Quote from Gordon McEwan, The Incas: New perspectives
Books I'm referencing here are 1491: The Americas Before Columbus by Charles C Mann, and The Last Days of the Incas by Kim MacQuarrie.
The latter goes into more detail of how the Inca Empire functioned as it operates as a chronicle of the Spanish Conquest of what would later be known as Peru by Francisco Pizarro. In essence, the Inca Empire didn't have a large amount of free, internal trade as we would understand it in European cultures.
In the Inca society, all lands belonged to the Inca and were used with his permission. The structure was fairly typical of feudalism, with a strongly defined hierarchy from the Inca down through increasingly regional Chiefs, to the populace.
The Inca tithe system operated purely on labour. A typical household would have a quota of three months per year in labour for the state. This was considered to be service directly to the Inca, and is also where tribute comes from.
This work might have been to fabricate Vicunya garments for the Inca, it may have been for building roads or bridges, serving in the military, or making weapons. The tribute would be distributed to local warehouses, where it would then be distributed to where it needed to be. It might be that llama wool was woven into nets in one area, to be eventually moved across to a coastal city for use in fishing. The fabricator typically wouldn't leave their home further than the local warehouse to deposit these goods. (Unless they were called to serve somewhere specifically, like a construction project or military campaign.)
This system was incredibly efficient. Numerous Conquistador accounts note warehouses piled high with goods, as the Empire tended to overproduce materials under this system. It also gave incredible resilience to food supplies, allowing a 2000 mile long empire of ten million people to operate for 90 years apparently without a single major famine.
Communication was also quite sophisticated. Runners called Chaski would operate in relay. Apparently this allowed a message from Cajamarca to reach Cusco, a distance of 1100 miles over mountainous terrain, in only five days. Atahualpa was able to operate his empire in captivity entirely through these runners, organising literal tonnes of gold and silver to be delivered across to Cajamarca within the span of months. It was also difficult to intercept the messages, as there was no writing. One would have to capture the Chaski himself and get the message from them. Serving as a Chaski was also a labour tithe option.
This also means, however, that the message dies with the Chaski. The Spanish used this to terrifying effect as their horses could cover ground far faster, and thus Chaski struggled to get the message out about the initial invasion. The fact that the Inca was the nexus of all these communications was also a key weak point. The capture of Atahualpa at Cajamarca by Pizarro completely stalled the empire until he was able to negotiate resuming his duties, in exchange for gathering gold and silver for the Conquistadors.
he older answers cited below are good, I might add a couple of thoughts from an archaeological perspective. The short answer is that the Inka did not need currency to operate or expand. There were items like finely-woven textiles and Spondylus ornaments that probably had convertible value, and were often given by elites to other elites, but were not really money. La Lone (1994) once described the Inka economy as “supply on demand”- or one that met institutional goals rather than the motivations of a market economy.
The Inka state functioned by what we (most historians and archaeologists) understand to long-standing cultural conventions related to reciprocity. This study relates to a larger body of literature in economic anthropology (among other specializations) that study the ideas related to “gifts”, particularly how they create obligations to give, to receive, and to repay, sometimes in the absence of (or in spite of) a monetary system.
The Quechua word (one of the most common languages spoken within the Inka empire) is ayni, which implies that when people are give something, they are entitled to receive of comparable value back (i.e., balanced reciprocity). So a common situation is that various community members might help a family till a potato field and, at a later date, that family might then later help various people sheer and store their llama wool. These obligations are often phrased in the language of kinship, relatives being expected to help other relatives. This turn taking is sometimes called mit’a in Quechua and is still practiced across many highland portions of the Central Andes. One of my favorite books that beautifully details the subject (among others) is The Articulated Peasant by Enrique Mayer.
The Inka were among the last in a long line of indigenous polities that interacted with local populations using familiar idioms of kinship to appropriate people’s labor and resources (see Silverblatt 1988). There were several different taxes and obligations, the most relevant is one called mit’a service, levied on able-bodied males. Mit’a service was usually scheduled to coincide with agricultural downtime and included a range of activities from construction projects to military service. This helped the Inka commission the building of road networks, large estates, and conquer or reclaim lots of new agricultural land. The latter is quite critical, as the Inka would commission the building of many terraced fields, and the agricultural resources of these fields was reserved for the Inka state. In some cases, the Inka would relocate entire populations (called mitmaqkuna settlers) to work on newly claimed lands. These agrarian staples would be stored in storehouses called qollqa, and reserves used to support the Inka themselves, other laborers, the military, etc., and the Inka kept a careful accounting of their resources using khipu (for an example, read Urton and Chu 2015).
The Inka, in turn, were expected to repay local communities for their labor. They did so in several ways, including displays of hospitality and generosity. Organizing festivities- replete with food and beverage- for the commoners was frequent. The archaeological site of Huanaco Pampa is a good case study. This was a large architectural site surrounded by qollqas, but most of the pottery was related to the brewing and serving of corn beer (chicha)- suggesting it was the site that helped to provision or host these festivals (Morris and Edwards 1985).
The advantage of mit’a labor taxation (called corvée labor elsewhere) is that, in theory, it doesn’t require people to give the state their own agricultural resources. Giving the state, say, 10% of your food or money in a lean year but be the difference between life and death. But giving the state a month of work during the time that doesn’t interfere with the planting, harvesting, canal cleaning, etc., tasks avoids this problem. By claiming or reclaiming land that wasn’t being used (again, in theory), the Inka allowed (friendly) people to keep their ancestral fields in return for their labor. Their labor would simply be directed toward securing new sources of food, corn beer, textiles, and other supplies for the state.
An early Inka historian, Cobo (1979: 234), wrote, “One thing that should be pointed out with respect to the amount of tribute that they brought to the king, and it is that there was no other rate or limit, either of the people that the provinces gave for the mita labor service or in other requirements, except the will of the Inca. The people were never asked to make a fixed contribution of anything, byt all of the people needed were called for aforementioned jobs, sometimes in larger numbers, according to the Inca’s desire...”
Murra (1980) discusses how labor taxation was probably changing by the time of Spanish contact, but that is a different subject. If you would like to read about the Inka in more detail, my recommendation is D’Altroy’s recent book The Incas, which shows all the signs of being a new gold standard in the archaeology of the region.
Hope this helps some. To sum up, the Inka didn’t develop from a tradition that used money as we know it, and instead relied upon taxing people’s labor rather than their wealth to realize their imperial ambitions.
References:
Cobo, Bernabé
1979 History of the Inca Empire: An Account of the Indians’ Customs and their Origin, together with a Treatise on Inca Legends, History and Social Institutions. Translated by Roland Hamilton. University of Texas Press, Austin.
D’Altroy, Terrance
2014 The Incas (second edition). Blackwell Publishing, Oxford.
La Lone, Darrell E.
1994 An Andean World System: Production Transformations under the Inka Empire. In The Economic Anthropology of the State, edited by Elizabeth Brumfield. Society for Economic Anthropology Monograph no. 11, pp. 17-41. University Press of America, Lanham.
Mayer, Enrique
2002 The Articulated Peasant: Household Economies in the Andes. Westview Press, Boulder.
Morris, Craig, and Donald Thompson
1985 Huánuco Panama: An Inca City and its Hinterland. Thames and Hudson, London.
Murra, John V.
1980 The Economic Organization of the Inka State. JAI Press, Greenwich.
Silverblatt, Irene
1988 Imperial Dilemmas, the Politics of Kinship, and Inca Reconstructions of History. Comparative Studies in Society and History 30(1): 83-102.
Urton, Gary, and Alejandro Chu
2015 ACCOUNTING IN THE KING'S STOREHOUSE: THE INKAWASI KHIPU ARCHIVE. Latin American Antiquity 26(4): 512-529
Just thought I'd add to the excellent discussions below with a few of my own older posts mainly about state expansion through trade (spoiler: it didn't really happen through trade)
https://www.reddit.com/r/AskHistorians/comments/8c8qxf/did_the_inca_know_the_aztec/dxelgth/