>> I do
>> like the idea of money arising as a way for
>> the State to help landowners squeeze peasants
>> by facilitating the creation of private debt.
>
> Which has everything to recommend it except the fact that it didn't?
In fact peasant attitudes to "hoarding" exacerbate the burden of their debts; at least they do so in Keynes's theory of money.
The "heart" of this theory is the assumption that there are irrational "money-making and money-loving instincts" - an "instinct of avarice", a "hoarding instinct" - underpinning monetary beliefs and behaviour (e.g. crank theories of money).
Keynes attributes a relatively primitive form of these instincts to peasants.
In his Tract on Monetary reform he points to irrational peasant hoarding as a factor reducing the inflationary impact of increases in the quantity of money and thus preventing the real value of debt - its burden - from falling as much as it otherwise would.
"In agricultural countries where peasants readily hoard money, an inflation, especially in its early stages, does not raise prices proportionately, because when, as a result of a certain rise in the price of agricultural products, more money flows into the pockets of the peasants, it tends to stick there; deeming themselves that much richer, the peasants increase the proportion of their receipts that they hoard." (Collected Writings, vol. IV, p. 66)
In Keynes's General Theory the understanding of how this irrationality works itself out has been significantly altered. Irrational peasant hoarding - peasant "liquidity preference" - now works to increase the burden of debt primarily through its effect on interest rates rather than on inflation.
For instance, Indian peasant hoarding - which in Keynes's earlier writing is given the role of reducing the inflationary impact of increases in the world supply of precious metals - now increases the burden of debt by increasing interest rates.
"The history of India at all times has provided an example of a country impoverished by a preference for liquidity amounting to so strong a passion that even an enormous and chronic influx of the precious metals has been insufficient to bring down the rate of interest to a level which was compatible with the growth of real wealth." (General Theory, VII, p. 337)
Keynes's foundational assumptions about the psychology of money would, I suspect, trace the origin of money to a social context governed by a still more primitive form of the "instinct of avarice", one in which hoarding served almost exclusively to alleviate persecutory anxiety and where hoarded objects (whose "value" derived from their unconscious symbolic meanings) had only very limited exchange value, this too expressing persecutory anxiety. The most obvious exchange value of this kind is that involved in institutions such as wergild which established "payments" by means of which "debts" arising from murder, injury and insult could be discharged and blood feuds avoided.
This interpretation of Keynes's monetary theory is also consistent with his summary statement of the reasons money is used as a store of wealth (as opposed to a medium of exchange).
"Why should anyone outside a lunatic asylum wish to use money as a store of wealth?
"Because, partly on reasonable and partly on instinctive grounds, our desire to hold money as a store of wealth is a barometer of the degree of our distrust of our own calculations and conventions concerning the future. Even though this feeling about money is itself conventional or instinctive, it operates, so to speak, at a deeper level of our motivation. It takes charge at the moments when the higher, more precarious conventions have weakened. The possession of actual money lulls our disquietude; and the premium which we require to make us part with money is the measure of the degree of our disquietude." (XIV, 116)
Ted -- Ted Winslow E-MAIL: WINSLOW at YORKU.CA Division of Social Science VOICE: (416) 736-5054 York University FAX: (416) 736-5615 4700 Keele St. Toronto, Ontario CANADA M3J 1P3