The Devil's Dung? Money as a mechanism of generalized reciprocity in human societies

St. Francis of Assisi (1181/82-1226) famously called money the devil's dung, and indeed money is often associated with greed, inequality, and corruption. Drawing on Nowak's five rules for the evolution of cooperation, we argue here that money promotes the formation of circuits of generalized reciprocity across human groups that are fundamental to social evolution. In an evolutionary tournament, we show that money exchange is an evolutionarily stable strategy that promotes cooperation without relying on the cognitive demands of direct reciprocity or reputation mechanisms. However, we also find that excessive liquidity can be detrimental because it can distort the informational value of money as a signal of past cooperation, making defection more profitable. Our results suggest that, in addition to institutions that promoted trust and punishment, the emergence of institutions that regulated the money supply was key to maintaining generalized reciprocity within and across human groups.