Thursday, September 08, 2011

He's No Brave Sir Robin!

No, Bob Murphy is more like the never-say-die knight in The Holy Grail: David Graeber has sliced off both of his arms and both of his legs, but is Bob quitting? No! He's shouting "Come back here, you coward! I saw how you mentioned silver being used in long-distance trade!"


  1. What about your arms and legs? Were they not sliced as well given what you wrote in pages 81-95 in Economics for Real People?

  2. Well, are you asking if what is written there is an incorrect version of the origins of money? Well, yes it is.

    However, there is a difference: Once presented with the overwhelming evidence that that is not how it occurred, *I changed my mind*.

    But there is this similarity, as well: I first encountered this evidence at a conference some eight years ago (presented by an Iranian economist whose name I forget). I also didn't change my mind immediately, but clung to the Mengerian theory for a while.

    It's hard giving up a very elegant theory in which you have invested something of yourself.

  3. Gene, does that explain why you haven't altered your previous post, which continues to falsely claim that Graeber says temple authorities were using fiat currency? Surely you aren't going to say that silver is a fiat currency?

  4. Bob, surely whether or not something is a fiat currency depends upon how it became currency: whether it did so by fiat (as silver had in the temple economies) or by being the most "exchangeable" commodity, as in the Mengerian story.

  5. OK Gene, let's try this one: Robert Fellner read the interview, and said he didn't understand why you were concluding that fiat currency preceded commodity currency. You said to him:

    Robert, you'd better read it a little more carefully. That unit of account used at the temple complexes, with no commodity backing? Well, that would make it a fiat currency now, wouldn't it?

    OK, so do you concede that what you said to him was wrong? (And incidentally, it was your statement right there that misled me in my initial response to Graeber. It's why I thought he was saying that the temples had abstract units of account. It never occurred to me that they were using silver.)

  6. "OK, so do you concede that what you said to him was wrong?"

    Maybe. I, of course, was going off of the interview, where that did seem to be what he said. I re-read the section on Mesopotamia a couple of times, and it's still not clear to me if silver was circulating as money or if prices were just set in terms of silver.

  7. This is funny, Gene. You're like that knight from the Monty Python sketch who didn't realize he was getting crushed...

    Now you're not even sure you can admit that silver is a *commodity*? You said to Robert that the temple's unit of account had "no commodity backing." Whether or not silver is money, it's surely a commodity, right?

    You can admit you overstepped on that, without saying I am right vs. Graeber.

  8. Yes, I get what your saying. Silver certainly is a commodity. And I very well may be wrong. But it's not clear to me if they were *backing* anything in silver, or just counting in units of silver.

    I would have to read more to understand exactly what is being said in those excerpts.

  9. OK that's fine, Gene, but it's funny how now, you're not even sure what Graeber said happened. Yet you had no problem ripping the poopy out of me several times on your blog about this.

  10. Well, no, I'm not sure what Graeber is saying!

    But whatever it is, it is not the Mengerian story, that is clear.

    (And once again: I think Smith, Menger, and Mises all put forward brilliant hypotheses. They just happened to turn out to be wrong.)

  11. OK last volley on this one: I maintain that the following is consistent with what Graeber has shared with us:

    (1) Merchants began using silver as a medium of exchange when dealing with foreigners, for all the reasons Menger cited.

    (2) A lot of transactions had been handled through councils of elders. In order to make those transactions more tractable, they began reckoning them in units of silver.

    (3) The council elders used silver prices by consulting the silver-good exchange ratios that emerged in voluntary barter transactions in the communities. Otherwise, every time they paid someone or otherwise used the silver accounting, they'd be screwing somebody in the transaction.

    I submit that the above is hardly a refutation of Menger. It's an elaboration and it's good to have the historical details plugged in, but it would hardly constitute a refutation.

  12. "Merchants began using silver as a medium of exchange when dealing with foreigners, for all the reasons Menger cited."

    No, Graeber very explicitly denies that happened. They did trade silver, but:

    "The reason is simple: if you have irregular, occasional exchange between strangers, it will not generate a money system – since irregular, occasional exchange will not produce any kind of system at all. If you have regular exchange between strangers, it’s because there are specific goods that each side knows they want or need."

    See that and the next paragraph of your Graeber summary. He's very clear: silver was not carted around as money!