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Graeber is a poor economist but a good anthropologist. Debt: The First 5000 years deserves props for debunking the myth of barter coming before credit and for
Graeber is a poor economist but a good anthropologist. Debt: The First 5000 years deserves props for debunking the myth of barter coming before credit and for its observations on how small economies of mutually known & trusting people operate. It doesn't make sense to scale these up to society-wide systems; indeed, the reason we can have societies on the scale of nation-states comes from financial innovations that replaced mutual trust & credit with ledgers and double-entry bookkeeping.
Interestingly, you can see the emergence of small-scale credit forming with things like how a group of mutual friends splits the tab when going out to meals. "I'll get mine, you get yours" doesn't usually survive as people get to know each other and start interacting more regularly, rather it's "I'll get this time, you get the next time", and it all works out as long as everything feels fair, because everybody has a pretty good memory for when they get shafted.
> ... everybody has a pretty good memory for when they get shafted.
Not just humans. Chimpanzees demonstrate jealousy or a sense of fairness in experiment. I'm pretty sure I've seen dogs show it, too.
> Graeber is a poor economist
Is exactly my point which is why said that Debt is a terrible book to understand money in the real world.
> deserves props for debunking the myth of barter coming before credit
Do you think Graber came up with this? Or that this wasn't the mainstream view amongst economists? Allyn Young wrote matter-of-factly about it for a popular science book in 1924[0]. And I don't mean to say he was the first one to realise this, I'm saying this was a common view. And Young wasn't some avant-garde heterodox radical. He was the president of American Economic Association. It doesn't get more mainstream than that!
And this what I mean by misrepresentation of the history and ideas of mainstream economics. And Graber doesn't stop there. He pretends like somehow all of economics is hinged upon this Myth of Barter.
Adam Smith is not the supreme arbiter and law-giver of economics. FWIW, Graber's critism of Adam Smith in this instance is justified. But as is typical of Graber, he doesn't stop there. He goes on to say thet Adam Smith's famous "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest" thesis is wrong because shopkeepers of the time mostly sold goods on credit and thus the customers were in fact depending on their benevolence.
If credit was benevolence, that would make banks the most benevolent entities on the planet.
0: https://d396qusza40orc.cloudfront.net/money/readings/Allyn%20Young.pdf https://d396qusza40orc.cloudfront.net/money/readings/Allyn%2...
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>Adam Smith's famous "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest" thesis is wrong because shopkeepers of the time mostly sold goods on credit and thus the customers were in fact depending on their benevolence.
It's not necessarily wrong though. Giving credit can still be a self-interest motivated action, in fact it would most often only be that - generating a higher reward to the risk taken by giving it - as banks try to manage. So yes, banks aren't run by benevolence, and they aren't the most benevolent entities on the planet (far from it) - they're just economically rational actors, that are benefited by offering credit.
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I’m about halfway through Debt and enjoying it so far, but that Adam Smith line, The Wizard of Oz being weirdly recognized as a Sliver/Gold standard allegory and the history of the creation of IBM were all odd enough to make wonder about the rest of the book.
I'm a poor doctor, but my book about heart surgery deserves props for debunking the myth... You do see the problem here, don't you?
If people aren't qualified, as opposed to having credentials, to understand and comment on a subject, they should get a good co-author. Because the look at monetary policy through the ages is a very interesting one. If the authors do have an actual grip, and the ability to explain things to the layman unless we talk about dry scientific books, of the subject. If they don't it's just pseudo-science sold with confidence.
"Debt" isn't about monetary policy, though. It's about the anthropology of money, trade, and debt. It seems to me that those aren't subjects exclusively, or even necessarily optimally, addressed by economists, who, as a different commenter (correctly) wrote* above, aren't actually interested in the history of those ideas.
* Interestingly, I think that was meant as exculpatory for economists, which is itself a bit revealing.
> Debt" isn't about monetary policy, though. It's about the anthropology of money, trade, and debt.
And it would have been fine if Debt stuck to the anthropology. But perpetuating inaccuracies about money can be actively harmful.
For example, I-series bonds are the safest instruments available to US residents to hedge against inflation. Now, in popular conception, if US treasury bonds are seen as a debt that will never be paid, people might instead put their savings into assets that are suboptimal. You already see gold shilling targeted at senior citizens which makes for a terrible investment.
We don't need nation states to maintain ledgers today. A "ledger" can now live entirely on the Internet and be totally trustless and decentralized.
> debunking the myth of barter coming before credit
Not debunked at all. How do people even agree what things are worth in order to offer credit before there exists any prices?
The issue with Graeber and others is they are looking for a historical account of barter pre-dating a historical record of debt, but they will never find it, because the record-keeping begin for the purpose of recording debt. Any barter would pre-date any record keeping, and would likely be very shortly-lived before people converge onto a common money. They have completely misinterpreted Menger's 'On the Origins of Money' to begin with, and are debunking a straw-man.
> "We have actual case studies of communities developing money prices from scratch: namely, prisoners who end up using cigarettes as the common medium of exchange. [...] The prisoners certainly weren't giving each other things from their Red Cross kits as gifts or as loans. No, they first were trading (in a state of direct exchange) and cigarettes quickly became the money in their community [...] The prices (quoted in cigarettes) of various items were posted on a board. If Graeber and his colleagues stumbled upon the ruins of this P.O.W. camp, they would presumably conclude that there was never a preexisting state of barter, because they only found boards listing prices quoted in terms of cigarettes." - https://mises.org/library/have-anthropologists-overturned-menger https://mises.org/library/have-anthropologists-overturned-me...
>>"The issue with Graeber and others is they are looking for a historical account of barter pre-dating a historical record of debt, but they will never find it, because the record-keeping begin for the purpose of recording debt."
Is this is the case, it seems to me that the issue is not with Graeber and others but, with the guys that claim something about which there is not historical account.
>>"We have actual case studies of communities developing money prices from scratch: "
The point is not if barter is used sometimes or if some people, in some circumstances, would start using cigarettes as money, but if that's the main history of money, specifically in the context of early states, as has been claimed for many years without any kind of evidence.
The burden of proof is not in the guys that examine the historic and archeology evidence, but in the ones that want to sell a narrative without evidence.
> Debt: The First 5000 years deserves props for debunking the myth of barter coming before credit
Barter is just trading without the use of money. It isn't mutually exclusive with credit. What Graeber describes in his book is still barter. It's just a primitive credit system based promises of goods and services instead of promises of money.
Barter involves agreeing on a specific exchange rate. Graeber describes (among other things, of course) systems in which that doesn't happen; systems in which debt isn't quantified, but instead a general sense of who has been more generous to whom over their lifetimes.
> Graeber is a poor economist
1) Have you ever met a good economist?
2) Is it possible you think he is a poor economist because he deeply understood it from the outside and you are still too "in it" to see? That is not a criticism, it is a question.
Which editon are you reading? I thought the garbled IBM/Apple story was removed from later editions. Anyways, it was just a failed attempt adding some colour. I wouldn't ascribe too much importance to it.
I had forgotten about the Wizard of Oz bit! I don't recall if it was meant as an aside or it was meant to support a larger point about public opinion of bimetallism.
The bulk of the middle section of the book is mostly just meh. The final chapter though is something to behold! It's comically bad.
The book remains fairly popular in certain circles. If not for anything else, read it so you can politely refute the person who brings it up at a party.
The Wizard of Oz was actually in fact a silver/gold allegory.
https://economics.rutgers.edu/joomlatools-files/docman-files/RockoffWizardofOz.pdf https://economics.rutgers.edu/joomlatools-files/docman-files...
L. Frank Baum's The Wonderful Wizard of Oz, however, is not only a child's tale but also a
sophisticated commentary on the political and economic debates of the Populist Era.1 Previous
interpretations have focused on the political and social aspects of the allegory. The most important of
these is Littlefield ([1966] 1968), although his interpretation was adumbrated by Nye (1951), Gardner and
Nye (1957), Sackett (I960), and Bewley ([1964] 1970). My purpose is to unlock the references in the
Wizard of Oz to the monetary debates of the 1890s. When the story is viewed in this light, the real reason
the Cowardly Lion fell asleep in the field of poppies, the identity of the Wizard of Oz, the significance of
the strange number of hallways and rooms in the Emerald Palace, and the reason the Wicked Witch of
the West was so happy to get one of Dorothy's shoes become clear. Thus interpreted, the Wizard of Oz
becomes a powerful pedagogic device. Few students of money and banking or economic history will
forget the battle between the advocates of free silver and the defenders of the gold standard when it is
explained through the Wizard of Oz.
Graeber did not claim to be the first debunking the myth of barter.
However, what does it even matter, when the zombie keeps walking to this day? The linked article repeats the myth of barter.
And lest people think it's only right-ish economists that keep repeating it, Yanis Varoufakis did so too (in his book "Talking to my daughter about the economy").
And yeah sure, nothing "hinges" on the myth of barter. But it is a symptom, a glaring illustration that economists are really bad at arguing from how real people actually act, and cheerfully embrace just-so stories that support their preferred ideas - which is the linked article's whole game, too.
> Graeber did not claim to be the first debunking the myth of barter.
I didn't say Graber claimed that. I was refuting the common defence of the book and emphasising that it was already a mainstream view.
> However, what does it even matter, when the zombie keeps walking to this day?
> But it is a symptom, a glaring illustration that economists are really bad at arguing from how real people actually act
How much does the historical origin of money matter to the understanding economics of today?
Economists aren't particularly interested in the origin of money. Any references to barter are usually in fluffy lines like this article or as dumb thought experimens. The fact that some of them get it wrong is not indicative of anything.
> cheerfully embrace just-so stories that support their preferred ideas
Which is rife across the humanities and not exclusive to economics. Hell, Graber's entire book is full of just that.
If you look at popular books or even school text books, they will cheerfully claim that seasons are caused by the change in distance between the earth and the sun. That doesn't mean people working on climate models don't know that's not the case.
And Varoufakis is <insert polite term for crackpot>, not exactly representative of mainstream economics.
I think your criticism of Graeber is somewhat fair. And it's a fair point that incorrect popular/lay theories don't mean experts don't know how things actually work.
That said, I do think Graeber is right to emphasize the role of culture and belief--anthropological ideas--as an antidote to overly quantitative/mechanistic models. I'm not an economist, but it does seem like behavioral economics was pretty revolutionary in advancing the idea that humans are not just rational utility maximizers, despite Keynes using the term "animal spirits" nearly 100 years ago.
Again, speaking as a layperson, it's frankly a bit weird to me how distant economics, anthropology, and psychology seem to be from each other.
> How much does the historical origin of money matter to the understanding economics of today?
A lot? Money is a social construct, so the history of money is something like a record of empirical observations that must be accounted for by any proposed theory of money. The fact that most modern economists don't seem too concerned with this doesn't mean that it's not important.
If you're going to dismiss all economists & anthropologists that do not subscribe to your opinions, you're not going to advance your opinions very much
> If you're going to dismiss all economists & anthropologists that do not subscribe to your opinions, you're not going to advance your opinions very much
The idea that Varufakis is not mainstream is not even remotely controversial. I have issues with Graeber's misrepresentation of economics, not his anthropology.
I'm pretty sure the "myth" of barter is really just an educational/explanatory crutch that economists have used to introduce laypersons to the idea of money without overwhelming them with caveats and nuances. Kind of like how schoolchildren learn that the American Revolution was a revolt against unjust "taxation without representation".
You can tell that Graeber isn't an economist because he mistakes the oversimplified educational narrative for what monetary economists actually believe about the history of money and credit. But you have a fair point--even economists often fool themselves about this, possibly because the field has grown to the point where many aren't as familiar with this topic as they should be (I don't think that was the case 100 years ago).
This is taught in universities in Economics degrees (along with many other misconceptions, as a matter of fact). So it's not at all the case you're saying.
Even if it is an oversimplified story to explain a more difficult concept, it's often used as a moral justification. And really, I'd say Debt is more about the moral justifications of capitalism than it is an economic argument one way or the other.
>Or that this wasn't the mainstream view amongst economists?
The myth is certainly taught by mainstream economists, here is one example:
http://www2.york.psu.edu/~dxl31/econ14/lecture18.html http://www2.york.psu.edu/~dxl31/econ14/lecture18.html
>And Graber doesn't stop there. He pretends like somehow all of economics is hinged upon this Myth of Barter.
I think he was specifically targeting neoclassical economists. The idea of Homo Economicus is essentially rooted in a number of myths that depict humans as spherical cows, Adam Smith's story of money emerging from barter being just one.
>Adam Smith is not the supreme arbiter and law-giver of economics.
Nope, he just has an unusual take because his analysis is more rooted in historical and anthropological study and, of course, he's kind of left wing. This angers people who try to gatekeep economic thought, limiting it to the likes of neoliberal (but still somehow mainstream) ideologues like Mankiw or Milton Friedman.
I guarantee that when David Koch made an large donation to Florida State U economics department he didn't do it with the idea that they would teach more Graeber.
> The myth is certainly taught by mainstream economists,
Can you please state what you think the supposed myth actually is? I'm asking because people seem to have very different ideas about what it actually is as seen in this very thread.
> I think he was specifically targeting neoclassical economists.
Quoting Graber:
> The answer seems to be that the Myth of Barter cannot go away, because it is central to the entire discourse of economics. Recall here what Smith was trying to do when he wrote The Wealth of Nations. Above all, the book was an attempt to establish the newfound discipline of economics as a science.
> Nope, he just has an unusual take because his analysis is more rooted in historical and anthropological study and, of course, he's kind of left wing.
I'm sorry, Adam Smith is left wing?
The myth is that barter arose spontaneously throughout history and that currency arose as a more efficient means of mediating barter.
>I'm sorry, Adam Smith is left wing?
I was referring to Graeber. He was left wing and anticapitalist.
Orthodox (neoclassical) economists like Mankiw tend to be very strongly pro-corporate due to way funding flows in the profession.
> The myth is that barter arose spontaneously throughout history and that currency arose as a more efficient means of mediating barter.
Interesting. Did you actually read Debt? Because Graeber himself says that economists don't claim a barter system as a historical fact:
> It's important to emphasize that this is not presented as something that actually happened, but as a purely imaginary exercise.
As I suspected, it seems you're arguing something else entirely
He's talking about a specific example lifted from a particular textbook with that quote where they used insinuation to push the myth. He cites another example by Stiglitz just beneath it.
I lifted a different example from some other lecture notes in my link above where they just flat out said "this is what used to happen".
Really, there is no shortage of examples. It's the same myth in all cases, (although I wouldnt be surprised if some econ textbooks got patched since the book came out).
Im not sure exactly what youre trying to prove here. The distinction you're trying to highlight is hardly material.
Yes, I obviously did read the book. I also used to believe the myth because I first read it in an undergraduate econ textbook.
The distinction between what is presented as a thought experiment and what is supposedly claimed as historical fact is most definitely material. And Graeber makes it clear what he's talking about:
> It's important to emphasize that this is not presented as something that actually happened, but as a purely imaginary exercise. "To see that society benefits from a medium of exchange" write Begg, Fischer and Dornbuch (Economics, 2oos), "imagine a barter economy. " "Imagine the difficulty you would have today," write Maunder, Myers, Wall, and Miller (Economics Explairzed, 1991) , "if you had to exchange your labor directly for the fruits of someone else's labor." "Imagine," write
Parkin and King (Economics, 1995) , "you have roosters, but you want roses".
He quotes Stiglitz after this and remarks:
> Again this is just a make-believe land
Before claiming it's the same myth it's necessary to clarify what the myth actually is and why it supposedly is so important for capitalism.
> Yes, I obviously did read the book. I also used to believe the myth because I first read it in an undergraduate econ textbook.
In a deleted comment you claimed you read it in Mankiw. There it is most definitely presented as a thought experiment asking the reader to imagine the inconvenience of barter.
The fact that public debt in its totality will never will be zero, doesn't mean that the tenants of that debt will not receive what they were promised.
In fact, you probably don't want the public debt to be payed.
If debt is a liability, that means that is also an asset of somebody. In the case of public debt is an asset of the private sector. A country without public debt would mean those senior citizens wouldn't have safe assets.
Also, a reduction of public debt means a lower deficit, that means less public expenses, that means, or a GDP fall or a higher private debt. Everything has to balance.
> The point is not if barter is used sometimes or if some people, in some circumstances, would start using cigarettes as money, but if that's the main history of money, specifically in the context of early states, as has been claimed for many years without any kind of evidence.
Both sides of the argument are making claims without evidence, because evidence prior to record-keeping of debt doesn't exist, and never will. There are only theories about how money came into being, and some are more plausible than others.
Graeber himself contradicts his own "debunking" of Menger's theory:
> "All evidence that exists points to money emerging as a series of fixed equivalents between silver – the stuff used to measure fixed equivalents in long distance trade, and conveniently stockpiled in the temples themselves where it was used to make images of gods, etc – and grain, the stuff used to pay the most important rations from temple stockpiles to its workers. Hence a silver shekel was fixed as the amount of silver equivalent to the numbers of bushels of barley that could provide 2 meals a day for a temple worker over the course of a month. It was the Temples that actually had a need to extend a silver system from a unit used to compare the value of a limited number of rare items traded long distance, used almost exclusively by members of the political or administrative elite of the societies in question – to something that could be used to compare the values of everyday items, like planks of wood, jugs of beer, and so forth."
Why silver?
Why were they already stockpiling silver?
How was it decided that silver would be used to measure fixed equivalents in long distance trade?
How was it decided the ratio of silver to bushels of barley?
What were these political and administrative elite doing when they proposed to offer a certain amount of silver for some long-distance traded rare items? (We have a word for this: 'barter')
Why would the foreigners they are trading with even want all this silver?
It takes some circular reasoning to get to where Graeber thinks he is, because he misinterpreted Menger to begin with. The above does not discredit Menger at all.
Behavioral economics, the bastard child of psychology, is built on an edifice of fashionable nonsense. The field is rife with grand generalizations based on dubious conclusions from small under-powered behavioral experiments. Just look at what a disaster the much hyped priming studies turned out to be. I would not count on behavioral economics to advance a more accurate understanding of the human condition.