I see a lot of people here arguing about points that Graeber is not making. His argument is not that no-one thought of swapping fruit for beefsteak until after minting coins, but that money and credit did not emerge out of an economy based on Smith-ian barter; instead, credit is the aboriginal economy, and money emerged relatively early on from multiple non-barter sources.
In reference to his arguments regarding barter, I think he has selected his terminology badly, and he is to some extent attacking a straw man; the “gift economy” system has been well known for some time in anthropology, and I doubt that most people with any understanding of pre-currency-exposure cultures really think most exchanges involved directly swapping six taro roots for half a basket of soybeans. But he seems to be writing mainly for economists, who don’t seem to pay much attention to anthropology, and for people who have been exposed to standard economic arguments, so maybe there is a point to hitting them with the bluntest possible clue-stick. (Disclamer: IANA economist and I don’t know how novel Graeber’s ideas were to the average economist, although I see a lot of reviews that seem to find them so.)
Here’s Graeber’s main thesis on barter again:
[QUOTE=Graeber]
In fact, our standard account of monetary history is precisely backwards. We did not begin with barter, discover money, and then eventually develop credit systems. It happened precisely the other way around.
[/QUOTE]
So he proposes:
- People evolved economic systems based on credit
- Then economic systems based on money
- Then economic systems based on barter
From the anthropological and archaeological record, the relative order of 1 and 2 is well established (see below). So the question is whether “barter” preceded or followed the invention of money.
Graeber points out that the earliest societies were almost definitely gift-exchange economies; “credit systems”, but ones in which exchanges were not formalized, were frequently multilateral, and did not involve specific enumeration of debts (“you owe me three cows”). This is well in line with anthropological studies of surviving economically primitive societies, which typically expect that people will do favors for and distribute surpluses to others within the community, and that these gifts will in the fullness of time be reciprocated by the recipients, but in the form of a social obligation rather than as a direct quid-pro-quo transaction. The question of “value” is handled through subjective assessments of generosity / stinginess, rather than explicit calculations (“I gave him 2 sheep worth’s of fruit but he only gave me one sheep’s worth of roots”). Therefore, contrary to The Hamster King’s criticism, even counting systems were not necessary*; counting, accounting, and record-keeping developed after formal trade emerged.
Graeber points out that the currencies of the most economically primitive societies that we know of (obsidian, shells, beads, cocoa) were not used for everyday transactions but mainly for major social exchanges such as dowries/bride prices, resolving disputes, and tribute, which obscures their identity as money from our commodity-exchange-focused point of view. From the archaeological record, these forms of “ceremonial” money seem to have emerged early on and usually predate evidence of formal trade.
As formal trade developed, societies first came up with the idea of recording debts owed (such as the sheep figurines mentioned by The Hamster King unthread), then later the idea of money as a standardized, universal unit of exchange that could be used to handle any transaction (he also discusses trading credit tokens as a route to money). Thus, money is quite early, but after credit, which remained a major form of economic exchange even after the idea of universal currency became widespread.
Figuring out where #3 falls into the timeline requires a definition of “barter”.
Graeber seems to use “barter” to imply a system of transactions that involve:
- An immediate, on-the-spot exchange of goods
- In which the exchange is predicated around equivalence of “value” (or at least an acceptable imbalance)
- Within a given community
Graeber excludes informal delayed exchange of favors from his definition of barter; if I agree to make you an axe, in return for you bringing me some antelope meat from your next hunt, that is not barter per Graeber.
Likewise, on-the-spot quid-pro-quo trades with members of other groups is not part of his definition, as he sees them as largely irrelevant to the local economy (as they would most likely have been relatively infrequent and involving rare or distantly-obtained goods rather than daily items, as is true for most economically primitive societies up until recently).
This seems overly restrictive, and not concordant with the way “barter” is typically used either in academia or in general conversation. But Graeber is specifically attacking the Smith-ian explanation for the development of money, in which money is invented to simplify equitable-value on-the-spot trades of different goods. His argument is that such transactions were too rare to require such simplification until after money had developed from ceremonial currency and credit-accounting systems. Furthermore, he argues that a system using Smith-ian barter as the default form of economic exchange requires a mindset that converts the value of the different goods to a universal standard, that could not have arisen until after the development of money as a unit of exchange. (This one I’m not completely convinced of.)
I don’t think Graeber’s argument on barter is as well presented as it could be, and there are a number of errors, omissions, and oversimplifications along the way. In particular, his point could have been better made if he had picked clearer terminology for his specific definition of “barter”. But I think the overall conclusions are correct at least in outline, and his examination of the multiple forms of money and the routes leading to them is interesting.
- Although The Hamster King has conflated the idea of written numbers with that of counting systems; it is possible to have the concept of “twenty-six” but not have a standardized method of recording that concept. How does he think the makers of the clay balls knew to put in three sheep figurines if they couldn’t count to three?