Ancient Monetary Theory

Comedy is no Laughing Matter

by Charles Pinwill

While hunter-gatherer societies do have a social structure and culture, and some form of belief system or “religion” which seeks to “explain everything”, civilization as such is usually not considered to have begun until agriculture enabled a sedentary life. Once farming allowed a fixed place of abode, rules aimed at enabling just relationships between the settlement’s people in their new circumstances, began to be put in place.

So first there came agriculture, then some form of “government” charged with upholding just relationships between inhabitants as that society perceived them. After this, sophistication in regulating economic activity could grow. A “monetary” system could begin. 

The first mediums for reckoning economic value were commodities. The Romans used salt and cattle, the word for which was pecus. Now, as a lingual inheritance, we speak of salaries and pecuniary matters. The early Egyptians used grain, usually wheat.

When the Pharaohs and their Governments realized that they had a commodity money system they devised their Ancient Monetary Theory. Apart from being distinguished by its antiquity and primitiveness, it was as dictatorial and exploitative of the ordinary people as the then Government’s imagination could devise. They did well.

They started from the observation that the Egyptians spent a third of their time without paid employment. Usually this ran from when one year’s crop was fully harvested, until the next flood had come and gone and the next crop could be sown. This period was about 4 months every year, and every Egyptian spent this in a manner of his own choosing. Four months voluntary activity of his own choosing was his profit won from 8 months activity compelled by need.

To Government this flew in the face of their policy of full employment, and they thought it best that they become the employer of last resort. They would offer paid employment to all fellahin paid in ready wheat. “Ready wheat in the hand”, as they used to say. “But where will the wheat come from?” cried the mediocrity of the time.

In those days there was no virtual wheat, or even digital wheat in cyberspace, so what to do? They issued claims for wheat (equal to four months’ wheat consumption) upon the fellahin, and gave him four months paid employment. Good idea, but what job will we give them? It was the God-King Pharaoh’s prerogative to say.

Although it puzzled everyone for the next 5,000 years, the decision actually resulted from an accident. In those times the Pharaoh’s household used to include people known as mathematician-court-jesters, a type of necromancer whose primary function was to entertain the Pharaoh mainly with flattery. One gave the Pharaoh eight match sticks and said that none could figure the greatest volume which could be encompassed by them.

When after two days the Pharaoh saved face by coming up with a pyramidal shape, the Court was so relieved that they hadn’t overtaxed the revered (and dangerous) one that they made a very great show of being most impressed. This so convinced the Pharaoh at his own cleverness, that the Court became excessively effusive and overdid it. Once the Pharaoh caught on to their little joke at his expense, he thought he’d have one on them. “I’ll have one!” he said.

In the Court’s stunned silence, trying desperately to think of something to say, the Chief Necromancer asked “How big shall we make it?”  The Pharaoh answered “Make its base at least a few acres, and have it weigh at least one million tons.”

And so it came to be ….For in those days the King’s Word was Law.

The result in growth and jobs was impressive. In the next twenty years the economy grew by one pyramid, and employment achieved absolute perfection and consumed all leisure.

The ancient ones had issued artificial though enforceable claims upon 1/3 of all wheat, thereby acquiring the whole of the people’s profit, they had boldly stepped in as the employer of last resort, banished leisure, and established full employment with a “job guarantee”.

Though to us, they had some quaint ways too. They never, even for one moment, thought of themselves as being ancient. And so it is that even to this day, we describe this policy and practice just as they did, as …. Modern Monetary Theory.

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