Carl Menger, father of the Austrian School of Economics, showed the world that money is not the product of the state. He did not mean that government is intrinsically incapable of decreeing something to be money while other groups, organized for different purposes, could do it.
He described how money emerges as the commodity which is most marketable (“absatzfähigkeit” in German). He discusses factors that limit marketability including to whom you can sell a particular good, where you can sell it, when you can sell it, etc. The most marketable is the one anyone can buy or sell anywhere at any time, with no limitations on quantity.
Picture the problems with fresh oysters, crude oil, winter woolens, and iron ingots. Oysters spoil very quickly, crude oil has to be stored in a specialized tank, no one wants wool mittens in the summer, and iron is heavy. Only a dealer in seafood could buy oysters. Oil can only be bought up to the buyer’s storage capacity. No clothing retailer wants to buy merchandise that will sit in a warehouse for a year until next winter. Moving iron any great distance is expensive.
At one time, cattle was money. A big cause of this is that cattle move under their own power. For nomadic societies, everyone thought of livestock as wealth and pastureland was not a limitation. However, as people settled into cities and agriculture, animals didn’t work so well any more. What would a blacksmith or weaver do with a few cows in the workshop? And what will it cost to feed them? They needed something more convenient.
Gold emerged as the most marketable commodity. It does not have any of the above problems. Anyone can accept gold anywhere at any time, and bring it anywhere else to anyone else. It is important to ask why a commodity. Why not love? “I will trade you two acres of farmlands for love (or a kiss)” Why not chiseled carvings on a stone at the city temple, kept in absolute trust by the priests? Why not pieces of paper? The first is a frivolous question to make a point. Love or a kiss cannot be exchanged with a third party.
Read more about this here...This is an interesting discussion on how the concept of money emerged over time and we can clearly see that it is not actually a product of the state but of the people themselves over a period of time. This is on contrast with what some government can be claiming that they inherited the power to print the fiat money in accordance with history.
At one point, cattle was even considered as the money...and that is why in the past the more cattle you have the richer you can be and the more attractive you can be to women who are looking for a husband (yeey!). Seriously, right now with cryptocurrency we are returning that power back to the people and this is kinda big disruption because we are fighting traditions and powers here.
