Wednesday, February 22, 2012

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”.

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.

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