A Theory of the Ancient Mesoamerican Economy

Purpose – To provide a general theory for how the ancient Mesoamerican economy functioned. Design/methods/approach – First the chapter describes formally the sectors or operations of the economy: production, consumption, labor, specialization, exchange and prices, savings and investment, credit, quasi-money, markets, and dynamics. Then it relates this economy to its Mesoamerican cultural context. Findings – Much but not all of this economy, with its great volume of transactions, worked according to market principles, without coinage or state-fiat money yet not barter. The theory has testable implications. Periods of growth and decline in preindustrial urban societies could have been due to economic forces. Research limitations/implications – The presentation is verbal, not mathematical. Precolumbian economic documents hardly exist; advances in this line of research will have to come from archaeology (in part informed by earliest contact-era history). Social implications – Extending theories of money and markets to include preindustrial urban societies should deepen and enrich economic thinking generally. Originality/value of chapter – The first nonsubstantivist model of the Mesoamerican economy; insights on specialization and competition when firms are households; how high volumes of exchange work with commodity monies.