Elementary Forms of Economic Organization

Abstract

This paper presents a model where societies whose population expands, experience advances in specialization at the cost of diluted monitoring, which limits enforcement and hinders trade possibilities. Cash and private circulating instruments can replace monitoring. Advances in specialization may make it feasible to replace agriculture with manufacturing. The model generates three stable regimes with di¤erent combinations of productive systems and trade arrangements. In small societies, agriculture is accompanied by mutual sharing arrangements of the gift exchange type; in medium sized societies, agriculture is accompanied by monetary trade; in large societies, manufacturing is accompanied by circulating private banknotes issued by specialized agents acting as intermediaries.