Short Comment on Dr Graeber's Theory

John Quiggin (22 Feb( in Crooked Timber HERE writes:

“The unmourned death of the double coincidence”

‘Jumping in first, I want to recommend Debt: The First 5000 Years as a book that ought to interest just about everyone interested in the way societies are organized. I learned a lot from it, well beyond the core point about the centrality of debt. I haven’t managed to collect my thoughts into a coherent response, so I’m just going to put one or two of them up for discussion, and read the other posts with interest

My first observation is that while economists are the target of quite a few well-armed barbs in Graeber’s book, his message is one that will actually make economics a bit easier to do, by ridding us of the need to treat money as a medium of exchange, designed to overcome the problem that barter requires “a double coincidence of wants”.

Comment
That much of the impetus to introduce coinage (often gold coins) was initiated by powerful rules to pay their troops (often mercenaries, or at least unreliable - garrison duty can be boring), it was a means of a) keeping unruly troops on side; and b) enabling local transactions with suppliers and residents when soldiers could use used their coin as money to acquire subsistence goods, local alcohol, trinkets, entertainment, gambling, and sex.

That coinage was a visible extension of a ruler’s power is seen in the stamping of the coins with his name or image and the imposing of the absolute requirement that the ruler’s coins were to be accepted in exchange transactions by all subjects on pain of punishment. In fact, claimants to the Emperor’s throne in ancient Rome also issued their own coins in a challenge to the existing Emperor, suggesting coinage could also be an instrument of their power struggle.

It is not clear to me that the so-called ‘double coincidence of wants story is any more than an explanation for why gold coin money (or whatever else was used as crude money, such as marked sticks, nails, cigarettes, shells, notes in a ledger, and so on) was an improvement on whatever else preceded it. Other debt obligations required long cultural habits to form to regulate the means of repayment through servitude obligations, as well as being an incentive to invent oppressive debts in the first place.

Complex alternative power plays were quite brutal. Dr Graeber calls them part of a ‘human economy’, though the humanitarian content of such ‘human economies’ is nigh non-existent including as they did – detailed by David Graeber – custom sanctioned rape, the prostitution of mothers and children, and life-long slavery for every victim.

Prior to coinage, personal relations were guided by naked, usually male, power, with ill-defined notions of what constituted an equitable exchange (that is of benefit, but not necessarily of equal benefit, strange notion that seems to attract Graeber) to both parties. Barter may have been back-projected onto past social relations in the 18th century, which may never have existed in stable forms, but coinage, once invented (4th century BCE?), most certainly facilitated exchange, transactions, irrespective of the downsides of monetary systems, of which history is replete with examples.

Review Part Eight Of Dr David Graeber’s “5,000 Years of Debt”

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Review: DR DAVID GRAEBER, DEBT: THE FIRST 5,000 YEARS, NEW YORK, 2011

Part Eight

[My review-reports of Dr Graeber’s Book have been interrupted by end of term examinations and my requirement to grade MBA/MSc papers in three subject that I taught for many years. I have continued reading when I can and making notes. I expect more papers to arrive before close of play this evening and my grading to continue over the holidays.]

The next three chapters, 8, 9, and 10 cover a wide geographical spread (The Celtic Fringe on the British Isles, through Europe to India and China) and to what Dr Graeber calls the ‘Axial’ economies, and the early market societies that blossomed almost simultaneously across the known world (Africa, the Americas and Australia remained predominantly hunter-gatherer and elementary agricultural societies).

He postulates that there are times of “historical opportunity’ and by “understanding” them we “can begin to have a sense of the historical opportunities that exist at the present” (p 212).

Critical to then (“roughly between 660 and 500 BC” (BCE) was the invention of coinage. This invention was guided from the top when “local rulers” (in the “Great Plain of Northern China, in the Ganges river valley of northeast India, and in the lands surrounding the Aegean Sea”, almost simultaneously replaced existing credit systems, though why and how this ”social transformation” happened remains unknown. It continued as issued coinage for a thousand years and then “dried up” around 600 AD (CE), and slavery was abolished, creating a cyclical process of periods of “credit money” (accurate records) alternating with “gold and silver” (accurate scales) (p 213), possibly coinciding with periods of “relative social peace“ and periods of generalised” violent periods (fall of Rome and warlords in Western Europe). Dr Graeber’s account of these periods is worth reading, if only to grasp his quite original thesis.

The “First Agrarian Empires (3500-800 BC”) (BCE) with their “virtual credit” give way to “Axial Age” (800 BC- 600 AD) when “coinage and bullion” took over. Then the “Middle Ages” 600-1450, a return “virtual credit money”, which led to the “Capitalist Empires” (1450-1971), and now we are back to “virtual money” (p 214).

Points to note: that “virtual money” implies a “lack of trust” (anonymity?) (p 215). Debts become “negotiable instruments” passed on in third-party transactions. Creditors must have had some faith in the final redeemer of the note; the trick being to pass on a credit note ‘before the music stops’. It’s not clear to me in what form a merchant repaid the lender – with what? Another credit note? Bullion? In this period Kings started wars to recover debts and to cancel all debts in their kingdoms (p 215-16). Also debtors and lying were endemic partners. “Peasant revolutionaries” made standard demands to cancel debts and led to “social breakdown” and disorder entirely (p 216).

Debts could be repaid in the form of agreed items, no doubt requiring bargaining as to what counted and the amount (nascent bartering behaviour?), though not mentioned by Dr Graeber (pp 218-20). Charging interest emerged but still requires agreement on what is added to whatever form of repayment of the debt is acceptable. Even one’s children could be accepted as a repayment, surely a barter-type transaction: which children, what age and sex, how healthy, and so on, against how much of the debt? Dr Graeber does not discuss or report such likely behaviours, which I find disappointing.

Chapter 9 on the Axial Age is most interesting (Dr Graeber never bores the reader, at least not this one for whom the parallel phenomenon across the large geographical space is quite new). Among the events was the issuing of coins as currency by all the petty kingdoms (p225). Bullion was “stockpiled in temples “as sureties for loans” , borrowed for what purpose is not stated. Once removed and broken into small pieces it was “placed in the hands of ordinary people” to be “used in everyday transactions” (p 227). Such as ….? With the king’s stamp on them, coins were a pictorial symbol of a king’s power, and when paid to soldiers, who spent them among the civilian population for whatever “necessaries, convenience, and amusements”(Adam Smith) that they required, they helped to fuel markets that made available whole ranges of products – many more than in a barter or a debt system of payment in fewer items. “Constant warfare” can be a “powerful impetus to the development of market trade” (p 226) but was not “ultimately a winning proposition” (p 227). The carnage of Axial warfare was extremely high; it also produced an “unprecedented outpouring of ideas” (p 228), (as did the Second World War, and as the 18th-century naval competition earlier).

Dt Graeber’s account of monetisation in India and China is most interesting (pp 232-37). His discussion of cash transactions is hampered by his view that “cash transactions” is about “how many of X will go for how many of Y, calculating proportions, estimating quality, and trying to get the best deal for oneself”, which Dr Graeber presents as a “new way of thinking about human motivation”. At root, Dr Graeber (p 238) believes that trade is an exchange of “equivalents” (X = Y) when exchange is actually a ratio (X/Y). It may be that X/Y for one party is > 1 and for the other it is also > 1; they do not need to be, nor are they normally, equivalent. I usually value what I get for what I want more than I value what I give up; indeed, this is the common motivation for exchange. Kids realise this when they trade their cds for video games. We can be both “better off” after the transaction than we were before it and they do not need to “calculate’ the ratio (far too complicated for everyday exchanges); they only have to “feel” better-off. Dr Graeber’s summary discussion (p 248-9) shows his counter-poising “materialism” to “morality and justice” when in reality the need for “morality and justice” is a product of the absence of material necessities among the poor.

Academics Discuss Dr Graeber's Book On "Debt"

A contributor (I am not sure of the author – Favio Rojas?) contributes to orgtheory.net discussion, “grabber {sic] forum (part 2) the attack of neo-classical economics”) HERE

“The first chunk of Graeber’s book is a anthropological account of barter. Where does it exist? …Why pile up on specialized goods and wait for other people to pile up on what you want and then trade? That’s bizarre.

The conclusion? Adam Smith was wrong to say that people have a natural tendency to “truck and barter.” Why? It’s a strange, unintuitive form of economic exchange. Therefore, money is not the natural solution to barter, since barter, for the most part, does not exist.

If direct exchange of goods (barter) is not the embodiment of rational action, then what is? The answer, I think, is generlized exchange. A true believer in economics text books would correctly point out that generalized exchange can be described in terms of utility functions. Fair enough, but that’s not the point.”

Comment
Follow the link to read the whole post and the interesting comments that follow.

I have no brief for neo-classical economics; my concern is with Adam Smith’s legacy, usually placed among Classical economists.

Paragraph 1 above raises a non-issue: “Why pile up on specialized goods and wait for other people to pile up on what you want and then trade? That’s bizarre.” No, it is the image that is “bizarre”. Barter is inconvenient because specific surpluses may not coincide with other’s people’s surpluses. It is from an accidental surplus that may arise in the course of daily life that a person may seek to exchange them for something more useable by her. But if nothing is available, “no exchange”, says Smith, can be made” (WN I.iii.2: p 37). He reports that that “things were frequently … valued according to the number of cattle and women which had been given in exchange for them” (p 38). The difference on this supposed transaction between Smith and Graeber is that the latter uses evidence to show that barter exchanges did not in fact take place. However, Dr Greaber says the male-dominated theory was that human life or reputation was “immeasurable”, yet life-long debt servitude, in terms of cattle and sex slavery were a common consequence.

Dr Graeber’s point that the evidence does not show a mere transition from barter to money must be well taken (and I do). Smith did not have access (nor did anybody else in the 18th century) to the post-1850s literature and the research of thousands of anthropologists that Dr Graeber has at the click of his laptop. But Smith was right that the “inconveniences” of “non-coincidental demands”, whatever their cause, were resolved eventually by the invention of money from c.3,000 BC (BCE)..

Smith’s asserted that the “propensity to truck, barter and exchange” originated probably with the acquisition of reason (not rationality!) and speech. (WN I.ii.1: p 25), and references to the Oxford English Dictionary settle his meaning. Multiple references to Dr Graeber’s interesting descriptions of the forms of exchange in place in ancient societies mostly involved the awful consequences of the institutional tyrannical disposition to control the exchange of women and children. I found these descriptions somewhat distressing in terms of humanity. Dr Graeber named these social systems as the age of “Human [!] Economies”

Dr Graeber conflates modern theories of rational utility maximization (at best merely mathematical equations) and all that follows from them, as being representative of modern economics, which he is most welcome and justified to critique, but for some reason he believes, wrongly, that they were the views of Adam Smith, which they most certainly were not. None of these abstract mathematical structures developed since 1870 are representative of Adam Smith’s moral philosophy and political economy (1759 and 1776), which is why I strongly disagree with Dr Graeber’s (?) assertion that “generalized exchange can be described in terms of utility functions”. The central point in all of Adam Smith’s philosophy was that “exchange” was, and is, a “universal”, common across the human species since its formation from “the necessary consequences of the faculties of reason and speech”.

My exposition of the role of exchange in the human species, perhaps unique to it, could be expressed, to coin a phrase, as: “Exchange: the first 200,000 Years”.

Review Part Seven Of Dr David Graeber’s “5,000 Years of Debt”

REVIEW: DR DAVID GRAEBER, DEBT: THE FIRST 5,000 YEARS, NEW YORK, 2011
Part Seven

Dr Graeber summarises Chapter 6 (“Games with Sex and Violence”) in Chapter 7 (“Honor and Degradation”), and asserts that “human economies, with their social currencies – which are used to measure, assess and maintain relationships between people, and only perhaps incidentally to acquire material goods – might be transformed into something else”. However, “we cannot begin to think about such things, without taking into account the role of sheer physical violence” (p 165). Indeed, such “Human” Economies practise violence at their core and their periphery. They are quite barbaric and not given to “sweetness and light”. They are not paragons of virtuous societies.

Mostly, his accounts show that men practise “sheer physical violence” in their social institutions against women. Predominantly, this violence was an internal phenomenon from within the so-called “human economies” and it was practised in numerous cultures (for want of a better word) in them over many millennia. The “African slave trade ”, which, writes Dr Graeber, was characterised by its “very brutality”, was “imposed from outside” of the Human Economies. We know this in great detail from the written records and public debate in European and North American legislatures, a source that was not so well documented in the Human Economies where slavery was practised widely in all historical regimes in Europe, the Near East, the Mediterranean, Central Asia, and China. One main difference between millennia-long classical institutional slavery across the globe and the Atlantic trade, noted by Dr Graeber, was the “suddenness” by which the Atlantic slave trade was imposed on tropical Africa (and, incidentally, lasted over a couple of centuries, not millennia. This short, but for the individual victim life-long and a dreadful event, compared we should note to the agonies of slavery practised in “Human Economies” for millennia, is not noted by Dr Graeber, as if he believes that it was a necessary characteristic of market economies only; it wasn’t. The implication, sometimes hinted at by Dr Graeber, is that he believes that historically, commerce in markets, is a uniquely immoral and brutalising phenomenon. This is a bold (even reckless) implication, given the long list of rival candidates throughout history that remain much better qualified for such a negative accolade, among which I suggest must be what Dr Graeber designates, ironically, as the “Human” Economies.

As Dr Graeber moves through his thesis (still worth reading for its coverage of anthropological literature, not normally accessed by most economists), he opens discussions of slavery as an export along, with “goods, cattle and people” in Ireland from “600 AD (CE)” (p 171). “Money”, he writes, “was employed almost exclusively for social purposes: gifts; fees to craftsmen, doctors, poets, judges, and entertainers, [and] various feudal payments" (p 172). Once again, this is clear evidence of exchange, in a Smithian sense, occurring across the social fabric – giving something to get something in return, whatever their respective “values” (which “value” would only be of interest to neoclassical and Marxist economists). Exchange in Smith’s sense is not recognised by Dr Graeber, in order, I suggest, to keep the conceptual integrity of his claimed Human Economy intact, despite the scattered evidence from his own accounts of exchange occurring when no “money” was involved. However, he is compelled to observe of the Irish “social” exchanges, that they were, “albeit in the sort of unwieldy arrangement that markets later developed to get round” (p 172). It was the “unwieldy arrangements”, not their cause, by which monetary markets resolved them. Whether Smith was correct of the existing problem being universal ‘barter’, he was correct about the improvements from resolving them. Smith was not conversant with the anthropological record (no surprise, neither was anybody else).

From page 176, Dr Graeber treats readers to a discussion of the “Origins of Patriarchy” covering, what amount to ‘Honour Killings’ (sadly, too often regular news items in the British press of events happening even today). Historically, says Dr Graeber, “war, states, and markets all tend to feed off one another”, and it was in “Mesopotamia” where an “explosion of debt” threatened to turn all human relations – and by extension, women’s bodies – into potential commodities” (p. 179). Yet in chapter 6, his account shows that human relations in his “Human Economy” achieved the miserable low status of “women’s bodies” independently in Africa without “states and markets”, nor anything remotely resembling the mobilisation of men into standing, or semi-standing, armies of Mesopotamian Sumerian societies (3,500-800 BCE).

In Irish and nearby Scottish societies at the time, from 3000 to 2,000 BCE (BC), “war” was more like small raiding parties, and continued for long enough when Norse and Viking invaders from outside swept in small raiding parties across their territories, well into the early centuries of the first millennium. Women were also the prime victims, if they were not killed, along with their men folk and children, they were often transported across the Irish Sea in like manner to the Atlantic slave trade millennia later. Modern DNA analysis of Irish and Scottish populations show interesting genetic markers of their distant origins, and some surprising evidence of unexpected sexual contacts by Irish male slaves with the wives of the raiders, c.1200 years ago Those Viking or Norse women, who quietly bore Irish children, were almost certainly vulnerable to a death sentence if caught by their, perhaps unsuspecting, men folk.

Dr Graeber’s account of the emergence of coins in Ancient Greece is interesting, linked to Greek Philosophy, the Homeric world, and moral debates (Plato, etc.,). He notes, of course, that there was an “omnipresent danger of predatory violence that reduces human being to commodities” (p 194) and to “encourage the very worst sorts of behaviour” (compared to what and where?).

Two factors might be important in these territories - changing ideas of social relations and literacy, both of which once started, their consequences continued to change the European world, when wedded to science and innovation, spreading eventually to the whole world (Western Philosophy was based largely on the Classics – Scottish university faculty wrote and lectured in Latin up to the 18th-19th centuries. Despite the succession of empires, with large populations, devastating wars and social breakdowns, the modern world began to emerge in the 18th century. The fall of the Western Roman Empire in the 5th century stalled European civilisation until the c.15th century. Meanwhile, despite the stunning advances in knowledge and technology in China and India (and in the early centuries from the spread of settled Islam), their potentiality as rival forerunners of a market-driven industrialisation sank into stagnation until the late 20th century, not helped by disastrous experiments in communism.

Much of what Dr Graeber considers to have been retrograde steps in moral standards is wrapped around his notions of debt as the key determinant of the world’s misery.

His conclusions to the three chapters covered so far in my notes (pp 207-10) open with another swipe at Adam Smith: “we seem” he writes, “to be trapped between imagining society in the Adam Smith mode, as a collection of individuals whose only significant relations are with their own possessions, happily bartering one thing for another for the sake of mutual convenience, with debt almost abolished from the picture, and a vision in which debt is everything, the very substance of all human relations – which of course leaves everyone with the uncomfortable sense that human relations are somehow an intrinsically tawdry business, that our very responsibilities to one another are already somehow based on sin and crime. It is not a very appealing set of alternatives” (p 207). I am not sure what Dr Graeber means in this paragraph, nor do I recognise the Adam Smith of Moral Sentiments (1759), where he mocks the “poor man’s son” who is “visited by ambition” and “admires the conditions of the rich”, and is determined to emulate them to become rich in possessions whatever the costs (“trifling conveniences”, Smith calls these possessions). The dreadful consequences on his life are that he exposes himself to “anxiety, to fear, and to sorrow” and finally to “diseases, to danger, and to death”, all in pursuit of a “splenetic philosophy of no great value and certainly never to be described as “necessary for happiness” (TMS IV.1.8: pp 181-3). Typically, Smith notes that the misguided actions of such people can have unintended beneficial effects on society’s progress to opulence (TMS IV.1.9 and 10: pp 183-5) though he does not think much of the moral sense.

Amazingly, Dr Graeber explains why he “developed the concept of human economies: ones in what is considered really important about human beings is the fact that they are each such a unique nexus of relations with others’ in that “no one could ever be considered exactly equal to anything or anyone else”, adding that in a human economy, money is not a way of buying and trading human beings, but a way of expressing just how much one cannot do so” (p 208). This paragraph is of truly Orwellian proportions, much like Stalin's rule in Russia.

He admits to describing societies in which men disproportionally dominate women, and use violence to exchange them and their children to each other in marriages, and in payments to their husbands or fathers for debts in exchange for ‘tawdry” (by any definition) pieces of cloth, given by men a believed by men but otherwise meaningless magical property and “brass rods”. Among insiders their made-up, but convenient beliefs, suit the beneficiaries, the rapists (the women remain silent during their, perhaps life-long ordeal or too old the be sexually useful; they don’t have a voice in these ‘human’ economies – that are already living artifacts, disposed of at men’s will and fancy, and moved around like today’s sex traffickers).

Later, they were transferred to outsiders to suit personal preferences in who should go and who should stay in local chains of violent conspiracies of brutal kidnapping. This Human Economy is also claimed to have existed in Ireland, Scotland and much of England, in the wake of Roman, Anglo-Saxon, and Norman invaders, as well as long periods of Norse and Viking, raiders from their many settlements. Later in the second millennium, the Atlantic slave trade devastated swathes of tropical Africa, aided and abetted, so to speak, by compliant men in Human economies. That some anthropologists have uncovered in all these internal and external depredations “a unique nexus of relations with others” enshrined by the principle “no one could ever be considered exactly equal to anything or anyone else” (to which weird notion I shall return in following reviews) is one way of describing a situation with all the subtlety of making something mean whatever an author wants it to mean in well-documented (except possibly in their Celtic fringes) hierarchical societies.