The historical development of money

Economic and management sciences

Grade 8

The economic cycle

Module 1

The historical development of currency/money

Assessment standard 1.1:

The historical development of currency/money

When you have completed this MODULE, YOU WILL BE ABLE TO DESCRIBE THE HISTORICAL DEVELOPMENT OF CURRENCY AND THE ROLE THAT IT PLAYS IN SOCIETIES AND THEIR ECONOMY.

The economic life of nations shows clear phases of development. The first of these development phases is always represented as the SELF-SUFFICIENT stage. The most characteristic feature of the self-provident phase is SUBSISTENCE ECONOMY, in which each family or person produces enough to provide in their own needs. The individual or family practised PRIMITIVE AGRICULTURE, which produced enough for his/their own needs. The self-provident stage therefore did not need barter, or a medium of exchange, because production did NOT result in ANY SURPLUS. The economy / family had no need for a MEDIUM OF EXHANGE or CURRENCY / MONEY as we know it.

Activity 1

SUBSISTENCE ECONOMY

GROUP:

Your group has survived the accident that forced the aeroplane in which you were travelling to crash down on a remote island. Having regained consciousness, you find that the wreck of the aeroplane was destroyed in an explosion after the disaster. The island is small and has a relatively high rainfall.

HOW WILL YOU GO ABOUT TO PROVIDE IN YOUR NEEDS IN ORDER TO ENSURE SURVIVAL? (Suggestion: Begin by determining what your immediate needs are). (Submit a brief list.)

GROUPS:

Try to identify the characteristic features of an economic situation in which you have to be self-sufficient.

During the next phase of economic development, which is characterised by SPECIALISATION, SURPLUSES AND EXCHANGE, communities/families produced sufficient products to have surpluses that they could exchange for other products that they needed.

EXAMPLE:

John, being skilled in making garments from animal pelts, was able to concentrate on doing that (i.e. he SPECIALISED in the production of clothing) and could use the extra garments that he did not need himself (SURPLUS) to engage in EXCHANGE for Peter’s SURPLUS of flour and related wheat products. This is how the first MARKETS, where BUYERS and SELLERS “met” and exchanged their SURPLUSES, came into being.

Activity 2

SPECIALISATION

SELF:

Design and build a model of a house, using stiff paper or cardboard, according to your own ideas.

Activity 3

SPECIALISATION AND DIVISION OF LABOUR

GROUP:

Design and build a model of a house, using stiff paper or cardboard, according to your own ideas. For this exercise, the planning and building of different component parts of the house must be delegated to different members of the group. One might be responsible for the roof, another for the walls, a third for the general framework, etc.

(Note: The different parts will have to be fitted together to form a whole.)

GROUP:

Compile a list of advantages and disadvantages of specialisation as encountered in this group work exercise.