On the origin of money, or Menger’s one-sided reading of Genovesi’s Lezioni

Abstract

By examining Menger’s interpretation of Genovesi’s arguments on the origin of money, this note shows that Genovesi is a subtle theorist managing to blend the Cartalist with the Mengerian approaches to the origins of money. Far from resting exclusively on the Mengerian unattended consequences of the uncoordinated behaviours of rational agents trying to minimise their transaction costs, Genovesi shows how governments can and do create fiat money with a positive value in connexion with their ability to raise taxes. For Genvesi both trust (à la Menger) and authority (à la Cartalist) are necessary to explain the positive value of money.

KEYWORDS:

• Genovesi
• Menger
• origin of money

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 For a recent survey of this literature, see Bridel (2013) and Walsh (2017).

2 The great thinkers of antiquity, and following them a long series of the most eminent scholars of later times up to the present day, have been more concerned than with any other problem of our science with the explanation of the strange fact that a number of goods (gold and silver in the form of coin, as civilization develops) are readily accepted by everyone in exchange for all other commodities, even by persons who have no direct requirements for them or whose requirements have already been fully met. A person of the most ordinary intelligence realizes that the owner of a good will give it in exchange for one that is more useful to him. But that every economizing individual of an entire society should be eager to exchange his commodities for small discs of metal, which ordinarily only a few men can use directly, is something that is so contradictory to the ordinary course of events that we cannot be surprised that it appears “mysterious” to even [many a] brilliant thinker (315).

3 “Il prezzo è figlio del bisogno” (286).

4 We are still far off from any idea of marginal utility or even marginal rate of substitution between goods but we are equally light-years away from a cost-of-production or labour theory of value.

5 Hence, for Genovesi, coinage is a public monopoly saving on the agents’ transaction costs by confirming that the natural intrinsic price of gold determined on the market corresponds to the actual value of the coin. Immediately after the mention of l’attestato pubblico, Genovesi concludes: “E questa è l’origine della moneta e del suo valore” (312).