Graeber and Debt (2)
David Graeber has some interesting things to say about money. He demonstrates that the classic economics textbook explanation of the origins of money is wrong. Money did not emerge from barter, with a popular commodity being held to deal with the double coincidence of needs. Money began as credit. He could be right about the order of development, but that does not prove much. The important concept that he seems to miss is that the division of labour, which is essential to economic development, requires the exchange of goods and services. It does not matter much whether this began with money or with barter, but the division of labour was an important step for human society.
Graeber does not distinguish clearly enough between relationships in a community and more distant trading contacts. In a local community, people know each other and understand who can be trusted. Credit transactions can be undertaken easily in this environment.
When trade and exchange take place between people in different communities and nations, the transactors do know each other, so they will not usually be able to trust each other sufficiently got give credit. Gold and silver were always important for people travelling to different countries, because it enabled them to make payment for purchases from people who did not trust them.
1 comment:
Graeber links debt and money in a way that doesn't make sense. Any debt presupposes the existence of some asset. Even if the asset isn't specifically to hand, so a barterer could say that when he makes his next kill he'll bring you the liver if you give him that spear you just made.
Money, at least as it was before governments came in and started making it by fiat, was also an asset. Graeber seems to want to confuse debt and money and probably sees little difference between commodity and fiat money. Graeber is an anarchist, but clearly a social progressive of a sort- Occupy Wall Street is his sort of thing. Assemblies, demonstrations, and incoherence, all of which he appeared to be proud of. Debt assumes some future asset with which to pay it off, while commodity money would give us the stark reality of whatever we have to hand today. I suspect the progressive prefers a debt instrument because it allows him to plan based on his daydreams, without the reality check of what is left in the warehouse.
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