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Barter and the origins of money

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Via Chris Bertram, this post from David Graeber is one of the best blog posts I’ve read in quite a while, and invokes a strong desire to read his book. There are many possible choice quotes here, but I’m partial to Russell Arben Fox‘s selection:

what economists are basically doing in telling the myth of barter, is taking a kind of behavior that is only really possible after the invention of money and markets and then projecting it backwards as the purported reason for the invention of money and markets themselves. Logically, this makes about as much sense as saying that the game of chess was invented to allow people to fulfill a pre-existing desire to checkmate their opponent’s king.

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  • Snarki, child of Loki

    Thanks for posting about this; that is an amazingly interesting post by David Graeber.

    Perhaps if more Austrian-school type economists were invited to a barter session in Arnhem Land, they’d have a better notion of “value”.

    • Malaclypse

      Perhaps if more Austrian-school type economists were invited to a barter session in Arnhem Land, they’d have a better notion of “value”.

      The Austrians would blame the failure of reality to fit their theory on government interference with the barter economy. Hayek cannot fail, he can only be failed.

      For example, the failure of Hayek’s main thesis in The Road to Serfdom – that the platform of the British Labour Party would inevitably lead to totalitarianism – is due to government interference, not the fact that Hayek was a Bloody Raving Loony.

      • DrDick

        Libertarianism cannot fail! You can only fail Libertarianism. Plus no true Scotsman!

      • Wait, so, the government effectively prevented itself from becoming a totalitarian state… and this is bad?

        Do libertarians want to live in a totalitarian state just so they can crow that Hayek was right? Do they see themselves in the Fawkes mask doing the kickass knife moves?

  • Marek

    Fascinating, thanks for posting that>

  • c u n d gulag

    djw,
    Thanks for the fascinating article.

    I’m in your debt. :-)

  • rj

    I agree, I caught that post too — really fantastic. I’m definitely going to read Graeber’s book.

  • DrDick

    Saw that earlier this week. As an anthropologist interested in political economy, I have some reservations/quibbles about what he says, but the general thesis is certainly spot on (as I have repeatedly tried to tell BradP). Markets and true market exchange only appear with the emergence of the state and are accompanied by the appearance of money.

    Partly this is because this is the point at which we get a complex division of labor and become dependent on routine exchanges with strangers, who we do not trust to pay us back. In pre-state economies, most economic exchanges are with people in your own small community who generally do the same kinds of things you do and are based on gift exchange. As such they are embedded in a social matrix which ensures that they will pay you back eventual. Market-like exchanges based on barter do occur with other groups, but these are not a daily occurrence and are often structured in terms of reciprocity between formal (often hereditary) trading partners.

    It only takes a little thought to realize how complicated and cumbersome market exchanges become without money. Barter economies simply cannot work owing to gross inefficiencies.

  • Left_Wing_Fox

    Thanks for posting that. It was a fascinating read.

  • Malaclypse

    While this is completely off-topic, I would be remiss if I did not note that the NYT has now compiled a list of all internet traditions.

  • sleepyirv

    The old saw, “It works in practice, but does it work in theory?” comes to mind except neither seems to matter to the Austrian school.

  • Graeber’s conclusion – that economists and Austrians in particular cling to a story without evidence, one that doesn’t adequately describe the reality of human experience, because of a need to view their idea of market exchange as innate to human nature – is a dynamic I’ve noticed in a couple of other areas: their reification of the concepts of “property” and “market.”

    They look at the actual historical experience of a marketplace – a location in which makers, merchants, and buyers come together and perform a wide range of activities, including the buying and selling of goods for mutually agreed-upon values – and then create out of it a simplified mental model which is actually quite useful in a lot of ways. The problem is, they then turn around and understand the actual agora as if it was a manifestation of their model, and describe everything going on there that isn’t a part of their model as being “non-market forces,” intruding on their market. Not least of their blindspots is the role of coercive, recognized state force as a prime mover in the creation of this phenomenon.

    They do something similar with “property,” viewing pieces of land on which someone does certain things, next to and near other pieces of land on which other people do things, all of which is dependent upon geology and climate and social norms and biology – as if it is merely a container for value, no different from a bond certificate.

    • DrDick

      Private ownership (as opposed to use rights and collective rights) of land is something else that emerges along with the state and is a necessary foundation for the social stratification upon which it rests.

      • dave

        I blame Engels. If he’d got The Origin of the Family, Private Property and the State in the right order, none of this would ever have happened.

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