This book is just as audacious as its title suggests: Graeber, an anthropologist, walks the reader through the history of debt. How seriously does the author take his task? Consider: he devotes the 38 pages of Chapter 5 to constructing “A Brief Treatise on the Moral Grounds of Economic Relations.” Inasmuch as Graeber takes aim at the economist’s standard account of the origin of money, his book presents a formidable challenge. Yet on close examination, Graeber’s ambitious and scathing assault largely misses the mark.
I do not have many kind things to say about Graeber’s book, but my objections are focused on his critique of economists and their explanation for the emergence of money.Read it at The American Conservative
Origin of the Specie
by Robert P. Murphy | Pacific Research Institute
Surprise. Murphy doesn't like it. You know, a priori reasoning is always better than a posteriori evidence in science.
19 comments:
If only Crusoe issued credit...
You know, a priori reasoning is always better than a posteriori evidence in science.
Except there is no a posteriori evidence that refutes the regression theorem of money nor the barter foundations of monetary exchange, and never will be.
A priori scientific reasoning is far superior to a posteriori cherry picking of data.
Murphy wrote:
I still do not see how people could possibly have amalgamated these various debt records—of heterogeneous goods owed by this person to that—into a common denominator without the antecedent use of barter exchanges to establish the relative valuation of the different goods.
I posted the following in response.
"They could amalgamate them with reference to the decisions of a single authoritative purchaser. Here’s how: The king requires lots of goods from his people. He has to decide what will be an appropriate share from each one, even though the subjects produce very different kinds of things. He and his viziers determine the appropriate proportions using their own subjective assessments of relative value, and assess the taxes. He then issues material proofs of tax payment summed up either by count or denomination."
"He and the viziers then hit upon the clever notion that if they allow some industrious producers to supply more goods than they have been taxed, and give them the equivalent amount of proofs of payment, and then allow the subjects to trade these proofs of payment among themselves so that others can present them as proof that their tax obligation is discharged, the king’s supply will be more secure, as the most reliable and industrious suppliers will then provision the kingdom directly and those suppliers will then exchange the tax credit proofs for other things. These tax credit proofs will be constantly in demand by virtue of the necessity of acquiring them to discharge a tax obligation. They become a broadly accepted item of exchange with a built-in exchange value determined by the king’s price list. Thus the origin of money.
"Of course, the king’s and viziers notions of equal value might not square with those of the subjects, introducing some distortions into the system of monetary exchange that are not offset by the great convenience the system provides. Thus the origin of lobbyists."
Dan:
Your story is just a reiteration that money arises from barter.
Um, no. Major. It says money arises from taxation. The Menger/barter story says that money arises spontaneously from barter exchanges as one particular commodity, originally bartered, is sifted out over time from other commodities to serve as the medium of exchange.
The tax credits in my story are never a commodity. They are created by government decision and are a creature of the state.
Dan Kervick:
It says money arises from taxation.
Um, no. It shows that money arises out of the goods being taxed. The value of the "proofs of payment" derive from the value of the goods being produced and exchanged through barter.
The Menger/barter story says that money arises spontaneously from barter exchanges as one particular commodity, originally bartered, is sifted out over time from other commodities to serve as the medium of exchange.
What is the material of the proofs of payment? Wood pulp? Cotton? Linen? It must have been used as a barter good prior, in order for the people to even have the material in their hand.
The tax credits in my story are never a commodity. They are created by government decision and are a creature of the state.
Tax credits taking the form of what? You're completely ignoring the barter origins of the material proofs of payment. And why? Because you're obviously just emotionally invested in believing and spreading the "money is a creation of the state" myth.
Archaeological evidence has conclusively shown the barter theory of money is garbage. Time for Major_Freedom to stop substituting his ignorant opinions for historical fact.
Major Freedom
Except there is no a posteriori evidence that refutes the regression theorem of money nor the barter foundations of monetary exchange, and never will be.
But there could be a positive evidence of barter in historic societies, but apparently neither it will be, because wherever scientists looked they found no signs of barter and exchange facilitated by credit.
A priori scientific reasoning is far superior to a posteriori cherry picking of data.
Huh? A priori reasoning gave us "obvious truths" like that the Earth is flat, it resides in the middle of a static universe surrounded by planets moving on perfect spheres. This all is obviously true to any thinking person. Similarly that time and space are uniform at all points. Too bad, these "obvious truths" were falsified by data.
Our brains didn't evolve to efficiently understand anything beyond the savanna that is why each time people came up with something "obviously true" they failed.
Nobody tells you to cherry pick data, just not to shut your eyes.
Quote From Major Slaver:
"Um, no. It shows that money arises out of the goods being taxed. The value of the "proofs of payment" derive from the value of the goods being produced and exchanged through barter."
Wrong! The idea of "proof of payment" being needed is premised on the idea of central judicating authority hence chartalism. A barter spot trade arising from double coincidence doesn't need documentation.
Proof of purchase documentation implies a institution dealing with legalities arise from payment over time i.e. credit contracts. Only slavertarians deny the obvious idea that debt/credit must exist in a social hierarchy before it is measured in a system of tokens requiring documentation.
Quote from Major Slaver:
"What is the material of the proofs of payment? Wood pulp? Cotton? Linen? It must have been used as a barter good prior, in order for the people to even have the material in their hand."
Why would voluntary stateless trading post need proof of payment? If I have fish and you have shoes and we trade there is no need for proof of purchase. Proof is legal concept requiring a state authority and hence is by definition not material but relational. You have made a major logical error of hypostatization of the immaterial cause found in the institution of the state and indeed primate social hierarchy with the physical manifestation of trading.
Quote: "Tax credits taking the form of what? You're completely ignoring the barter origins of the material proofs of payment. And why? Because you're obviously just emotionally invested in believing and spreading the "money is a creation of the state" myth."
You have no physical evidence of large barter trading posts whatsoever. You have no evidence a anarchic society with material documentation of purchase prior to a governing social hierarchy because they are no human or any primate societies without social hierarchy.
The evidence of social hierarchy based on social obligation has being show to exist in chimps.
Biologist (i.e. real scientists) have debunked the social Darwinism of Austrian economics over and over again and are starting to getting tired you.
You have no evidence the barter origin of the concept of "proof of payment" prior to the state nor can you based on the hard physical wiring of the human brain.
The totalitarian idea of "free markets" is a false anti-human idea that must die for humanity be free and thrive.
The "free market" is the idea that humans aren't creative and therefore can't have government based on human reason and the common good but instead must hand over their creative sovereignty to the voodoo "free market" gods which is reality is always a plutocratic oligarchy.
The "libertarian" seeks liberation from morality and reason themselves but a human incapable of exercising reason and morality is the most pitiful of slavish beasts.
From the back-and-forth, it seems that there are two places where Graeber's arguments fall flat:
(1) Graeber seems to think that neo-classical economists are all wedded to some "Adam Smith" view of history which says there was FIRST a huge barter network, and THEN someone figured out money as a better way to do things.
I think the problem with this approach is that no neo-classical economist really believes this. Graeber is attacking a strawman.
For example, many Austrians writers write that a large scale system of barter exchange *could not* exist and therefore *if* you have a large system of exchange, you must have money to do it. No we're not talking about cows and eggs here. We're talking about a real, industrial economy with a high degree of specialization.
(2) The question of what role the state played a role in the development of money is a subtle question.
If we're asking whether money could have developed *without* a state (and taxes), then the answer seems to clearly be YES. First, we have these inter-state trading networks that build up without a single tax authority covering the whole thing. Second, this is ultimately a *conceptual* and not historical question. We're trying to reason about the space of counterfactuals here, primarily to see which ones are possible/internally consistent.
If we're asking whether the historical state involvement *sped up* or *encouraged* the formation of money, the the answer is probably also YES. Having a tax obligation in gold certainly increased the marketability of gold. This is more of a pure historical question and less of a conceptual one.
I see state currency probably first being created under Alexander. The tip-off for me is when you start to see images of humans on the coins.
Then copied and improved upon by the Romans. (Much archaeology record there) It even looks as though the Romans indirectly used the same coins that were originally struck under the Greeks.
Seems like a state currency system is the best way (tho requires non-morons to be in charge) to provision the govt sector and operate robust local economies if you are running a long term, vast empire type of system back then.
Resp,
Graeber admits that there is evidence of barter trade among communities but not in communities. Credit (mutual reciprocity) relationships exist among primates, not only primitive (tribal) humans. The record of credit transactions (ancient Mesopotamia) greatly precedes the first evidence of coinage (c. 600 BCE).
The commodity theory is apriori "must have beent", the credit theory is a posteriori "actually was."
One is entitled to one's own opinion but not making up facts.
I would imagine barter, private credit/debt relationships and "state money" (by state I mean local 'authority') probably all coexisted (as they still do today). Is it really that significant for economics exactly which one 'came first', or how exactly the history of money was played out? Not my area of expertise so comments would be appreciated.
Septeus7
"Um, no. It shows that money arises out of the goods being taxed. The value of the "proofs of payment" derive from the value of the goods being produced and exchanged through barter."
Wrong! The idea of "proof of payment" being needed is premised on the idea of central judicating authority hence chartalism. A barter spot trade arising from double coincidence doesn't need documentation.
False. Proof of payment refers to proof of payment....in GOODS. Goods that were already produced, and exchanged through barter. The value of the proofs of payment are derived from the value of the bartered goods.
Proof of purchase documentation implies a institution dealing with legalities arise from payment over time i.e. credit contracts. Only slavertarians deny the obvious idea that debt/credit must exist in a social hierarchy before it is measured in a system of tokens requiring documentation.
Payment over time...in GOODS that were bartered.
"What is the material of the proofs of payment? Wood pulp? Cotton? Linen? It must have been used as a barter good prior, in order for the people to even have the material in their hand."
Why would voluntary stateless trading post need proof of payment?
I never said that they would need it. It depends on what people want. The point is that the value of the proofs of payment are derived from the bartered goods.
If I have fish and you have shoes and we trade there is no need for proof of purchase.
There is no objective need or lack of need for proof of purchase.
Proof is legal concept requiring a state authority and hence is by definition not material but relational.
Legality does not require a state. You're ignoring private law.
The proof of payment is material. If those proofs are going to circulate in exchange, they are tangible, and their value is derived from the value of the bartered goods indirectly, and the value of the material the proofs of payments themselves (much like a penny has a $0.01 par value as a means of exchange, as well as having a value due to being made out of copper).
You have made a major logical error of hypostatization of the immaterial cause found in the institution of the state and indeed primate social hierarchy with the physical manifestation of trading.
I didn't hypostatize anything. The proofs of payment, if they are going to be a money, MUST be derived from materials. It cannot be derived from immaterial relations only, since the relations themselves are relations between bartered goods.
Septeus7:
"Tax credits taking the form of what? You're completely ignoring the barter origins of the material proofs of payment. And why? Because you're obviously just emotionally invested in believing and spreading the "money is a creation of the state" myth."
You have no physical evidence of large barter trading posts whatsoever. You have no evidence a anarchic society with material documentation of purchase prior to a governing social hierarchy because they are no human or any primate societies without social hierarchy.
You have no physical evidence of proofs of payment. You have no evidence of a state creating money ex nihilo.
I do have evidence of anarchic societies. Look up ancient Ireland and Iceland.
Social hierarchy societies is not the same thing as statist societies.
The evidence of social hierarchy based on social obligation has being show to exist in chimps.
Humans aren't chimps.
Biologist (i.e. real scientists) have debunked the social Darwinism of Austrian economics over and over again and are starting to getting tired you.
Biology has no say in economic principles based on the reality of human action. Nobody has ever debunked Austrian economics, and Austrian economics is not social Darwinism.
You have no evidence the barter origin of the concept of "proof of payment" prior to the state nor can you based on the hard physical wiring of the human brain.
That money derives from barter is not a hypothetical proposition subject to testing. It is a logically necessary truth that every single empirical research will be 100% consistent with, the same way that every empirical research will be 100% consistent with the logically necessary truth that square circles are impossible.
Septeus7:
The totalitarian idea of "free markets" is a false anti-human idea that must die for humanity be free and thrive.
Calling free markets a totalitarian idea is like calling up a down idea, or black a white idea, or true a false idea, or non-contradiction and contradictory idea.
It's a rank contradiction. Free markets are anti-totalitarian.
Free markets are not anti-human. They are very much human.
The "free market" is the idea that humans aren't creative and therefore can't have government based on human reason and the common good but instead must hand over their creative sovereignty to the voodoo "free market" gods which is reality is always a plutocratic oligarchy.
False. The free market idea is the idea that humans are creative and there don't need ancient superstitious institutions like monopolies of violence that non-state individuals must obey and pay tribute by force.
The free market is just letting individuals dictate their own lives. It is not voodoo, and it's not religious. YOUR statist view is voodoo (initiating force against innocent people helps them), and religious (we must worship the state, pay tribute to the state, obey the state).
The "libertarian" seeks liberation from morality and reason themselves but a human incapable of exercising reason and morality is the most pitiful of slavish beasts.
No, the libertarian is not against morality and reason. The libertarian is in favor of a morality of individual economic freedom based on private property rights. The libertarian is not against reason because the idea of individual rights is itself based on individual reason.
It is precisely statists who want to turn humans into beasts. Statism makes individual freedom impossible. Statism is an attack on individual reason. The result of states controlling individuals from cradle to grave, is a failure of individuals to learn the full range of cause and effect when it comes to their actions. Statism destroys the human spirit.
Tom Hickey:
Graeber admits that there is evidence of barter trade among communities but not in communities.
Absence of evidence does not mean evidence of absence.
Credit (mutual reciprocity) relationships exist among primates, not only primitive (tribal) humans. The record of credit transactions (ancient Mesopotamia) greatly precedes the first evidence of coinage (c. 600 BCE).
Credit and spot transactions were still BARTER credit and spot transactions.
The people who traded on credit were trading via barter. Goods for other goods. Regardless of whether the time in between the finality of the exchanges was one second or one year, it was still goods trading for other goods. That's why people gave goods to others on credit. It was with an expectation that they receive goods back in the future. Early peoples did not exchange goods with others on credit because they were secretly hoping that a savior state will swoop in and turn those promises into money.
The commodity theory is apriori "must have beent", the credit theory is a posteriori "actually was."
The a posteriori theory is incomplete. It's the problem of induction.
One is entitled to one's own opinion but not making up facts.
It's not merely an opinion that barter logically precedes money.
You're just an attacker of reason, that's all. You need to attack reason because economic science is based on reason, and the only way to promote your worldview is if economic science is abandoned.
@ Major Freedom
"Absence of evidence does not mean evidence of absence."
Granted. However, based on the evidence the probability of a barter economy approaches zero, zero being logical contradiction. when everything speaks for one of two alternatives and nothing for the other, then rational person will go with the first, while being open to further evidence, of course.
"Credit and spot transactions were still BARTER credit and spot transactions."
Spot transactions of goods for good is barter. Spot transactions involving cash are not barter. Credit transactions, which involve an IOU, are not barter.
"The people who traded on credit were trading via barter. Goods for other goods."
Fantasy. If you want to call that barter, all transactions involving goods are barter, which is not the accepted meaning of barter. If you want to coin your own terminology in your group, you are free to do so, but you exclude yourself from the commonly accepted universe of discourse.
"The a posteriori theory is incomplete. It's the problem of induction."
Science is tentative. That is basic to the philosophy of science. Economists are kind of unique in that they don't seem to accept that even repeated contrary evidence is disconfirming.
"It's not merely an opinion that barter logically precedes money."
The argument is not logically compelling and there is no evidence in support of it.
"You're just an attacker of reason"
Actually, I am a professional philosopher and when I taught the intro course what about how to reason correctly and how recognize fallacious and sophistical arguments. Your arguments are full of holes, as many here have been pointing out to you, but that seems to be a waste of our time.
"Nobody has ever debunked Austrian economics"
That has to be the funniest thing I've read today.
No one but the followers of your odd little cult takes you seriously. Have you noticed? That's probably why you're all so angry and such unpleasant people.
No one wants to live in your tyrannical dystopia. People will not give up their political freedoms and their democratic rights so you can scream all you like but at the end of the day you'll have to crawl back to your sorry little holes with your sorry little piles of gold and weep over them because no one is interested.
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