Friday, December 16, 2011

Academics Discuss Dr Graeber's Book On "Debt"

A contributor (I am not sure of the author – Favio Rojas?) contributes to 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

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”.



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