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. Here, we argue that money can facilitate the formation of circuits of generalized reciprocity across human groups, a crucial mechanism for the evolution of cooperation when monitoring the actions and reputation of potential partners becomes difficult. Using an agent-based evolutionary tournament, we show that money exchange constitutes an evolutionarily stable strategy, promoting cooperation without the cognitive demands of traditional reciprocity mechanisms. In particular, we demonstrate how the monetary exchange strategy can take advantage of, and ultimately displace, reputation-based systems in mixed populations. 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, generalized reciprocity within and across human groups may also have depended on institutions regulating the money supply.