L2 - The Explosion Of Shell Money Flashcards
Shell money efflorescence
There was an efflorescence (explosion) of shell money across Europe, since people were using it like money. However eventually it was replaced by state currency. It was never banned, it just fell out of use.
The economics view:
The value of the shell was losing its value as more and more came into circulation.
The anthropologists view:
The anthropologists examine the changes in the purpose of the currency in the two places.
This topic helps us too recognise the economic versus the anthropological explanations.
Anthropological explanations
Anthropologists offer a “sub-alternate theory of the political purposes of money in colonialism.
Sub alternate means ‘against the norm’, from the grass roots.
They showed that the increase in the volume of trade led to inflation but also the debasement of human dignity through the sacrifice of livelihoods.
Background: Papua New Guinea Highlands
Middle of the 20th century, Australians flew over too Paula New Guinea and brought 10 million cowrie shells with them in order to pay the villagers there too look for gold and coffee plantations.
However villagers were worried about the cowrie: it was volatile and they were not sure what to do with it - what was its purpose? It wasn’t like pigs which also looked after them and were a store of wealth.
History of the Cowrie Shell
1700: trade of cowries was 10bn
Their value came from the slave trade where slabs traders bought salves with cowries in West Africa to carry to plantations in the Caribbean.
The Dutch dominated the trade until 1810 where the amount of cowries in circulation fell considerably and eventually by 1900 there was none left in circulation.
Collapse, revival, collapse
1) Collapse (1810): The abolition of the Atlantic slave trade caused the first collapse - the cowries no longer had a purpose - it no longer brought wealth. The British had preempted this and so stop using cowries in 1810. The Dutch only used cowries for a bit longer after the collapse.
2) Revival (1840): Britain leads the revival as the cowrie is thought to be able to be used in agricultural trade alongside British sterling.
3) Collapse: Countries with cowries from Zanzibar release them into the market and lower prices and the market collapses. The cowries were so volatile that people decided to not use them again.
Economic theory of the value of money
Economists view on the second collapse:
It is and example of the power natural logic:
That increasing the supply of money has an inflationary effect on the value of goods.
People wanted to use the ‘good cowrie money’ from the Maldives, not the ‘bad’ ones from Zanzibar! This created an exchange rate for each currency. The value of the cowrie goes down to lower than there 1840 value and this can’t buy as much as before… people stop using it.
Gresham’s law and Fishers rule
These are 2 laws that support the economists view on the theory of money.
Gresham’s law: This law follows the power of natural logic. It believes that ‘bad money drives out good’ and assumes that all people everywhere want social and economic stability.
Fisher’s Rule: MV X PQ
How increasing the money supply assures economic growth
If the number of transaction rises in the economy it should cause economic growth.
This is dependent however on inflation and price stability.
Economic theory of the value of money
It assumes that there is one universal standard of money which is based on natural logic - the idea that everyone shares the same logic.
Anthropologist sub - alternate view =
They assume that multiple standards of money exist, I.e the cowrie and the pound. But that this can be discovered through the ‘grass roots’. Anthropologists believe that the value of money is made or lost in a struggle to assert the dominance of one standard of value over another. For example the cowrie lost in its struggle to abolish slavery and also to assert dominance over the pint for trading in the colonies of West Africa.
Disagreement between anthropologists and economists
For money to exist it has to be given a standard of value.
This can be done in 2 ways:
1) the cultural logic of power: Anthropologists rely on this and they believe that power is a relationship of domination and subordination.
2) the power of natural logic: economists explanations rely on this explanation. They believe that the standard of value rests on the power of natural logic, as that is what human, rational thinkers would do and see power as an ability to act effectively.
Note: Economists believe that humans act rationally and in the best interests of others.
