Paul: you are touching on exactly the right issue. I think price and value need to be separated, OR value needs to be relativized (i.e. not ‘good’ or ‘bad’ but ‘is mine the same as yours?’). I like the idea that pricing should be agnostic to value. Force or fraud SHOULD be included. There is presumably a set of pricing dynamics even in protection rackets, where street apple sellers get taken for more than store merchants, and each level of defaulting has its own punishment (“if you miss a protection payment this week, you get a slap in the face. Miss it for 2 weeks, you get beaten up at night. 3 weeks, house burned down. 4 weeks, you get killed”).

Tubelite: the animal world examples are great. I hadn’t thought of the friend’s-stomach=refrigerator analogy at all. But it makes sense. Iterated prisoners’ dilemmas get to evolutionary stable states (ESS) of tit-for-tat if discounting of future isn’t “too high.” Your Dawkins/Pinker example formalizes that notion. If discounting of future value of trust (in PD sense) is less than degradation rate of meat, it makes sense to put it in stomach-refrigerator. There may be a general model here that combines NPV-DCF analysis with capital asset depreciation dynamics.

Small scale prisoner’s dilemma games can be played with memory. When you have much larger sets and you want to discriminate, you really have to use an external data structure viz. money.

Quote from Dawkins’ “The Ancestor’s Tale”:
The idea (I attribute this inspired way of expressing it to Steven Pinker) is that before the invention of the freezer the best larder for meat was a companion’s belly. How so? The meat itself was no longer available, of course, but the goodwill it buys is safe in long-term storage in a companion’s brain. Your companion will remember the favour and repay it when fortunes are reversed. Chimpanzees are known to share meat for favours. In historic times, this kind of IOU became tokenized as money.

1. Would a theory of money have to be historical? Would it aim to analyze what absolutely all money is, to account for currencies like wampum, cattle, &c.; or would it aim for a pure definition of Money that might well exclude many categories of trade goods and tokens which happen to have been its historic predecessors or alternatives?

2. How would a theory of money relate to the theory of value? One the one hand there is work to build upon in the theory of value; on the other hand severing the theories of money and value has the appeal of an elegant scientific gambit, like the way information theory severs the concept of information from the engineering of the system that carries it. But such value-neutrality would contradict the idea that value is identical with price (unless you generalize price as something only sometimes or partly monetary). Information theory doesn’t care whether information is true or false. Likewise a general, value-neutral theory of money would have to be applicable to exchange under conditions of force or fraud.

If you go with the broad consensus in economics that price carries information, money becomes a way to represent this information. At different points in time, different forms worked because this representation has some prerequisites such as durability and trust. The information view also means that since there are infinite variety of things that can be price, there is no one notion of money that will work. We routinely trade (concrete) favors. The favors are currency too.

One issue with money is the control of the representation (bills, etc.). Whoever gets to define it/own it, gets political power. In all cases that power is abused. It goes on until the price of corruption of the system is much lower than the transaction value it enables. Countries/economies collapse when that is not true.

I like the idea of “emergent” currency. But the state/powerful elite will not allow that to happen because they want the ability to corrupt (e.g., to wage a war)

The first line of thought worries me because it builds in notions of society, agency and subjective value as fundamental. In fact the biological examples of direct/indirect reciprocity (such as the famous example of bats sharing food) show that those phenomena don’t actually need money to happen, just enough memory to play the underlying information games such as prisoner’s dilemma. I think the money may well lubricate and accelerate such phenomena (because it reduces the transaction cost known as the “dual coincidence of wants“), but it would be a emergent effect of money, not a part of the definition.

The second one is more fundamental, since “confidence” is a type of information that can be encoded and therefore (as you say) externalized. I have been groping along the same lines myself.

I think what will turn out to underlie both phenomena will be a definition in terms of information theory. The tentative definition I am playing with is “money is known-unknown information about which there are shared expectations.” I haven’t yet worked out the details, but I’ll let that statement stand baldly there while I do

Thanks for the papers, they are going into my gradually accumulating bookmarks folder on the subject.