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Before money people traded favors. You help me butcher my cow, I help you rebuild your house (which was more work then the cow), so maybe later on your brother

Before money people traded favors. You help me butcher my cow, I help you rebuild your house (which was more work then the cow), so maybe later on your brother helps fix my plow knowing he'll eventually get something in return, and now I am trading favors with you and your brother, etc. This bonded people. It would have been insulting to say "here are two chickens for your lamb, we are now even, I owe you nothing evermore!" Money originated as a way for kings to pay troops, who operated outside these village economies. Money has made it possible for us to build impersonal systems at gigantic scale. It seems to have paved the way for more stuff, but it does come with some downsides. Debt, The First 5,000 Years [0] by David Graeber talks about this stuff. [0] https://theanarchistlibrary.org/library/david-graeber-debt https://theanarchistlibrary.org/library/david-graeber-debt

sjg007 5y ago
It’s amazing how money actually came to be: https://en.m.wikipedia.org/wiki/History_of_money https://en.m.wikipedia.org/wiki/History_of_money
s1artibartfast 5y ago
Before money, people traded services and power. In this sense, money is just an accounting tool to track the same
- mikem170 5y ago
  Not exactly the same. Money changed a lot of things, much more than just an accounting tool. The use of money drastically changed the scale in which goods and services could be traded. Before money people kept track of who owed who a favor amongst the people they dealt with. Family, friends, and others learned who they could trust not to be a mooch. Money made possible much larger scale projects, enabling the industrial revolution to proceed at breakneck speed, the ability to wage world wars, and a modern global finance system treating everyone and everything as fungible, with credit scores replacing personal bonds of trust, billionaire leveraged buyouts and market manipulations, consumer/debt culture, sanctions, etc.
  - s1artibartfast 5y ago
    I think we agree that the accounting tool changed the possible scale, but we are still trading the same thing. For example, I use currency to track and buy favors from some laborer in China I have never met.
    - curryst 5y ago
      I don't think it's the scale, but the specialization. When what you need is unspecialized manual labor, favors work great because those kinds of favors are fungible. It starts to fall apart when you need specialized work. I.e. I'm a farmer and I need to see a doctor. The doctor doesn't want to see me, though, because 134 other farmers already owe him/her favors and he/she doesn't know what to do with the favors he/she already has. The doctor needs a way to convert all those favors they don't need into favors they do need. You could trade them, but then you need an exchange rate. There's 400 farmers in the town and only one electrician; is a favor from the electrician worth the same as a favor from a farmer? At a certain point, it makes sense to just exchange stores of value rather than try to manage favors like assets. > but we are still trading the same thing I don't really think they are. Favors are closer to an asset. $5 is $5, regardless of the holder. Favors have bearer-specific value, such that one might be near-worthless to me but priceless to you. > For example, I use currency to track and buy favors from some laborer in China I have never met. To me, this demonstrates the above premise. That laborer in China would rightly value your favor at near-zero. You're too far away for them to meaningfully cash in on that favor. Your favor behaves like an asset that they have no use for. Money is distinct in that it allows you to crystalize the labor that would have been done into a physical form, and allows you to do it ahead of time. No more worrying about fungibility, and no more worrying about whether the other party will actually honor the favor.
      - s1artibartfast 5y ago
        100% agree, fungibility is key advantage of currency over personal IOUs, and that it enabled specialization and scale. My point was more that serves the same purpose: purchasing services and power. It just does it better. My post was more a reaction to the moral sentiment that prior to currency, transactions were more equitable and somehow less coercive.
xondono 5y ago
> Money originated as a way for kings to pay troops, who operated outside these village economies. That’s one theory, and it’s not even the one Graeber preferred. According to him (and supporting evidence) money originated as a way to “keep score” of debts. The question of the origin of money is an interesting one, but that will be probably be unsolvable, since some of the alternative theories (like barter) would leave little to no evidence.
- imtringued 5y ago
  Yes, money is just a token to keep track of your balance sheet intuitively. Given a secure enough institution we could do it entirely on paper.
  - bruiseralmighty 5y ago
    This is one of the fundamental principles behind Satoshi's white-paper and all of crypto currency.
belugacat 5y ago
“No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money,” wrote the Cambridge anthropology professor Caroline Humphrey in a 1985 paper. “All available ethnography suggests that there never has been such a thing.” https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/ https://www.theatlantic.com/business/archive/2016/02/barter-...
- mikem170 5y ago
  The source I quoted agrees, saying favors, not barter. People did something before money was invented, right? Parent's raised kids, kids helped parent's when they were older, families banded together, items were traded between villages, across continents, etc.
  - samatman 5y ago
    Money in a broad sense is as old as anatomically modern humans, so, no. 80,000 year old grave goods have been discovered, consisting of shells of a consistent size, with holes drilled in them, a few hundred kilometers from the ocean. We know from ethnography of societies which existed until very recently that these collectibles served the same purpose as money. A good complement to Graeber's book is the work of Nick Szabo, I would start here: https://fermatslibrary.com/s/shelling-out-the-origins-of-money https://fermatslibrary.com/s/shelling-out-the-origins-of-mon... You can find most of the rest of his writing on the subject on his blog: http://unenumerated.blogspot.com http://unenumerated.blogspot.com
    - mikem170 5y ago
      But the first source you quoted, the Atlantic article [0], quotes Graeber describing economies which don't depend on money or barter: > Communities of Iroquois Native Americans, for instance, stockpiled their goods in longhouses. Female councils then allocated the goods, explains Graeber. Other indigenous communities relied on “gift economies,” which went something like this: If you were a baker who needed meat, you didn’t offer your bagels for the butcher’s steaks. Instead, you got your wife to hint to the butcher’s wife that you two were low on iron, and she’d say something like “Oh really? Have a hamburger, we’ve got plenty!” Down the line, the butcher might want a birthday cake, or help moving to a new apartment, and you’d help him out. > On paper, this sounds a bit like delayed barter, but it bears some significant differences. For one thing, it’s much more efficient than Smith’s idea of a barter system, since it doesn’t depend on each person simultaneously having what the other wants. It’s also not tit for tat: No one ever assigns a specific value to the meat or cake or house-building labor, meaning debts can’t be transferred. > And, in a gift economy, exchange isn’t impersonal. My original reply in this thread was to mention that there have been functioning societies that don't use money. I was replying to a post that couldn't imagine such things. Maybe I'm misunderstanding why you brought up barter economies? I'll have to get back to your first Nick Szabo reference, it doesn't format readable in the browser I'm in front of at the moment (overlapping text). The second link, the blog post, seems to discuss the history of money as opposed to alternatives (like the Iroquois and gift economies mentioned above). [0] https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/ https://www.theatlantic.com/business/archive/2016/02/barter-...
mattm 5y ago
It's been a while since I read that book but I believe the message was also that money allowed groups to grow larger than the Dunbar number. In a small community, you can keep track of the favours with everyone. It's also highly likely that you'll see someone you help out with again so there is a good chance you'll get paid back.

sjg007 5y ago

It’s amazing how money actually came to be: https://en.m.wikipedia.org/wiki/History_of_money https://en.m.wikipedia.org/wiki/History_of_money

s1artibartfast 5y ago

Before money, people traded services and power. In this sense, money is just an accounting tool to track the same

mikem170 5y ago
Not exactly the same. Money changed a lot of things, much more than just an accounting tool. The use of money drastically changed the scale in which goods and services could be traded. Before money people kept track of who owed who a favor amongst the people they dealt with. Family, friends, and others learned who they could trust not to be a mooch. Money made possible much larger scale projects, enabling the industrial revolution to proceed at breakneck speed, the ability to wage world wars, and a modern global finance system treating everyone and everything as fungible, with credit scores replacing personal bonds of trust, billionaire leveraged buyouts and market manipulations, consumer/debt culture, sanctions, etc.
- s1artibartfast 5y ago
  I think we agree that the accounting tool changed the possible scale, but we are still trading the same thing. For example, I use currency to track and buy favors from some laborer in China I have never met.
  - curryst 5y ago
    I don't think it's the scale, but the specialization. When what you need is unspecialized manual labor, favors work great because those kinds of favors are fungible. It starts to fall apart when you need specialized work. I.e. I'm a farmer and I need to see a doctor. The doctor doesn't want to see me, though, because 134 other farmers already owe him/her favors and he/she doesn't know what to do with the favors he/she already has. The doctor needs a way to convert all those favors they don't need into favors they do need. You could trade them, but then you need an exchange rate. There's 400 farmers in the town and only one electrician; is a favor from the electrician worth the same as a favor from a farmer? At a certain point, it makes sense to just exchange stores of value rather than try to manage favors like assets. > but we are still trading the same thing I don't really think they are. Favors are closer to an asset. $5 is $5, regardless of the holder. Favors have bearer-specific value, such that one might be near-worthless to me but priceless to you. > For example, I use currency to track and buy favors from some laborer in China I have never met. To me, this demonstrates the above premise. That laborer in China would rightly value your favor at near-zero. You're too far away for them to meaningfully cash in on that favor. Your favor behaves like an asset that they have no use for. Money is distinct in that it allows you to crystalize the labor that would have been done into a physical form, and allows you to do it ahead of time. No more worrying about fungibility, and no more worrying about whether the other party will actually honor the favor.
    - s1artibartfast 5y ago
      100% agree, fungibility is key advantage of currency over personal IOUs, and that it enabled specialization and scale. My point was more that serves the same purpose: purchasing services and power. It just does it better. My post was more a reaction to the moral sentiment that prior to currency, transactions were more equitable and somehow less coercive.

xondono 5y ago

> Money originated as a way for kings to pay troops, who operated outside these village economies. That’s one theory, and it’s not even the one Graeber preferred. According to him (and supporting evidence) money originated as a way to “keep score” of debts. The question of the origin of money is an interesting one, but that will be probably be unsolvable, since some of the alternative theories (like barter) would leave little to no evidence.

imtringued 5y ago
Yes, money is just a token to keep track of your balance sheet intuitively. Given a secure enough institution we could do it entirely on paper.
- bruiseralmighty 5y ago
  This is one of the fundamental principles behind Satoshi's white-paper and all of crypto currency.

belugacat 5y ago

“No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money,” wrote the Cambridge anthropology professor Caroline Humphrey in a 1985 paper. “All available ethnography suggests that there never has been such a thing.” https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/ https://www.theatlantic.com/business/archive/2016/02/barter-...

mikem170 5y ago
The source I quoted agrees, saying favors, not barter. People did something before money was invented, right? Parent's raised kids, kids helped parent's when they were older, families banded together, items were traded between villages, across continents, etc.
- samatman 5y ago
  Money in a broad sense is as old as anatomically modern humans, so, no. 80,000 year old grave goods have been discovered, consisting of shells of a consistent size, with holes drilled in them, a few hundred kilometers from the ocean. We know from ethnography of societies which existed until very recently that these collectibles served the same purpose as money. A good complement to Graeber's book is the work of Nick Szabo, I would start here: https://fermatslibrary.com/s/shelling-out-the-origins-of-money https://fermatslibrary.com/s/shelling-out-the-origins-of-mon... You can find most of the rest of his writing on the subject on his blog: http://unenumerated.blogspot.com http://unenumerated.blogspot.com
  - mikem170 5y ago
    But the first source you quoted, the Atlantic article [0], quotes Graeber describing economies which don't depend on money or barter: > Communities of Iroquois Native Americans, for instance, stockpiled their goods in longhouses. Female councils then allocated the goods, explains Graeber. Other indigenous communities relied on “gift economies,” which went something like this: If you were a baker who needed meat, you didn’t offer your bagels for the butcher’s steaks. Instead, you got your wife to hint to the butcher’s wife that you two were low on iron, and she’d say something like “Oh really? Have a hamburger, we’ve got plenty!” Down the line, the butcher might want a birthday cake, or help moving to a new apartment, and you’d help him out. > On paper, this sounds a bit like delayed barter, but it bears some significant differences. For one thing, it’s much more efficient than Smith’s idea of a barter system, since it doesn’t depend on each person simultaneously having what the other wants. It’s also not tit for tat: No one ever assigns a specific value to the meat or cake or house-building labor, meaning debts can’t be transferred. > And, in a gift economy, exchange isn’t impersonal. My original reply in this thread was to mention that there have been functioning societies that don't use money. I was replying to a post that couldn't imagine such things. Maybe I'm misunderstanding why you brought up barter economies? I'll have to get back to your first Nick Szabo reference, it doesn't format readable in the browser I'm in front of at the moment (overlapping text). The second link, the blog post, seems to discuss the history of money as opposed to alternatives (like the Iroquois and gift economies mentioned above). [0] https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/ https://www.theatlantic.com/business/archive/2016/02/barter-...

mattm 5y ago

It's been a while since I read that book but I believe the message was also that money allowed groups to grow larger than the Dunbar number. In a small community, you can keep track of the favours with everyone. It's also highly likely that you'll see someone you help out with again so there is a good chance you'll get paid back.