Chapter 13: Accounting Requires Money First

The commodity-counter theory assumes tokens were invented for accounting. This assumption reverses the logical order.

Accounting requires money. Money does not require accounting.

The Receipt Problem

Consider what a receipt does.

A receipt records what was exchanged and for how much. When you buy a car, the receipt says: "One automobile - $20,000."

Notice the receipt needs two pieces of information: the item and the price.

Without the price, the receipt is useless. A receipt saying only "car" tells you nothing. Was it a gift? A loan? At what value?

Price requires money. Price is the amount of money exchanged.

Therefore: receipts require money. Accounting requires receipts. Accounting requires money.

If tokens were accounting devices, what were they accounting in? What unit of measure? What currency?

The conventional theory has no answer.

My theory answers simply: plain tokens were the money. Later developments were the accounting systems that money made possible.

Why would anyone want records?

All these purposes assume transactions with prices. Debts denominated in some unit. Wealth measured by some standard.

They all assume money.

In pure barter, accounting is nearly useless.

If I trade three chickens for one goat, what is there to record? The transaction is complete. There is no debt, no price, no denomination.

Future transactions cannot reference past records because there is no common unit.

Barter societies exist. Anthropologists study them. They manage without accounting through memory, reputation, and social pressure.

Money changes everything.

With money, transactions have prices. Prices can be compared. Records become meaningful.

With money, debts can be precise. "You owe me 50 tokens" is enforceable.

With money, wealth can be measured. Taxation and inheritance become calculable.

Money does not just enable accounting. Money creates the need for accounting.