“Money is a memory of transactions of exchange of goods for money” is a circular definition. Money is more than a memory. Fitness is determined by the ability to attract quality mates, to form alliances and coalitions, and to gain deference from non-allies. Key to all of this is the individual’s potential to influence the behavior of others. The potential to influence the behavior of others is how I define status. Status in human societies can be obtained in two ways. Dominance – by subduing others – using force or the threat of force – and prestige – by changing the behavior of others through awe, and the expectation of benefits to be gained by deferring. Money is the generally accepted prestige platform for status transfer – the most popular prestige status memory. Money balance is proof of helping others in the past, a prestige status signal. “Paying” is using your status to influence other people’s behavior to serve you or give you goods. Money reduces aggression among people who use it because it provides incentives for cooperation and a means of exchange, even between competing, hostile individuals. Money, unlike gifts, creates a positive feedback loop among helpers and enables reciprocal “altruism” (long-distance transactions and large-scale cooperation) among genetically unrelated strangers-individuals who do not live in the same community, share no common ancestry, ethnicity, or religion, and may never meet again.


  1. “And whether the true Idea of Money, as such, be not altogether that of a Ticket or Counter?” asks Bishop (George) Berkeley in The Querist (1737).[1] Yes, money is memory (Kocherlakota, 1996).
  2. But memory of what? According to Kocherlakota money is nothing more than[2] memory of transactions: “…a historical record which reports to any agent at any date the full histories of all agents with whom he has had a direct or indirect contact in the past.” (Kocherlakota, 1996).
  3. But what is being transacted? Goods for money. But what is money again? “Money is a memory of transactions of exchange of goods for money” is a circular definition.
  4. There is a paradox in this view of money: why would anyone begin to use money in exchange? How is it possible for it to have become a memory in the first place?

Money is Not Debt

  1. Davey and Jokinen try to circumvent this problem with “Money is only memory” hypothesis: “we re-interpret the basic transaction — traditionally viewed as an exchange of goods and money — as a one-sided “gift” of goods that is recorded on a shared ledger” (Davey, Jokinen 2020). Their solution is to leave the money out of the theory of money: “In fact, there is no recognizable concept of money in the theory we develop”.
  2. A popular answer to the question of what money is is debt (Graeber, 2011). Davey and Jokinen also take this approach: “This enables us to describe environments, which have hitherto been considered monetary, in terms of a pure credit economy.” Money is a pure credit record keeping technology: “The seller accepts currency as a record, or receipt, for having parted with goods — not as a delivery of equal value.”
  3. If I have money, no individual or any abstract concept of society owes me anything, implicitly or explicitly. No debtor, principal, duration or rate of interest is specified. Money balance doesn’t entitle me to anything. I have no rights to any goods in the economy other than the money I hold. The “payback” is not obligatory, but voluntary. Money is inconvertible – not a claim on consumption or capital goods (Wallace, 1980). There are no “societal obligations” of anyone objectively or subjectively (Kocherlakota, 1998). Money is neither debt nor the memory of debt.
  4. Money became money precisely because it is not a debt – a liability of anyone. Money doesn’t have credit or duration risk. If money has credit risk, like private bank demand deposits, then it is not money proper, but a money substitute – a money claim against a debtor (Mises, 1912), in Kocherlakota’s words “a form of bonds, not money” (Kocherlakota, 1998). [3]
  5. Money is the tool used to extinguish debt.

Money is More than Memory

  1. As Bigoni, Camera and Casari (Bigoni, Camera and Casari, 2015) show empirically, money has to be something more than a “pure record-keeping device” (Kocherlakota, 1998) or a public ledger of past transactions: “…we show that the suggested functional equivalence between money and memory does not translate into an empirical equivalence. Monetary systems perform a richer set of functions than just revealing past behaviors, which are crucial in promoting large-scale cooperation”. For money to function as money and facilitate sustained cooperation, it’s not enough for it to be a memory. Bigoni, Camera and Casari (Bigoni, Camera and Casari, 2015) found in their experiment that “the tokens’ superior performance is tied to the presence of external “liquidity” constraints, which facilitate the task of coordinating on credible, incentive- compatible trade patterns.” The liquidity constraint of tokens is a key feature of money, because: “…if the only way of having a positive balance is to help someone who has a positive balance, then this automatically implies a sanctioning of free riders (who have zero balance) and also of those who help them (whose balance remains zero). This second sanctioning mechanism is only built into monetary trade, because in the other treatments (with money just as a record- keeping system based on numerical balances, that increase for those who give help and decrease for those who receive it, added by the author) a positive balance can be obtained also by helping free riders.” (Bigoni, Camera and Casari, 2015).[4]
  2. The aggregate view of money as mere memory misses the incentive structure of the people who use it and its effect on the economy and thus on the extent of cooperation. Money is more than just a pure record-keeping system – money tokens perform the function of a decentralized facilitator of cooperation between strangers by disincentivizing free-riding without the need for centrally agreed and enforced norms.[5] To discourage free-riding and to facilitate and sustain cooperation between strangers, it is sufficient to help (in monetary terms: sell) only people one meets with money tokens – proof that they have helped the helpers in the past, too.[6] Thus, money encourages people to help helpers and, at the same time, not to help free-riders, only when the tokens are scarce.
  3. Liquidity constraint – inelastic supply of money is important to reliably maintain the signal of past cooperative behavior of the stranger counterparties in the environment of information asymmetry.[7] It can be achieved by the physical scarcity of a monetary good in the environment. Or, in the case of digital money, by an agreed and enforced norm.
  4. But why should anyone demand a money token? Why should an „intrinsically useless object“ (Hellwig, 1993) have a positive exchange value? Menger’s answer would be: „because it was a very saleable commodity to begin with“ (Menger, 1892). Let’s be a little more specific.

Fitness is Determined by Coalitions – Allies, Mates and the Deference of Competitors

  1. A small group of cooperating mediocre humans can kill the strongest human in a physical confrontation. Using weapons, even one may be enough. Coalitions of subordinates can ostracize or execute individuals who display aggrandizing behavior (Boehm, 1999).
  2. At least since the emergence of culture, the crucial factor in the evolutionary selection process for humans is not the natural environment, but other humans.
  3. In human societies, fitness is determined by the ability to attract quality mates, to form alliances[8] and coalitions, and to gain deference[9] from competitors. Key to all of this is the individual’s potential to influence the behavior of others.
  4. The potential to influence the behavior of others is how I define status.

Status Untangled…

  1. In sociology, many equate status with socioeconomic status (SES). SES is commonly defined as the social standing or class of an individual or group as measured by a combination of education, income, and occupation. This definition of status is based on an independent, single, static structure of hierarchy with ranks to fill. It is too narrow and misses parts of prestige status and a lot of dominance status. Poor Mother Teresa had a higher status than most PhDs, rich merchants, and prime ministers. Not every educated, rich, or accomplished person is an influencer, and not every influencer is educated, rich, or holds a high official position.
  2. “Status is an index of the social worth that observers ascribe to an individual or a group” (Chen et al. 2012) “a distinct social hierarchical dimension” (Chen, Y. R., Blader, S.L. 2014) is a more general definition of status in psychology that focuses on the relative social position or rank that individuals or groups occupy in a social system. “This definition makes clear how social status relates to (and, in most cases, differs from) other dimensions of social hierarchy, such as power, socioeconomic status (SES), dominance, prestige, influence, and leadership. All of these are dimensions for rank-ordering actors in a given social context, but we argue that each is distinct from the others and, moreover, that each has some distinction from status.” (Chen, Y. R., Blader, S.L. 2014) But where and how can the index of social value be observed or measured? Objective “social worth” doesn’t exist. Value is subjective and context dependent. Subordinates and followers confer status based on subjective factors. The way some subjective valuations are expressed in objective, observable and comparable variables in the economy is through monetary exchange and the emergence of prices. The same is true for status. More on this later.
  3. The popular definition of status in current anthropological literature focuses on the access to resources that status confers: “Social status can be defined as relative access to contested resources within a social group. Among most animals, social status largely results from a superior ability to inflict costs on others (i.e. dominance), including the withholding of benefits critical to others’ fitness.” (von Rueden, Gurven, Kaplan, 2011) or “Status can be viewed as either a hierarchy of rewards or as a hierarchy of displays – or both simultaneously…. High status entails greater access to desirable things, that access typically is not actively resisted by inferiors…This understanding is signaled in ethological behavior, such that higher status individuals – identified by the flow of benefits – are typically the receivers, rather than the givers, of deference displays.” (Henrich, Gil-White, 2001)

…and Properly Defined

  1. I define status as the potential to influence the behavior of other people.
  2. The closest I could find to my definition of status is in von Rueden’s: “Social status may be viewed less as the trait of an individual than as the behaviour produced by others‘ perceptions of that individual. Group members concede to higher-status individuals because they believe they will avoid harm or gain some benefit from their deference.” (von Rueden, Gurven, Kaplan, 2011).
  3. My definition is more general than the common one. It includes more “power” as originally defined by Weber (Weber, 1922)[10] than SES, but also influence not by power but by prestige (“social honor” in Weber), which SES lacks.
  4. Status is dynamic, not static like the definition of status in psychology. What appears to be a hierarchy or social ranking is not an independently existing single structure, but an emergent dynamic contextual order created by the changing influence of individuals on each other (status). It’s not a ladder, but more like crystallization processes in a solution with inhomogeneous and constantly changing concentrations.
  5. Hierarchy is the result, not the source, of the status (influence).
  6. Access to resources (economic goods, mates, and associates), which is emphasized in status definitions in the anthropological literature, is not a status per se, but a result of status: the subset of all behavioral changes in others brought about by an individual’s status.
  7. In economics, costs, benefits, or resources are all subjective categories that depend on the unique individual and his goals (von Mises, 1949). In biology, value is often treated as an objective, observable variable, defined as adding to or subtracting from the inclusive fitness of an individual organism. But one can only measure the effect of a variable on the fitness of an organism post hoc, and never objectively predict value looking into the future. One cannot truly estimate the future impact of a current variable on the fitness of an individual organism without running a parallel evolving universe. The world is too complex for that and life is computationally irreducible (Wolfram, 2002). Therefore, fitness value is always just a special abstract reductionist hypothesis. Even this use of the term „value“ in biology presupposes that the organism’s perception of value must be subjective: subject to the characteristics, goals, and circumstances (Innenwelt) of the individual (Uexküll, 1909). A well-built, assertive male Adam may be a valuable resource to a receptive female Xena, and an enormous cost to a weak, shy, and competitive male Bob. On the other hand, if Adam, after a costly gift, becomes Bob’s ally, he becomes a valuable asset to him.
  8. Status – the potential to influence the behavior of others – is also interpersonally objective only after the fact. In our example, you can rank Adam and Bob, by Xena’s willingness to mate with them, by the outcome of their dyadic physical confrontation, or by the number and quality of their allies.
  9. Status is about behavior, not goods and resources. If the resource is not owned, it is freely available, already produced, and ready for consumption, then it is not scarce (not an economic good) and not an object of potential conflict. If it is owned, not freely available, or requires further production, then it is scarce (it is an economic good), and an individual who wants to consume it must influence the owner, a capitalist or a worker, to change his behavior so that it is transformed into a consumer good that he can access and consume.

Two Status Acquisition Strategies – Dominance & Prestige

  1. Status creates coalition potential of an individual.[11]
  2. Status is fitness enhancing (von Rueden, 2014) – affecting fertility and offspring mortality by various pathways like the length of the reproductive period, number of mates, age, fecundity, health and productivity of mates, alliances and exchange partnerships and access to other resources (von Rueden, Gurven, Kaplan, 2011 and von Rueden, 2014).
  3. Status in human societies can be obtained in two basic ways. (Henrich, Gil-White, 2001) (Maner, 2017, Cheng, & Tracy, 2014) Dominance – by subduing others – using force or the threat of force. This is the older form of status acquisition strategy that is also present in other species. The behavior of others is influenced by the threat of causing harm (costs).
  4. Among modern humans, the person with the dominance status usually doesn’t have to use the force himself, but he often delegates it to associates or organizations he belongs to.
  5. Dominance status is based on the submission of the other party in the hope of avoiding further harm from conflict (costs).
  6. Threats range from physical violence, psychological violence, expulsion from the group, or restricting or threatening to restrict access to resources.
  7. The cooperation that results from dominance is based on the fear of incurring costs.
  8. Prestige status is the newer form of status acquisition strategy.
  9. Prestige status is based on a person’s competence, ingenuity, and superior characteristics: such as size (height and muscularity), beauty, skills, knowledge, bravery, social and networking skills, verbal ability, entertaining ability, entrepreneurship, leadership.
  10. The behavior of others is altered by awe, admiration, and expectation of benefits to be gained by deferring. These can take many forms such as access to mates, goods, services, knowledge & information (Henrich, Gil-White, 2001), coordination, leadership, and gaining status through association.
  11. The resulting cooperation from prestige is based on voluntarily conferred deference.
  12. Dominance status is “push”, prestige status is “pull”. Dominance creates subordinates, prestige creates followers.
  13. Dominant individuals are avoided by subordinates. Prestigious individuals are sought out by their followers, who want to be near them and pay the high-status individual with attention and other services and goods.
  14. The same feature can play a role in different status strategies. In today’s modern societies, the hypertrophied human muscles built in gyms are mostly not meant for dyadic physical confrontation, but for show. They are now a signal of prestige rather than dominance. They communicate superior genes, health, stamina, and the luxury of abundant resources to invest in leisure activities such as muscle building that are not necessary for survival. They are not usually interpreted to signal ability and willingness to kill or subdue other humans. Height is a status signal not only because of the greater potential to subdue other individuals in physical confrontation, but also because it correlates with cognitive abilities (Case, Paxson 2006) and is therefore a signal of good development with low exposure to disease and sufficient quality and quantity of nutrition.

Only one Status Economics – Human Action

  1. Although using distinct psychological structures, different behavioral patterns, and ethological displays prestige has the same origin as dominance – striving to influence the behavior of others. [12]
  2. When thinking about prestige and dominance status in terms of potential gains (prestige) and the threat of incurring costs (dominance), one must keep in mind that the price of a particular behavior (cost) is defined by the foregone profit of the second-best alternative not chosen (opportunity cost). Thus, prestige and dominance are just names for strategies in the same status economy, and one cannot clearly separate them. For example, a prestigious individual’s refusal to accept deference from and associate with a follower imposes costs on the follower, so it is strictly a dominance status move. Or the prestigious individual sometimes becomes a protector of lower status followers (Henrich, Gil-White, 2001) from other dominant individuals, so the use of prestige status in this case is a dominance tactic.
  3. Generosity too, is often a way how to assert dominance. As von Rueden writes: “At the potlatch, the seating arrangement, order of distribution of food and property, and the size or worth of gifts all reflected relative positions of the assembled guests (Drucker and Heizer 1967). Among the Gitkasan, individuals would move to new settlements after potlatches where they felt their leader was not as generous, hence powerful, as others (Adams 1973).” (von Rueden, 2014).
  4. And vice versa, dominance breeds prestige. Many subordinates of domineering bosses not only parrot their ideas, but actually begin to believe them, dress in their style, and copy their mannerisms. Or try to disentangle the prestige and dominance status of a heart surgeon for the patient. The Stockholm Syndrome and its adaptive nature (Cantor, 2005) is another stark illustration of how intertwined dominance and prestige status strategies are.
  5. Hunter gatherers are predominantly egalitarian not because they were different and didn’t strive for status, but because upstarts on dominance path are immediately sanctioned a penalized from such behavior (Boehm, 2009). As Schneider writes: “All men seek to rule, but if they cannot rule, they prefer to be equal.” (Schneider, 1979 as in Boehm, 2009). Thus, egalitarian societies are the emergent result of the status-seeking individuals within them.
  6. Status is group dependent, and its power increases with group size. A group of allies structured by the forces of prestige status will gain dominance status. A prestigious person can use his prestige status to create and coordinate a group and defend or enforce his will, thus turning prestige status into dominance. This emerging and coordinated group has influence – dominance status – of its own.
  7. Emergent alliances gain dominance status and help explain Henrich’s (2001) conundrums why prestigious individuals are influential, even beyond their domain of expertise and how selection for skill transforms dominance into prestige (Henrich, Gil-White, 2001).
  8. Cultural hierarchical structures, such as organizations, confer status on the individuals who fill them.
  9. Prestige and dominance are two different strategies with the same goal – to maximize status. In economics, individuals maximize their ability to influence the behavior of others who are valuable to their goals.

The Evolution of Culture and Prestige as its Facilitator

  1. „You may have more money, but I have an academic title (care about the poor, care for the environment…)“. An abundance of prestige status games, as opposed to a single dominance status game, reduces wasteful competition for dominance and increases cooperation because individuals can choose from a variety of status games that match their endowments and abilities. As Barkow notes: “the evolution of diverse prestige allocation criteria permitted individuals to believe themselves to be as high or higher in prestige than many of those around them.“ (Barkow, 2014).
  2. Individual choice in prestige status games creates status ambiguity and reduces direct antagonistic status competition and comparison.
  3. Thanks to prestige, people cooperate more (Henrich, Chudek, Boyd, 2015) and complex societies emerge (Barkow, 2014).
  4. The more people cooperate, the more easily culture spreads (Boyd, & Richerson, 1992), replicates and more complex it evolves (Kline, Boyd, 2010).
  5. Think of culture as a collective of evolving individual structures – in Daimonion vonCave’s terms (Daimonion vonCave) membionts[13] – using people’s brains as a substrate. If you are not ready to go that far, just replace „membionts“ with „self-replicating brain-based structures with differential stability in culture“ or “cultural variants” in the rest of the article, and treat the brain not as the substrate in which the membionts live, but simply as a node – a medium of storage and processing power for self-replicating selected structures in the culture.[14]
  6. The higher the total number of human brains and the more frequently they communicate, the higher the rate of reproduction, mutation, and specialization of the membionts. The more brains interact, the more complex the collective of membionts becomes.
  7. Prestige status facilitates learning specifically through “info copying” (Henrich, Gil-White, 2001). Info copying is an anthropocentric view of self-replicating cultural structures – membionts. When learning by copying, “the behavioral traits, the ideas, values, and opinions of prestigious individuals are also likely to be copied” (Henrich, Gil-White, 2001) because of the high costs associated with recognizing the key features. Prestige status thus dramatically helps membionts to reproduce faster in the symbiotic process between culture and humans.
  8. Preferential attention to and learning from high-status individuals helped to select for adaptive membionts in Homo sapiens‘ symbiosis with culture (Barkow, 2014) and kept the population of neutral or maladaptive membionts in culture at bay.
  9. The greatest obstacle to the spread of culture is aggression and unwillingness to cooperate, for example, with out-group non-kin. Dominance status is based on aggression that discourages cooperation. This is why cultural evolution selects more and more for prestige status.
  10. With the evolution of complex culture, the importance of prestige status grew. Prestige facilitates the spread of culture membionts. To replicate in the brains of nearly the entire group of followers, the membionts need only access the brain of a prestigious person at the top of the local status hierarchy.
  11. Today, prestige is a more important strategy for status acquisition than dominance in Western human societies. For example, US undergraduate women prefer prestigious men to dominant men as romantic partners, especially in the context of long-term relationships (Snyder, Kirkpatrick, & Barrett, 2008).
  12. Overt dominance began to be a low status signal in family or work environments in Western societies.
  13. People are motivated by status to work for the culture, to replicate it, and to make it more complex.
  14. But not all culture is adaptive to humans (Barkow, 1989).
  15. Because of prestige status, many people in affluent societies invest much more resources in culture replication than in the past. They even go so far as to forgo their own reproduction in order to reproduce the symbiotic membionts. This explains the shocking decline in human reproduction in affluent societies.

Gifting/Helping as a Status Acquisition Strategy through Prosocial Costly Signaling

  1. Altruism and generosity toward in-group members increase perceived prestige (Cheng, & Tracy, 2014). Giving goods and services is one of the original forms of prestige status acquisition strategies (Barclay, 2010).
  2. Gifting and self-sacrifice signal surplus obtained through skill, resourcefulness, knowledge, social network, cooperation, or dominance of the individual.
  3. Helping others is an important form of conspicuous consumption.
  4. The ability and willingness to help an unrelated person is a strong prestige status signal (Smith & Bliege Bird, 2000). This is why, for example, caring for the sick is such an effective status signaling channel (Gurven, Allen-Arave, Hill, Hurtado, 2000) and why there is so much overspending in health care. By providing health care, we signal in an asymmetric information environment that „we care“ and „we will stay (allies)“ (Hanson, 2007). The huge power differential between the sick and the healthy also creates great potential for status acquisition.
  5. A related, cross-culturally widespread, but less adaptive strategy for acquiring status was the display of wealth destruction to outdo or humiliate a rival, as described in Mauss’s The Gift (Mauss, 1990): “they even go as far as the purely sumptuary destruction of wealth that has been accumulated in order to outdo the rival chief as well as his associate.”
  6. Precursors of non-nepotistic gift-giving behavior can be observed in some other social mammals, such as vampire bats or bonobos.

Bonding Through Giving

  1. A gift is not only a strong status signal, but also an instrument of reciprocal “altruism”[15].
  2. Helping non-kin creates a bond between unequals. A gift creates an implicit bond between the giver and the receiver.
  3. Gift is often an exchange spread over time.
  4. Giving creates new associates.
  5. Gifts in hunter-gatherer societies were rarely a gift, but came with an expectation of fair value in return (Mauss, 1990, Jaeggi and Gurven 2013). This is why giving first is still such a successful strategy for influencing people (sending gifts to potential business partners, paying for dinners, paying for „conferences“ of doctors by pharmaceutical companies…) (Cialdini, 2007).

Origins of Money – Gifts

  1. Prestige status acquisition and competition is an equilibrium selection mechanism for altruism (Hardy, Van Vugt, 2006).
  2. Signaling status through giving is adaptive for the entire human species because it provides incentives for able individuals to continue working even after they have provided for themselves and their families, reallocates available resources to individuals in need, reduces waste, and provides insurance. Giving allows the same environment to support a much larger human population.
  3. Gifts spawn webs of reciprocity that encourage cooperation among individuals.
  4. Gift bonds, opens up debt relationships with credit risk.
  5. Gift giving involves significant transaction costs because of the need to mentally account for all claims, liabilities, and the value of goods and services provided by various individuals.
  6. Gift exchange can be a substitute for some functions of money in small, not very specialized populations (Araujo, 2004). Gift-giving creates the potential for future cooperation, but is limited to people who know each other and interact regularly.

We Learn to Appreciate What Signals Status

  1. Proto-money evolved from collectibles (Szabo, 2002) – scarce, usually small and portable objects often used as gifts.
  2. Money is the gift that everybody wants.
  3. Possession of collectibles that were extremely costly to produce and required skill to make (Szabo, 2002) is a strong prestige status signal.
  4. Some people are considered beautiful by others because of physical features that signal their health and fertility (fitness).
  5. A high status signal of a good increases the attractiveness of that good, just as an advantage over competitors increases the enjoyment of an activity. For example, tall people enjoy basketball more, attractive people enjoy modeling or acting, and smart people enjoy coding, chess or pursuing academic titles.
  6. Similarly, people appreciate goods that are money. They find them appealing not only for their physical qualities, but also because they serve as status symbols.
  7. Gold is considered beautiful by individuals who use it as money or proto-money, because it signals prestige status, not because it is yellow.
  8. Art is also a status signal. Art is usually valued not because of its appearance, but because we know it’s not fake, it’s hard to make, and therefore a reliable status signal. The advent of photography changed people’s subjective aesthetics by devaluing photorealistic paintings and opening the door for new types of paintings (Simler & Hanson, 2018).
  9. Esthetics is not universal and stable in time in people. It is positively reinforced by what status signals and money the society uses.
  10. The evolution of culture affects people’s aesthetic preferences and the value they place on objects over time.
  11. Hunter-gatherers wore their prestige status symbols in the form of proto-money (such as jewelry, cowries, shells on strings, wampum belts, and dentalium shell coats) to display them when appropriate.
  12. Modern people also wear their prestige status symbols to make them conspicuous. Common examples of such symbols are jewelry, watches, handbags, smartphones or €100 and €500 bills worn on a Roma bride’s wedding dress (photo from a Roma wedding in eastern Slovakia in 2016).

A photo from a Roma wedding in eastern Slovakia in 2016

Memory of Good Deeds

  1. Today, most gifts of goods or services are immediately followed by payment. As a result, any credit bonds (relationships) created by the act of helping are immediately closed and the debt is extinguished. Therefore, helping no longer carries a credit risk.
  2. Money took the credit risk out of reciprocity, and thus made it much more common.
  3. By settling debts, money reduces the need for bookkeeping – keeping track of who provided how much value to whom.
  4. In the past, people acquired status by giving gifts. Today, the same status can be gained by earning money by providing goods and services.
  5. Money balance is proof of helping others in the past, a prestige status signal.
  6. More money signals more valuable services provided to society in the past, thus a higher prestige status.
  7. Here many authors erroneously assume that a positive monetary balance implies that society is obligated to repay the value. In Richard Dawkins words „money is a formal token of delayed reciprocal altruism“ (Dawkins, 1976). But accepting money to change one’s behavior is not an obligation, but a voluntary act.
  8. “Paying” is using your status. You use your money to influence the behavior of other people to serve you or give you goods.

Money Enables Impersonal Help

  1. The origin of money is the acquisition of prestige status by giving away surplus, not utilitarian trade. Utilitarian trade support is a byproduct of the evolution of money.
  2. Money made helping impersonal and thus made long-distance trade possible.
  3. Money allowed competing individuals to inadvertently insure each other. If a tribe has proto-money, it can buy help (resources) even from unfriendly neighbors (Szabo, 2002).
  4. In hunter-gatherer societies, money helped to reduce frequent violence (Szabo, 2002). Blood money shortened the cycle of revenge by offering something other than physical vengeance to the victims‘ relatives.
  5. When tribal rules were broken, it was suddenly possible to pay with money rather than with life or health. Money helps to settle disputes and provides remedies (Szabo, 2002).
  6. Money enables reciprocal “altruism” (long-distance transactions and large-scale cooperation) among genetically unrelated strangers-individuals who do not live in the same community, share no common ancestry, ethnicity, or religion, and may never meet again.

Money as Our “Common Ancestor”

  1. Money and trade are alternatives to domination and aggression in human societies.
  2. Money coordinates the people who use it. The existence of money forms a group of people who are available for cooperation and behave like relatives. Money thus functions as the symbolic common ancestor of all humans. It is a sorting mechanism similar to kinship, religion, ideology, ethnicity, or nationality.
  3. Money is the only God everyone believes in.

Money is More than a Gift Network

  1. Monetary economies are not merely “large interlocking networks of gifts” (Kocherlakota, 1998). Money improved the exchange of gifts (Duffy and Puzzello 2014). Money made gifts impersonal.
  2. Money solves for the lack of formal or informal enforcement and disincentivizes free riding. Money is a form of private decentralized enforcement of gift contracts. Using Leeson’s terms (Leeson, 2003), we can rephrase: money is a non-coercive third-party gift contract.
  3. Without money, it is not possible to sustain cooperation among strangers (Bigoni, Camera and Casari, 2015), (Camera, Casari, Bigoni, 2013).
  4. Money, as opposed to gifts, creates a positive feedback loop among helpers. At all times, someone has a positive cash balance and thus a potential to get help from other willing helpers.
  5. The advent of money made it worthwhile even for “bad” people to do “good” things for society.

Money as One of the Key Forces of Domestication

  1. Money transforms the implicit bond of indebtedness between individuals created by reciprocity into a de facto bond between the individual and culture.
  2. By breaking the gift bonds of debt between people, money freed individuals from closed small communities and led them into a large global cooperative society.
  3. By lowering the cost of cooperation and reducing the level of aggression compared to chimpanzees or hunter-gatherers, money exponentially increases interactions between people, dramatically increasing the size and value of the human network using money.
  4. Culture and Homo Sapiens are in symbiosis (Daimonion vonCave).
  5. We are not self-domesticated but culture-domesticated (Daimonion vonCave). Culture is the best explanation for what accounts for the domestication syndrome.[16]
  6. Money is the main domesticating force of culture on people, imposing norms and morals (Enke, 2023) (Theofanopoulou, O’Rourke, Samuels, Messner, Martins, 2017) on people through the generally accepted prestige status platform.
  7. Money transfers from the individual to the culture the complex record-keeping, the incentives for individuals to help strangers, and the coordinated joint punishment of free riders, that are necessary for efficient reciprocal „altruism“ and, as Trivers speculated (Trivers, 1971), so demanding as to give rise to our large brains.
  8. Money enables the transfer of personal prestige status to non-human structures – organizations and institutions (culture membionts) that use money for self-sustenance and replication. Similarly, dominance status is transferred from individuals to rank or function in an organization.[17]
  9. Money motivates people in developed countries to work longer hours than hunter-gatherers (Bhui, Chudek, & Henrich, 2019), despite having their “needs” met.

Money as The Generally Accepted Platform for Interpersonal and Intertemporal Prestige Status Transfer

  1. The emergence of money created a generally accepted prestige status platform with interpersonally and intertemporally transferable units.
  2. Money is prestige status, so they appear to be substitutes in experiments. “Economic experiments using real monetary rewards show that more skilled individuals receive benefits from less skilled individuals. For example, (Ball, Eckel, Grossman, & Zane, unpublished observation) manipulated apparent skill by making the results of an apparent „trivia quiz“ known to participants. In subsequent bargaining interactions, prices were higher when high-status sellers faced low-status buyers and lower when low-status sellers faced high-status buyers relative to controls. Performance on the trivia quiz is the only information participants have about each other, so players seem motivated to defer at a real financial cost to more skilled individuals,“ Henrich writes (Henrich, Gil-White, 2001). Being associated with the high-status person in a transaction is a reward in itself. The more prestige one has as an individual, the less one has to add in the form of money to arrive at the total price demanded by the seller in an exchange. If you pay someone with prestige, you need less money. Similarly, CEOs who work for prestigious firms earn on average 8 % less than CEOs of comparable firms that are not listed in the Fortune ranking (Focke, Maug, Niessen-Ruenzi, 2017).
  3. Money is a unit of influence.
  4. This unit of prestige status of the society using the status memory becomes the measure of all prestige status transactions and is used in many decisions by every person every day.
  5. This unit of account of prestige status allowed for interpersonal and intertemporal status comparisons and rankings. A generally accepted prestige status scale makes it possible to compare different prestige status paths and strategies, and to choose the most appropriate and effective one for the individual.
  6. Money enables status calculation, investment and speculation.
  7. The emergence of money allowed the existence of prices in these units of prestige status, which were easy to compare and remember between different goods, thus reducing the cost of exchange and further promoting trade and specialization.
  8. Feelings and preferences are based on the prestige status unit. That’s why it’s so difficult to switch to new money, it’s like switching languages.
  9. Market prices convey information and allow intersubjective comparison of different goods and services in units of status.
  10. Money allows the transfer of prestige status to prodigies beyond death. Family social network and reputation do some of the same thing, but they are limited to people in the community and are not additive. Money thus reduces time preference and increases the incentive to invest.
  11. Money enables prestige-based cooperation even in extremely large groups, which models (Henrich, Chudek, Boyd, 2015) predict will be increasingly difficult to sustain. According to Boyd, “a much bigger problem when it comes to explaining human cooperation—reciprocity can only sustain the provision of public goods in small groups.” (Boyd, 2017) Prestige status acquisition as a key driver of human behavior and money as a status memory solves the problem of how to extend reciprocity beyond kin and small groups, between people who do not recognize each other, without the need for direct sanctions. Helping a person with money eliminates the need to know her personal or transactional history to keep the reciprocity chain intact.

Show me the Money! Money is Status Memory

  1. Money, as a generally accepted prestige status scale facilitates status ranking in the human society. Deference follows after the presentation of money, without the need for conflict or aggression. Money is the great pacifier and reduces conflicts.
  2. „The primary and ultimate evolutionary function of collectibles was as a medium for storing and transferring wealth,“ writes Nick Szabo (Szabo, 2002) about the precursors of money. Neither collectibles nor the money that evolved from them are real wealth – goods for consumption or investment. They are tools for the acquisition of wealth. Tokens that have the potential to influence the behavior of other people to provide us with goods. Without people around us, there is no wealth in money. Money is not wealth, but status memory.
  3. Money as status memory solves the “Hahn’s problem” summarized by Martin Hellwig (1993; p. 216) as: ​“Why does fiat money have a positive value in exchange against goods and services even though it is not intrinsically useful?” The claim that fiat money is „intrinsically“ useless (Wallace, 1980) is in such stark contrast to everyone’s everyday perception that it is surprising that this is the standard economic position. It has not only exchange value, but also status-preserving use value. One actually consumes money by using it to change the behavior of other people, just as one uses a bullet to change the trajectory of a hunted animal. You can even change the behavior of others by publicly declaring that you have a certain amount of money, much like flashing an expensive watch on your wrist.
  4. Money as status memory explains why orphaned fiat money such as the Somali shilling, despite the fact that Somalia’s central bank ceased to function in 1991 (Luther, White, 2011), or the Swiss dinar after it was demonetized and discredited by its issuer, the Central Bank of Iraq, continued to circulate as money without any even implicit backing.
  5. Money as status memory explains why pure recordkeeping systems cannot function as money and facilitate deep cooperation between strangers (Bigoni, Camera and Casari, 2015). It also explains, why money tokens need the „liquidity constraint“ (Bigoni, Camera and Casari, 2015) or a sufficiently inelastic supply to sustain cooperation between strangers over time. If there is no obvious supply constraint on money tokens, users will not value them as good status stores and will not demand them for status signaling.
  6. Bitcoin works because it is a digital implementation of the memory problem (Luther, Josiah 2013). In this case, the limited supply of tokens is determined not by the scarcity of a good in an environment, but by an agreed-upon norm written into the code from the beginning and a prevailing consensus not to change it. Bitcoin tokens had non-zero value (were in demand) precisely because of their status use – they were a geek club membership token – a prestige status signal. You wouldn’t predict the success of bitcoin based on the barter theory of money. So money is not a “bubble“ (Samuelson, 1958) and its value is more than just a liquidity premium (convenience yield). It has status value and that is why it is so liquid.

Greed was Good

  1. No one can ever win a permanent victory in the status game. The rules of existing status games are constantly changing, and new status games emerge. Status hierarchies are constantly being reconstructed. In the past, a big belly and white skin were status signals. Today it is a flat belly and a tan. Although in places like Uganda, obesity is still perceived as a reliable signal of wealth and facilitates access to credit. (Macchi, 2023). People today strive to have white teeth, even paying for them. Only 100 years ago, women in Vietnam painfully blackened their teeth to signal beauty, maturity, and civilization. Bare feet, once a symbol of poverty, are now a kind of prestige signal in wealthy Western societies.
  2. Larger status markets thanks to new communication networks between people lead to deeper specialization in various status games and the need to change status acquisition strategies. 50 years ago, you could impress your son by skimming a stone 10 times. Today, you have to do better than that, because he can watch a guy skim a stone 88 times on Tik Tok, just by pulling out his phone. There are world championships in this seemingly useless activity.
  3. Status is relative. It is a zero-sum game. Objective improvements in people’s lives, reductions in poverty, and increases in absolute wealth therefore do not diminish the drive and motivation to strive for more status.
  4. Although status is ordinal, money has made it possible to transform prestige status into cardinal quantities – units whose accumulation helps individuals climb various peaks in the status landscape.
  5. Prestige status hierarchies are perceived as more mutable than dominance status hierarchies. There is greater upward mobility in prestige status hierarchies, and they are therefore more competitive than dominance status hierarchies. Individuals with low prestige status are more likely to challenge the status quo and engage in status competition than individuals with low dominance status. This leads to more competition between individuals in prestige status hierarchies than in dominance status hierarchies (Hays, & Bendersky 2015).
  6. The modern world’s shift from dominance to prestige-status acquisition strategies has led to greater competition among individuals.
  7. More competitive behavior by individuals in zero-sum game settings, such as those set up as laboratory experiments (Hays, & Bendersky 2015), can be dysfunctional and counterproductive to group welfare. But in most modern real-world settings, you win the zero-sum prestige-status game by accumulating points in non-zero-sum cooperation games. You gain more prestige (money) by serving others. Thus, more competition due to the shift to prestige status games means more value production and group welfare. This is not true of old dominance – status structures such as religious institutions, the army, the state, or academia. People rise in dominance hierarchies by imposing costs on others or by threatening to do so. Thus, more intense status competition here leads to welfare losses.
  8. Status anxiety, envy and jealousy are thus the endless source of motivation for action, even for historically extremely wealthy, overfed, modern people with all their basic needs met.
  9. Status anxiety as a key motivator for people explains Keynes’s mistake in predicting that people would take up leisure as modern society became more affluent (Keynes, 1930). Status is what Keynes missed when he feared that people would have problems with too much leisure (Keynes, 1930). People in the developed world are extremely wealthy in absolute terms, but often work harder and longer hours than baboons.
  10. Striving for prestige status was the main driving force of civilization and progress in all spheres of society.
  11. Greed was good.
  12. Now it seems that greed for prestige status is becoming maladaptive. It serves the reproduction of culture membionts at the expense of human reproduction, as evidenced by declining reproductive rates in richer societies.

Membionts using humans for replication at the expense of their own replication

People Optimize Status, Not Money

  1. Parts of economics can be improved by recognizing that people don’t optimize for money, but for status. Money is just a status memory. Where there is a conflict between earning money and more status, status optimization wins and helps explain these puzzles and alleged “irrationalities” described by behavioral economics.
  2. The drive for status need not be conscious. In fact, it usually is not (Simler & Hanson, 2018).

Ongoing Evolution of Money as a Status Memory and Other Prestige Status Memories

  1. For something to become money, the important factors are scarcity, divisibility, transferability.
  2. Since money is memory, the stability of the records is important. In the case of gold, this was provided by its chemical inertness; in the case of digital money, it is provided by database technology and management.
  3. The value of the status memory depends on the number of people using it (nodes in the network). The network effect of money leads to the hegemony of the winner of this competition.
  4. Other forms of prestige status platforms evolved, such as various artifacts like fist wedges, hunting and salmon-running rights, titles, surnames, bloodlines, and caste. Today they are car, watch, smartphone, club membership, neighborhood, political functions, academic degrees, citations, academic awards, religious ranks, reputation, businesses, social contacts, number of employees, number of subordinates (serfs in the past), and ownership of various assets such as houses, stocks, cattle, bonds, commodities, cryptocurrencies, art, number of followers/subscribers/likes on social media, etc.
  5. These other forms of prestige status platforms do not allow status transfer as universally as money (e.g., surnames), or have much higher transaction costs (art), low divisibility (houses), or no unit of account status and thus volatile exchange value (bonds, stocks, and other assets).
  6. Money is the solution to the problem of the most efficient memory of prestige status in the current technological and social context.
  7. Money as a status memory enables the replication and evolution of the production structure of the economy. It serves a function similar to that of DNA in the organism for economic membionts.


Juraj Karpis, Institute of Economic and Social Studies, Bratislava, Slovakia

First draft written on the 13th of December 2022

Last edit on the 13th of May 2024

Published on this page on the 13th of May 2024, here it is published on SSRN

Did you find an error? Do you have any comments or suggestions? Write to me!

memory @ jurajkarpis . com



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[1] Quote found on https://theaccountingview.blogspot.com

[2] „I conclude that the only technological role of money is to provide a (possibly limited) form of societal memory of transactions “(Kocherlakota, 1998).

[3] „…checking accounts are a form of bonds, not money.“ (Kocherlakota, 1998).

[4] The mechanism is similar to what Dawkins (Dawkins, 1976) describes in his grooming example about Grudgers, Suckers and Cheaters: „It is quite entertaining to watch a computer simulation that starts with a strong majority of suckers, a minority of grudgers that is just above the critical frequency, and about the same-sized minority of cheats. The first thing that happens is a dramatic crash in the population of suckers as the cheats ruthlessly exploit them. The cheats enjoy a soaring population explosion, reaching their peak just as the last sucker perishes. But the cheats still have the grudgers to reckon with. During the precipitous decline of the suckers, the grudgers have been slowly decreasing in numbers, taking a battering from the prospering cheats, but just managing to hold their own. After the last sucker has gone and the cheats can no longer get away with selfish exploitation so easily, the grudgers slowly begin to increase at the cheats’ expense. Steadily their population rise gathers momentum. It accelerates steeply, the cheat population crashes to near extinction, then levels out as they enjoy the privileges of rarity and the comparative freedom from grudges which this brings. However, slowly and inexorably the cheats are driven out of existence, and the grudgers are left in sole possession. Paradoxically, the presence of the suckers actually endangered the grudgers early on in the story because they were responsible for the temporary prosperity of the cheats. “

[5] Kocherlakota points out the difference between money and debt using the same distinction– external norm enforcement: “Money serves as a type of memory in environments or relationships without enforcement or commitment. (So when money is involved, all transfers of resources can legitimately be described as gifts.) Bonds serve as a type of memory in environments or relationships with enforcement or commitment. (Some transfers of resources occur because of the threat of external force.)” (Kocherlakota, 1998).

[6] For the purposes of this paper, I will ignore theft and robbery, as the goal is to illustrate the difference between money with infinite (money as pure memory) and nonelastic supply.

[7] The lack of this kind of feedback in the system and the incentive to free-ride is one of the reasons why a universal basic income is not a good idea if you want to sustain cooperation in a society.

[8] “Number and quality of allies“ is Robin Hanson’s status definition (Hanson, 2007).

[9] As in Henrich: “Status equals the amount of deference received.” (Henrich, Gil-White, 2001).

[10] “In general, we understand by, „power“ the chance of a man or of a number of men to realize their own will in a communal action even against the resistance of others who are participating in the action.”

[11] For empirical example in children see Gross, & Johnson, 1984.

[12] For some empirical examples how status influences behavior see von Rueden C, Gurven M, Kaplan H (2011): “During Tsimane community meetings, vocal support from allies is a principal means by which influential men swing opinion in their favour. When disputes over land access for horticulture are aired during community meetings, the collectively agreed terms of their resolution often favour high status men’s families. Generous sharing of food builds social partnerships among the Tsimane, but subordinates may also cooperate with higher status men because of skills they hope to learn, the benefits from higher status men’s coordinative leadership or physical labour in collective actions, or the indirect benefits of signalling membership in a powerful coalition. Men with community-wide influence are more generous and garner more social support than physically dominant men, but both forms of status associate with frequent visitation by peers, greater number of allies and more labour partners.“ (von Rueden, Gurven, Kaplan, 2011)

[13] Membiont is through sustained replication and passage through selection process of human brains surviving individual structure, in Daimonion vonCave’s words “A living being made up of an organically interconnected structure of memes.” (Daimonion vonCave).

[14] For the purpose of this paper, let’s ignore the other kinds of culture memory in the form of nonliving artefacts like books, tools, machines or hard drives that Daimonion vonCave terms “morphs” (Daimonion vonCave) used by membionts for reproduction into brains.

[15] Reciprocal altruism is like selfless selfishness. If it’s truly reciprocal, it’s not altruism, it’s a loan or an investment.

[16] For more on domestication syndrome and its alternative explanations see Wrangham (Wrangham , 2019).

[17] This is the domestication transfer (Daimonion vonCave) of a function from the individual to the culture, as well as the impersonalization of helping thanks to money.

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