Harvard Undergraduate Law Review

Desan: Let me talk for a minute about the way money is conventionally conceptualized. If you look at a macroeconomics textbook, the attention given to defining money is quite scant, and the assumption is often expressed that money is some kind of measure that arises from private exchange. We’re in a society where we’re exchanging wheat for fish and chicken for salt. It’s very hard to make those exchanges because if you’re bartering, the items you have might not be the items other people want, so you can’t trade easily. So, say many commentators, what happens is that something that’s easy to give and take rises to the top of the exchange, kind of like fat to the top of broth, and that becomes the item that’s used to measure other things. In the conventional story, silver and gold rise to the top of the exchange, and are used to measure other things. Then, the government then gets involved standardizing silver and gold, making coins out of those materials so people can use them easily. And if you think about that story, it’s a story about private activity in which the government’s role is one of an administrator. The market itself is represented by barter, by the underlying give and take of items, and the advent of money makes things easier but doesn’t fundamentally change anything about the market.