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)