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Comment by milesvp | Hacker News Reader

There was a great blog post I saw some years ago on HN about someone reminiscing about halloween candy trading as a kid. They remembered fondly about just how organized the trading quickly became. it was all barter, but there emerged quickly a candy franca. All the kids were willing to accept three muskateers bars because they knew others would accept them, and worst case they were at least tolerable to eat.

While I agree that the barter economy as a rhetorical construct is most certainly made up, being very useful in freshman econ, I’m not convinced it money could possibly happen without first having trade in general. I would argue that money happens very quickly, which is why you’re not going to see a lot of evidence of extensive barter. If one childhood is enough to establish a candy currency, then you’d expect a similar currency to develop very quickly in any society.

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The argument from the apparent source of this (Graeber's Debt) is that the progression of "barter, but that's inefficient so we create -> money, and then later we create -> debt" is historically inaccurate—instead, debt comes first, barter also but mostly for dealing with strangers, and then money is a later invention that has to do with sophisticated (relative to what came before) military logistics in large states/empires.

This is an oversimplification but gives you the gist of the book's argument. So yes, it agrees that money is a relatively late development and trade existed before it and was largely barter-based but only when strangers or rival groups traded, but the central argument is that debt (basically) came first rather than last, and effectively precedes money, which is more a tool of debt than debt is a tool of money, if you will.

Was it "formal" debt though, or more like "I'll give you some of my extra grain, because you seem kinda friendly, and you might repay me the favor if I happen to be in trouble in the future"?

Things like tally sticks for tracking debt were used, absent and before currency, it seems. Pretty widely. IIRC (it's been a while since I read Debt) the book asserts that very small tribal or family economies likely worked the way you describe, with informal, mental tallies of debts, and as communities got just a bit larger physical tallies took over, persisting for some time. A consequence of this is that debt isn't surely "less real" or less essential/natural than money, nor even newer, but in fact more real, more essential or natural (so to speak), and older.

Even in small groups you still need a currency (unit of account) before you can keep a tally, though—unless you're going to keep separate tallies for each kind of good, which quickly becomes impractical since even similar kinds of goods may not have equal value. Also, you need some standard good with broad marketability as a means of settling debts which can't be paid in kind (i.e. legal tender or equivalent).

They certainly had a unit of account (bushels of grain, for example) to quantify debt, but they didn't have a currency, which has additional necessary criteria besides unit of account.

What these cultures had, according to Graeber, were essentially ledgers for keeping track of debt.

'"I'll give you some of my extra grain, because you seem kinda friendly, and you might repay me the favor if I happen to be in trouble in the future"?'

I think one way of looking at this is that humans are generally embedded in larger contexts, because we always come in communities. (The exceptions are, broadly speaking, historically uninteresting.) So it isn't just that Alice and Bob are sitting there at this isolated moment when Alice has grain and trying to work out if it's worth asking Bob, whom she has never met before, to trade the grain for a future favor. Alice and Bob know each other, and are embedded in a community. They have access to a reasonable approximation of each other's reputation. Alice knows whether or not Bob tends to default on his debts. Alice can make Bob pay for defaulting with his reputation, which can theoretically become so bad that nobody wants to trade with him, which in many historical circumstances may be a literal death sentence. (We are very wealthy, and casually trade with many strangers, and have a hard time internalizing the world they lived in.)

Attempts to model Alice and Bob's interactions as if they are strangers meeting for the first time, who generally expect to never see each other again, may be of some mathematical utility but won't explain the real world very well.

So, it's neither a formal debt in anything like the modern sense, but neither is it "maybe you'll repay me in the future"; there's not total assurance, but in the community context there's much higher assurance of future repayment than that.

It doesn't have to be formal. Everyone does this today, and keeps a kind of list of debts in their head. "Bob asked me to help him move this weekend, and I really don't want to, but he helped me move last year."

If you don't repay your social debts, you're going to find yourself getting a lot less favors done for you, and having a lot less friends in general.

Sounds like a mises.org post Jeffrey Tucker wrote

https://mises.org/library/halloween-and-its-candy-economy

The barter model explains why money is beneficial. People need not have actually engaged in a barter economy for it to be a valuable explanation.

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