Too late to edit : reading the article, I notice an interesting detail : a stone once sank, but kept being traded around, despite being now not only useless but also inaccessible. This is a currency even more abstract than banknotes, on par with electronic money. You’re the proud owner of a big stone somewhere at the bottom of the sea that nobody can see or touch and you can buy, say, a new canoe by transfering its ownership to some other guy.
Yap stone money is talked about since it was so very weird. Cowrie shells were used for jewelry, just like Gold.
I think – but if there’s anyone who’s thought about this more I’d be happy to be corrected – that an ideal currency should not be an absolutely fixed amount. If there are, and always will be, only X McGuffins, then each McGuffin should be worth about 1/X of the whole economy. If the economy grows (either more kids born, or another village decides to use McGuffins at currency) then each McGuffin must be worth more and more (naturally: there’s more stuff to buy, but only the same amount of McGuffins to spend), and pretty soon everyone is trying to figure out how to use 1/100th of a McGuffin to buy something that used to be 1 McGuffin (plus, everybody is going to try to hoard McGuffins, instead of spending them, because they keep getting more valuable).
On the other hand, if the currency is something like cowrie shells, that anyone can create more of with, say, an hour of work, then the value of a cowrie shell will always be close to one hour of labor, with more shells being put into circulation if the economy grows and starts trying to deflate the currency.
Good point MrQwertyasd. It’s just surprising to me that I haven’t seen any articles supporting Graeb’s view in the mainstream media, although the idea that bartering didn’t precede money isn’t new. It still seems to be a fringe view but I could be wrong.
This is a very narrow understanding of “barter,” and a very broad idea of “money.”
If I need help moving furniture today, and offer to fix an appliance for somebody at a later date in exchange… most people consider this the antithesis of monetary exchange. Trading favors, to avoid the necessity of paying for needed services (or goods).
Yabadabadooooooo
You might wanna read this
I don’t doubt that small scale bartering like that preceded the use of money, but to maintain an economy of any practical size it doesn’t work. Trading favors leads to disputes. It’s one thing to say I’ll move your furniture today if you fix my TV tomorrow, it’s a totally different situation to say I’ll move your furniture in exchange for a favor to be named later. Money sets a value for the favor provided and the return favor can determined later, divided among many favors, or redirected to someone else. So I am using narrow and broad definitions because the distinction of applying a value to goods and services is important.
Wish I hadn’t posted that Graeber article now, I’m not confident in it’s veracity.
You have reason not to be confident. Graeber mangles his facts, even in the very chapter where he makes claims about barter. It gets pretty ugly:
http://delong.typepad.com/sdj/2013/04/david-graeber-april-fools-day-post.html
There are lots of examples. Here is one howler from Graeber: [INDENT]Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other’s garages… [/INDENT] Er, wah? Apple was founded in the 1970s by Steve Jobs and Steve Wozniak, neither of whom worked at IBM. They didn’t quite fit the mold, to put it mildly.
ETA: Wait, laptops?
Oh, Watson…
IBM wasn’t in Silicon Valley. It was and is in New York state.
Jobs was an atheistic Buddhist. Wozniak is an atheistic Freemason, which I didn’t know was possible. (Leave it to him to hack the rules like that, though.) Jobs supported Obama, Wozniak supports Sanders. Describing either of them as “Republicans” in the modern sense is idiotic.
Apple was founded in the 1970s. The Apple II was released in 1977, and it was one of the defining computers of the later 1970s microcomputer environment. The 1980s was when IBM moved into the micro world, belatedly, and then swept the field due to the fact it was still IBM back then. (Think Microsoft in the 1990s, only bigger. Microsoft was once a wart on IBM’s ass.)
Laptops didn’t exist until the 1980s, and then only just. The Osborne 1 from 1981 didn’t even have a battery. They got more usable as the decade went on, but positing the founders of Apple using laptops to develop the first Apple computers is kind of like imagining the early Ford employees driving to work in Subarus.
Finally, imagining Steve Jobs as being democratic in any sense is so goddamned ridiculous I can’t even come up with a funny riposte. It’s just idiotic. Does anyone remember what he did with NeXT? (No, of course not, nobody using MacOS X has any knowledge of NeXT or any of its software… )
Samuelson has a textbook that is read by a wide variety of people. Howlers presumably don’t make it into later editions. Graeber has a lower circulation book on debt full of howlers. That said, if you can find a peer reviewed anthropological paper that says money preceded barter, I would skim it with interest.
(None of this is your fault MrQwertyasd. Samuelson’s text does simplify and IIRC the original claim came from Adam Smith, who was making a logical and not empirical argument. So your stance is reasonable, and it seems that you were betrayed by surprisingly poor scholarship on the part of Graeber.)
Here is a reasonably definitive source.
http://projects.exeter.ac.uk/RDavies/arian/amser/chrono1.html
First cattle were used as a unit of account (money) around 9000 - 6000 BC. Then crops. In 3000 - 2000 BC banking was established in Mesopotamia. They took in crops as deposits.
So. Money preceded credit. If you don’t think that cattle or crops are money (a dubious proposition as they are a store of value and a unit of account) then credit indeed preceded money, but barter nonetheless preceded credit.
Graeber maintains that the order was credit - money then barter. I find that description difficult to square regardless of the definitions. Figurines exist from 35,000 years ago. I find it hard to believe that tribes of the day never traded objects with one another.
But you just missed about 200,000 years of human history. Not to mention vast tracts of the planet outside of Mesopotamia. I think this debate is way too focussed on one area in a certain time span, although Graeber does that too, although it’s hard to argu about massive unknowns like human history.
I’d like to see some of those too. Google scholar ?
But really, you need to find the anthropological evidence that supports the barter idea
David Graeber is a well known name in Anthropology, if any of his peers have produced good evidence to counter his assertion (and he’s not the only one saying it) then it should be easy to find, and there would likely be a public debate about it. He’s always arguing on twitter about something for a start.
http://p2pfoundation.net/How_Barter_Followed_and_Did_Not_Precede_the_Creation_of_Money
References
[1] Jevons, W. Stanley, Money and the Mechanism of Exchange. New York: Appleton and Company, 1885, and Menger, Carl, “On the origins of money.” Economic Journal 1892 v.2 no 6, pp. 239-55
[2] Humphrey, Caroline, “Barter and Economic Disintegration.” Man 1985 v.20: 48. Other anthropologists have gone even further, for instance Anne Chapman, “Barter as a Universal Mode of Exchange.” L’Homme 1980 v22 (3): 33-83), argues that if pure barter is to be defined as only about the things, and not about the people, it’s not clear that it has ever existed—as the cases cited at the end of this essay indeed illustrate.
[3] Gregory, Chris, Gifts and Commodities. New York: Academic Press (1982): pp. 48-49. On gift economies, the classic text is Mauss, Marcel, Essai sur le don. Forme et raison de l’échange dans les sociétés archaïques.” Annee sociologique, 1924 no. 1 (series 2):30-186. On spheres on exchange in general see Bohannan, Paul “Some Principles of Exchange and Investment among the Tiv,” American Anthropologist 1955 v57:60-67; Barth, Frederick, “Economic Spheres in Darfur.” Themes in Economic Anthropology, ASA Monographs (London, Tavistock) 1969 no. 6, pp. 149-174; cf Munn, Nancy, The Fame of Gawa: A Symbolic Study of Value Transformation in a Massim (Papua New Guinea) Society, 1986, Cambridge, Cambridge University Press, and Akin, David and Joel Robbins, “An Introduction to Melanesian Currencies: Agencies, Identity, and Social Reproduction” in Money and Modernity: State and Local Currencies in Melanesia (David Akin and Joel Robbins, editor), pp. 1-40. Pittsburgh: University of Pittsburgh Press.
[4] Servet, Jean-Michel, 1994 “La fable du troc,” numero spécial de la revue XVIIIe siècle, Economie et politique, n°26: 103-115
[5] The classic work on the economics of POW camps, whence this argument derives, is Radford, R. A., “The Economic Organization of a POW Camp.” Economica 1945 v.12 (48): 189-201. There is an excellent critique of the assumptions underlying it in Ingham, Geoffrey, “Further Reflections on the Ontology of Money,” Economy and Society 2006 v 36 (2): 264-65, which notes among other things the obvious point that the entire camp environment was created and maintained by a bureaucratic organization that supplied all actual necessities—food, shelter, etc—through administrative distribution.
[6] Hudson, Michael,“The Development of Money-of-Account in Sumer’s Temples.” In Creating Economic Order: Record-Keeping, Standardization and the Development of Accounting in the Ancient Near East (Michael Hudson and Cornelia Wunsch, editors, 2004), pp. 303-329. Baltimore: CDL Press.
[7] Grierson, Phillip, “The Origins of Money.” In Research in Economic Anthropology 1978, v. I, pp. 1-35. Greenwich: Journal of the Anthropological Institute Press.
[8] Levi-Strauss, Claude, “Guerre et commerce chez les Indiens d’Amérique du Sud.” Renaissance. Paris: Ecole Libre des Hautes Études, 1943 vol, 1, fascicule 1 et 2.
[9] Berndt, Ronald M., “Ceremonial Exchange in Western Arnhem Land.” Southwestern Journal of Anthropology 1951 v.7 (2): 156-176.
[10] See for instance Dillard, Dudley, “The Barter Illusion in Classical and Neoclassical Economics”, Eastern Economic Journal 1988v14 (4):299-318.
http://innerasiaresearch.org/CHsite/pdfs/CH1992%20Introduction%20barter%20exchange%20and%20value.PDF
I’ll start with a citation from Lipsey, Steiner et al (1990) Economics, 9th edition: “The earliest market economies depended on barter, the trading of goods directly for other goods.”
I basically agree with this. Lipsey et al, Adam Smith and even Plato were using barter as a means of understanding market economies: they were neither anthropologists or even pre-modern historians.
I think it’s best to go to Graeber’s sources, as I believe I have legitimate distrust of his characterizations. After some struggle on the internet, I obtained a copy of CAROLINE HUMPHREY’s 1985 paper, “Barter and Economic Disintegration”. Basically she defines barter more narrowly than economists do (see Lipsey’s definition above) then notes that all known societies today use money in one way or another. The idea that barter came before money is borrowed from Polanyi (1957). But the footnote offered in the quotes says something a little different than what she implies - and Graeber would later take the distortion further. Here is the Polanyi quote in footnote 2 of Humphrey (1985). I add emphasis: ‘The logic of the case is, indeed, almost the opposite of that underlying the classical doctrine. The orthodox teaching started from the individual’s propensity to barter; deduced from it the necessity of local markets, including division of labour; and inferred, finally, the necessity of trade, eventually of foreign trade , including even long-distance trade.In the light of our present knowledge we should almost reverse the sequence of the argument: the true starting point is long-distance trade,a result of the geographical location of goods, and of the “division of labour” given by location. Long-distance trade often engenders markets, an institution which involves acts of barter, and, if money isused, of buying and selling, thus eventually, but by no means necessarily, offering to some individuals an occasion to indulge in their alleged propensity for bargaining and haggling’.(Polanyi I 957: 58). Ok. So we start with long distance trade. (Not credit markets, by the way.) If money isn’t involved, then we are either dealing with gift exchange or barter. So what’s wrong with the classical doctrine? Humphrey defines barter as involving bargaining and haggling. That’s an entirely legitimate area of study. But honestly that has nothing to do with the (frankly ahistorical) claims made in standard economics texts. Barter is the trading of goods for other goods; bargaining is often involved but it’s really not a necessary component. The key concept is that barter necessarily involves “A double coincidence of wants.” Humans addressed that problem with the invention of money: the trading of goods for a standardized product that other people are likely to want. As a matter of informed speculation, that probably came after barter. Surely people wanted something that others had before they got around to inventing a convenient social institution for acquiring those things. I suppose you could argue that warfare preceded barter, but even that is pretty dubious.
Anyway, here’s some more direct data. Chimpanzees don’t use money. Chimpanzees are known to trade among themselves: they trade food for sex. That’s barter. QED.
Yeah, I don’t buy it. It just makes sense to start simple and get more sophisticated.
Perhaps a hangup is the term “barter economy”. Barter is so inefficient that it can’t sustain much of an “economy.” But we do know that long distance trade preceeded agrarian civilization by 10s of thousands of years. That is, we know the trade existed, but I don’t know if we have a good idea how systematic it was.
Humans have a keenly evolved sense of fairness, as do other social apes. That clearly wasn’t a recent development. It’s quite likely that “barter” per se wasn’t necessary within a hunter - gatherer group; a more sophisticated but largely instinctive sense of fairness and other social pressures could be sufficient.
But when two HG groups meet, barter makes sense: we have fresh meat, you have tanned hides, whatever. We’ve certainly read about barter rituals between groups: each side presenting and adjusting a pile of goods until both sides are satisfied. I’d be very surprised to hear that this is only a myth, or that it only antedates money. Very surprised; I’d need to see much better evidence than so far presented.
I find that hard to imagine and impossible to believe. When and why was this? Even at the great constriction when there were only about 40k humans, there had to be many tribes. Or are you referring to Adam and Eve?
You mean “prehistory,” which is why we need archeology to provide evidence. Lacking evidence, we can either remain mute or we can conjecture. Those who say the consensus conjecture is mistaken have the burden of the argument, and it seems to me that Graebel isn’t convincing.
Oops, omitted my reply to Mr Bill, which was basically, “I agree.”