Sapiens: a brief History of Humankind

26.
 In ancient Chinese script the cowry-shell sign represented money, in words such as ‘to sell’ or
‘reward’
.
In modern prisons and POW camps, cigarettes have often served as money.
Even non-smoking prisoners have been willing to accept cigarettes in payment,
and to calculate the value of all other goods and services in cigarettes. One
Auschwitz survivor described the cigarette currency used in the camp: ‘We had our
own currency, whose value no one questioned: the cigarette. The price of every
article was stated in cigarettes … In “normal” times, that is, when the candidates
to the gas chambers were coming in at a regular pace, a loaf of bread cost twelve
cigarettes; a 300-gram package of margarine, thirty; a watch, eighty to 200; a litre
of alcohol, 400 cigarettes!’
6
In fact, even today coins and banknotes are a rare form of money. In 2006, the
sum total of money in the world is about $60 trillion, yet the sum total of coins
and banknotes was less than $6 trillion.
7
More than 90 per cent of all money –
more than $50 trillion appearing in our accounts – exists only on computer
servers. Accordingly, most business transactions are executed by moving electronic
data from one computer le to another, without any exchange of physical cash.

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Only a criminal buys a house, for example, by handing over a suitcase full of
banknotes. As long as people are willing to trade goods and services in exchange
for electronic data, it’s even better than shiny coins and crisp banknotes – lighter,
less bulky, and easier to keep track of.
For complex commercial systems to function, some kind of money is
indispensable. A shoemaker in a money economy needs to know only the prices
charged for various kinds of shoes – there is no need to memorise the exchange
rates between shoes and apples or goats. Money also frees apple experts from the
need to search out apple-craving shoemakers, because everyone always wants
money. This is perhaps its most basic quality. Everyone always wants money
because everyone else also always wants money, which means you can exchange
money for whatever you want or need. The shoemaker will always be happy to
take your money, because no matter what he really wants – apples, goats or a
divorce – he can get it in exchange for money.
Money is thus a universal medium of exchange that enables people to convert
almost everything into almost anything else. Brawn gets converted to brain when
a discharged soldier nances his college tuition with his military bene ts. Land
gets converted into loyalty when a baron sells property to support his retainers.
Health is converted to justice when a physician uses her fees to hire a lawyer – or
bribe a judge. It is even possible to convert sex into salvation, as fteenth-century
prostitutes did when they slept with men for money, which they in turn used to
buy indulgences from the Catholic Church.
Ideal types of money enable people not merely to turn one thing into another,
but to store wealth as well. Many valuables cannot be stored – such as time or
beauty. Some things can be stored only for a short time, such as strawberries.
Other things are more durable, but take up a lot of space and require expensive
facilities and care. Grain, for example, can be stored for years, but to do so you
need to build huge storehouses and guard against rats, mould, water, re and
thieves. Money, whether paper, computer bits or cowry shells, solves these
problems. Cowry shells don’t rot, are unpalatable to rats, can survive res and are
compact enough to be locked up in a safe.
In order to use wealth it is not enough just to store it. It often needs to be
transported from place to place. Some forms of wealth, such as real estate, cannot
be transported at all. Commodities such as wheat and rice can be transported only
with di culty. Imagine a wealthy farmer living in a moneyless land who
emigrates to a distant province. His wealth consists mainly of his house and rice
paddies. The farmer cannot take with him the house or the paddies. He might
exchange them for tons of rice, but it would be very burdensome and expensive to
transport all that rice. Money solves these problems. The farmer can sell his
property in exchange for a sack of cowry shells, which he can easily carry

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wherever he goes.
Because money can convert, store and transport wealth easily and cheaply, it
made a vital contribution to the appearance of complex commercial networks and
dynamic markets. Without money, commercial networks and markets would have
been doomed to remain very limited in their size, complexity and dynamism.
How Does Money Work?
Cowry shells and dollars have value only in our common imagination. Their worth
is not inherent in the chemical structure of the shells and paper, or their colour, or
their shape. In other words, money isn’t a material reality – it is a psychological
construct. It works by converting matter into mind. But why does it succeed? Why
should anyone be willing to exchange a fertile rice paddy for a handful of useless
cowry shells? Why are you willing to ip hamburgers, sell health insurance or
babysit three obnoxious brats when all you get for your exertions is a few pieces
of coloured paper?
People are willing to do such things when they trust the gments of their
collective imagination. Trust is the raw material from which all types of money
are minted. When a wealthy farmer sold his possessions for a sack of cowry shells
and travelled with them to another province, he trusted that upon reaching his
destination other people would be willing to sell him rice, houses and elds in
exchange for the shells. Money is accordingly a system of mutual trust, and not
just any system of mutual trust: