The history of money, one of humanity’s most transformative creations, has been the subject of discussion for centuries. How did this fundamental tool for the economy emerge? A recent study published in the Journal of Archaeological Method and Theory presents a new perspective that reconfigures the debate. According to Mikael Fauvelle, author of the study, money did not exclusively arise as a state mechanism for collecting taxes, nor as a natural evolution of internal barter in primitive societies, as traditional theories have suggested. Instead, the researcher argues that money originated to facilitate external trade between strangers, an idea he refers to as the “trade theory of money”.
The study challenges the two dominant positions regarding the origins of money. The first is the “money as commodity” theory, which proposes that money emerged as a medium of exchange to overcome the limitations of barter. According to this view, money allowed communities to overcome the so-called “double coincidence of wants” problem, i.e., the difficulty of finding someone who wanted to exchange one specific good for another at the same time. This theory, historically defended by Aristotle and economists like Carl Menger, argues that valuable and durable materials, such as metals, naturally evolved into monetary systems.
The second is the “chartalist theory” or “money as credit” theory. This more recent approach suggests that money emerged as a tool imposed by ancient states to standardize tax and tribute payments. This view, defended by authors such as Georg Friedrich Knapp and later popularized by David Graeber, emphasizes that money originated in a hierarchical process, where the central authority defined its value and use.
However, both perspectives have faced criticism. Critics of the first argue that there is no historical or ethnographic evidence to demonstrate the existence of economies based exclusively on barter, leading to the classification of this idea as the “myth of barter”. Meanwhile, the chartalist theory has been questioned for underestimating the role of trade and social dynamics in the emergence of money.

Fauvelle proposes an alternative that combines elements of both theories but with a significant twist. According to his analysis, money did not emerge within communities to solve local exchanges, but as a practical solution to facilitate trade between regions, particularly in situations where traders had to interact with strangers or cross cultural and linguistic borders.
The author supports his hypothesis with archaeological and ethnohistorical evidence from two key regions: pre-Columbian North America and Europe during the Bronze Age. In both contexts, specific materials, such as shell beads in California and bronze ingots in Europe, began to be used as money to ensure the success of long-distance exchanges.
Trade, Fauvelle explains, introduces a different dynamic than internal exchange in small societies. While within a community, economic relationships are often based on reciprocity and trust, traders traveling long distances faced a greater challenge: negotiating with strangers in unfamiliar contexts. Here, the use of a common, portable medium of exchange with intrinsic value was essential.
The first case study presented by Fauvelle focuses on the indigenous societies of North America, particularly in the region of California, where shell beads were used as currency for over a thousand years before European contact. These small beads, produced in the Channel Islands, were highly valued and used to purchase food, tools, and services.
The production of these beads reached industrial levels, with millions of units manufactured and distributed across a vast territory spanning hundreds of miles. Traders from different cultural groups, such as the Mojave, transported these beads inland, where they were also accepted as a means of payment.

The study highlights that these beads not only served an economic function but also a social one. They were used in rituals, to settle debts, and as a status symbol. However, their practical value as money in commercial exchanges is undeniable. According to Fauvelle, the high portability and fungibility of these beads made them an ideal tool for trade in regions as culturally and ecologically diverse as California and the southwestern United States.
The second case study explores the economy of the Bronze Age in Europe, a period marked by trade networks connecting regions from Scandinavia to the Mediterranean. In this context, bronze, an alloy of copper and tin, was not only used to make tools and weapons but also became a medium of exchange.
Bronze ingots, axes, and rings, many of them standardized in weight, circulated throughout the continent. Fauvelle argues that these pieces served a function similar to modern money, enabling traders to conduct transactions in distant markets. The standardization of weights facilitated negotiations and reduced conflicts in transactions, demonstrating a practical use of bronze as currency.
Moreover, bronze trade was not limited to the elites. Although the rulers of the time may have played a role in its production and distribution, Fauvelle emphasizes that the demand for bronze was widespread, including among more modest sectors of the population. This reinforces the idea that money was not exclusively a state control instrument, but a tool that emerged to solve practical problems in trade.
Fauvelle’s study raises important questions about how we understand money and its role in human history. His trade theory of money does not seek to entirely replace traditional theories but to complement them by highlighting an alternative mechanism for the emergence of monetary systems.
The author concludes that money probably emerged independently in multiple regions and for different reasons. In some contexts, it may have been a product of state authority, while in others, as analyzed in this study, it was a practical innovation driven by the need to trade with strangers.
SOURCES
Fauvelle, M. The Trade Theory of Money: External Exchange and the Origins of Money. J Archaeol Method Theory 32, 23 (2025). doi.org/10.1007/s10816-025-09694-9
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