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The subject’s book “Debt: The First 5,000 Years” was so poorly researched and argued, it’s one of the few books I’ve returned to Amazon in the past two decades. (“A History of Interest Rates” by Homer & Sylla, remains the definitive history of debt among humankind. Originally written in 1963, I’d been hoping to find a modern update to the subject matter.)

Similar to this article - lots of claims of greatness, but never actually gets around to using facts to build the case.

“All hat and no cattle” as they might say.

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I didn't evaluate its sources, but thought the writing in Debt was excellent. The typical pattern throughout was for Graeber to introduce an idea in a paragraph, for me to think of several "what about..." and "hm, I dunno"s for it, and for Graeber to spend the next few paragraphs addressing all of those, directly.

One thing I took away from it that has been true every time I've had occasion to check: When economists tell the "first there was barter, and then there was money" story, they almost never care to connect the claim to evidence.

It's like they're laying down premises for an argument rather than making claims about actual humans.

Sort of how economists are always urging more neoliberalism and less of any alternative (socialism, syndicalism, Georgism, whatever): they're talking their own book. If they don't examine the nature of money (for example, the control that capitalists exert over Fed policy etc.) too closely they can pretend that their simplistic models still have some explanatory value.

You haven't met a wide range of economists.

There is indeed a bunch of variety among academics in economics, but a very heavy filter biases which kinds of economic opinions make it into the broader public sphere.

This has a lot to do with how think tanks are, on average, politically biased due to their funding sources, and so one could argue that it's not academics' fault.

Still, I often feel that academics in economics too easily abdicate their responsibility for how the subject impact society.

Hunch: It is because academics need to prove their results. In order to do that, they generally need numbers.

I haven't seen a "wide range of economists" on TV! Or testifying before Congress! Or arranging coups in Chile!

At university, I met (and roomed with) lots of economists, all of whom were solidly in the neoliberal camp. As perceptive readers might have realized, since then I've read and listened to a broader range of economic expertise. My favorite now is Richard Wolff.

You might like the writings of Yanis Varoufakis.

Yes, I do. He has interesting things to say about the role of Germany in EU, much as e.g. Michael Hudson has interesting things to say about the role of USA globally.

I’ve read that the Austrian school believed you can figure out economics from first principles, but I don’t think that’s true generally.

Moreover, the premise violates one of my first principles.

That's so obvious it doesn't require evidence. Of course there was bartering before there was money, you don't need to money to barter, you need to invent money to use money.

It is obvious that barter was a possibility. It is not obvious that most economic interaction worked through barter. How often do your interactions with your friends and family involve barter? Mine are more nuanced exchanges like

- "I generally do the dishes and trust that you are keeping on top of sorting our mail"

- "I've got this round of beers. You'll probably get the next one but nobody's counting"

- "Sure, I'll help you move flats"

So because you don't barter with your family and friends - while living a top 0.00001% lifestyle compared to most people in history - you conclude bartering wasn't really a big thing in the past and people just gave things away for free most of the time?

I assume no, but I'm not understanding what are you actually arguing for then?

I think you misunderstood his point- in a system without money, you can directly barter (ie I give you an apple for your your orange), or adopt a ‘credit’ based system (ie I give you an apple today, and when I need a favor I’ll ask you for one - like the Godfather, for example).

What the book ‘Debt’ discusses is that credit based systems were the norm, not bartering.

In fact, iirc even bats have been shown to keep track of who shares food with them, and to share excess food with a less lucky partner, provided that partner continues to reciprocate.

Thank you for explaining.

Isn't that 'credit system' just one step in transitioning to a monetary system?

It's unlikely that people were battering one day and then suddenly had this great idea of transitioning to a system of using money. Battering > battering with some credit > formalised money system seems like a logical series of steps to me. And of course there would be many more small steps between those. I would expect the number of transactions using credit to track the growth of society and the corresponding range of goods and service available.

Well thats the whole point of the debt book. Taking that progression and poking holes in it. IIRC, Graber suggests that physical money came in too play when kings needed to levy armies.

I know this is a lousy source, but my Latin teacher in High School claimed that Caesar invented fiat currency (although she didn't use those words).

He put is face on gold coin, gave it to soldiers, and demanded that his taxes be paid not in any-old-gold, but in Caesar-face gold. Thereby ensuring that recently conquered villages have an incentive to feed and house the solders that conquered them. This way, those soldiers didn't need to resupply before moving on to the next village.

It would seem that we've been using money to override ethics on behalf of the powerful ever since.

My assumption is that your lifestyle is similarly detached from antiquity as mine. My only firm conclusion is that it is non-obvious, either of us would need more evidence, and that it was worth David Graeber's time to research.

One of the difficulties of separating small-tribe economics from the rest of their social system is that the members of a small tribe don't think of it like that. If you live in that kind of society then you know personally the people you are dealing with, and while you might "trade" items or favours, its all pretty approximate, with the "balances" held in peoples heads, and tied in with other concepts of social obligation such as a general duty to look after the sick and elderly, and watch out for each other's children. It's only once people start living in larger groups where you can't know everyone that something like an economic system develops.

Yes, incidents of barter will pre-date incidents of spending money. That part is obvious.

But this does not imply that there was a widespread "barter system" as the primary means of trade and cooperation, which was then replaced by a superior "money system". Instead, there would have been systems of credit, where you give me chickens now and I give you apples in six months. No money changes hands, but it's possible to keep track of who deserves to have some apples, and complex social institutions can be constructed on this basis, that would never be possible if society relied entirely on a "barter system". The "money system" is not an alternative to a "barter system" but is an alternative to a "credit system". Societies have gone back and forth between them many times throughout history - arguably we switched from a money system to a credit system when we abandoned the gold standard, and Bitcoin advocates want us to switch back again.

> Instead, there would have been systems of credit, where you give me chickens now and I give you apples in six months. No money changes hands, but it's possible to keep track of who deserves to have some apples.

That is called "barter".

Unless all the transfers/debts/values are being tracked in terms of apple's, then apples are fulfilling at least one aspect of money: unit of account.

> That is called "barter".

From the Wikiepdia page on "Barter"[1]:

> In trade, barter (derived from baretor) is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. Economists distinguish barter from gift economies in many ways; barter, for example, features immediate reciprocal exchange, not one delayed in time.

The "immediate reciprocal exchange" criterion means that exchanging chickens now for apples later is not barter. When we talk about money replacing barter, we are talking specifically about the ability to immediately exchange physical tokens for goods or services. This refers very specifically to money as the medium of exchange, not as the medium of account.

In the traditional story, money was needed because Farmer A wants to exchange chickens for apples with Farmer B, but Farmer B doesn't have any apples right now. Money is useful because they can exchange that instead. But this story loses a lot of its force when you understand that they could have simply exchanged credit, without any need for money at all. The systemic change is not barter -> money, but credit -> money, which has very different implications for how society is organised. And, as I mentioned, we can see transitions from credit -> money and back again occur many times in history, whereas we see barter occur only in extremely rare circumstances.

[1] https://en.wikipedia.org/wiki/Barter

Thanks for the clarification!

I was not aware of the "immediate" condition for barter.

Reading from your link, there seems to be a gap in terminology for a situation separate from bartering, gift giving, and money based exchanges. Specifically, delayed exchanges where an account is informally kept but based on what was taken, not any unit/money.

The wikipedia entry for "Gift economy" rules out "explicit agreement for immediate or future rewards". [1]

So what to call the situation implied by "delayed barter", or "gifting with explicitly expected reciprocity"?

That situation can still happen without money. (Not claiming it was the basis for any particular economy, as it wouldn't scale well past trusted or enforcable relationships.)

[1] https://en.wikipedia.org/wiki/Gift_economy

This, a hundred billion times this. It’s been a nagging, cavernous hole in the explanation every time I hear the overly simplistic “barter system was replaced with the eventual invention of money”. It not only denies the existence of more sophisticated systems of barter that include any sort of “futures” being bartered, “pigs now for part of my apple harvest in a couple months”…

It also denies the existence of any systems where “money” is simply just the “most convenient commodity to barter with”. If everyone has these handy similarly sized hunks of gold and trade them cause it’s more convenient than carrying a chicken, that doesn’t mean “your using money”. If I’m happy not having gold and can simultaneously function in the “local economy” entirely with my chickens, I may use “gold”/“money” purely as a temporary item of escrow. I give gold to a shepherd to deliver sheep to my barn but he gives back the gold and takes some of my chickens when he leaves after the delivery… basically the “obviously money replaced barter cause it’s better” is a bullshit story that no one seems to give a shit trying to find evidence and I’m kind of sick of it.

/rant over

So where are the serious historical, evidence based research economists to be found? Id love a well researched history that had some evidence of past social behaviour with respect to barter/money.

What you are describing is still a bartering system - just with delayed payments.

Nonetheless, we do see evolutionary examples in-between pure barter and government-standardized metal coinage in the historical record.

The Aztecs had a complex system involving cacao seeds, strips of cloth, and "hoe money" for larger values. But while all three of these were used as a unit of account, they were also consumed directly as commodities.

Prior to the technological migration of metal coinage, ancient East Asia used shell money. These were almost exclusively used as a medium of exchange, and were not directly consumed as a commodity.

Standardized metal coinage was almost certainly invented only once by the ancient Mediterranean culture. Part of why the story "money replaces barter" is told is because this invention disrupts and rapidly replaces every other system that it touches for the next several hundred years, until the entire Old World is using metal coinage of some sort.

> These were almost exclusively used as a medium of exchange, and were not directly consumed as a commodity.

See also cigarettes in prisons (more recently ramen).

I checked that one out myself. Modern economics textbooks don't do that.

That entire section seemed to be Graeber saying "Economists have been promoting a myth for the last two centuries, but here I graciously point out their error so that they may be corrected and learn the truth." It never seems to occur to him that he might be tilting at a straw man.

I'm quite happy to agree that Smith got it wrong, but the modern examples Graeber cites don't support his claims. If you read them more carefully, what they are saying is "IF we were to live in a barter world then it would be very inefficient, hence money". They don't say that Barter World ever existed; its just a thought experiment.

> Most economists would probably relate a stylized “history of money” something like the following: As specialization caused problems in coordinating trade, societies naturally settled upon certain commodities, usually metals, as media of exchange.

The Transition From Barter to Fiat Money, Saint Louis Fed WORKING PAPER SERIES, 1994: https://files.stlouisfed.org/files/htdocs/wp/1994/94-004.pdf

This idea is widely accepted to be wrong today, but as you can see it wasn't the case not so long ago.

I know this is a public forum and not a scientific discourse, but considering that you criticising the book for essentially lack of evidence (facts), could you give some some evidence/examples for this?

I think the biggest set of fallacious claims made are made on the "Clovis Point" finds. The author makes broad sweeping statements based on these small finds that are not really supported by the evidence, nor do any of the experts in the field agree.

Additionally, the author goes to great lengths to make the claim that the earliest societies were egalitarian "commune" societies of hunter gatherers, by cherry picking very specific finds, and completely ignoring any counter-examples. He also draws broad conclusions on very weak evidence. For example, he looks at the ruins of certain ancient sites only partially excavated, notes that there's no evidence of a "central large building" and draws the conclusion that these societies had no central gov't or singular leadership.

These are wildly fallacious arguments. It's the sort of thing we see when someone who is very politically active does direct historical research. It's too easy to biased your research if you're specifically looking for evidence to support your modern politics.

Equating the natural history of "interest rates" with that of debt / credit relations gives a hint of why you might not have liked the Debt book.

Anecdotally, modern day bankers and economists get a real shock when he discusses the long historical relation of debt with slavery. Their further response to the book is generally tainted by that unease.

The rarefied world of high finance and macroeconomics (while well endowed with "research" and sophistry) has generally avoided to take responsibility for both human and physical (environmental) costs of the financial / economic systems they rationalize. That is a societal debt that is now becoming overdue with unknown consequences.

Hence our deeply rooted tradition of bankruptcy and laws prohibiting debtors' prison.

This tradition an almost uniquely US phenomenon. "Around the world, people are less forgiving about debt forgiveness than they are in the United States" [0]

Now consider the implications of a globalized economy where consumption in rich countries is underwritten by debt peonage. "The International Labour Organization (ILO) estimates that $51.2 billion is made annually in the exploitation of workers through debt bondage".[1]

[0] https://www.bc.edu/content/dam/files/schools/law/lawreviews/...

[1] https://en.wikipedia.org/wiki/Debt_bondage#South_Asia_2

My understanding is that home mortgages are also more borrower-friendly in the US than elsewhere (e.g., fixed interest rates for 30 years).

Another aspect of how home mortgages are more borrower-friendly in US is that in many states of USA if you default on your mortgage, then after foreclosure the debt is considered settled; while in many other countries the mortgage is just "extra" collateral, so if you default then the mortgaged property is auctioned, but if the proceeds do not cover the whole debt, the remainder still has to be paid in due term and/or accrues extra penalty interest; so a housing bubble followed by a mortgage crisis hits borrowers more and banks less.

I had Dick Sylla as a professor for economic history. Wonderful lecturer with encyclopedic knowledge of the history of finance. Though A History of Interest Rates is thorough, comprehensive and well documented, I must say the writing is pretty dry.

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