If you only do one thing this weekend

Spend an hour listening to Doug Henwood interview David Graeber about his new book

Debt: The First 5,000 Years.

To whet your appetite, here is some of the dialogue:

Graeber:  It goes back to Adam Smith, there is a fascinating story that we all learn, where money is supposed to come from:

Originally there is barter: “I’ll give you 20 chickens for that cow” . You say, “I don’t really need chickens right now”, “Maybe firewood?” ..And eventually you find what they need or you have to invent money. We all learn this.

In fact — being an anthropologist this is a professional pet-peeve — because we’ve been looking for 150 years if there is any place in the world where they do that and if there was, we would have found it by now.

There isn’t. It’s not true.

They do lots of other things, but they never do [barter]. […]

So the question is why?

I think because money is credit. Credit is a social relation, and early economists had a problem with credit.

Henwood: They also had a trouble with social relations

Graeber:  Exactly, they had a problem with credit because credit is a social relation.

In order to constitute economics as a domain unto itself you have to posit that there is a sphere of human activity where people are just thinking about the stuff. But in normal human life we are never just thinking about the stuff; so you have to create a sphere, which is what the early economists were doing.[…]

Adam Smith and people like that came from a class where they thought that you really *should* be able to walk into the butcher or baker, plunk down your cash, take your stuff, walk out and never see the guy again, not even knowing his name — which was not the way it worked at the time.

There’s a great line in Adam Smith where he says “It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest.”

The crazy thing is that it wasn’t true at the time. All transactions were on credit. People were asking favors from butchers and bakers all the time.

[…]

So why does Adam Smith tell this story? Because If you think about it, it doesn’t make any sense. Here’s this guy, here’s his neighbor. He wants this cow, and offers some chickens, the neighbor says no. Well — these guys are neighbors in a small neolithic community, presumably.  But the economists are assuming that they will only interact with each other on the spot trade. Something for something right now and we walk away.

What sense does that make?

These guys are neighbors. If you don’t want his chickens, he’s going to have something. In fact, that’s what really happens. You walk up and you say “Hey, nice cow!”, and the guy says “oh, you like it? Hey it’s yours, don’t even think about giving anything back.”

Now you owe him one.

And he’s going to come later and say, “You know, my son is really interested in your daughter.” Or, “nice shoes”.

What you actually have is a rough informal credit system.

But again, that involves things like “my son is in love with your daughter”, which falls outside the domain of economics, so what they actually did is they made up this little story where everyone is just swapping stuff on the spot, and money comes in as a way of facilitating that.

Update: See also

  • See also the interview in NakedCapitalism — and be sure to read the comments, as David Graeber participates extensively.
  • Graeber posts a response to criticism at the Online Bible School.
  • A Graeber essay on debt and money posted at longnow.org
  • Graeber interview with RT (youtube).
  • Graeber interview with Anarchist News.
  • Writer’s Voice interview (audio)
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If you only do one thing this weekend

17 thoughts on “If you only do one thing this weekend

  1. beowulf says:

    Ahh, brings back memories of freshman year Sociology.
    “Gemeinschaft (often translated as community) is an association in which individuals are oriented to the large association as much, if not more than, to their own self interest…”
    “In contrast, Gesellschaft (often translated as society or civil society or ‘association’) describes associations in which, for the individual, the larger association never takes precedence over the individual’s self interest, and these associations lack the same level of shared mores. Gesellschaft is maintained through individuals acting in their own self interest.”

    http://en.wikipedia.org/wiki/Gemeinschaft_and_Gesellschaft

    Of course, much the policies of the greatest destroyer of private wealth in American history (Abraham Lincoln) , Gemeinschraft is just another way of saying, “lacking in microfoundations”. :o)
    “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”
    http://www.cooperativeindividualism.org/lincoln-abraham_on-labor-and-capital.html

    1. That’s interesting, Beowulf. I wasn’t familiar with those terms. I never took a college sociology class, so that is a hole.

      But I think Graeber would disagree with this characterization. He would probably argue, or at least, I am arguing, that part of people’s self-interest is to be viewed in a certain way by their peers, and to participate in a certain social framework. Graeber gives the example that in non-monetary societies, those who are lazy are viewed as less desirable mates by the opposite sex and are ridiculed by others. That seems to be enough of an incentive to avoid free riding without introducing an exact impersonal accounting system of debts.

      Therefore you cannot define “individual self-interest” independently of the needs of the society, as successful societies have norms in which the two coincide, but not necessarily because pursuing self-interest, in terms of maximizing consumption, leads to optimal outcomes.

  2. vjk says:

    Quote:

    “— being an anthropologist this is a professional pet-peeve — because we’ve been looking for 150 years if there is any place in the world where they do that[barter] and if there was, we would have found it by now.

    There isn’t. It’s not true.
    They do lots of other things, but they never do [barter]. […]”

    End quote.
    ——-

    No barter ? Do tell ?

    Well, the above is just silly. Perhaps he may want to stop being an anthropologist for a bit and venture into the real world.

    My neighbor swapped(permanently) a chainsaw for a lawn mower the other day to clean after the recent storm. There are tons of advertising on craiglist, for example, to swap one brand of cell phone for another. A teenager I know just did that — swapped an iphone for some android toy.

    Russia did quite a bit of barter deals during the detente era. Does OXY and Armand Hammer ring a bell ?

    How much barter exchange vs. credit exchange was taking place in the paleolithic society is a question that will never have an answer despite futile speculations of the ivory tower, especially when they unable to see what is going on right before their eyes. Not surprising though, rather funny.

    1. VJK,

      Let’s not play dumb here. Graeber wasn’t say that two individuals never exchange goods.

      What he was saying is that the spot exchange of goods is not the means of allocation or distribution of goods within pre-monetary societies. Graeber is studying societies and how they operate.

      The example of Russia or of POWs using cigarettes as a medium of exchange is something he discusses at length. Those are examples of societies that already used money, and the money was taken away, so they came up with a replacement. Those examples cannot be used as a description of how money arose in the first place.

  3. vjk says:

    1. “They do lots of other things, but they never do [barter]. […]” — that’s “dumb”.

    2. I do not believe that you can extrapolate backwards in time to such a critical degree (pre-literate societies) with a straight face. The earliest recorded evidence is Sumerian cuneiform. The clay tablets do not provide enough evidence to see how important a role barter played role in pre-Babilonian Sumer. Perhaps, insignificant, perhaps not– we just don’t know and never will although there are still probably hundreds of tablets with some numbers whose context was lost forever (and is now open to wild speculations). The very nature of barter exchange rarely requires any recording hence scarcity of evidence. We do know that temple taxes were payed in barley, wool and other stuff.

    I did read his book.

    But (1) is amusing.

    1. “They” refers to societies that do not use money.

      In terms of extrapolation, there are pre-monetary societies currently in existence that anthropologists study, but more importantly we have the archeological record. The use of medium of account pre-dates the use of medium of exchange by several thousand years, etc. But if you read Graeber’s interviews or excerpts from the book, then you can see the evidence that he presents for his case.

      1. vjk says:

        If you mean the silver shekel used as medium of account, the first reference to the measure did not appear until about 2100 BC (if memory serves). I am not convinced however, as there is not enough evidence one way or the other, that it (a) supplanted barley as such measure, (b)coexisted with other measures, or (c)gradually grew in significance post 2000 BC. Therefore, I am not convinced that the shekel was not just one of measures, or “media of account” if you want call it that.

        “But if you read Graeber’s interviews or excerpts from the book, then you can see the evidence that he presents for his case”.

        That’s exactly what I am not happy about — I did not see convincing evidence in his book, much less in the interview, stemming from the original records — clay tablets, either direct or statistically convincing regarding the purported transition from gifting to credit to money as medium of exchange. For example, to speculate about transition from gifting to credit, one needs to have an idea what people *thought* about this or that kind of relationship at *the* time, not today, not in Ancient Greece or Rome. That data is clearly unavailable and never will be (also see below) — transactional records of the later period do not provide any insight into the man brain of that period. We may of course try and extrapolate modern man thinking back in time, but in my opinion it would be rather naive to put it mildly.

        I also consider analogizing modern pre-monetary societies to Mesopotamia circa 3500 BC unfounded due to lack of reliable data covering various sides of everyday Mesopotamian society life and, instead, abundance of speculations about the latter. Reasonable people may disagree 🙂

  4. “I do not believe”

    The four most dangerous words in economics.

    Not ‘There is no evidence for’ or ‘We can’t find the evidence to’ – it’s always ‘I believe’.

    Science does not believe. Science postulates and looks for evidence to confirm. If there is no evidence then it discards and starts again.

  5. vjk says:

    Neil:

    “I do not believe””

    Nice try, but that’s what, in fact, I wrote earlier:

    “The clay tablets do not provide enough evidence to see how important a role barter played role in pre-Babilonian Sumer

    ‘I do not believe’, in this context, is not an expression of faith. It is something different that a native speaker of English should be quite capable of parsing, one would hope !

    Science postulates, yes, but to refute an older theory science should provide enough evidence to falsify “the null hypothesis”. I do not “believe” that was done in the instant case. If you have references to the original clay tablet translations documenting transition from gifting to credit to coins, don’t hesitate to provide them 🙂

  6. vjk,

    The evidence is provided in the link above,

    “[2] Humphrey, Caroline, “Barter and Economic Disintegration.” Man 1985 v.20: 48″

    ” Hence in the definitive anthropological work on the subject, Cambridge anthropology professor Caroline Humphrey concludes, “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing” [2]

    a. Just in way of emphasis: economists thus predicted that all (100%) non-monetary economies would be barter economies. Empirical observation has revealed that the actual number of observable cases—out of thousands studied—is 0%.

    b. Similarly, the number of documented marketplaces where people regularly appear to swap goods directly without any reference to a money of account is also zero. If any sociological prediction has ever been empirically refuted, this is it.

    So I’m afraid it is for those who “believe” in it to prove the barter theory against the overwhelming weight of evidence against it.

  7. vjk says:

    Neil:

    I appreciate your response.

    With all due respect to Caroline Humphrey, the quote is not evidence but merely her opinion. Perhaps, she did provide references to source data ?

    I see many instances of barter both in the modern literate society as well as in the examples of pre-literate societies. For example, other than the usual suspects, I recall ethnographic work on Russian evenks (Siberian tundra), who transacted in fish and pelts (one reindeer for some amount of fish, for example) among themselves as well as with “strangers” before and after Russians penetrated, en mass, into Siberia. According to modern ethnographic evidence, they continue to do so even today, bartering the same fish for a motorized snow vehicle, for instance.

    Thus, the claim that “No example of a barter economy, pure and simple, has ever been described” strikes me as bizarre, an attempt to fit facts to model rather than the other way around.

    I am not denying in principle the path: gifting->credit->coins in some hypothetical society, I just would like to see original compelling evidence, enumerated and quantified, rather than speculations presented as facts, especially when they contradict other facts that are reluctantly admitted, like “yeah, there were those prisoners, but it does not matter” or the above claim of no societies with any widespread barter relationship. Perhaps, those evil Russian evenk ethnographers lied and there is no barter there occurring on a massive scale, but it has to be refuted with some alternative research, not mere opinions.

    1. Sergei says:

      “I recall ethnographic work on Russian evenks (Siberian tundra), who transacted in fish and pelts (one reindeer for some amount of fish, for example) among themselves as well as with “strangers” before and after Russians penetrated, en mass, into Siberia.”

      This seems to me wrong. First of all fishing never was an important activity for the evenks to become anything remotely like trade. At best fishing was a by-product of main activity which was hunting. Evenks did not even have fishing tools and generally used arrows and bows.

      As for hunting and trading in general then a major patriarchal tradition of the evenks is to give the products of hunting for free, which is gifting. This tradition is called “nimat”. Gifting is also reflected in another tradition which is to give everything, including sharing the last piece of meat, to guests, or “strangers” as you call them.

  8. Matt Franko says:

    RSJ,
    It seems that the link in your second bullet in your update to this post is broken, Can you update that link to the Graeber comment you refer to please…. Resp,

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