21 thoughts on “THE RHETORIC OF GRAEBER’S “MYTH OF BARTER” (& the likely early role of commodity-exchange in credit- & State-money development)

  1. From some replies on FB to comments: To someone who could not imagine units-of-account coming from anywhere but a State: Emergent properties in general are crucial to understanding the social development of complexity. “Money” is a perfect example of what in part at least is surely an emergent property of population growth and the resulting demands on political structures, rather than a top down phenomenon. It is odd to me to see an anthropologist arguing for such a top-down view of society (suggesting that units-of-account could only come from rulers or temples or a State) rather than a bottom-up view of emergent properties (such as early units of account) coming from social interaction and population growth.

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    1. “there cannot have been credit-money before a customary unit-of-account”

      Probably there can’t be credit-money, but sure there can be “credit-transactions”.

      For example, today I help you build your house, tomorrow you help me with my harvest so we can get even. There is no credit-money involved. It is just subjective value there.

      That is the kind of credit system that Graeber focus on that part of the book. He is not talking about credit-money.

      There is no double coincidence of wants issue in such a credit system. So there is no need for creating some kind of money that would solve that non-existent issue. That is his main point, if I can remember it right.

      He claims that barter had existed but played a minor role. I would agree that this is debatable. If proven false, his theory would crumble.

      Graeber clearly believes that an unit of account must exist before the actual credit-money itself. I couldn’t understand your criticism on that…

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  2. George, I’ve been meaning to get back to that, just haven’t had time and no copy of the book. It does seem like the Ridgeway (and spread by Toynbee) idea in some ways blends state imposition with metallic standards, on a pre-existing private issue ..is that your take? Sort of a first millennium BC. version of what would happen again a thousand years later?

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  3. I’m about a third of the way into Graeber. Enjoying it so far but was expecting him to sharpen up his argument as he goes on. Sounds like he doesn’t.

    Now, it seems to me that a unit of account is necessary for a money of account. The function of a money of exchange is to avoid the need for an account, and therefore a unit of account. So the question is why are so many units of account named after commodities? What does this tell us about the order of events? Were the ancients trying to peg their money of account to their money of exchange?

    Money of exchange is primarily used for foreign trade. Money of account is used for internal trade. I think this is a key insight which is not sufficiently appreciated.

    Erenofre was dealing with a foreign merchant. An Egyptian merchant would have accepted Egyptian money.

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    1. Hello, is this the same Friday who gave the useful input last year? Thanks and hello again, as you saw, some of it made it into the book.
      Good points, and interested in your input. I sort of wish I had avoided any commodity-exchange talk at all, but as you can see, I don;t believe it can be avoided and still get an early unit of account in a realistic way. This became clear as I had my Islanders economy developing. To anyone: Try to tell the story I did with no unit of account and you will see what I mean 😉
      And yes, Graeber’s book is a good read. I just don’t think the gift-exchange focus is that relevant.

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    2. “Were the ancients trying to peg…” My argument is that until tax-credit units became viable, they HAD to do so, and that would have emerged from very early commodity-exchange. Remember, of course, that until just 1971 we still pegged internationally to a commodity. We are only just now understanding the true nature of tax-credit money; MMT is leading the way (back) to genuine accurate Macro.

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  4. Hello, yes it’s me again. Didn’t see how old this post is until after I replied, I came to it via Mike Norman who linked it yesterday.

    You seem to be suggesting, up at the top, that units of account developed from money of exchange which must therefore precede money of account. I don’t think this is necessarily so. Yes, they are named after commodities but was barley really ever used as a money of exchange? I think it more likely that barley became the unit because it was a widely used commodity within the community.

    The need for an internal money of account must have been far more pressing to the ancients than the need for a money of exchange for occasional foreign trade. (Maybe only to governments though, Graeber tells of several tribes whose internal money was not used for ordinary commerce.)

    Once a money of exchange was established I can see it replacing the original unit in an attempt to peg or unify the two monies. As MMT shows that is a mistake, but it’s a perennially popular one with the merchant class.

    Money of exchange does not need or use a unit of account, it is its own unit, so it’s not like it provides the idea.

    Graeber does emphasise some things which are tangential to our interest but his book is called Debt, not Money, and that is a somewhat wider remit.

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    1. Can you clarify this: “Money of exchange does not need or use a unit of account, it is its own unit, so it’s not like it provides the idea.”
      Thanks (and again, your comments have been very insightful. thanks 🙂

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  5. Money of account needs a unit of account to make all the IOUs commensurable, fungible, transferable, accountable and so forth. That’s because without it IOUs can be denominated in anything. If you don’t want chickens why accept an IOU for chickens? How many potatoes is it worth anyway?

    Money of exchange is made out of a commodity. It has ‘intrinsic’ value and is not an IOU. There is no need to keep an account, once the transaction is made there is no residual debt. No account; no unit of account.

    We can calculate the number of potatoes per chicken if we know both their values in terms of the unit of account, or in terms of a third commodity. The ‘intrinsic’ value of the third commodity / money of exchange plays the role of the unit of account.

    So, it’s not obvious to me that money of exchange must have inspired the idea of a unit of account. It could just as easily go the other way. Or perhaps they were independent innovations. Maybe all three at different times and places.

    [Problems posting. Sorry if you get dupes.]

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    1. In fact that is my overarching point: money of account and money of exchange are two separate ideas with two different purposes. They are not points on a line of technological development such that we have to argue about which came first. They are parallel lines of development. The anarchist tribe may develop or adopt a money of exchange but never need a money of account. The isolated city may need money of account but, with no foreign trade, money of exchange never occurs to them.

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      1. You wrote above: “Money of account needs a unit of account” I am merely saying they have to come from somewhere. They could in theory be decreed at some point by a (proto) “state” (temple etc). As historical records do not go far enough back, we do not know. However, given the very long archaeological record of trade before historical records of decrees defining units of account, it seems (significantly) more likely that the earliest units emerged (as much social custom emerges from population growth and cumulative technological & organizational response) from ever increasing trade (at all scales) from both complex effects of rising populations and falling transport costs (two things we know empirically happened, and have good reasons to imagine had profound effects on early human organization). Emergence at these earliest scales/times seems sociologically more likely than suddenly someone pulling a new thing (a “skladobbity” or something) out of a hat. Note “skladobbity” sounds absurd. But does “shekel”?

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  6. PS And I am not relying on shekel being the oldest, merely pointing out that customary grain, silver measures were widely accepted; decree seems less likely than emergence, and there were millennia of trade before “shekels”. As Denise always discussed, first we have 1, 2, 3, many…

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    1. Yes, decree, emergence, or copying an existing money of exchange probably all happened. Making up a silly name not so much, even though perfectly cromulent. The naming of a unit may give some indication of which took place. A unit named after silver or the like was probably copying. A unit named after a popular foodstuff probably emerged. Decreeing was probably used to confirm or standardise existing units. I’m probably making this up as I go along.

      Can you explain why you think they had to peg? I’m not finding your reasoning above by searching.

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      1. Peg in the sense of measure in a commodity, at least in early stages; if you say a shekel is equal to a qty of barley, it is pegged to that qty of barley. The barley unit is the earlier unit of account, and the question, of course, is how did it arise.

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  7. Ah, right. When people start exchanging IOUs they are expecting them to be redeemed for their face value at some point. When that expectation fades you can float the unit.

    In the case of barley the most obvious origin is the warehouses. You deposit your surplus barley, get a receipt denominated in barley which you can then use as money. People understand it and get used to it.

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    1. I like that succinct description. Basically the Goldsmith story, but thousands of years earlier. I would think earliest units (more than 6000 yrs ago) would have developed at even smaller scales, the “warehouse” being the simplest storage arrangements. Of course, if a “Big Man” was in charge, you might still call the unit a “state” unit. What units s/he used would probably come from still earlier customary units, handfuls or whatever.

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      1. Hah, you’ve made me think twice there. I never liked the goldsmith story as it’s often accompanied by some guff about ‘representative money’ and segues into fractional reserve banking. But I suppose, if you strip away those encrustations and recognise they are issuing credit notes, there is a nugget of truth to it.

        I agree about the customary units, the trick is finding some unambiguous evidence for them.

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