Part 1: Some thoughts on David Graeber, barter and the invention of money

by Jehu

I have been reading Engels “Origin of the Family, Private Property and the State” — and it is fascinating. To accompany it, I looked for recent works that more or less critique it, employing scientific information available after the book was written.

ancient-mesopotamian-inventions-3My first stop was this very good David Graeber response to the bourgeois economist, Robert F. Murphy, On the Invention of Money.. It is pretty good to have a communist who can call bullshit on everyone in the room on the basis of scientific expertise. Graeber, for instance, make this observation of the explanation for money offered by mainstream economics:

“Just in way of emphasis: economists thus predicted that all (100%) non-monetary economies would be barter economies. Empirical observation has revealed that the actual number of observable cases—out of thousands studied—is 0%”

Ha! I wish I had wrote that line.

Comparing Graeber’s synopsis of his argument with Engels, my problem with Graeber’s is probably best expressed in this particular assertion:

“What they never found was any place, anywhere, where economic relations between members of community took the form economists predicted: ‘I’ll give you twenty chickens for that cow.’”

If Graeber is correct, and I assume he is, we still have a problem because we still don’t know where money came from. If money did not arise from within communities, as Graeber believes, it seems to me that it had to arise between communities, as both Marx and Engels argued. However, in his response at least we never get a cogent argument for how money could arise from trade between communities that themselves had no exchange within them.

Graeber argues no community ever invented money for its own internal requirements. In fact, commodity exchange was unknown in communities of the sort Graeber is talking about. But then Graeber does this thing that is bewildering to me: he dismisses barter between communities as well.

Exchange, community and moral strangers

Graeber’s argument goes something like this

That barter happened between communities is widely observed in many times and places. But this barter takes place between strangers, i.e., “people who have no moral relations with one another.” Okay, this is good, barter doesn’t take place within communities, but between them. This suggests commodity exchange relations are not relations of trust but relations of distrust, hostility.

Then he advances what he believes are conditions that give rise to money but in a peculiar way that appears to only reluctantly admit it could have ever happened. For instance, we are told, occasional interactions between people unlikely to meet again are not likely to produce a monetary system or any other sort of system. This point makes sense, but why not just come out and say commodity exchange between two communities has to be developed enough to have become routine?

Another objection to the bourgeois barter theory Graeber makes is that there is no such thing as the ‘double coincidence of wants’ problem, because the bartering develops only when people of one community know the other community has something they want. The anthropological evidence suggests that bourgeois economists simply invented the ‘double coincidence of wants’ problem out of thin air.

On the other hand, commodity exchange, if it does develop, appears at first to take the form of exchange according to some fixed schedule of ratios between use values. There is no marketplace, where people carry their products for the purpose of exchanging them — which is to say, in these early primitive exchanges of use values, no price discovery takes place or can take place. The ratios by which products of labor are exchanged between communities are fixed and, at least on the surface, appear to be established by traditions of some sort.

What Graeber has established in his oddly structured argument is that exchange of commodities (barter), and eventually money itself, arises under conditions of hostility, between communities that are moral strangers, not within them; the members of each community each definitely have specific commodities the other community wants; and the schedule by which these commodities are exchanged are fixed by custom and tradition.

Instead of this perfectly comprehensible argument, because of the way he structured his presentation of the evidence, Graeber appears to deny that money arose from commodity production and exchange — an assertion for which there is in fact no evidence.

Money defined

When Graeber attempts to lay out his own argument, he immediately runs into a problem defining money. This is a problem, of course, because money is the thing whose emergence he is trying to explain. He begins his discussion with this fragment:

“If money is simply a mathematical system whereby one can compare proportional values, to say 1 of these is worth 17 of those …”

Yes. “If money is a mathematical system” But what if money is not a mathematical system? What if money is something else altogether? The problem here seems to be that Graeber has decided for himself that money is “a mathematical system whereby one can compare proportional values.” Which is to say, money is a sign or symbol of value, like a price sticker or a system for measuring temperature. And if money is simply a sticker on a commodity denominating its value on a scale then something like symbolical money must emerged many times in history for many different reasons.

But what if money is more than simply a mathematical scale for denominating the value contained in a product? What if money contains value in its own right beside other commodities that themselves contain value?

Moreover, money is not just another value, but the most highly sought after value among commodities because it has the capacity to be exchanged for any and all other commodities at any moment? In this case we have a problem, because very little of what Graeber has said so far explains how this object or the other products of labor became values in the first place.

To put it simply, a community cannot trade what it doesn’t have and since no product is exchanged within the community, no commodity values exist, because no product of labor ever became a value within the community; which, of course, is why money could not begin within the community. Since, within the community, a particular product of labor never becomes a commodity, the product of labor only becomes a commodity when it is exchanged for products of labor produced by another community.

Why does the product become a commodity only when exchanged? Obviously because the same ‘rules’ do not apply as within the community. Inside the community we find a “bewildering variety of arrangements, ranging from competitive gift-giving to communal stockpiling to places where economic relations centered on neighbors trying to guess each other’s dreams”. Among certain groups, for instance, any member of the community could simply take anything she needed and such taking was never interpreted as stealing.

Never did relations within the community take the form of exchange relations — exchange only occurs in relation to other communities. Which is to say, when exchange (barter) of commodities does occur, it occurs between “people who have no moral relations with one another.”

War and exchange

As far as I can figure, there are three types of relations a community can have with moral strangers — (there may, of course, be more):

(a) Kill them and take what they have,

(b) Enslave them and take what they have,

(c) Trade with them.

Exchange between communities, i.e., between individuals who have no moral relation with one another, moral strangers, is only one of several possible forms of relations. Graeber doesn’t discuss these other two forms of relations, but they, along with trade, more or less constitute the gamut of possible relations between two groups who are otherwise moral strangers.

I cannot tell from his discussion whether war and slavery arise together with commodity exchange or not. But Graeber does give an tantalizing hints along these lines: one community, the Amazonian Nambikwara, would occasionally get together for purpose of trading, and begin their activities with a dance “that mimics military confrontation.”

The implications of Graeber’s story seems to be that hostilities between the groups was channeled into trade. How what was possibly an ongoing military conflict ultimately became a trading opportunity is not clear from Graeber’s brief discussion, but it appears from his discussion that trade is war by other means.

How might this be true?

If you think about it, trade accomplishes much of what war does in that it provides access to the possessions and even labor of the moral strangers in the other community. And it pays for itself by effectively increasing the productive capacity of the two groups more than it increases the number of mouths to feed based on the resources of a given area.

There is, of course, a cost to this avoidance of hostilities: While you get access to the possession and labor of the other community, you also have to give the moral strangers access to your possessions and your labor. This is certainly a high cost, but it might beat losing all of your possessions, being made a slave, or even being killed by the moral strangers.

And what might threaten this sort of mutually beneficial arrangement of hostility? Graeber provides an answer: If a deal is unsatisfactory to one party or the other: “fights may ensue.” And, it appears to me, although I don’t have any direct evidence, this seems to be why the trade is carried out on the basis of “traditional fixed equivalences.” By fixing the equivalences of the trade through custom, habit and traditions, the two groups minimize the risk of conflict blowing up the meeting between two hostile camps.

As Graeber argues:

“When one is dealing with a world unfamiliar with money and markets, even on those rare occasions when strangers did meet explicitly in order to exchange goods, they are rarely thinking exclusively about the value of the goods.”

Although Graeber is the expert here, I am not sure I would phrase it the way he did. Since exchange ratios are fixed by customs, habits and traditions, of course, these exchange ratios among commodities well known by both parties to the trade and probably are routinely observed. But these equivalences must be well know among both communities precisely to avoid conflict over the relative values of commodities. If mutually hostile communities get together for trade and nobody agrees on the value of anything …

Well, you can just imagine the result of undue haggling.

The Welsh code and Marx’s expanded form of value

In other words, equivalences would be fixed by traditions precisely because these hostile strangers care a great deal about the value of their commodities and this concern evolve into almost ritual-like practices. I’m just a layman here, but I think this is an alternative interpretation to Graeber’s regarding a fixed schedule of ratios.

The important question here, however, is how the equivalences are fixed. How do the communities concerned arrive at the optimal cloth-for-spears ratio. Because, if we knew this, we might be able to understand why, according to Graeber,

“Welsh and Irish codes contain extremely detailed price schedules where in the Welsh case, the exact value of every object likely to be found in someone’s house were worked out in painstaking detail, from cooking utensils to floorboards—despite the fact that there appear to have been, at the time, no markets where any such items could be bought and sold.”

The codes Graeber discusses in this passage immediately called to my mind Marx’s discussion of the “Total or Expanded Form of value” in Capital:

“z Commodity A = u Commodity B or v Commodity C or = w Commodity D or = Commodity E or = &c.”

The similarity between what Marx proposes in his book and what Graeber and other anthropologists has found in actual empirical research is tantalizing enough to call for further research along these lines. Obviously, the Welsh price schedule begins with a process very much like the Amazonian Nambikwara and both seem consistent with an evolution of commodity exchange proposed by Marx.

However, from reading this paper, I have no idea whether Graeber has any idea what principle governed the fixing of barter equivalences. The fixing of the equivalences are critical, since, unlike wimpy deals today, if the deals go south, everyone around the campfire could die. The lives of two communities depended on having a mutually agreed upon standard for setting the equivalences employed in the barter. It would be nice to know what that standard was.

And this is the thing: Equivalences had to be fixed using a commonly agreed upon measure for estimating exchange ratios between commodities. Here Graeber lets us down: he can tell us that trade normally led to “creation of a system of traditional equivalents relatively insulated from vagaries of supply and demand”; but he does not provide us with any clues to the logic of such systems.

Law and the law of value

Further, it seems to me, the logic behind this system also has to explain money itself, since, by Graeber’s own admission, this is the only way money could emerge from commodity exchange:

“One might of course ask, could not such a system generate something like money of account—that is, the use of one or two relatively desirable commodities to measure the value of other ones, once more items were added to the mix (say, our merchant is making several stops)? The answer is yes. No doubt in certain circumstances, something like this did happen.”

Graeber, in fact, offers no other route to go from trade between ancient communities to what we use as money today. In fact, he has no other route even to get the point where, as he argues, the legal system begins intervene and to set equivalences:

“In many times and places, one sees a similar arrangement: two sorts of money, one, a common long-distance trade item, the other, a common subsistence item—cattle, grain—that’s stockpiled, but never traded. Still, Temple bureaucracies and their ilk are something of a rarity. In their absence, how else might a system of pricing, of proportional equivalents between the values of any and all objects, potentially arise? Here again, anthropology and history both provide one compelling answer, one that again, falls off the radar of just about all economists who have ever written on the subject. That is: legal systems.”

In this passage, Graeber unknowingly reveals a weakness in his argument against the bourgeois simpleton economists: he is simply trying to move the question along from primitive trading between moral strangers to temples to the state, without having first explained how any fixed equivalences were initially determined.

Having already posited that early humans exchanged their products employing fixed equivalences, and that this fixed schedule of ratios actually precedes money, the critical question to be answered is how this fix was determined. This has to precede the role of the state, since, although I could be wrong, it seems to me that, at least in the beginning, the ancient laws were only codifying local traditional measures. Which is to say. only after we have determined the standard by which  so many arrow heads traded for a canoe, can we understand how in the legal system a finger came to be worth a pig.