Tuesday, December 06, 2011


Part Three

Examples by Adam Smith of the limitations of barter across more than a handful of products are fine, as far as they go, as illustrations. Whether humans experienced stable barter systems does not make redundant the significance of the problem of a non-coincidence of wants and its resolution in monetisation in multi-product economies. Barter is of limited value to the extent that it obscures the important significance of informal, but real, reciprocity norms, prevalent across the human species and in nature. The importance of Adam Smith’s allusion to ‘truck, barter and exchange’ lies in the word exchange.

Dr David Graeber informs us (p.34) that “the English words Truck and barter”, in several European languages, means “to trick, bamboozle, or rip off” (John-Michel Servet, 1981. ‘Primitive Order and Archaic Trade’, Economy and Society, Parts I and II, at: 1981: 10.4: 423—50, and 1982, 11.1: 22-59). Strong stuff, indeed. It certainly puts Adam Smith’s allusion in WN into doubt, too conveniently. However, the prime authority on the English language: The Oxford English Dictionary (1981) defines both words as below. (NB: I give the first-level definitions - full entries can be consulted in OED; they do not support Dr David Graeber’s and John-Michel’s versions, nor do the lower-level OED versions):

“Barter. 1. The act or practice of trafficking by exchange of commodities or stock [source entries from 1592 to 1794, etc.,], Vol 1. p.974.”


Truck. 1. The action or practice of trucking; trading by exchange of commodities or barter. [source entries from 1553 to 1747, etc.,] Vol. 23, p.602”.

Of relevance to the issue of what Smith meant by Barter and trucking, is the fact that the 18th century index, published by Smith from the third edition (1784) of Wealth Of Nations, contains this relevant entry: ‘Barter, the exchange of one commodity for another, the propensity to of (sic) extensive operation, and peculiar to man, 25. Is not sufficient to carry on the mutual intercourse of mankind, 37. See Commerce.” Smith's index for truck just gives the name, though it may be relevant to note that the Truck Act in the 19th century banned the payment of wages in truck form - i.e., employers were prevented from paying in kind (often at inflated prices - like in 'the company store' of the '16-tons' folk song) instead of cash.

Selective quotations, I suggest, from the 1980s are not as authoritative as the OED, which is the definitive etymological history of the English language. Also note that when Smith wrote Wealth Of Nations from 1763-76, his use of the words ‘Truck and Barter’ was in line with their common English meaning (and Smith had a good knowledge of French, Greek, Latin and Italian literature). He can only be called to account for what he believed, not for what 20th-century scholars assert about the meaning of words.

Chapter 3 is titled, ‘Primordial Debts’ in which Dr David Graeber shows the existence of debt ‘from the beginning’ and lays his case for his 5,000 years hypothesis, with side mocks at ‘imaginary villages’ and ‘Smith’s Land of Barter’, asserting that the ‘Myth of Barter is central to the entire discourse of economics’, p 43 ( a controversial conclusion). This really is a step too far. Dr David Graeber has not yet mentioned reciprocity, though I note he does so much later in his 534 page book. Yet reciprocity is surely central to any discussion over the origins of debt in history. How ‘mainstream economists’ are employed in modern society is hardly germane to a discussion of Adam Smith’s views (1723-90). Modern economists are deeply in error on Adam Smith's meanings, including on 'an invisible hand' theory, as no doubt we shall see when Dr David Graeber discusses it.

Long before states were formed, Smith hypothesised the early existence of exchange behaviour. It is a central idea in his two works published in his lifetime, in 1759, and 1776 (including his paper on the origins of language published in 1761, and his History of Astronomy, published posthumously in 1795, and the unpublished lecture notes on Jurisprudence, 1895, 1978). Exchange was central to Smith’s entire philosophy (see James Otteson, 2002, Adam Smith’s Market Place of Life). The issue of whether barter, at least in versions that amount to bargaining, among pre-history hunter-gatherers and in early village life, is an interesting distraction based on unverified contemporary accounts and the imaginations of travellers and 18th-century philosophers. Reciprocity norms are far more important contributory elements in the evolution of bargaining. Barter, I suggest, is not crucial to the evolution of exchange forms from general reciprocity into bargaining and to that extent, Dr David Graeber is right to downplay barter, but he is wrong in not focussing more on reciprocation norms. Looking for signs of general bartering in surviving examples of small village life or among hunter-gatherers may be the wrong focus.

Dr David Graeber takes barter as an example of Smith denying the role of the state in monetisation; I don’t think he did so from his extensive discussion of state institutions and their activities in minting coins and corrupting them for from time to time. The appearance of non-monetary tokens (cows, nails, marked sticks and written accounts, etc.,) not sanctioned by states, suggests an evolutionary pattern worthy of more study. Dr David Graeber sees a purely power-driven purpose behind the activities of kings in imposing their money, implying a far greater degree of purposeful intentionality about markets, implying intentional acts to create markets. European 19th-20 century colonial practice, I would suggest, does not project back to the unintentional consequences of the deep past, and rather than being a common purpose by all kings in all places in all millennia for 5,000 years it was originally a consequence. And with nobody else articulating that such defined purposes guided the kings’ behaviours, Dr David Graeber’s assertions to the contrary in the 21st century is original thinking indeed.

Armies most certainly had to be paid (unpaid armed are dangerous) and always were paid in some way if they were assembled to provide what Smith called the ‘first duty of duty of the sovereign, that of protecting the society from the violence and invasion of other independent societies’ (WN Book v.i.a.1: 689). Of course, the same sorts of expense were imposed on lower Lords, Barons, ‘proud and unfeeling landlords’, post-Roman Empire warlords, brigands, raiding parties, the great Khans of central Asia (and today’s ‘mafia’-style, criminal families), and on those who challenged them. If not by coinage, or precious metals, then it was by the eternal soldiers’ litany – ‘no plunder, no pay’ - and the consequential deplorable acts of mass rapine (one of the dreadful human costs of organised violence all through the ages and today).

A consequence of paying soldiers may well have been the development of markets ( have always taekn soldiers' pay in Roman armies as a sign of market activity in garrison towns, contrary to Karl Polanya's thesis of it being a 19th-century event). The population were obliged to accept the king’s coins in final payments for whatever his solders needed, from the concomitant consequence of having to pay for soldiers by some means or other. ‘Plunder or pay’ was very destructive (the Thirty Years War in Europe; the Civil War in England) and no doubt taxation suggested itself as a more reliable means of ensuring that domestic populations bore the costs of military forces, supplemented by levies on conquered populations. Dr David Graeber quotes from his research in the history of colonialism in Madagascar (p. 50-53) (similarly experienced under British, French, German, Belgian and Portuguese rule across Africa) and how domestic peoples were compelled to pay poll taxes in cash, which they could only earn from labouring for colonial settlers or on government projects. When the Jewish people were taken to Babylon the transfer included all useable property too. I doubt that this implies that ancient kings originally conceived of tax payment schemes as being about ‘generating markets’. It was initially, more likely, more of a way to relieve kings of endlessly spending money on the expence of occupation, from which finance, state institutions emerged unintentionally strengthened. The difficulties of making these tax schemes work on a large-scale were shown by the consequence of attempts at taxation in British colonies in North America before 1776, where the colonists were armed and trained, and their leaders articulate and literate.

Dr David Graeber suggests money is not a ‘thing’ (I do not disagree). He argues it is a way of ‘comparing mathematically’ equivalents, such as ‘one of X is worth 6 of Y’ (p 52), which leads to his discussion of various 19th century theorists. Smith similarly concluded that one beaver was worth two deer from the effort required to hunt both, and went down the dead-end of the labour cost theory of value (WN I.vi.1: p 65). That money has become the ‘creature of the state’, explains why ‘early states’ used money and unintentionally ‘created markets’. That this has evolved into ‘primordial debt theory’ (by French economists, anthropologists, historians and classicists; p 55), in which ‘debt is the essence of society’ and existed long before money and markets’ (p 56), originally with Asian religious explanations.

Dr David Graeber’s discussion of primordial debt theory is detailed and interesting (p.51-62). He finds it “compelling’; I found it interesting, much like reading in any unfamiliar area, such as of ancient British stone-axe trade routes and what they imply, or how war and trade in ancient Greece were conducted by the same crews in the same ships. But where does it take us? Dr David Graeber considers these scholars are “inventing a myth’ (p62).

How this myth squares with “Mesopotamian city-states’ dominated by “vast temples” which were “gigantic, complex industrial in institutions often staffed by thousands”, including shepherds, and barge-pullers to spinners and weavers to dancing girls and clerical administrators, in which Dr David Graeber is absolutely sure that nobody ever swapped “one item for another”, whether money tokens existed or not (swapping things is common in society today which historically is surely the most monetised ever). People labour for wages – swap their toil for physical tokens and swap their tokens for subsistence – in great broad cycles of exchange behaviour ‘give me that which I want, and you shall have this which you want, is the meaning of every such offer’ (Smith WN I.ii: 26). Their predecessors entered into obligations in narrow cycles of reciprocation and toiled for themselves, knowing who owed them what favours and kept count without records, ‘’If I do this for you, then you ought to do that for me”. The quasi—bargain (reciprocation) led seamlessly to the bargain over many millennia. Exchange has always been ubiquitous. Obligations (debts) are far older than 5,000 years, but do not have the onerous burdens imagined by Dr David Graeber, nor are they an intellectual case for anarchism.

Dr David Graeber must concede that the myth of primordial debt is an unlikely hypothesis, which dissolves into an argument (he is an anarchist of sorts) against the existence of states and markets (p 74). “States”, he says “created markets. Markets require states. Neither could continue without the other, at least, in anything like the forms we would recognise today”. Readers might see where his book is heading and why I shall continue should read and comment on it.

[Part 4 on ‘Cruelty and Redemption will follow in a day or so. I have a lot of exam grading to do.]



Anonymous Anonymous said...

I find the comment "non-monetary tokens (cows, nails, marked sticks, etc) not sanctioned by states" a very interesting hypothesis. If you study law, you find that laws always lag behind social action and then become adopted by the state. For instance see the different movements/actions such as (antislavery, civil rights, Reformation, etc.) the same could apply to money. If so, then the evolutionary aspects of Menger's theory of money was correct.

5:21 am  
Blogger Gavin Kennedy said...

Thank you for your comment. Laws are formed by states; some 'laws', custom, and rules are set by powers of influence, prior to States in the modern sense. It was likely that 'leaders', however described, settled disputes and imposed sanctions on behalf of the tribe, band or extended family, by accepted 'wisdom', sheer physical strength, courage against predators, or claims to 'magic' within superstitions. In larger societies there may be competing factions - religious and secular- that set these sorts of rules, not always associated with an individual. These more informal groups continued in formal state societies, today called 'social action' that agitate for policies that may at some later point be adopted into formal laws, both of sanctions and of norms.
If you care to elaborate on Menger's theory of money I would be glad to post it on Lost Legacy for debate. [For such longer comments please post gavin@negweb.com - you keep the copyright.]

11:28 am  
Blogger Unknown said...

From Michael Hudson:
"Manual labour in Mesopotamia's temples and palaces was composed of persons who could not make a go of things on the land, mainly because of physical infirmity or the misfortune of having lost their husbands and/or fathers through war, and not been incorporated into the households of relatives. (Skilled craftsmen were formed into company-type unions run by the palace, not by the craftsmen themselves."

1:16 pm  

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