THE HISTORICAL TRANSFORMATION OF INDIGENOUS AND COLONIAL INSTITUTIONS OF CENTRAL MEXICO: THE STATE AND MONETARY SYSTEMS A DISSERTATION IN Economics and Social Science Presented to the Faculty of the University of Missouri-Kansas City in partial fulfillment of the requirements for the degree DOCTOR OF PHILOSOPHY by KAROL GIL-VASQUEZ M.A., University of Central Missouri, 2006 Kansas City, Missouri 2013 © 2013 KAROL GIL-VASQUEZ ALL RIGHTS RESERVED THE HISTORICAL TRANSFORMATION OF INDIGENOUS AND COLONIAL INSTITUTIONS OF CENTRAL MEXICO: THE STATE AND MONETARY SYSTEMS Karol Gil- Vásquez, Candidate for the Doctor of Philosophy Degree University of Missouri-Kansas City, 2013 ABSTRACT Based on a critical analysis of the mainstream development discourse, the subaltern's history, and hybrid theoretical models, this dissertation is focused on studying the transformation of the Pre-Hispanic state and the institutionalized social relationships of money in Central Mexico. This work emphasizes the need to recreate historical specific models to re- conceptualize institutional development in former colonies. Chartalism, the state theory of money, assists in the creation of a more comprehensive theory to study monetary history in Central Mexico. I argue that in order to create an alternative historiography, it is mandatory to shed light on the institutional structure of the Mexican subaltern—the Mexicas. This study begins by analyzing the nature of the Mexica's political and monetary institutions. This analysis is followed by the study of the monetary and production systems that emerged out of the interaction between the Mexicas and the Spanish immigrant population during the early and the late colonial periods. The study focuses on the transformation of Nahuas interrelated institutions—state and money—once the Spanish institutions were introduced. iii A parallel objective of this dissertation is to study two major kinds of institutions— institutions of social reproduction and institutions of economic exploitation —found in constant interaction throughout the history of Mexico. The institutions of social reproduction have allowed the maintenance of non-capitalist social arrangements in the form of peasant- indigenous communities that have coexisted through self-sufficiency and/or a partial incorporation into the capitalist economy. The institutions of exploitation are represented by the ancient tributary systems and the colonial taxation systems that have attempted to control peasant-indigenous communities to a political institution. From this interaction, a particular monetary system has been generated during the colonial times. Influenced by cultural patterns and ideologies, political and monetary systems have taken different shapes throughout historical periods in Central Mexico how this study shows. iv The faculty listed below, appointed by the Dean of the School of Graduate Studies, have examined a dissertation titled “The Historical Transformation of Indigenous and Colonial Institutions of Central Mexico: Monetary and Production Systems,” presented by Karol Gil- Vásquez, candidate for the Doctor of Philosophy degree, and certify that in their opinion it is worthy of acceptance. Supervisory Committee Randall Wray, Ph.D. Department of Economics Mathew Forstater, Ph.D. Department of Economics Jan Kregel, Ph.D. Department of Economics Viviana Grieco, Ph.D. Department of History John F. Henry, Ph.D. Department of Economics v CONTENTS ABSTRACT…………………………………………………………………………………..…...v ACKNOWLEDGEMENTS………………………………………………………………….......ix Chapter 1. THEORETICAL FRAMEWORK: THE NON- LINEAR ANALYSIS OF MONETARY HISTORY OF CENTRAL MEXICO ………………………………...………...…….......1 Statement of the Problem: The Development of Money and the History of the Subaltern……….. ………………………………………….………………………...1 The History of the Subaltern’s Resistance……...................……………….…11 The Study’s Framework……………….…………………………………..….14 Theoretical Framework: Institutional Economics and Chartalism……………….....18 Chartalism: Monetary and Production Systems in Non-Western Societies……………………….…………………………………………….24 2. METHODOLOGY: HYBRID MODELS AND SUBALTERN STUDIES…….….……27 The Destructive Nature of the Development Discourse …………..………..……....27 Rethinking Hegemony and Reconsidering Hybrid Models …………..….…………34 The Pitfalls of the World Systems School of Thought………...……………...37 Subaltern Studies and Institutional Ethnography ………......……….…….….42 Replacing the Market Economy’s Cult: Neoclassical Economics and the Anthropology of Western Modernity………………………...……………….43 3. THE TRIPLE ALLIANCE’S INSTITUTIONAL MODEL: A SUBALTERN HISTORICAL CONTEXT...…………………………………………………………….48 Historical Continuity………………………………………………………………..49 The Mexicas………………………..……………….………………………….…...51 vi The Triple Alliance’s Establishment and Expansion…………….......……..53 The Altepetl—Political Structure…….………………………………….….57 The Triple Alliance’s Institutions………………………..………….……….…...…61 Social Structure……………………….……………….…….……….……..61 The Tianguis-Centers of Distribution………………………………….……65 Land Ownership………………………………………………..…………...67 Units of Measurement…………………………………….…………...……71 4. DID THE NAHUAS HAVE MONEY? THE CONSTRUCTION OF MYTHS……………………………………………………………………..……...……75 The Myth of the Two World’s Encounter…………………………………..…...…76 The Myth of the Nahua Economy: Markets and Money……….……………..…....79 Money as a Social and Institution: Money as a Creature of the State………………82 The Nahuas Religion: Humans’ Sense of Indebtedness…..……………….....86 The Nahua Tributary and Monetary Systems……………….………………..91 The Triple Alliance’s Preponderance and Reciprocity……………..…………….....95 Systems of Production and Distribution………………………………........102 5. NEW SPAIN’S INSTITUTIONAL STRUCTURE: TRANSITION OR DISRUPTION………………………………………………………………………..…110 La Conquista: A Colonizing Process?...................…….……………………….….110 The Colonial Authorities………………………………………...…………..117 The Indigenous Settlement Policy………………………………………….…...…120 The Context of New Spain’s Political Economy…………………….………….....122 The Cabildos……………...…………………………....……………………122 The Production System…………………….……...………………………...126 vii 6. NEW SPAIN’S TAXATION SYSTEMS: DID COLONIAL MONEY REPLACE NAHUAS’ SENSE OF RECIPROCITY………………………….................................131 Encomienda and Taxes………………………………………………………….…131 New Spain’s Hybrid Monetary System…………....................................................139 The Creature of an Unstable State: Colonial Units of Account and the Currency “Issue”……………………………………………………………………………..142 The Operation of the Monetary Economy……………......…………………145 The Operation of the Natural Economy……………...……….……………..151 7. THE NATURE OF THE COLONIAL STATE AND MONETARY SYSTEMS IN CENTRAL MEXICO…..………………...………..………………………………..….159 The Pre-Hispanic State and Monetary Systems………………..……………..........160 The Colonial State and Monetary Systems...…………………..………….……….164 The Bourbon State and Monetary Systems………………………………………..168 Conclusions……………………………………………………………………..…169 Central Mexico’s Hybrid Monetary System………………………………………169 APPENDIX A. MAP OF CENTRAL MEXICO’S MAJOR ALTEPETLS..............................................187 B.TERMS FOR FRACTIONS OF PRIMARY UNITS IN THE INDIGENOUS MEASURING SYSTEM………………………………………………………..…188 C. CABILDOS IN CENTRAL MEXICO BY THE EIGHTEEN CENTURY……..…….....189 REFERENCE LIST.............................…………………………………………………....……190 VITA……………………………………………………………………………………….…...204 viii ACKNOWLEDGEMENTS I would like to acknowledge the people who have supported me—academically, financially, and emotionally—throughout my exciting time at the University of Missouri- Kansas City (UMKC). My expressions of gratitude will be mentioned in chronological order according to the time they appear in the road of my studies without ranking of importance, since all kinds of support are of paramount significance. I would like to express my gratitude to Professor Frederic Lee, whose prompt advice a couple of years back incited me to apply for the I. Ph. D program at the UMKC-Department of Economics. I am indebted to the Center for Full Employment and Price Stability (C-FEPS) and the Department of Economics that provided me a graduate teaching assistantship during the first and last years of my studies. I am also deeply indebted to several individuals at the UMKC-Institute for Human Development (UMKC-IHD); colleagues who from the beginning of my graduate studies have been, visibly and invisibly, along my side. In the first years of my graduate studies, Dr. Christina Case, former director of Alianzas, was instrumental in providing alternative financial opportunities and offering exciting research opportunities related to Hispanic immigrants. Derrick Willis, a friend and colleague at the same institution, has also facilitated invaluable and rewarding professional experiences while working on educational programs geared to minority high school students. The summers that I have spent working for the Kansas City Summer Transportation Institute not only assisted me economically, but also taught me aspects of human interaction that have a lot to do with reciprocity and care. Also, I want to thank Carol McGinnie, who has helped me on editing the various manuscripts of this dissertation. I really appreciate the extended support provided by ix Dr. Carl Calkins, UMKC-IHD Director, who believed in my research capabilities and opened the door to begin a research career at the Institute. My gratitude is also extended to Debbie Brooks, the Assistant Dean at the UMKC School of Law, who granted me the