subroza

David Graeber introduced a new generation to the politics at the heart of economic anthropology. In Debt: The First 5,000 Years he sets out ambitiously to reveal the myth of homo economicus. It is an expansion of his early academic work on value and seeks to articulate the anarchist counter to the capitalist development of “big history” and New Institutional Economics. This marked an important return to the politics from which Graeber’s institutional intellectual history was derived. The student and later colleague of Marshal Sahlins, he returned the politics of substantive anthropology to academia and the public. His commitment to anti-imperialist capitalism spanned from the 1990s to the occupy movement. For these reasons, his work served (and serves) to inspire many around the world who are (or aspire to) continue these movements. 

His critique, however, was not limited to bourgeois economics but frequently was leveller at any materialist history. There is no better way to understand his contributions and the debates he helped bring back to the forefront of anthropology and ancient history than his theory of money. 

In the second chapter, he puts forth a theory of money that has largely been overlooked because it is largely synonymous with his general theory of debt. His own theory begins with a critique of the bourgeois historical model that contends there was “a historical sequence from barter to money to credit” (ch. 2, n. 10). Via the works of the German historical school, (See Bruno Hildebrand 1864 and Karl Bücher 1907) the scheme from (1) primitive barter, (2) ancient coinage, and (3) the “modern stage of credit” took hold. He believes this is the model that came to be standard and “which reappears in at least tacit form in Marx… despite the fact that almost all subsequent historical research has proved it wrong” (ch 2. N. 10). Unfortunately, Graeber does not cite where and when Marx inherited this model  (Marx is the only author in the discussion with a name but no citation). It had long been the tradition of substantivism to try Marx in absentia and Graeber continues a tradition that goes back to Polanyi and Sahlins. Thus, there is little discussion of Marx’s response to the modern commodity definition of money  (1) medium of exchange, (2) unit of account, (3) store of value (See Jevons 1875). Whatever one thinks of scholars like Jevons, the picture Graeber paints is so broad that is risks obscuring ideas that remain powerful in the shaping of international economics today. This is especially true of the ideas that became influential to Polanyi’s socialist economics anthropology because they remain influential in Graeber’s own ideas.

For Graeber, there are two broad theories of money. The first, drawn from German historicism, is (A) the commodity theory. The second, is (B) The state-credit theory. The commodity theory is equated with the barter-myth. Grabber’s polemic against the “barter myth” of modern economics, while generally salutary, occasionally conflates commodity theories of money with liberal economics. To treat commodities as a substantive category of economics history does not entail support for the barter theory in its reductive liberal form. (For instance, if barter is defined as commodity for commodity exchange then Graeber is clearly wrong to state that history reveals no evidence for pre-monetary barter.) For those curious about the commodity theory of money in the 19th century, it is best to read Jevons and Karl Marx’s Capital. In the first, second, and third chapter, he discusses his own theory of the commodity and the development of money. (Contra the bourgeois theory, he contends that that money is first a measure of value (magnitude of value and price), a medium of exchange, and that it progresses through hoarding, payment (and credit) and finally universal money. (It is clear Graeber has never read the text.)

According to Graeber, it was the translation of Egyptian and Mesopotamian Bronze Age texts and their subsequent revelation of the “economy dominated by vast temple and palace complexes” which definitively showed that money was “in no way the product of commercial transactions. It was actually created by bureaucrats in order to keep track of resources and move things back and forth between departments” (p. 39). Money then was “used to calculate debts (rents, fees, loans, etc.) in silver. Silver was, effectively, money” (p. 39). This, in Graeber’s account, showed the credit was not last in the developmental history. It appeared before coinage.  [“Shakespeare and the formation of the modern economy” article citation Wasko 1996x]

This provides the empirical evidence that once and for all overturns the commodity theory of money. Therefore, Graeber turns to (B) the credit theory of money. Graeber contends that we have had the history of money backwards this whole time. “What we now call virtual money came first. Coins came much later… never completely replacing credit systems. Barter… accidental by product of the use of coinage or paper money” (p. 40). Mitchell-Innes, we are told,  solved this is 1913-1914. No one listened.  “historically, credit money comes first” – today we are witnessing a return to basic assumption obvious to common sense in the Middle Ages and Mesopotamia” (p. 18) “The difference between a debt and an obligation is that a debt can be precisely quantified. That requires money” (p. 21). Therefore, for Graeber, discovery of Bronze Age revealed “credit system preceded the invention of coinage by thousands of years” (p. 38).  In contrast to the bourgeois commodity theory of money (a model guilty of British empiricism et cet.), the credit theory of money was first developed out of the German Historical School. 

They “insisted that money is not a commodity but an accounting tool. In other words it is not a ‘thing’ at all” (p. 46). It was an idea – a social idea. Thus, there was an “abstract systems of accounting” that emerged “long before the use of any particular token of exchange” (p. 46). Money is just a measure. It is a yardstick. But, “If money is just a yardstick, what then does it measure? The answer is simple: debt” (p. 46). Money then began its history as a measure of debt, what Graeber calls an IOU. Once bronze age palaces can tally debt, why can’t others exchange this debt as ‘money’ ? This question (to my knowledge never answered) leads us to a definition of value. Since the transfer of the IOU is a measure of debt, it can only function as money if the other people accept the transfer of the obligation. To accept this obligation then is value – it is “the measure of one’s trust in other human beings” (p. 47). The logic of debt as money culminates in the history of the tally and tax. This theory of money qua social contract (a topic he discusses more thoroughly in the following chapters) is similar to David Hume’s theory of the social contract. It perhaps makes sense then that it culminates in the claim that the modern bank of England is 1694 represents yet another chapter in the same story. We are asked to believe that the modern banknote is the same “idea” (or does he here mean ‘thing’?) of debt qua social contract. It is just the original credit form of money “in reverse.” 

Once one accepts this definition of money, it is hard to claim much beyond the fact that modern economics is wrong about barter. It is no doubt true that the modern theory of barter has been once and for all completely invalidated. There is no ground to stand on for those who wish to argue that mankind barters by nature and that money was developed to ‘lower the transaction’ costs of trade. The fact that this theory is wrong does little, however, to prove what did happen in history. To state that credit is the origin of money and then to push the question of the social contract to the state does little than restate the major questions of political economy since Hobbes. Credit is belief. All this puts a great burden on the very abstractions we began the study by critiquing. It takes little intelligence to discover that the same critique can, of course, be levied against Graeber. What proof is there of “credit” ? Well, it depends on what we mean by credit. And by credit? Well, it means what we mean by debt… and so the chain of reasoning becomes a bit unwieldy because this in the end will only mean what we mean by money. 

There is little reason to concede that such chains of abstractions do a better job of explaining reality and history than common human words used to explain “things.” There are many good reasons to argue that they do a worse job. In the end, Graeber uses such reasoning to argue that money in the end can be almost anything. Whether he is discussing blood payments or scribal accounting, it is clear that he means that money is ultimately the social contract. For those that accept money as a numerical account of our worth in modern capitalism, this is psychologically liberatory. It is better than accepting the lie of economic history at the bottom of the barter myth. It fails, however, to explain many fact of history. Among these facts is the essential question of how the modern financial credit system arose under capitalism. To understand that money is a social contract does little for those who desire more than freedom for debt. For those who demand the rights of humanity to survive and thus control the means of production under capitalism, it offers only inspiration for the pursuit of better material history.