The Myth of the Barter Economy (2016)
theatlantic.com
theatlantic.com
For instance the Pharaoh was in need of cedar wood, so he would write to the King of the Assyrians in Sumerian (the lingua franca of the time) "Dear cousin, I would like to send you some gifts but I'm out of boats. Cheers, Ramses".
To which his "dear cousin" would reply "Dear cousin, I'm sending you these cedar logs so that you can build these boats you need. Did I tell you that drought has hit Niniveh and the corn is scarce? Yours, Sennahcherib". Then Pharaoh would send back boats full of grain, and so on.
Akkadian, not Sumerian was the language of international diplomacy in the period you speak of. Sennacherib came later in the Iron Age. And if the Egyptians needed cedar, they'd write to Byblos (which during the New Kingdom, was a tributary state more often than not), not Assyria.
It's a very good book.
A minor theme is indeed that Mesopotamian city-kings had a hard time trading with Egypt. Mesopotamia seems to have produced mostly textiles, which Egypt made domestically. What Egypt needed from international trade was copper and wood.
All the Mesopotamian city-kings wanted gold, though, which came from Egypt. They could get this one time, by marrying a daughter to the Pharaoh. We have an example of Pharaonic correspondence with a king who repeatedly asked for unworked gold, finally sent a daughter over, received a mountain of gold in return, and concluded by complaining that the gold had been worked (into statues).
I assume many of those statues got melted down.
There is some discussion in https://www.amazon.com/dp/0670022667/ (Carthage Must Be Destroyed: The Rise and Fall of an Ancient Civilization) of how the Phoenician city-states of the bronze age (source of cedar wood to Egypt) gradually succumbed over the centuries to Assyrian empire-building. It's not the main focus of the book though.
All history is viewed through the eyes of the author's politics. I accept that, and set my personal politics aside and considered his history. One of the major positives of this book is its ambitious scope. The narrative spans millenia of history and I respect that ambition.
I don't agree with everything Graeber says but he proposes new ideas (to me at least). Those new ideas are fun to consider and think about.
The book's very well-constructed that way, actually—make assertions that the thinking reader will have objections to or questions about, proceed to directly call out and address same in following paragraphs—but apparently some people's eyes go so red on reading something they don't immediately agree with that they totally miss the explanation and defense that follows. In short, many of them accuse the book of specific sins it did not commit. Others don't provide enough specific criticism to be analyzable, usually accusing it of the same sorts of problems but without enough details to tell whether the reviewer's just a bad reader like a lot of the other people dumping on it.
Possibly there are good negative reviews out there, but a good percentage of them seem to be folks who are, bluntly, not literate enough to read the book—though it's far from a challenging read.
Another example of someone in power saying "Hey, see this problem we created? Well, we also have the solution..."
Ancient taxes were assessed in kind, most commonly in grain or labor. The reason was that the government wanted the grain or labor. The main benefit of taxing in metal is that grain is perishable and voluminous, not that it creates demand for more metal.
Consider a stylized section of Chinese history:
State-issued currency: copper coins (low value, accepted most places); paper notes (high value in the capital, hard to spend elsewhere)
Means of exchange: raw silver valued by weight
Form of taxation: silver
1. Currency invented where there were just raw materials before. ("Conceptual invention")
2. Currency invented to replace or exist alongside other already-known currency.
In case 1, I believe the currency is generally an object that was already valuable, and therefore doesn't need support. Coins were usually able to trade a little above their value as measured in raw material because of the nominal standardization they provided.
Case 2 is not at all rare, and there are even cases of states deciding to make coins from a worthless material (iron) for ideological reasons. Everyone can have iron.
This seems like an ideal case for propping up the (otherwise too low to bother with) value of the ideological coins, but I'm not really up on the history of this kind of thing. I know the iron-coin states were often economic failures (e.g. Sparta). I know there were a lot of difficulties with paper money in China, but I don't know the details.
The wikipedia article briefly mentions this: https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
"The author postulates the growth of a "military–coinage–slave complex" around this time. These were enforced by mercenary armies that looted cities and cut human beings from their social context to work as slaves in Greece, Rome, and elsewhere. The extreme violence of the period marked by the rise of great empires in China, India, and the Mediterranean was, in this way, connected with the advent of large-scale slavery and the use of coins to pay soldiers. This was combined with obligations to pay taxes in currency: The obligation to pay taxes with money required people to engage in monetary transactions, often with very disadvantageous terms of trade. This typically increased debt and slavery."
It occurred mostly in subjugated nations as a way to bring in the new money (from the perspective of the conquered, who saw no value in this foreign coin). It accelerated adoption in populations who had no familiarity with the system, and indeed may have been operating on non-monetary systems still (the book credits Alexander as wiping away many of the last vestiges of such economies).
Looking at the above passage, it has some resemblance to company scrip.
I'm trying to get a sense of where to put this on a continuum between "I could imagine things happening this way" and "here are contemporary records in which the king specifically states that the new tax is needed in order to get people to accept the new coins".
Postulation isn't really what I'm usually looking for in a historical work.
This way of thinking can provide a satisfying explanation of the emergence of gold as a global store of value.
For more reading: https://mises.org/library/origin-money-and-its-value
That might be hard to model mathematically.
"The most saleable good" in our economy is money. The majority of explicit trades for goods and services involve money. Of course, that is now and we need to explain how this happened.
If I have a good another wants then I may accept something I don't directly want as payment. Of goods I indirectly value, I should value more the goods that are most saleable as they provide the shortest path to goods I directly value. Throughout this my valuations are based on expectations of others' future valuations. We can think of the path from regular good to money like a feedback loop. It's the economic bubble that doesn't burst (except when it does and we all switch to silver or furs).
Of course it's much harder for the value of the anomalously valued good to crash in a real economy because of things like taxation (this is almost chartalism).
Barter of goods is just inefficient in comparison.
You can :-)
If the debt is non-transferable, so simply between me and the other guy, then it's not money. Debt like this may lead to money but its no more money than barter is. Of course that is not to say that debt cannot be money (even following a similar process). I want to be clear that I would make no normative claims over which goods (or similar things like debt) can become money.
I don't think the argument I made was strictly Misesian but it's similar and to his credit he was careful on this same point. In The Theory of Money and Credit he's clear that he doesn't argue for gold (or metallic currency) based on "intrinsic value". He even goes out of his way to specify cases where metallic tokens (like scheidemünze) may not be considered money in the narrower sense (but may in the broader) and includes things classifiable as debt in both the narrower sense of money and in the broader (as money-substitutes). One key difference I can see in his treatment of debt is that he considers it after the existence of commodity money.
> Which works because you live in a small society where everyone trusts each other
I think this is one of many arguments where there's the unexplored subjective element. Argument A and argument B look reasonable to person A and B because of their upbringings. I wonder how trusting you are compared to me and how your social experiences have differed.
> Barter of goods is just inefficient in comparison.
Yeah, it can be.
OK, and here is the key thing, can you provide an example of a pre-money society doing this? Because as far as I am aware there are no examples from either History or Anthropology showing that this happens. Once again it doesn't matter how much sense this idea makes to us coming from a post-money society if it is not what actually happened.
Can you provide me an example of a pre-money society becoming a post-money society? I can't name any. Unless your point is that any theory would be speculative (which is correct). I think even if we were to see the same evidence our conceptual models would be different but I'd very much sincerely like to see evidence which allows me to rethink things.
Humans operate by doing each other favours. You'll find you intuitively know who you've done a favour for and who you owe a favour to. It's inherent to being humans and three year olds can do it - as science has discovered.(https://www.en.uni-muenchen.de/news/newsarchiv/2016/paulus_s...) We all walk around with a favour ledger in our heads.
Essentially "here's a chicken, you owe my a chicken's worth of something sometime".
As groups get larger you end up taking tokens as an IOU aide-memoir. And to nail those who try to cheat.
That then evolves into money. Token money. Tokens representing promises.
In my experience; just because something is in use today does not mean that it can’t be critiqued, and evolve.
Humans operate by doing each other favours.
But intuitive tracking of who owes you favors and who you owe favors to does not scale. The double coincidence of wants problem is not a myth; it just doesn't come into play until you start dealing economically with groups that are too large for intuitive tracking of favors to work--roughly, groups larger than the typical hunter-gatherer tribe.
> Essentially "here's a chicken, you owe my a chicken's worth of something sometime".
Order Without Law has a good discussion of this. (It is a study of modern ranchers in northern California.)
The fact that this must be solved in an exchange economy does not mean that it is the same as the genesis of money. Every historical economist has had a theory as to the genesis of money, from Smith, Ricardo and Marx to Mises. To say that money evolved as a solution to the problem of the coincidence of wants may not be correct. Solving the coincidence of wants may just be a side effect.
I remember way back when Diablo 2 was big, in-game gold was essentially worthless as it was so common. So players started using bushels of a somewhat-rare and generally useful magic ring as currency.
That's why you see certain agricultural products like grain and olive oil in the ancient Mediterranean serving in the role of currency prior to gold. While less durable than gold, these goods met all the other criteria and ultimately were useful as well. Gold comes on the seen when there is a significant economy-wide surplus of output.
I think a similar misunderstanding takes place with Hobbes's idea that the man in the state of nature lived in a war of all against all. There's simply no evidence that this ever happened, even though it has been used by Hobbes and others as a justification for the need of oppressive institutions.
I think that if we start investigating the conceptual underpinnings of things quite a bit of economical and political thought will prove to be essentially unfounded and unscientific.
This being said, we can't entirely fault people like Hobbes and Smith who didn't have access to the investigative tools that are now available. We can however fault today's social scientists who continue to build on faulty foundations instead of honestly reassessing their theories.
This is reminiscent of how, say, in Athenian democracy, a citizen was a male property owner - and most of the population just didn't count; most people were reduced to slavery (much due to debt actually!). Some of this conception persisted all the way up to the original US constitution - women don't count, slaves don't count but are property etc.
As for faulting Hobbes - you can fault him plenty. There was critical anti-establishment practice and thought, always - in varying forms.
While I agree that the barter economy as a rhetorical construct is most certainly made up, being very useful in freshman econ, I’m not convinced it money could possibly happen without first having trade in general. I would argue that money happens very quickly, which is why you’re not going to see a lot of evidence of extensive barter. If one childhood is enough to establish a candy currency, then you’d expect a similar currency to develop very quickly in any society.
This is an oversimplification but gives you the gist of the book's argument. So yes, it agrees that money is a relatively late development and trade existed before it and was largely barter-based but only when strangers or rival groups traded, but the central argument is that debt (basically) came first rather than last, and effectively precedes money, which is more a tool of debt than debt is a tool of money, if you will.
What these cultures had, according to Graeber, were essentially ledgers for keeping track of debt.
I think one way of looking at this is that humans are generally embedded in larger contexts, because we always come in communities. (The exceptions are, broadly speaking, historically uninteresting.) So it isn't just that Alice and Bob are sitting there at this isolated moment when Alice has grain and trying to work out if it's worth asking Bob, whom she has never met before, to trade the grain for a future favor. Alice and Bob know each other, and are embedded in a community. They have access to a reasonable approximation of each other's reputation. Alice knows whether or not Bob tends to default on his debts. Alice can make Bob pay for defaulting with his reputation, which can theoretically become so bad that nobody wants to trade with him, which in many historical circumstances may be a literal death sentence. (We are very wealthy, and casually trade with many strangers, and have a hard time internalizing the world they lived in.)
Attempts to model Alice and Bob's interactions as if they are strangers meeting for the first time, who generally expect to never see each other again, may be of some mathematical utility but won't explain the real world very well.
So, it's neither a formal debt in anything like the modern sense, but neither is it "maybe you'll repay me in the future"; there's not total assurance, but in the community context there's much higher assurance of future repayment than that.
If you don't repay your social debts, you're going to find yourself getting a lot less favors done for you, and having a lot less friends in general.
The git economy in a village and the one in a community of friends have something in common. Another hint is yet in the article when it states "it's hard to imagine a gift economy working to build skyscrapers and iPhones".
It seems pretty clear to me that the problem of a gift economy is that it doesn't scale.
As long as every person in a group knows each other it is fairly easy to keep track of gifts given and received. This becomes impossible as the group grows and the number of people each person has to keep track of grows with O(n).
Of course you can divide a big number of people into groups and have those groups use a gift economy between them by having leaders keeping track of gifts given and received between groups.
And of course can also have multiple levels of subdivision. But the problem becomes clear. The system is quite centralized and there is no direct way for someone in one of those groups to exchange goods and services directly with someone of another one without the good or service going up the command chain and down to the other side.
Unlike in barter, in a gift economy no one keeps track of who owes what to whom, they just all give each other what they need.
To give an example, I've long participated in the open source community, where I give away software that I've written and help others on IRC, in various forums, and on stackexchange. I don't ask for or expect anything in return, but I know I'm helping the community and I seek and accept aid from the community when I need it, by asking my own questions and using software freely given away by others.
This example is of a well functioning gift economy which has scaled incredibly well.
I find your open-source analogy funny when we have all these maintainers of major projects protesting about lack of funding.
The gift economy fails when it comes up against human nature at scale.
Humans are lazy and greedy, you need to account for that. When you're not checking who owes what, you're ripe for exploitation.
My reading of gift economies is that there often is some element reciprocity. In any given context, there might not be a direct exchange of gifts, but those not participating in the process over time get excluded from future gifting. And there are all sorts of "social status" and signaling effects that make this much more than just altruism.
One of the things which emerged to be almost as good as money back then was "energy credits" with large power plants and networks serving as a kind of banks/clearing houses.
Do you have any links that go into more detail about the Russian B2B bartering and accounting?
I did some research on how gold became money. Archeologists found evidence of gold usage dated 40,000 BC. When gold shows up in written history around 10,000 BC, it's already money. We did not really know if gold was good first or money first. I conclude that it's a little bit of both when humans first found it. I wrote about the topic in this article:
https://bitflate.org/post/2019/11/29/how-gold-became-money.h...
Going back further, I think we can say sex was the first kind of currency. Organisms exchange sex to reproduce.
Today, we have Bitcoin. It's also unclear how we should define it: asset or money. The answer is it's a little bit of both. I hope the IRS will lower the tax rate on Bitcoin when they understand this.
https://en.wikipedia.org/wiki/Debt%3A_The_First_5000_Years
or you can just download it. How's that fir a gift economy? :-)
http://www.fon.hum.uva.nl/rob/Courses/InformationInSpeech/CD...
It's safe to say that something-like-money is substantially older than agriculture.
Barter requires a coincidence of interests. Alice grows some pecans and wants some apples; Bob grows apples and want some pecans. They just happen to have their orchards near each other, and Alice just happens to trust Bob enough to wait between pecan harvest time and apple harvest time. Assuming all these conditions are met, barter works pretty well. But if Alice was growing oranges, even if Bob wanted oranges as well as pecans, they'd be out of luck -- oranges and apples don 't both grow well in the same climate. If Alice and Bob didn't trust each other, and couldn't find a third party to be a middleman [L94] or enforce a contract, they'd also be out of luck.
This is the canonical Myth of Barter, where some society is assumed to have existed that was so inconvenienced by the double coincidence of interests/wants/needs that it invented money. This never happened as there exists no evidence that a society existed that used barter as its main method of exchange; barter was used on the edges of society, spot transfers made between people who did not have the trust necessary to support debts.
Here's the passage where he refers to 'time-lagged barter':
Local but extremely valuable trade was, this essay argues, made possible among many cultures by the advent of collectibles, by the time of the Upper Paleolithic. Collectibles substituted for otherwise necessary but non-existent trusting long term relationships. If there had existed a high degree of sustained interaction and trust between tribes, or individuals of different tribes, so that they gave each other unsecured credit, this would have stimulated time-lagged barter trade.
I did read the article. In fact, I read this article years ago shortly after it was published as back then I was an anarcho-capitalist, very interested in non-state solutions to money.
Szabo's argument is that collectibles predate history by tens of thousands of years, that rather than replacing some mythical bartering system, that a system of exchanged collectibles co-evolved with the entire concept of trade.
substituted for otherwise necessary but non-existent trusting long term relationships, as in, allowed them to exist in the first place, not replacing some barter-only system. Nick isn't crediting the Austrian origin mythos here, he's providing a cogent alternative to it.
What I'm seeing no evidence for, and don't expect to, is the claim that debt precedes collectible money. This is quite unlikely, as it seems to be a feature of sedentary agrarian cultures; it's difficult to picture it arising in a milieu of traveling bands of hunter-gatherers, who are mutually suspicious, often rivalrous, and may not speak the same language.
It still exists today as ‘giving away’ of the bride. The female’s dna and germline gets the best it can buy with dowries and the bride’s attributes.
It would be interesting to see this emerge in a population unaware or unexposed to the concept of money.
Using money in these games is perhaps as much a form of roleplay as it is an economy.
It's more like an expensive theme park.
> A potlatch is a gift-giving feast practiced by indigenous peoples of the Pacific Northwest Coast of Canada and the United States,[1] among whom it is traditionally the primary governmental institution, legislative body, and economic system.
https://en.wikipedia.org/wiki/Potlatch
- - - -
I have a crude "theory" that economic forms follow density:
Small groups, families and small clans, operate more-or-less communally (not political Communism; I mean communal living. Sharing resources, etc.)
Larger groups, tribes and neighborhoods, operate more-or-less on barter or favor-balancing.
Beyond that, you get money evolving out of long-distance trade, and modern mercantile and financial (as contrasted with "just" economic) systems.
Money is desirable because it makes transactions and economic calculation so much easier. As a pure abstraction, money is simply a ledger (https://www.minneapolisfed.org/research/sr/sr218.pdf). When humans live in small groups related by blood, they just keep the ledger in their heads (if at all) because the penalty of cheating is so great that no one will defect (exile from the tribe and a lonely death).
When humans need to transact with people and there is uncertainty about (a) whether they will be able to punish cheating, and (b) whether they will ever meet this trading partner again, then they will use a more explicit and trustworthy form of money to reduce the risks. For most of human history the only real option here was some kind of physical token, which had to approximate the ledger abstraction: uniform in quality, easily divisible, easy to authenticate, with as inelastic a supply as possible.
The modern sovereign state allows for fiat money, since the state can simply declare that its official currency is the ledger that everyone will use. It's quite efficient, since you can do things like maintain a banking system that exists primarily as numbers in a spreadsheet rather than vaults full of dusty gold bars. Our fractional reserve system also mingle debt and money, and for most of us the two are equivalent.
This makes perfect sense when you consider that money is a claim on the future output of everyone who agrees to use the money. It's an EOU: everyone owes you. Thus, if you issue fiat currency against public debt, it's effectively an EOU as well since everyone in the economy is indirectly responsible for the eventual repayment of that debt. Of course, sovereign currencies have borders, so looking at the ledger used by governments to keep score amongst themselves is quite telling.
However, when there is no socially accepted authority to dictate consensus, how do mutually disinterested individuals agree on a form of money? This was a pure thought experiment until the invention of Bitcoin, because the options were exceptionally limited: precious metals were so much better than anything else that had been tried, for reasons I won't go into here, that there really wasn't a choice. But with Bitcoin, you have a protocol for digital cash that can be used to create an infinite number of ledgers with the same desirable properties. How do we choose which one to use?
The answer, of course, is proof-of-work.
how does one do this?
do you mean looking at the currency exchnage market?
The private banks have their own ledger, and, in that sense, they can create money. But if they have to operate outside their ledge, they need a "more real" money. That money, it's the ledger in the central bank (and cash).
This "more real money" is called "bank reserves" (not to confuse with reserves of gold or foreign currencies that are a different thing).
https://en.wikipedia.org/wiki/Bank_for_International_Settlem...
Also, game theory is a very limited model of human behavior. That you choose to invoke it, and you choose to believe that humans are simple rational game-theoretic "players" is not in any way proof that they actually are any of these. There is a lot of observable human behavior which contradicts rational and game-theoretic models - just look at some observations from behavioral economics.
There are also plenty of scenarios in which humans do behave according to game theoretic predictions.
This is such a tired argument that I can't believe I'm repeating it, but game theory is a bit like highly school physics ("assume the cow is a sphere and there is no friction") in that it's an oversimplified model of human behavior that you can still use to make testable predictions.
Also the deviations from expected utility maximization in behavioral economics can and are being incorporated into current game theory research. See for example "Repeated Games with Endogenous Discounting" by Kochov and Song.
The point of all this is to say that you can't dismiss an argument out of hand because it appeals to game theory, on the grounds that "game theory bad".
On a meta level: Is there a generalized reason why people reject tools of analysis on the basis of "imperfect reflections of reality". I've never come across someone rejecting the formula for the diameter of a ball just because it's "only an approximation". Does it have something to do with number and size of assumptions involved?
Meanwhile, sociological models don't really have any idea of how much relevant detail they are ignoring, meaning that it is far more likely than in physics that the model is simply not useful, equivalent to saying that may make unfounded assumptions (like trying to use a spherical frictionless cow model to compute what kind of cow shoes work best).
It's when people hear an analysis and remember experiences in their past where, had they applied that same analysis, they would have been completely wrong and maybe even achieved a much worse outcome for themselves.
Another take is that some situations have chaos-like properties when approximation analysis is applied to them. The diameter of a ball isn't going to explode several orders of magnitude wrong and into negative space.
Thanks for the pointer to the article. Game theory is an extremely valuable tool and model, it is just not the ultimate word on human behavior, at least as it stands today.
Also, I wasn't asking for citations, just some general arguments.
It's just not used for the things you're buying. You don't need BTC to buy stuff at the store. The State enforces dollar legitimacy.
So what's it good for? Anything the State does not recognize. In this realm, BTC and siblings like XMR are vigorously exchanged. Surely your imagination can fill in the details. :)
The primary purpose of Bitcoin is to be a store of value (the definition of money), without this achievement it cannot evolve to a medium of exchange (definition of currency).
To be money, something must fulfill three criteria: 1) be a medium of exchange, 2) be a store of value and 3) act as a unit of account. It helps if the something is also fungible, easily divisible, etc.
And then later you have one of their institutions basically becoming a central bank and issuing a currency!
Knowing the shopkeeper in the butchery meant that he could reserve the fresh meat for you once it gets delivered, while you, for example, as a car repair guy in a state enterprise would provide him with some parts for his Lada from any leftover quantities. It was a hidden parallel economy that was "boosting" the planned economy. No kind of accounting was taking place between the exchanging parties, people were doing it for their own interest in the long run.
These types of relations between people were (and still are) leading to many corrupt practices. A police officer or any kind of state representative would treat you differently if you were a part of their social circles. It's a toxic environment where you start putting greater value on connections rather than on actual work and self-development.
Yeah sorry, but it is a barter economy. They only frame it differently to get their papers published.
Yes, it may work not exactly like described in the economics textbooks (and gift economies have some interesting specific properties). But I am really tired of people claiming everything in economics textbooks is to be taken absolutely literal, and if the real world is not like that, then classical economics has been refuted.
Of course they use idealized models in the textbooks, including the rational actor. The economists are well aware that they are using simplified models.
If currency vanished overnight, most people would not be producing enough material things to survive a barter economy.
So life-by-barter doesn't ever make sense: it only makes sense if you are used to the idea of exchanging your value for currency.
Maybe specific bartering gets more important with bigger societies, when it is not possible to keep track in one's brain anymore.
People do things for people they are unlikely to see ever again, just because it's a nice thing to do.
You can't squeeze that into the definition of barter, at all.
Honestly, to cut the discussion short: do you have kids? I have two kids. Maybe I am doing something wrong, but they are really not all that naturally generous and giving to each other. Must be the toxic capitalist environment they grew up in? How can I activate their socialist genes and make them want to share all their toys with each other?
This idealized barter economy contains a the same rather specific notion of value (as something countable, comparable, fungible, etc.) that is like the idea of value that a monetary system rests on. The article suggests that historical evidence fits better with the idea that money actually precedes that notion, rather than the other way around. This should impact the way barter economies are analysed and compared to monetary systems.
Graeber is an interesting guy, but he is also a Socialist with an agenda.
I remember a story of a linguist (Dan Everett, probably) working in the Amazon. He tried to convince a speaker of the language he was studying to sit with him for a few hours to help him with his grammar. He offered some fishhooks in return. The guy asked, "do you fish?", to which he replied no, and then the guy looked puzzled and said "then why don't you just give me the fishhooks?"
There are all sorts of societies, or were, throughout history. I remember reading about one where they didn't have the concept of ownership of things. But it was very logical for their environment, where most things would only have been a hindrance. In such a society, for example, maybe people would be wondering why somebody would want to hold on to fish hooks.
So sorry, some anecdotes don't cut it.
Me having an agenda: I have an opinion, obviously. Feel free to take what I say with a grain of salt. My whole point was that you should also take what Graeber says with a grain of salt.
When you do a favor for a friend (like giving a referral for a job), do you see it as a transaction where you expect them to pay you back at some point?
To some limited degree.
If you were later in your life in need of a job, and your friend could refer you to their new company, but they refuse to because of arbitrary reasons.
Would you not think they are being a poor friend? Even more so because you did a very similar favor for them in the past?
Even your example only really works because you have constructed it in a specific way. Of course if your friend could do you a small favor that helps you greatly, and that you have performed for them in the past, you would expect that they owe it to you, as if you had a mental ledger. However, if the situation is slightly different, say, their father is ill and they are caring for them in hospital, would you still expect them to call their office to recommend you? If they were out of a job at the moment as well, but happened to have some extra money, would you expect them to provide you a loan so you could fund a start-up instead of getting a job?
I don't believe human relationships and gift economies reduce to a kind of barter. There are barter-like aspects to it, but I think they stem from different internal impulses. I may well be wrong, but I don't think we can assume they are not simply because some mutual exchange is taking place.
Even in our today's world with money, people help other people in need. I don't think it defies economic reason, either. It is "pay it forward" or a kind of social insurance, as people can expect the same being done for them. Also perhaps it is simply a different kind of interaction, who says EVERYTHING has to be modeled as a trade? Or maybe it is the price for belonging to society, or to a certain circle of people, who would shun you if you would display antisocial behavior. Not every exchange good has to be a carrot.
Maybe the insurance model explains it quite well, now that I think about it.
Rational actors also work out in the long run, because by evolution the more rational strategy prevails. So people may not be aware why they help others (they don't do a calculation in their head every time), but it can still be the rational thing to do.
This seems like a disproportional emotional response, considering that the article was roughly 30 paragraphs, out of which 1 was dedicated to "the evils of money" and 1 to the current existing anarchistic communities.
I dont really care, but you might gain from understanding your own bias in this regard
Yes, Smith himself did believe it, which makes this an interesting article about anthropology and the history of economics. But the whole thing should have been structured differently.
Monastery’s demonstrates what it takes for such communities to last over hundreds of years. Effectively they must recruit, be economically viable, and avoid any single point of failure like having a specific leader.
Before the Reformation and the revolutions, monasteries generally had land given by the nobility or the otherwise wealthy. Some farmed it themselves, some had tenants. I don't know how much money monasteries tend to get directly from the Church.
The downfall of the self sufficient commune movement is it frequently resulted in poverty. The example I am referring to had well paid professionals including doctors etc who saved money by joining. Low rent including utilities, food, appliances, and household supplies allowed members to travel and party more. In effect a collage fraternity without the collage rather than a monastery without a religion.
I'm afraid this is one of the "history doesn't fit my ideology" pieces.
I'm afraid this is one of the "article title doesn't fit my ideology" comments.
None of these are barter. All of these are more like money...
I'm not a historian but I'm pretty sure his ideas about history aren't relevant to us in the year 2020.
The first two words after the title are "Adam Smith". Later text confirms that it's the same person, with "The man who arguably founded modern economic theory, the 18th-century Scottish philosopher Adam Smith, popularized the idea that barter was a precursor to money."
there's already very good rebuttal to David Graeber claims by Robert P. Murphy [1]: "Finally, we have actual case studies of communities developing money prices from scratch: namely, prisoners who end up using cigarettes as the common medium of exchange. The classic work here is Radford's 1945 article, "The Economic Organization of a P.O.W. Camp." There is nothing in Radford's account that conflicts with the standard economists' story about the origin of money. The prisoners certainly weren't giving each other things from their Red Cross kits as gifts or as loans. No, they first were trading (in a state of direct exchange) and cigarettes quickly became the money in their community for all of the reasons that economists typically cite.
And to reinforce the point we made earlier, Radford explains that the prices (quoted in cigarettes) of various items were posted on a board. If Graeber and his colleagues stumbled upon the ruins of this P.O.W. camp, they would presumably conclude that there was never a preexisting state of barter, because they only found boards listing prices quoted in terms of cigarettes. There were no boards listing the thousands of pairwise permutations of direct-exchange ratios, and so clearly the Mengerian story must have been wrong — so would go the erroneous reasoning of Graeber."
[1] https://mises.org/library/have-anthropologists-overturned-me...
They talk about that and say barter generally did exist as trade between groups outside the local community. Which makes sense as an alternative to the gift economy.
Also POW camps aren't really great examples because they're a) already coming from money based societies b) not producing their own goods, ie all incoming things are basically gifts especially in the POW camp and everyone has a similar set of goods initially and c) they're in confinement which distorts any group's dynamics.
That last part of b is really because people all share 90% of the same set of resources and the main difference is the relative weights each person assigns to each item.
"Elaborate barter systems often crop up in the wake of the collapse of national economies: most recently in Russia in the '90s, and in Argentina around 2002, when rubles in the first case, and dollars in the second, effectively disappeared. Occasionally one can even find some kind of currency beginning to develop: for instance, in POW camps and many prisons, inmates have indeed been known to use cigarettes as a kind of currency, much to the delight and excitement of professional economists. But here too we are talking about people who grew up using money and now have to make do without it - exactly the situation "imagined" by the economics textbooks" (p. 37 of Debt)
Further, the second place where Graeber notes that barter tends to emerges are precisely in those cases where different groups have no established societal relationships, and are thus exceptional to almost all well established societies - as exactly in a case like Columbus meeting natives:
"True, barter does sometimes occur between people who do not consider each other strangers, but they're usually people who might as well be strangers-that is, who feel no sense of mutual responsibility or trust, or the desire to develop ongoing relations. The Pukhtun of Northern Pakistan, for instance, are famous for their open-handed hospitality. Barter is what you do with those to whom you are not bound by ties of hospitality (or kinship, or much of anything else)" (p.33).
Which is all to say that the two examples used above are very much exceptional, and exactly what one would expect if the anthropological understanding of debt holds.