Quite frankly, we can see the concept of reciprocal exchange as the predecessor to a thriving market exchange. In order to move into a market exchange society, it has to have already progressed through a reciprocal society in which there is already a decent amount of valuable goods in circulation. In other words, a reciprocal exchange is an economy in which there is no official currency, that is, gold, silver, bronze, or our modern-day paper money. In order to acquire the daily necessity, one would simply be trading one good for another good of a similar value. Both of these types of economies have their advantages and drawbacks. For one, in a reciprocal economy, each family or household, in this sense, is considered a separate entity on its own, in which they will have to produce something in order to exchange for something else. This oftentimes means that they are likely to be quite self-sufficient in comparison to a market exchange economy in which societal prosperity is heavily based on trade and commerce. Also, in a reciprocal exchange economy, there is less need for regulations, bureaucracy, or a uniform language, and the market will simply self-regulate and readjust according to the need of the social majority. Nevertheless, the downfall of this type of society is also visibly apparent, and although it promotes inclusivity, it promotes way too much individualism, which, in theory, will be impossible to unite everyone around a common purpose. Basically, the idea of a social contract, in which governing body rules over the people, will not be enforceable here. Even if it is enforceable, taxation and conscription will be a revolving uphill battle.

This, quite frankly, is where the market exchange economy comes into play. A thriving market exchange economy relies on a trusted and often commodity-bonded currency. The governing body must also be proven to be fiscally responsible also for garnering the trust of the people whom they are governing so that the people are less prone to cause social unrest or revolt. Despite being founded towards the latter half of the eighteenth century, the United States was never in a reciprocal exchange economy. The official currency of the original colonies was British pounds, and even when the revolutionary war ended, each colony still had its own respective currency. Although there were many issues of inflation and imbalance of monetary value among each colony’s currencies, they were still backed by their respective colonial banks. It was not until the establishment of the First Bank of the United States that the U.S government tried to unify the already chaotic currencies in circulation. And during the Panic of 1819, also known as the first financial crisis, the First Bank of the United States tried to collect gold from the debtors, hinting that the gold reserves at the central bank were scarce, thereby causing substantial catastrophic panic among the people, in which it inevitably lost the trust of the people, causing the First Bank to fall short on its renewal after the first twenty years trial term ended.