The Theory of Money

Menger focuses on money to illustrate his theory on the evolutionary emergence of social institutions. He applies his theory to the emergence and evolution of money, though he expressly states that the same theory can also be applied to explain the emergence of all the other institutions that make life in society possible. How does Menger explain the emergence of money? Well, as the result of a process he calls “organic.” (He is still using a somewhat unsuitable terminology.) In other words, an evolutionary process in which many human beings participate and in which the institution almost miraculously emerges without any prediction from the participants in the process that money would emerge nor any deliberate pursuit of its emergence.