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The Evolution of Money summary

Name: The Evolution of Money
Rating: 4.1 (77 reviews)
Author: David Orrell and Roman Chlupatý

David Orrell and Roman Chlupatý

From ancient Greece to the digital era

4.1 (77 ratings)

19 mins

Brief summary

"The Evolution of Money" by David Orrell and Roman Chlupatý explores the history and development of monetary systems. It delves into the relationship between money and society, and offers insights into the future of finance.

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Change & Evolution International Economics

Table of Contents

The Evolution of Money
Summary of 8 key ideas

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Key idea 1 of 8

What’s in it for me? Explore the history and character of money.

As a child, did you ever wonder why someone would gladly exchange precious things – a car, a teddy bear, a piano – for little green pieces of paper? Did this not strike you as strange?

Money really is an odd thing. Humanity has been using it for a long time, but even economists are still divided over its exact character. Also, it comes in many different forms, both tangible and not, from shells to bills to Bitcoins.

These blinks offer an in-depth look at money’s turbulent history, its uncertain future and the many ways in which the economy has tried to make sense of it.

As we move through the centuries, you’ll also discover

one more reason to envy Australians;
how money is related to quantum theory; and
why two pizzas once sold for what would be worth millions in today’s money.

Contrary to popular belief, money wasn’t invented to replace the barter system.

Have you noticed how bartering comes very naturally to children? Perhaps you remember exchanging a juice box for some cookies, or your best set of marbles for a Matchbox car.

One old and popular theory holds that money was “invented” as societies outgrew the barter system. In fact, this theory dates back to Aristotle.

Though it was essentially pure speculation, the theory gained traction with many great thinkers who followed, including the influential eighteenth-century economist, Adam Smith.

They all believed that money was an outgrowth of commercial trading – where, for example, some valuable bit of property such as cattle could be traded for a certain number of slaves.

But this isn’t very efficient; things like cattle aren’t very easy to transport, whereas coins are.

Plus, the precious metals in coins were seen as being valuable just about anywhere, while other goods may not be in demand in some areas and are therefore less valuable.

This idea of money evolving from bartering may sound plausible, but it’s actually been debunked. In 1913, Alfred Mitchell-Innes, a British economist, published his own findings, noting that there was no evidence in commercial history to suggest that a barter-only system ever existed.

And Mitchell-Innes has yet to be proven wrong – in fact, historians have only gone on to find more evidence of ancient civilizations using old forms of money in addition to bartering.

Around 5,000 years ago, in Sumer, one of Mesopotamia’s earliest urban civilizations, commercial transactions were recorded on clay tablets, which show us that salt, beads and bars of precious metals were all used as early versions of money.

The truth is, we don’t know exactly how or when money came to be used, but we do know that the first coins began appearing in the seventh century BC, in the Mediterranean kingdom of Lydia.

And by the sixth century BC, Greek city-states were minting their own coins as a demonstration of power and independence.

Determining the value of money reveals its complex nature.

You probably know that Sir Isaac Newton is one of world history’s most influential physicists, but did you know he also had a huge impact on our currency?

Indeed, Newton is responsible for developing the relationship between money and its weight.

Banking and international trade flourished after the invention of debt.

No one enjoys being in debt, but debt itself is a necessary part of a functioning economy.

Debt can’t exist without negative numbers. And the first person to demonstrate the use of negative numbers was Brahmagupta, an Indian mathematician who explained their purpose in his seventh-century book, The Opening of the Universe.

The gold and silver riches of the New World significantly changed the world economy.

The discovery of the Americas was, of course, a big deal for folks in the Old World, and part of that was due to the economic impact it had.

After Hernán Cortés conquered Mexico in 1521, Spain soon learned about the financial chaos that too much of a good thing can suddenly cause.

The ability to print money led to certain problems, but a stable economy eventually emerged.

Paper money has come a long way. It’s now a complex mix of numbers, watermarks and even holograms.

The history of banknotes goes back to the early eighteenth century when France was facing some tough economic times.

Economic theory has changed over the last few centuries, and it’s come to include psychological aspects.

If you’ve taken a class in economics, one of the first names you’ll have encountered is that of the eighteenth-century philosopher, Adam Smith. In his desire to create a universal theory of finance, he gave birth to the science of economics.

Smith laid a very solid economic foundation, but our understanding of the relationship between money and its value has certainly evolved since then.

Economists and politicians have discussed and tried various methods to deal with monetary crises.

Here’s a funny thought: one day, a government employee shows up at your door with an envelope filled with cash and says, “Enjoy.” Pretty unrealistic, right?

Actually, a number of economists believe that providing people with extra spending money is a very realistic way of helping economies bounce back from recessions, like the one that followed the 2007 crisis.

Bitcoin has changed the present status of monetary systems – and the future has many challenges.

Things have been changing fast in the new millennium, and it’s not over yet. Before long, things like piggy banks and coin jars might be a thing of the past.

So far, the Bitcoin is the closest we’ve come to a truly universal currency, and it’s also a threat to the traditional banking system.

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What is The Evolution of Money about?

The Evolution of Money (2016) offers an insightful look at the history of currency in civilized society, from shells and coins to the digital ones and zeroes of an online bank account. Find out how monetary systems have always functioned much like religion – without faith and belief, they’d collapse – and learn what the future may have in store.

The Evolution of Money Review

The Evolution of Money (2016) is a thought-provoking exploration of the history and future of money that is definitely worth reading. Here's what makes this book special:

It offers a comprehensive look at the evolution of money, from its origins to modern-day digital currencies, providing readers with a deep understanding of its impact on society.
Backed by extensive research and expert insights, the book uncovers the underlying drivers and trends shaping the way we use and perceive money.
With its accessible language and engaging examples, this book succeeds in making a potentially complex subject fascinating and relevant to readers of all backgrounds.

Best quote from The Evolution of Money

Like a toxic algal bloom on a lake, the economy is doing fine, but it is asphyxiating everything around it.

—David Orrell and Roman Chlupatý

Who should read The Evolution of Money?

Students of politics and economics
Businesspeople
Anyone curious about the financial crisis of 2007

About the Author

David Orrell is a Canadian author with a doctorate in mathematics from the University of Oxford. His writing has been featured in several economic publications and his other books include Truth or Beauty: Science and The Quest for Order.

Roman Chlupatý is a journalist and consultant who specializes in economics and politics. He is also the author of the book (S)OUR EARTH: Fourteen Interviews About Things That Are Changing Our World.

Categories with The Evolution of Money

Economics

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