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Friday, February 17, 2012

Barter Came After Money

"The economists tell us a neat story about the development of money. The primitive world, they tell us, begins in barter, develops in money, and matures in credit systems. The problem however, is that the historians and the anthropologists have been telling the economists, and telling them for over 100 years, that they can find no record of this development; in fact, the actual history seems to be just the opposite: first comes credit, then money, and finally barter systems. Widespread barter systems only come about after the collapse of monetary systems, and even then money is still used as a unit of account, as a way of equating dissimilar items." -- John Medaille

10 comments:

  1. For some reason I thought you had taken up this topic a while back when Murphy pushed back against the idea.

    Surely your reason to post can't be because of Mr. Medaille. Either way, what is your take on Distributism?

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  2. I'm actually a few chapters into David Graeber's book on debt, Gene, and I'm sorry, but he hasn't convinced me at all. They don't have evidence of cavemen suddenly using money. They don't really know what happened, because the earliest evidence has people already using money.

    That's not really surprising when you think about it.

    And I've also pointed out that it's a pretty big coincidence that the "unit of account" that the temple authorities selected for their people was silver, don't you think? Out of all the thousands of goods they could have chosen--or they could have used some abstract mathematical device a la bitcoin--instead they happened to pick a commodity that was extremely suitable for money if it emerged the way Menger described.

    I agree with Graeber et al. that economists have been guilty of ascribing too much historical authenticity to their armchair exercises in deduction, but at the same time I think Graeber's historical evidence basically confirms the Misesian stories. In contrast, I don't see very little support for their claim that first there was credit, then money, then barter. They don't even attempt to answer the serious theoretical problems that such a progression implies.

    I realize I sound stubborn, but I think a physicist who didn't believe a historian who said, "Caesar's diaries say he saw a perpetual motion machine on the battlefield!" would be in a similar boat.

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  3. Re perpetual motion machine: Except for this, Bob: Physicists actually have a very well-confirmed theory as to why a perpetual motion machine is impossible. All Menger has is a *story* as to how money *could* have arisen. It's much more like a story in biology as to how giraffes *could* have wound up with long necks. When there is no evidence that that route was actually taken, it is time to come up with another story.

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  4. Well, the absence of evidence for X doesn't automatically qualify as evidence for not-X. Take the statement, "My body is made up of an even number of molecules." I have no evidence for that statement, but I would be foolish to dismiss it on that ground. The important question is, "If X were true, how likely is it that there would nonetheless be no evidence for X?"

    Depending on the answer to that question, the argument from lack of evidence might be strong or weak. And even if it is strong, you still have to balance it against the rationale for X.

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  5. So then could you explain to what extent the points made by Akiva in his blog post at The Libertarian Standard are wrong?

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  6. Well, Eric, I'd say close to 100%.

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  7. I believe you misread my question, so let me rephrase.

    When Akiva states that Murphy and Graeber are talking past one another, as evidenced by the fact that they seem to be using different working definitions of common words in debate, are you saying that this is not correct? Why?

    I am trying to understand both sides of this issue, but in reading Graeber directly I don't believe that he acquits himself well, and as I've searched the web for discussions about him and his book I find that this problem of definitions tends to repeat itself. Since you generally explain things well, I was hoping you could shed some light on it.

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  8. I read the relevant part in Graber's book too, and I got the same impression as Bob. The unit of account seems to be the money that emerged out of barter, not within communities, but among communities.

    I think there are misunderstandings between the two positions.

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  9. Eric Evans wrote: Since you generally explain things well, I was hoping you could shed some light on it.

    I think you must be confusing this guy with a different Gene Callahan.

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  10. Listen, stalkerman, I'll sick the fuzz on you if your not nice!

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