Review Of David Graeber's 5,000 Years of Debt (part 2)
Part Two
REVIEW: DAVID GRAEBER, DEBT: THE FIRST 5,000 YEARS, MELVILLE HOUSE PUBLISHING, NEW YORK, MAY 2011, 534 pages
Reading what Smith did say is a step forward, but we should put it into context to judge it. The difference between a 1st Age of Man in the scattered hunting bands and a spread of the 2nd and 3rd Ages of Man (accepting Smith’s words) of shepherds and farmers, was in the size of the populations involved, once changes were established roughly among in some communities along the modern borders of Syria, Israel and Jordan. The populations of scattered hunting bands surviving into the 20th century were significantly smaller in population than more settled bands of the descendants of the early shepherds and farmers. Among the many differences between the agricultural dynasties of Mesopotamia, Egypt, and China and the early human groups of hunters and gatherers, population size is striking, and in consequence, the division of labour was more specialised and the range of products significantly wider (the division of labour is ‘limited by the extent of the market, noted Smith). Brad Delong illustrated this necessary, obvious, but often missed, factor in comparing ‘stone-age' hunter-gatherers on the banks of the Orinoco River with 4th age+ New Yorkers on the banks of the Hudson, using modern Stock-Keeping Units. At most, the hunter-gatherers clocked up hundreds of units while New Yorkers it was nearer to ‘tens of billions’ (quoting Beinhocker, 2006, Origin of Wealth). Clearly, if reciprocity across simple exchanges of a few items among a small group of individuals who know each other, could be quite complex socially, but it becomes incomparably more complex as anonymity spreads and the objects of reciprocation exchange (grooming for chimpanzees; simple help for humans in modern work places and neighbourhoods) increases exponentially even in modest early, larger towns from the classical period onwards. Rome at its peak housed upwards of a million people; today conurbations reach into the tens of millions. Bargaining in its modern form is incomparable with stone-age reciprocity and this is lost in notions of primitive barter. Reciprocity is about obligations, i.e., debts.
Smith discusses examples of the emergence of items as crude money units (WN pages 37-44, without the heinous crimes attributed to him by David of ‘objecting to the notion that money was the creation of government’. He was not stupid. Nor did he ever underplay the necessary roles taken by states – he didn’t object to states as much as he did to their history of imposing damaging policies and (and wars that went with them) and of acting in economic matters way beyond their areas of competence. He was neither an advocate of laissez-faire, never using the words though he knew of them, nor a dogmatic minimiser of the state's role, and shows areas where the state should be expanded (as shown regularly on Lost Legacy in relation to public education of all children in literacy, and arithmetic, in health measures against 'noxious' illnesses, and in something as mundane as street lighting, refuse collection, and pavements).
Both Smith and David identify substitutes, as precursors for metallic money, so I have difficulty in following what Smith was guilty of when comparing their texts, unless David intends to pick a fight on a distinction without a difference, or insists that only states alone invented monitising debts (i.e., obligation, drawn from the ancient habits of reciprocation)
David describes the ‘notching of sticks’ to keep account of debts (i.e,m obligations), and later-on writing on accounting tablets. Progress yes. But knowing who owed what favours in reciprocal exchanges (quasi-bargains) was already (still is) practised for hundreds of millennia because of the common culture of reciprocity emerged, possibly pre-dating our speciation. As a faculty member at a university, I am sure David can remember who stood by and helped him in a task, and who returned to him a small favour of, say, carrying an unwieldy pile of exam scripts because he had helped her on an earlier occasion, or supported him when Yale denied him tenure (a wholly pernicious system). It’s called reciprocity, it worked in early hunting and gathering bands, and in farming among close neighbours; still works today in our societies. David makes all this well-founded, everyday obervation into something to fight about.
He denounces Smith for allegedly denying that governments created money, as if that precludes all the informal and unintentional, steps along the way, many of them before governments formed. Social evolution takes a long time, though not as long as its precursor in nature. Early governments were ‘kingships’ of one form or another, assembling armed gangs, later armies to protect themselves, and not just against the poor (as in Smith’s Lectures On Jurisprudence) but also to protect a king against rival, rich claimants, who seizing the throne also seized all the king’s lands and armies. Marking a set of coins gave a monopoly status to his money, which also bolstered his claims to his throne and to his inheritance rights to prolong his dynasty (challenging a Roman Emperor could begin with a General of Legions minting his own coins). In short, minted coins became a means to a political end, whatever else was associated or followed in consequence.
Smith’s designation of exchange as the propensity to ‘truck, barter, and exchange’ attracts the special wrath of David (and others) but he should focus on the word, exchange, because it is, and has been, ubiquitous since the ‘faculties of reason and speech’ evolved uniquely in the human species (maybe in other solar systems too where they might also be prevalent in other speaking species). Even this simple observation is twisted by David’s evident political distaste for bargaining as a phenomenon. He says “humans will always try to seek their own best advantage, to seek the greatest profit they can from the exchange” (p 25). Is that assertion even true; is David prone to it too? It reads like a cartoon extremist’s explosion of anti-market prejudice, not a considered statement of a Smithian economist, or anybody acquainted with real-world bargaining as advanced by Adam Smith, and confirmed by expeerience.
Taking the famous parable of the ‘butcher, brewer, baker’ exchange transaction (WN I.ii.2. 26-7), Smith gives specific advice to an intended diner: ‘don’t just refer to “your own necessities”, but address yourself to their (the seller's) “self-love” and to “their advantages” from transacting with you. In short, be “other-centred” and not “self-centred” (Moral Sentiments).
Bargaining exchanges are about exchanging different things that you value less (a belief) than those things you get in return that you value more (subjectively - subject to taste) with people who value what they give less than they value what they get in exchange. Little point in exchanging exactly that same things. David does not yet understand that. We do not exchange equivalents. If both seek to gain the ‘greatest profit’ they will more likely deadlock, as they do, and as I have observed in half-a lifetime of working with would-be bargainers (until retirement in 2005, I worked in a UK Business Schools).
David’s field research and reading have led him to scenarios of small group transactions where the parties know each other well, where the “double coincidence” of wants “disappears”. Was it ever there? But quasi-bargaining transactions under the customs of reciprocity do not require a double coincidence of wants at all because under reciprocity the custom, or ‘rule’, such as there is one, is that ‘if you accept the benefit (of whatever is offered) you ought at some later unspecified date make an offer in return’, usually of the same favour, with time gaps determined by local practice. Reciprocal exchange differs from bargaining exchange where the rule is that if you accept the item offered, you must hand over your own offer in exchange simultaneously or close to immediately. There was a long historical gap between the predominance of reciprocity by exchanging the same favour (quasi-bargaIning) and the introduction of bargaining, usually exchanging different things, now operating alongside reciprocity in daily human contacts.
David’s illustrations of Sumerian economies, temple bureaucrats, and Mesopotamian market places, let alone the Roman Empire, were relatively high population centres (p 39-41), a long way institutionally and technically from the small villages, and before them, small population hunting bands. He switches between them without indicating the all important population differences the different cultures of one sort or another.
[Next review, I shall examine David on ‘Primordial Debts’ in Chapter 3.]
REVIEW: DAVID GRAEBER, DEBT: THE FIRST 5,000 YEARS, MELVILLE HOUSE PUBLISHING, NEW YORK, MAY 2011, 534 pages
Reading what Smith did say is a step forward, but we should put it into context to judge it. The difference between a 1st Age of Man in the scattered hunting bands and a spread of the 2nd and 3rd Ages of Man (accepting Smith’s words) of shepherds and farmers, was in the size of the populations involved, once changes were established roughly among in some communities along the modern borders of Syria, Israel and Jordan. The populations of scattered hunting bands surviving into the 20th century were significantly smaller in population than more settled bands of the descendants of the early shepherds and farmers. Among the many differences between the agricultural dynasties of Mesopotamia, Egypt, and China and the early human groups of hunters and gatherers, population size is striking, and in consequence, the division of labour was more specialised and the range of products significantly wider (the division of labour is ‘limited by the extent of the market, noted Smith). Brad Delong illustrated this necessary, obvious, but often missed, factor in comparing ‘stone-age' hunter-gatherers on the banks of the Orinoco River with 4th age+ New Yorkers on the banks of the Hudson, using modern Stock-Keeping Units. At most, the hunter-gatherers clocked up hundreds of units while New Yorkers it was nearer to ‘tens of billions’ (quoting Beinhocker, 2006, Origin of Wealth). Clearly, if reciprocity across simple exchanges of a few items among a small group of individuals who know each other, could be quite complex socially, but it becomes incomparably more complex as anonymity spreads and the objects of reciprocation exchange (grooming for chimpanzees; simple help for humans in modern work places and neighbourhoods) increases exponentially even in modest early, larger towns from the classical period onwards. Rome at its peak housed upwards of a million people; today conurbations reach into the tens of millions. Bargaining in its modern form is incomparable with stone-age reciprocity and this is lost in notions of primitive barter. Reciprocity is about obligations, i.e., debts.
Smith discusses examples of the emergence of items as crude money units (WN pages 37-44, without the heinous crimes attributed to him by David of ‘objecting to the notion that money was the creation of government’. He was not stupid. Nor did he ever underplay the necessary roles taken by states – he didn’t object to states as much as he did to their history of imposing damaging policies and (and wars that went with them) and of acting in economic matters way beyond their areas of competence. He was neither an advocate of laissez-faire, never using the words though he knew of them, nor a dogmatic minimiser of the state's role, and shows areas where the state should be expanded (as shown regularly on Lost Legacy in relation to public education of all children in literacy, and arithmetic, in health measures against 'noxious' illnesses, and in something as mundane as street lighting, refuse collection, and pavements).
Both Smith and David identify substitutes, as precursors for metallic money, so I have difficulty in following what Smith was guilty of when comparing their texts, unless David intends to pick a fight on a distinction without a difference, or insists that only states alone invented monitising debts (i.e., obligation, drawn from the ancient habits of reciprocation)
David describes the ‘notching of sticks’ to keep account of debts (i.e,m obligations), and later-on writing on accounting tablets. Progress yes. But knowing who owed what favours in reciprocal exchanges (quasi-bargains) was already (still is) practised for hundreds of millennia because of the common culture of reciprocity emerged, possibly pre-dating our speciation. As a faculty member at a university, I am sure David can remember who stood by and helped him in a task, and who returned to him a small favour of, say, carrying an unwieldy pile of exam scripts because he had helped her on an earlier occasion, or supported him when Yale denied him tenure (a wholly pernicious system). It’s called reciprocity, it worked in early hunting and gathering bands, and in farming among close neighbours; still works today in our societies. David makes all this well-founded, everyday obervation into something to fight about.
He denounces Smith for allegedly denying that governments created money, as if that precludes all the informal and unintentional, steps along the way, many of them before governments formed. Social evolution takes a long time, though not as long as its precursor in nature. Early governments were ‘kingships’ of one form or another, assembling armed gangs, later armies to protect themselves, and not just against the poor (as in Smith’s Lectures On Jurisprudence) but also to protect a king against rival, rich claimants, who seizing the throne also seized all the king’s lands and armies. Marking a set of coins gave a monopoly status to his money, which also bolstered his claims to his throne and to his inheritance rights to prolong his dynasty (challenging a Roman Emperor could begin with a General of Legions minting his own coins). In short, minted coins became a means to a political end, whatever else was associated or followed in consequence.
Smith’s designation of exchange as the propensity to ‘truck, barter, and exchange’ attracts the special wrath of David (and others) but he should focus on the word, exchange, because it is, and has been, ubiquitous since the ‘faculties of reason and speech’ evolved uniquely in the human species (maybe in other solar systems too where they might also be prevalent in other speaking species). Even this simple observation is twisted by David’s evident political distaste for bargaining as a phenomenon. He says “humans will always try to seek their own best advantage, to seek the greatest profit they can from the exchange” (p 25). Is that assertion even true; is David prone to it too? It reads like a cartoon extremist’s explosion of anti-market prejudice, not a considered statement of a Smithian economist, or anybody acquainted with real-world bargaining as advanced by Adam Smith, and confirmed by expeerience.
Taking the famous parable of the ‘butcher, brewer, baker’ exchange transaction (WN I.ii.2. 26-7), Smith gives specific advice to an intended diner: ‘don’t just refer to “your own necessities”, but address yourself to their (the seller's) “self-love” and to “their advantages” from transacting with you. In short, be “other-centred” and not “self-centred” (Moral Sentiments).
Bargaining exchanges are about exchanging different things that you value less (a belief) than those things you get in return that you value more (subjectively - subject to taste) with people who value what they give less than they value what they get in exchange. Little point in exchanging exactly that same things. David does not yet understand that. We do not exchange equivalents. If both seek to gain the ‘greatest profit’ they will more likely deadlock, as they do, and as I have observed in half-a lifetime of working with would-be bargainers (until retirement in 2005, I worked in a UK Business Schools).
David’s field research and reading have led him to scenarios of small group transactions where the parties know each other well, where the “double coincidence” of wants “disappears”. Was it ever there? But quasi-bargaining transactions under the customs of reciprocity do not require a double coincidence of wants at all because under reciprocity the custom, or ‘rule’, such as there is one, is that ‘if you accept the benefit (of whatever is offered) you ought at some later unspecified date make an offer in return’, usually of the same favour, with time gaps determined by local practice. Reciprocal exchange differs from bargaining exchange where the rule is that if you accept the item offered, you must hand over your own offer in exchange simultaneously or close to immediately. There was a long historical gap between the predominance of reciprocity by exchanging the same favour (quasi-bargaIning) and the introduction of bargaining, usually exchanging different things, now operating alongside reciprocity in daily human contacts.
David’s illustrations of Sumerian economies, temple bureaucrats, and Mesopotamian market places, let alone the Roman Empire, were relatively high population centres (p 39-41), a long way institutionally and technically from the small villages, and before them, small population hunting bands. He switches between them without indicating the all important population differences the different cultures of one sort or another.
[Next review, I shall examine David on ‘Primordial Debts’ in Chapter 3.]
Labels: David Graeber Review
1 Comments:
Note Graeber's argument in Chapter 2. First he suggested that barter was nonexistent in villages but did exist between exchange with strangers in which he separated the with the later not found in society.
The history between small hunter/gather societies based on reciprocity in villages w/barter among strangers (by Graeber’s own admission) and large Mesopotamian society based on silver money is unclear. The interesting point is what happened to smaller societies as they grew becoming more complex to the point where neighbors/villagers become strangers. Note that in Graeber’s account in small societies barter was instituted among strangers and with neighbors/villagers strangers would the rules of reciprocity or barter apply to them. This is an interesting question in the attempt to fill the gap between small and large societies (would they still rely on reciprocity without ever knowing if they would see them again?).
Now let’s move to the large Mesopotamian society cited by Graeber. The question arises how and why did temple bureaucrats know to use silver (a highly valued commodity) as the source for money? Following the law lag hypothesis (law follows social change) money arose/was being worked out first by society then adopted by the state as complexity demanded when dealing with strangers. If true than money takes on a more complex role in society as it pertains to value (as commodity money). When Graeber moves between small/large societies he assumes the same relationships which govern the small and applies them to the large i.e. using reciprocity/debt/credit among known neighbors while rejecting barter interaction between strangers (which he admits happened but doesn’t include it as being part of society as a whole).
Also note Graeber’s argument as it relates to money in Mesopotamia when he discusses that silver wasn’t primarily used in exchange (but only in limited instances). When various forms of money like wine, barley, etc. became accepted as payments silver money didn’t circulate like the other forms i.e. Gresham’s Law. Why would one use silver (high value) when other (lower value) forms are available to use. Perhaps that’s why silver didn’t circulate as expected by Graeber.
Post a Comment
<< Home