Note on the Origins of Money
Societies which use money are only possible when people have produced a surplus beyond their immediate needs and have something to exchange. Barter is the first form of exchange in human history. For example, a bow and arrows for a bronze axe, etc. Before the production of a surplus, there was no exchange. People produced or hunted and gathered then distributed for their needs without exchange. But once surpluses are produced systematically (and this implies technical innovations and development), exchange beyond simple barter then requires a universally accepted medium of exchange. This is when money comes on the human scene. For most of human history, people have lived without using money. The first forms of money were goods like cattle, pieces of iron, sheep, shaped coal or amber discs, beads etc. Only later does bronze, silver, gold and coin serve as money until now we have paper and electronic money. Money becomes the universal representation of value (labour time).
As soon as labour power itself becomes a commodity then it becomes exchangeable for money. In the epoch of capital, the value which labour produces is always greater than the actual value of the labour power. This is the source of what Marx calls surplus value which becomes profit on the sale of produced commodities on the market. In other words, the capitalist class exploits people by making them work for less than the value of what they actually produce. And this is the source of their profit. In socialist society, because we produce this surplus by our collective labour, that surplus belongs to the whole of society and not simply to a ruling class of capital-owning parasites. Eventually socialism will dispense with money so that production will simply be for human needs and the goods produced will be distributed accordingly to meet those needs. The capitalist state defends the current system of exploitation and that is why it must be toppled if we are to progress to the new society.
Money is only necessary in a society based on the production and exchange of commodities or in previous pre-capitalist societies where exchange is a peripheral activity. Or in a society (the early phases of post-capitalist, socialist society) where accountancy of labour time still retains a validity. The society we live in is based on capital as the ruling social relation. The root of the problem is not money per se but the continuation of this type of social formation involving capitalist commodity production. Once this social formation disappears, and after a period of transition in which money for a time will be necessary, there will be no need for money. Money therefore will always be needed as long as this type of society persists.
How does society dispense with money at the current stage when we have not created the necessary social conditions to do so? How do you and I and every one else live without money today? That is not possible at the present stage. It will require social changes and massive upheavals of a historic nature to create a society where money is no longer necessary.