The Myth of the Myth of Barter

Adam Smith, barter, Carl Menger, David Graeber, history of money
Olaus Magnus, "Historia om de nordiska folken" (modified)

???????????????????????????????????????????So far as some people are concerned, when it comes to bashing economists, any old stick will do.

That, at least, seems to be true of those anthropologists and fellow-travelers who imagine that, in demonstrating that certain forms of credit must be older than either monetary exchange or barter, they've got some of the leading lights of our profession by the short hairs.

The stick in this case consists of anthropological evidence that's supposed to contradict the theory that monetary exchange is an outgrowth of barter, with credit coming afterwards.  That view is a staple of economics textbooks.  Were it nothing more than that, the attacks would hardly matter, since finding nonsense in textbooks is easier than falling off a log.  But these critics have mostly directed their ire at a more heavyweight target: Adam Smith.

In The Wealth of Nations, Smith observes that

When the division of labour has been once thoroughly established, it is but a very small part of a man's wants which the produce of his own labour can supply.  He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.

But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations.  One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less.  The former consequently would be glad to dispose of, and the latter to purchase, a part of this superfluity.  But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them.  The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it.  But they have nothing to offer in exchange, except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for.  No exchange can, in this case, be made between them.  He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another.  In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.

What's wrong with that?  In the words of Cambridge anthropologist Caroline Humphrey, as quoted in a recent article on the subject in The Atlantic  (the appearance of which inspired the present post), what's wrong is that "No example of a barter economy, pure and simple, has ever been described, let alone the emergence of money… . All available ethnography suggests that there has never been such a thing."

Now, the mere lack of historical or anthropological evidence of past barter economies is itself no more evidence against Smith's account than it is evidence in favor of it:  after all, if barter tends to get as "clogged as embarrassed" as Smith maintains, we should not be surprised to find no evidence of societies that relied on it.  That lack might only mean that societies either came up with money quickly, or perished equally quickly.  Instead of refuting Smith's theory, in other words, the lack of evidence of barter may simply reflect survivorship bias.  Julio Huato, in his astute review of Graeber's book, makes the point most cogently: "Graeber's attitude," he writes,

is like that of a chemist rejecting the idea that unstable radioactive isotopes of a certain chemical element exist and tend to evolve into stable isotopes because the former are only exceptionally found in nature, while the latter are common.

But the problem with Smith's understanding, according to Graeber, isn't merely that anthropologists can find no evidence of barter societies.  It is, rather, that those same anthropologists have plenty of evidence of societies that subsisted, if they didn't thrive, despite neither having money nor relying upon barter.  Instead of relying on "quid-pro-quo" exchanges, whether direct or indirect, they managed by resorting to subtle forms of credit, if not outright gift-giving.

As our Atlantic correspondent explains:

If you were a baker and needed meat, you didn't offer your bagels for the butcher's steaks.  Instead, you got your wife to hint to the butcher's wife that you two were low on iron, and she'd say something like, "Oh really?  Have a hamburger, we've got plenty!"  Down the line, the butcher might want a birthday cake, or help moving to a new apartment, and you'd help him out.

Far be it for me to deny that trade of this sort happens, even in modern societies, or even that entire communities have at various times depended on it.  Heck, I once taught a short course on economic anthropology an entire section of which was devoted to gift giving and other sorts of "ceremonial exchange."  What I do deny, and vigorously, is anthropologist David Graeber's claim that the existence of gift economies undermines, not just Adam Smith's account of money's origins, but "the entire discourse of economics."

Hear our correspondent once again:

According to Graeber, once one assigns specific values to objects, as one does in a money-based economy, it becomes all too easy to assign value to people, perhaps not creating but at least enabling institutions such as slavery…and imperialism… .

There you have it.  By claiming that societies could thrive only by means of monetary exchange, Adam Smith is supposed to have given shape to an "economic discourse" according to which all things, including people, are bound to be valued in terms of money, thereby "enabling" slavery and imperialism and…well, the whole capitalist catastrophe.

That nothing could be more grotesquely unjust to Adam Smith than Graeber's attempt to paint him as an enabler of slavery and imperialism is (or ought to be) painfully obvious.  But if fair play is not Professor Graeber's forte, neither is a solid, or even a more than exceedingly superficial, understanding of the tenets of modern economics.  Had Graeber's purpose been, not to document  economists' ignorance of anthropology, but to show that at least one anthropologist doesn't know the first thing about economics, I dare say that he could have done no better than to write Debt: The First 5000 Years.

Consider the opening passage of "The Myth of Barter," Graeber's second chapter, and the one in which he sets-out his central claim that Smith, by getting the story of money wrong, took a fateful wrong turn:

What is the difference between a mere obligation, a sense that one ought to behave in a certain way, or even that one owes something to someone, and a debt , properly speaking?  The answer is simple: money.  The difference between a debt and an obligation is that a debt can be precisely quantified.  This requires money.

"A history of debt," Graeber observes two paragraphs later, "is thus necessarily a history of money."

This is simple, all right.  But a moment's thought reveals that it is also simply wrong.  One can incur a debt by borrowing some non-monetary good or goods, just as well as by borrowing money, where repayment is also to be made in goods, and is no less precisely quantified than a monetary obligation might be.  To say, "Give me a hamburger today and I'll repay you two hamburgers on Tuesday," is to offer to go into debt to the tune of (precisely) two hamburgers.  That money is both fungible and relatively (though in practice not infinitely) divisible makes it an especially convenient object of debt contracts.  But that is a difference in degree rather than in kind.

Far from being innocuous, the error with which Graeber's chapter opens is but one crack in the severely-flawed foundation upon which his entire critique of both modern economics and commercial society rests.  That foundation consists of the view that money is, not only uniquely (and precisely) quantifiable, but something capable of precisely measuring the value of other things:

What we call "money" isn't a "thing" at all; it's a way of comparing things mathematically, as proportions: of saying one of X is equivalent to six of Y.

Monetary exchange, in turn,

is all about equivalence.  It's a back-and-forth process involving two sides in which each side gives as good as it gets. …[E]ach side in each case is trying to outdo the other, but, unless one side us utterly put to rout, it's easiest to break the whole thing off when both consider the outcome to be more or less even.

In other words, monetary exchange, being but an "impersonal" matter of mathematics, is a contest that must result either in a stalemate, with neither side winning, or in a bargain by which one side rips the other off.  Gift exchange, on the other hand, "is likely to work precisely the other way around — to become a matter of contests of generosity, of people showing off who can give more away."

I leave it to the reader to imagine how, by means of repeated appeals to this sort of reasoning, Graeber manages to paint Adam Smith (and most economists since) as an apologist for slavery, imperialism, and pretty much every ungenerous and unkind activity under the sun.

There's just one problem.  Just as money is in truth no more "quantifiable" than hamburgers, so, too, is it the case than money is no more a "measure" of value than a hamburger is.  By that I mean, not that a hamburger is also capable of measuring the value of other things, but that neither it nor any sort of money is capable of doing so.

The idea that money is a "measure of value," like the related idea that exchanges are necessarily exchanges of equivalents, is among the hoariest of economic fallacies.  It plays a prominent part in Aristotle's economics — and, not coincidentally, in Aristotle's condemnation of all sorts of "capitalist" activity.  Smith himself, in subscribing to a modified labor theory of value,  was unable to break free of it.  It is more than a little ironic that Graeber, in flinging all sorts of undeserved criticism at Smith, cleaves to him when it comes to his one indisputable mistake.

The notion that money is a "measure of value" is but a particular instance — albeit one that has managed to linger on in some economics textbooks — of the mistaken belief that economic exchanges are exchanges of equivalents.  In his book Money: The Authorized Biography, Felix Martin, like Graeber, takes the "measure of value" notion seriously, and attempts to build from it a critique of both modern economics and modern monetary economies.  In reviewing that work, I explained Martin's mistake by observing that when a diner sells me bacon and eggs for $4.99, "that doesn’t mean that bacon and eggs are worth $4.99, 'universally' or otherwise.  It means that to the diner they are worth less, and to me, more."

Grasp this little strand of truth.  Pull on it.  Keep on pulling.  And watch Martin's critique unravel. Graeber's critique, with its fatuous dichotomy of generous credit transactions on one hand and antagonistic monetary transactions on the other, rests on the same fallacy, and is no less gimcrack.

My main concern, though, isn't with Graeber's sweeping condemnation of modern economics, or of the  economic arrangements for which modern economists are supposedly to blame.  It's with his particular claim that there's no merit in Smith's account of the origin of money, or in the later  accounts of other economists, including Carl Menger.  Despite what these economists have argued, money couldn't have grown out of barter, Graeber insists, because the "fabled land of barter" that these accounts posit never existed.  Instead, credit came first, sometimes in subtle and elaborate forms that made it indistinguishable from gift-giving; then came money, in the form of coins.  Barter, finally,

appears to be largely a kind of accidental byproduct of the use of coinage or paper money: historically it has mainly been what people who are used to cash transactions do when for one reason or another they have no access to currency (my emphasis).

So, how true is Graeber's account, and just how fatal is it to the "fable" that economists like to tell?  For answers, we need look no further than the evidence Graeber himself supplies.  For on close inspection, that evidence itself suffices to show that, notwithstanding the fact that credit is older than barter, Smith's theory is, after all, not all that far removed from the truth.

A paradox?  Nothing of the sort.  The simple explanation is that, while subtle forms of credit or outright gift giving may suffice for affecting exchanges within tightly-knit communities, exchange within such communities hardly begins to take advantage of opportunities for specialization and division of labor that arise once one allows for trade, not just within such communities, but between them, that is, for trade between or among strangers.  One need only recognize this simple truth to resuscitate Smith's theory from Graeber's seemingly fatal blow.  Simple forms of credit may come first; but such credit only goes so far, because it depends on a repeated interaction, and the trust that such interaction both allows and sustains.  That affection and other such "moral sentiments," to use Smith's own term, also play a large part is evident from the fact that, within families even today,  monetary exchange and barter play hardly any role: every family is, if you like, a vestigial "gift" economy.

It's absurd to suppose that Smith himself failed to recognize that credit (or something like it) functions in place of either barter or money in families; and hardly more so to suppose that he denied that it might do the same in somewhat larger but still tightly-knit communities.  Little Adam Smith did not, presumably, bargain with his mother over bed and board, or find his efforts to secure those and other necessities "embarrassed and choked" for want of either double coincidences or cash.  Nor could anyone aware of passages like the following, from Smith's Theory of Moral Sentiments, suppose that he considered mutual aid unimportant except within nuclear families:

In pastoral countries, and in all countries where the authority of law is not alone sufficient to give perfect security to every member of the state, all the different branches of the same family commonly chuse to live in the neighbourhood of one another.  Their association is frequently necessary for their common defence. They are all, from the highest to the lowest, of more or less importance to one another.  Their concord strengthens their necessary association; their discord always weakens, and might destroy it. They have more intercourse with one another, than with the members of any other tribe. The remotest members of the same tribe claim some connection with one another; and, where all other circumstances are equal, expect to be treated with more distinguished attention than is due to those who have no such pretensions. It is not many years ago that, in the Highlands of Scotland, the Chieftain used to consider the poorest man of his clan, as his cousin and relation. The same extensive regard to kindred is said to take place among the Tartars, the Arabs, the Turkomans, and, I believe, among all other nations who are nearly in the same state of society in which the Scots Highlanders were about the beginning of the present century.

If Smith recognized, at least implicitly, that, in families and other tight-knit communities, "credit" serves in place of either barter or money, Graeber for his part is forced to admit that, when it comes to trade between strangers, credit won't serve:

Now, all this (meaning the lack of evidence of a "fabled land of barter") hardly means that barter does not exist — or even that it's never practiced by the sort of people Smith would have referred to as "savages."  It just means that it's almost never employed, as Smith imagined, between fellow villagers.  Ordinarily, it takes place between strangers, even enemies (my emphasis).

Later Graeber writes,

What all … cases of trade through barter have in common is that they are meetings with strangers who will, likely or not, never meet again, and with whom one certainly will not enter into any ongoing relations. …

…Barter is what you do with those to whom you are not bound by ties of hospitality (or kinship, or much of anything else).

No doubt.  But how big a problem is this for Smith?  Let pass the silly remark about "savages."  (An anthropologist ought, one would think, to be capable of resisting the temptation to pass judgement on an 18th-century Scotsman's choice of words according to 21st-century notions of political correctness.)  The question is, what did Smith really "imagine"?  His story of the butcher and the baker notwithstanding, his reference to pastoral societies makes it perfectly evident that he understood the difference between conduct among "villagers" and conduct among strangers.  His theory of the origins of money ought to be understood accordingly.  It is a theory of how, when opportunities for trade arise among strangers, bringing with them further scope for the division of labor, trade will be "choked and embarrassed" if it must occur by means of barter, but will cease to be so once barter gives way to the employment of money.  In portraying such cases as exceptions to the rule that "credit" proceeds barter, Graeber simply fails to understand that such "exceptions" are all that matters in assessing Smith's theory.

Nor will it do to suggest that Smith's understanding of money's origins confuses what happens within societies or communities with what happens between them.  Such a view depends on arbitrarily rigid definitions of "community" and "society" that overlook these concepts' inherently elastic nature:  formerly separate communities cease to be so precisely to the extent that commerce takes place between them.  Smith, for his part, recognizes this.  Moreover he understands that the rise of commerce, meaning commerce among strangers, serves in turn to reduce the relative importance of ties of kinship and such, further increasing thereby the importance of monetary exchange.  Here is the passage from the Theory of Moral Sentiments that immediately follows the previously-quoted one on pastoral societies:

In commercial countries, where the authority of law is always perfectly sufficient to protect the meanest man in the state, the descendants of the same family, having no such motive for keeping together, naturally separate and disperse, as interest or inclination may direct.  They soon cease to be of importance to one another;  and, in a few generations, not only lose all care about one another, but all remembrance of their common origin, and of the connection which took place among their ancestors.  Regard for remote relations becomes, in every country, less and less, according as this state of civilization has been longer and more completely established.  It has been longer and more completely established in England than in Scotland; and remote relations are, accordingly, more considered in the latter country than in the former, though, in this respect, the difference between the two countries is growing less and less every day.  Great lords, indeed, are, in every country, proud of remembering and acknowledging their connection with one another, however remote.  The remembrance of such illustrious relations flatters not a little the family pride of them all; and it is neither from affection, nor from any thing which resembles affection, but from the most frivolous and childish of all vanities, that this remembrance is so carefully kept up.  Should some more humble, though, perhaps, much nearer kinsman, presume to put such great men in mind of his relation to their family, they seldom fail to tell him that they are bad genealogists, and miserably ill-informed concerning their own family history.  It is not in that order, I am afraid, that we are to expect any extraordinary extension of, what is called, natural affection.

In short, a generous reading of Smith, far from making him out to be a right bungler when it comes to matters ethnographic, yields a relatively sophisticated view, according to which kinship and "credit" first predominate, but then give way, as strangers meet, first to barter, but eventually to monetary exchange, which in turn allows for the growth of commerce, which ends up reducing the role of kinship and kin-based credit relationships.

If Graeber's reading of Smith is ungenerous, his reading of Carl Menger is…well, it's obvious that Graeber hadn't read Menger at all, for if he had he could not possibly have written that Menger improved upon Smith's theory mostly "by adding various mathematical equations" to it, or that Menger "assumed that in all communities without money, economic life could only have taken the form of barter."  (Nor, for that matter, could he have failed to note that the senior Menger, unlike his mathematician son, spelled Carl with a "C.")  Instead, Graeber would have had to admit that Menger understood perfectly well that "credit," in Graeber's loose sense of the term, is older than either monetary exchange or barter.

Menger's appreciation of the importance of what he sometimes referred to as "no-exchange" economies is especially evident in his 1892 article, "Geld," in the Handwörterbuch der Staatswissenschaften  (pp. 730-57), from which his more well-known article "On the Origins of Money" is extracted.  According to Menger,

Voluntary as well as compulsory unilateral transfers of assets (that is, transfers arising neither from a ‘reciprocal contract’ in general nor from an exchange transaction in particular, although occasionally based on tacitly recognized reciprocity), are among the oldest forms of human relationships as far as we can go back in the history of man’s economizing.  Long before the exchange of goods appears in history, or becomes of more than negligible importance…we already find a variety of unilateral transfers: voluntary gifts and gifts made more or less under compulsion, compulsory contributions, damages or fines, compensation for killing someone, unilateral transfers within families, etc.*

Far from exemplifying Graeber's claim that economists "begin the story of money in an imaginary world from which credit and debt have been entirely erased," Menger explicitly recognizes that

people had probably tried to satisfy their wants, over immeasurable periods of time, essentially in tribal and family no-exchange economies until, aided by the emergence of private property, especially personal property, there gradually appeared multifarious forms of trade in preparation for the exchange proper of goods. …Only then, and hardly before the extent of barter and its importance for the population or for certain segments of the population had made it a necessity, was the objective basis and precondition for the emergency of money established.

In light of such evidence — which, bear in mind, comes from a work published several decades before Mauss's pathbreaking work on gift exchange — the attention given to Graeber's critique, and the fact that even some economists saw merit in it (if only temporarily), tells us that there is, after all, at least one impulse among humans that's more deep-seated than their "propensity to truck, barter, and exchange."  I mean, of course, their propensity to let themselves be thoroughly bamboozled.


*From the English Translation "Money," by Leland Yeager (with Monika Streissler).  In Michael Latzer and Stefan W. Schmitz, eds., Carl Menger and the Evolution of Payments Systems: From Barter to Electronic Money (Cheltenham, UK: Edward Elgar), pp. 25-108.



  1. Graeber wouldn't have had to look any farther than the third edition of Hirshleifer's Price Theory book (p. 436) to find a reference to anthropologist Marshall Sahlins' book Stone Age Economics, which described barter among the Busama and Tami tribes in the East Indies.

    To find examples of early credit, he only had to familiarize himself with tallies: either the wooden kind used as money up until the invention of paper money, or the much older clay tablets used as money in Mesopotamia.

    1. All true. I well remember as an undergrad reading all about potlatches and such. There was a general understanding that economics wasn't just about monetary (or barter) societies.

      1. You seem to be emphasizing gift economies. They are not the only alternatives to money or barter. "Favor banking" is not a gifting economy.

        1. You ignore my "and such." Elsewhere I sometimes use gift economy as a shorthand for non-exchange economies with any sort of non quid-pro-quo goods transfers.

  2. Sad that economists, anthropologists, and historians of capitalism probably do have leaks in their thinking that a big interdisciplinary conversation would fix, yet that conversation seems to have opened with a "gotcha", which can only bring wave upon wave of counter-gotchas for the foreseeable future.

    Then again, if the public conversation Graeber started and that you are working to refine does force econ textbooks to reckon with better historical evidence for how money emerged, the next Graeber will have less recourse to gotchas and more reason to let modern economic theory settle in their head awhile before they begin responding to it.

    1. Far enough. But textbooks have never represented the best thought in any discipline. When one considers how publishers go about commissioning people to write them, this is hardly surprising. On the other hand, Graeber's complaints, if taken seriously, will only result in another crop of textbooks containing silly statements about how naive Adam Smith was. It is the nature of the beast. Textbooks are all about conventional wisdom, as opposed to the real thing.

      1. Yeah, the scenario I've painted probably gives too much credit to future textbook editors and future Graebers alike.

        By the way, I'm really enjoying that Julio Huato review you quoted from. Like you, he writes about these topics very accessibly and sharpens his criticisms to a fine edge.

    2. I have little problems with the questions Graeber is asking or what he posits as answers.
      I have serious problems with the hubris of calling them certainty.
      Even the "hard sciences" go through long periods of being wrong before coming closer to the right answer.
      In many many things we will never know the answers. Far too many particularly on the left are incapable of living with that.
      The odds of Graeber being right are zero – because we are unlikely to have sufficient evicence of knowledge to know these things with certainty. Anthropology takes the debris that remains after 10's even hundreds of thousands of years and tries to guess at the details of life long ago.
      Noting that is little more than an educated guess does not diminish anthropology.
      But presuming we know what we can not know does.

  3. Really strong discussion here, George. Keep pushing this issue. Graeber and the good folks at Jacobin and Adbusters magazine et al. have been able to sell their followers on this idea because it looks like a takedown of all of economics, which implies a takedown of all oppressive thought structures (or something). So nothing drives these people crazier than competition in this arena, and most economists have left this debate behind. You're doing the Lord's work here…

    1. What's really bizarre is that some people think that economics stands on one leg, and if they can only kick that leg out, that all of economics falls. Is there any other serious field of study where there is just one connection between the theory and reality, so that destroying that connection breaks down the field?

      1. Other versions of that tactic have been tried. Behavioral and heterodox people have claimed for a long time that it would take more than a lifetime to completely rank preferences over consumer goods even given very conservative per-ranking-choice times. It follows that rational choice is impossible to imagine in reality.

        I think this is pretty common actually. I used to think that taking apart Marx was sufficient to undermine the entire enterprise of sociology. We can certainly get a lot more traction if we go after first p

  4. I've had my own run in with Graeber. He really does seem to be remarkably ill informed on the basics of the economics he think's he's debunking.

    1. Yes, I was shocked when I first read his book to realize that some economists were taking him seriously. For someone making such strong claims against our discipline, he evidently spent very little time learning about it.

      Having now encountered a number of persons who feel inclined to condemn Adam Smith, both from the left and from the right, I can honestly declare that every last one of them has struck me as being very poorly informed, if not blinded by their hostility to someone they understand solely as a symbol, rather than as a very cautious and careful thinker.

      1. I might be taking it a little more personally. I"m a Fellow at the Adam Smith Inst for one, and my economics education was from the LSE, where Graeber now teaches in the anthropology department. I just can't help thinking that if he wandered down the corridor and asked a few questions he might be better informed.

    2. Why bother to understand something when you know it's nonsense? I don't have to study astrology, or homeopathy, or chiropractic (the subluxation part, not the body mechanics and massage part) in order to say that they're nonsense. Why should Graeber bother to study economics? The fact that many universities grant PhD's in economics shouldn't serve as a clue to him. The fact that economics can explain why popcorn is so expensive in a movie theater, isn't going to inform him of anything.

  5. Graeber says: "The difference between a debt and an obligation is that a debt can be precisely quantified. This requires money."

    The author says: "…a moment's thought reveals that it is also simply wrong. One can incur a debt by borrowing some non-monetary good or goods, […] and is no less precisely quantified than a monetary obligation might be. To say, "Give me a hamburger today and I'll repay you two hamburgers on Tuesday," is to offer to go into debt to the tune of (precisely) two hamburgers. "

    Colin says: Both guys kind of missed the point. Graeber was too quick to finger money. The author was too quick to miss the important point that Graeber made – that is the quantification.

    It doesn't matter if we're exchanging coins or burgers, the quantification and accounting is the problem. Reducing our existence to a decimal number scale is ok for computers, tax collectors and 'economists', but it is not compatible with emotional animals

    1. Really, Colin. Do you really imagine the world would be a better place if no one ever kept accounts? Do you imagine that human relations would be improved if we only would always make a point of being vague about exchanges and obligations? How much anger and recrimination do you suppose results from failure to "quantify" matters? Why, half the world's lawyers make their living from instances in which obligations weren't sufficiently well defined.

      Even in so-called "gift" economies there is a sense in which "quantification" applies. Those who fail to reciprocate adequately incur various kinds of sanctions.

      All social life is a matter of give and take; and according to the most universal of ethical notions the giving and the taking are supposed to arrive at some sort of balance. It is, to say the least, extraordinary that some of those who complain most loudly about how the market system breed "inequality" should at the same time complain that that same system encourages people to keep track of quantities!

      1. Hi George, thanks for the reply. Firstly I've no idea what this means, or who you are referring to here:

        "..those who complain most loudly about how the market system breeds "inequality" (and who muster every sort of statistic to prove the point) should at the same time complain that that same system encourages people to keep track of quantities!"

        Anyway, we are surrounded by examples of natural exchange in the animal kingdom where balance occurs. No creature is ever obligated to purchase or exchange for anything it requires. No accounting required.

        Yes, social life is a matter of give and take. But do you keep accounts for your friends and family? I'm sure you don't. Why is that?

        I advocate a post-market, post-scarcity society such as suggested in the Free World Charter. [ ] It's essentially a return to that natural equilibrium of not-keeping-score-because-everything-evens-out-in-the-end, while utilising the best of technology to improve lives and reduce the burden of labour, eradicating goods and services markets, and basing personal values on our place within our community and biosphere rather than continually engaging in auto-genocidal consumerism.

        This is 21st century heresy of course and probably too much for you to digest considering your remarks about how lawyers, so I see where you're coming from! Essentially we have to consign Messrs Smith, Keynes & von Mises & Co to the graveyard where they belong. We are pretty close to f*cking everything here, so we either change the game radically or asphyxiate in ignorance instead..

        …Really, there's far too much new information for me to squash into this small comment. If' you're vaguely interested in learning about radical post-market theories let me know and we can discuss it in depth. Or you can google:

        The Mechanics of a Free Society
        The Zeitgeist Movement Defined
        The Venus Project

        1. "Social life is a matter of give and take. But do you keep accounts for
          your friends and family? I'm sure you don't. Why is that?"

          I do not, Colin. But you must understand that accounting and exchange are "civilizing," not antagonistic. They supply the means by which "society" expands beyond the boundaries of the family, or the tribe. They are to be understood, not as alternatives to the "give and take" of family and tribal existence, but to the plunder and warfare that were once the common means through which different families and tribes interacted. It is true, as Adam Smith observed, that this civilizing process of (quantified) voluntary exchange also brings in its wake a decline in the importance of kinship and non-exchange relationships. But that it the price we pay, if indeed it is to be reckoned a real price, for rising beyond a state of constant warfare. The happy ideal to which you refer of the world living as one big family is chimerical in the extreme, whereas the means you would have people embrace to arrive at it would instead result in a reversion to a life red in tooth and claw. That is the aspect of man's "animal" nature than your philosophy too readily neglects.

          1. We should not overplay the distinctions of family and tribe. War and plunder can occur inside of families when that give and take breaks down, we can atleast hope that accounting and the rule of law will civilize even family arrangements.

        2. You really want to live according to the rules of the "animal kingdom" ?

          And yes even there creatures are required to purchase what they need.
          Mana does not fall from the sky.
          Lions must hunt and kill to survive, Everything any animal requires for survival it must procure.

          There is very good reason not to return to the past – it sucked compared to now.
          I wish time travel were possible and we could send all those longing from some better past, back to it.

          1. It would certainly be useful to purge the world of all those mindless Adam Smith-bots still chanting his Gospel amid planetary decay 250 years later. What I propose is not something from the past. It's never been possible before now to effectively eliminate labour.

            Anyway, as I said – heresy. Go back to your sacred texts. 🙂

          2. All hail the gods of emotion and illogic.
            Lets throw virgins into the volcano to cure our economic ills,.
            Atleast we will feel better afterwards.

            Too bad we can not send you back to London in 1776 so that you can experience first hand the "environmental degredation" that has occurred since then.

            It is still not possible to effectively eliminate labor.
            Today is no different than Smith's time. We can effectively reduce the need for low skilled labor. Though we have gotten much better at that – as we must.

            Because an improving standard of living requires producing ever greater value with ever less human resources.
            That sustainable limitation is not in some sacred text, it is basic math – but then you eschew that.

          3. Wow! I think today is TOTALLY different from Smith's time. I can't believe you think nothing has changed as far as labour is concerned. We have already mechanised almost everything, we have created instantaneous global communication, an electronic human network, open source and distributed methods of production, and now AI is coming right down the tracks. Why can't you see that? Or do you, like other Smith-bots, believe that unemployment is merely caused by bungling government?

            Do you seriously think that our ecosystem was worse in 1776 than it is today? No oil spills, no large-scale mining, almost no carbon emissions, no plastic in the seas, lakes and streams, no mercury in the fish, many more species than today, etc etc.

            As to math, how does your math account for the trillions of global debt for which no money exists to repay and is still accruing interest? What about the billions of tons of food wasted every year while millions die because they lack the money to pay for it?

          4. All of the changes since 1776 make us more productive. They do not alter the rules that govern economics or human behavior.

            There are plenty of changes coming – some that I see and many that none of us see that will make us even more productive and therefore improve our standard of living further.

          5. I not merely think, I know the ecosystem was worse in 1776.
            The burning of "sea coal" in London was banned as long ago as 1300 – because the pollution was lethal.

            Water supplied near almost every population center of the least consequence have been near lethally polluted practically since roman times.
            Until the last few decades there had been no fish in the Thames for centuries.

            In the 60's Paul Ehrlich "Population Bomb" predicted that by 1974 the oceans would be as dead as lake erie. Today Lake Erie is fine as are the oceans – Ehrlich is not.

            The history of polution is transitioning from one form to another as we get CLEANER.
            humans living close to other humans has always brought pollution. It has taken 150,000 years just to get relatively good at managing our own excrement. In 17th century London dung was a PRODUCT that poor people sold. Outside of winter in most of london food left uncovered for more than a few minutes became unedible – because flies from the dung heaps that were everywhere would have poisoned it.

            Assorted Plagues, Cholera, Typhus, Tuberculosis – all biological pollution have been an enormous problem until the last century.

            Mining has produced massive waste for centuries. However bad it is today it is far less than in the past.

            Mercury levels started rising at about the civil war, peaked with WWII are lower today than 1890 and dropping.

            Farmed fish today produces more food than meat production – for the first time in world history.

            In 1970 there were 24.5 major oil spills per year.
            Today there are 1.6. The rate has been declining steadily for a long time.

            Nearly all plastics produced today biodegrade quite rapidly.

            As to CO2 – not a pollutant. A pollutant is a substance that makes air sea or land unsuitable for human use.

            The critical aspect of that is toxicity – as everything is toxic at some concentration.

            Low level of radiation are not toxic – and in fact there is evidence it makes us healthier. While high levels are clearly lethal.
            Mercury and other substances are the same.
            We are actually having problems with children and asthma and allergies because the environment for most children is TOO Clean.

            Regardless, CO2 is not toxic to humans at concentrations orders of magnitude higher than present. Concentrations that will never be reached.
            Overall higher CO2 is better for both humans and the environment.
            The most optimal climates of the past all had CO2 concentration much higher than present (also temperatures much higher than present).
            Increases in CO2 over the past 250 years have likely increased food production – both for humans and the rest of the planet – possibly as much as 25%.

          6. Money is meaningless. Creating money is trivial. Governments can create as much money as they want.

            It is creating wealth that is difficult and critical. Government creates little or no wealth. At best it fosters the creation of wealth.

            Standard of living is population/wealth produced

            Earth's population has doubled since 1965.
            As has standard of living – that means that we are now producing twice as much wealth per capita/per year and four times as much total.

            In 1965 in my elementary school classroom we had milk cartons to collect pennies and nickels and dimes for the millions of starving children in bangeledesch.

            Today the left moans because a few hundred bengeledeschi's die in factory fires. Lamentable, but still world wide starvation is now ENTIRELY a political problem.

            Calories consumed per capita globally today si double what is was in 1965.
            Starvation where it occurs is because governments or warring factions destroy farms, crops, livestock and prevent food relief.

            In 1950 30M+ people starved to death in china. When Mao died in 1976 china was a net importer of food. Today they are the third largest food exporter behind the US and Brazil.

            Debt as a percent of GDP for much of the world plumetted though to 1980
            and was relatively stable from then until recently.

            While there are a number of nations such as Japan that run counter to these trends, for most of the world Debt is a problem today – but less of a problem than it was in 1950.

          7. I have covered most of the nonsense in you post.

            Is there any one item you would really like to look at in greater detail ?

            This left wing nut malthusian crap is so much bunk.

            No the world is not perfect. There are even a few ways in which it has gotten a little worse. But in nearly every way the trend of the past 4 centuries has been dramatic improvement.

            Paul Ehrlich famously bet Julian Simon in 1980 that the real price of 5 commodities chosen by Ehrlich would increase as they became more scarce. In fact the NOMINAL price of all but two declined.

            The point of Simon's offer was that regardless of the measure over the long term they improve.

            Whether we are talking about the scarcity of copper or the price of wheat, or the quality of water over a long enough period of time things improve.

            We can scare monger. We can find a few things that are worsening at this moment, but all long term trends are towards improvement.

            And infact the very scarcity that left wingnuts such as Ehrlich think drives us to destruction, actually drives us to cheap abundance.

            Brent crude is about $40/barrel in 2009 it spiked to $140/barrel.
            It is that spike that ultimately drove the technology that increased the supply to bring the price down.

            You misunderstand technology which is why you think Smith's time was somehow different.

            The laws of supply and demand are immutable. When demand is higher enough to drive up prices, supply increases bringing them down.

            Supply can increase myriads of ways – Technology is a major one of those.
            All those technological changes you refer to since Smith are merely the market supplying our increasing demands as the virtuous cycle of our increasing standard of living allows us to want and have ever more.

          8. Thanks for taking the time to respond John. In short, yes, technology has improved lives. That's kind of what I'm on about. Why not take the logical course and allow that technology to bring us beyond the primitive exchange and systems that cause unnecessary suffering also?

            Re ecosystem, I was not referring specifically to London or other population centre, but rather the health and diversity of the biosphere as a whole.

            Ever-increasing wants are the product of our consumer- and worker-based education program. An economy demands consumption at any price, so we prep our kids for it. That's just not sustainable. A change in mindset and priorities is required now. It just can't happen within a market system. You can't make or expect people to 'behave' in a competitive system linked to their own wellbeing and/or survival. They won't. As long as personal wealth gain is incentivized, personal and environmental morality will always be overridden.

            The 'laws' of supply and demand only apply within a competitive trading system. We don't have to remain forever in that box. 🙂

          9. Technology is an artificial box arround a small subset of the means by which we work to improve our lives. The ultimate end objective is the same – improving our standard of living.

            Exchange is not "primative". Quite the opposite

            "Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that. "
            Adam Smith

            Exchange is an evolved method nearly unique to humans and most developed in humans.

            The "Logical Course" is for ever greater individual freedom, ever greater division of labor, ever greater exchange and every higher standard of living.
            No other creature has evolved such a system, no other creature has improved its own conditions so radically. What you see as primative is not only highly advanced, but one of the most significant causes for our ability to thrive and adapt far better than any other animal.

          10. Whether it is 15th Century London or anywhere else in the world at anytime the ecological conditions of humans at any other period in history were with very few exceptions worse than those of humans today anywhere.

            For much of 150,000 years of human existance life expectance was a bit more than two decades. Higher rates of violence were responsible for about 1/4 of the deaths of cavemen. All other causes link to the filth and associated disease. Specifics were different for humans in cites as opposed to the country, but death was early and driven by "pollution" none the less.
            Whether it was the foul air from burning wood or the diseases associated with living in our own excrement life was brutish and short.
            Nature did not give humans a lifespan of nearly a century – we have done so ourselves. And we have done so by improving the world we live in.
            Technology may appear to you to be the cause – but it is merely one of the means. Bandages, antiseptics, cleaner fuels, a reliance on ever less biological power and ever more safer power from ever cleaner fossil fuels.

            Further nearly all the improvement in life expectance happened in the period of time you claim humans have been polluting the most, and is nearly all caused by the very things you see as the problem.

            We can and should do better – and we will. We need no intervention to do so. Innumberable times in the past we have paid more for something that made our lives cleaner and less brutish. Even today coal and wood are cheaper ways to heat our homes, than oil, gas or electricity

            We moved from dung and wood to coal for heat – because it was cleaner.
            We moved from coal to oil, gas and electricity because they are cleaner.

            I have little doubt that when AS INDIVIDUALS we see sufficient benefits from solar, wind, nuclear, or biofuels that we will move again.

            We need no help to do so. The very system of free exchange that you call primative will ensure that as we produce more our demands and our ability to meet those demands will increase.

            Maslow's hierarchy of needs functions in the economic sphere too.
            We meet our needs for air, food, water, shelter, before we address love, friendship, entertainment. The value we place on things is based on our ability to meet lower needs. When we are dying of thirst clean water is worth more than gold. When we have made a very fundimental need abundant we place a higher value on less critical and more scare needs.
            It is their very scarcity – coupled with our higher standard of living that ultimately makes what is scarce and expensive cheap and abundant.

            Ever increasing wants are why we are living almost a century.
            They are a very good thing not a bad one.

            Again an instance where Sander's is nuts.
            the availability of 20 different brands of deodorant is caused the higher standard of living that results from being more productive.
            Those we call poor today live better and longer than Pharaohs.
            It is because of the "primative" system of exchange that gives us 20 different deodorants, that those at the bottom are so well off.
            John Rockefeller – possibly the wealthiest man the world has ever known, could not afford to cure his nephews scarlet fever. Until recently diabetes was a death sentence – no matter how rich you were.
            Today even the poor live to old age with problems that were fatal a few decades ago.

          11. The Primative system you eschew is not only sustainable – it is the ONLY sustanable system. No other system has ever so efficiently reduced scarcity, delivered what we want and need, improved our standard of living, increased our life span, increased our freedom, even made possible your lunatic ideology. People living at subsistance levels can not afford the nonsencial views of the left. It is the very success of the system of trading value for value, the system of self interest, that the opportunity even exists to contemplate alternatives.
            And everytime we have presumed that some elilte elected or otherwise can make better decisions for us than we can for ourselves – they have failed.

            The "primative" exchange scheme you eschew is both far more sophisticated, far more evolved and far better at delivering the highest standard of living to the largest number of people – particularly those at the bottom as anything else ever conceived.

          12. You posit a change in mindset – and how is it you expect to accomplish that ?

            While you are free to attempt to persuade people to think differently, anything beyond persuasion is criminally immoral.

            Why do you presume that different priorities are needed ? And why do you presume that you are entitled to set them ?
            You say this can not happen within a market system – doesn't that damn whatever you propose ? If you can not accomplish your goals working in a system where individuals are free to make their own choices, why are you allowed to accomplished whatever your goals through force ?

            Why are you entitled to "make or expect people to 'behave'" according to your priorities or values ?

            Individuals and their interests and wellbeing are real. Group conceptions are convenient fictions. Regardless, we work in groups because of the benefits to us as individuals.
            "As long as personal gain is incentivized" is forever.

            There is no "environmental" morality.
            The choices of humans are about their own interests.

            Read the words:
            We value the environoment or other things.

            WE VALUE – again humans decide our own values.

            You can be vegitarian or vegan or hold whatever set of values you wish.
            But YOU choose those values. They are not chosen for you by nature.
            You can value a spotted owl – but YOU – a human values it.

            There are not values beyond human values.

            The laws of supply and demand are actually laws of human behavior.
            The economy rests on them – not the other way arround.

            The economy works as it does – because of human values and behavior.
            Not the other way arround.

            AGAIN you are free to try to persuade people to change their values.
            You are not free to use force to do so, and therefore you are not free to use government.

            In fact even if you were somehow correct and humans making their choices individually and freely would result in some cataclysm. You are still only free to change your own values, and try to persuade others.
            Whether we choose to commit suicide individually or as a group. Whether we do so deliberately or through negligence, we are still free to do so, and your interference in that freedom is limited to persuasion.

            There is no morality without individual liberty.

            A masters choice to direct a slave to do good accrue no moral merit for the master.
            A slaves good deeds at the direction of their master acrue no moral merit to the slave.

            Morality can not exist without liberty, and there is no morality beyond individual morality.

          13. Colin, it accomplishes nothing to suggest that those who disagree with you are "chanting a gospel," while you yourself are a free-thinking fellow. Some might reply that you are preaching a gospel of your own (or of some other "mindless" priests). It should be considered, moreover, that the majority is not always the least likely group to have sense on their side.

          14. Thanks George, but actually it does accomplish something. I am disagreeing with you and making a point. The fact that I represent a tiny minority of opinion does not take away from the facts, not least of which the fact that our version of 'business as usual' is destroying the planet that you and I share.

            It is simply not good enough to keep regurgitating centuries old text and applying it to modern problems. That's kind of nuts. No other science would tolerate it. Maths and physics throw out just about all their texts every 100 years or so, why not economics?

            The reason is that economics is not a science – or to more precise, it is not a fixed set of parameters. We do not obey economic law. WE are the actors. Economics is (or at least should be) nothing more than a set of observations. These are subject to change. Our behaviour changes. Our circumstances change. The works of Smith, Keynes and von Mises no longer apply in a world of unprecedented connectivity, freedom of movement, mechanisation, bio-tech, artificial intelligence, and crucially, where the art of 'economy' has brought the planet's ecosystem to a crisis point.

            That crisis point is coming where if we do not adapt we will perish, either at the hands of climate catastrophe or war. We do not need to be at war with each other, or make life so hard for ourselves any more. Food/water scarcity are today technically a thing of the past – yet our 'distribution' system doesn't allow it to go where it's needed. Does that sound like a good idea to you? Surely continued support of 'modern economics' in light of this fact alone is something akin to an indirect vote for genocide? What say you?

            (Apologies for late reply. I was on the devil's business the last few days) (That's a joke)

          15. It is of course OK to disagree, Colin. And I do not insist that those in the minority are necessarily wrong (goodness knows I'm myself in the minority often enough). My point is that you are wrong to suggest that those who disagree with you are less capable of clear and unbiased thought than you are. We should all, in polite discussion, deal only in arguments, and not in suggestions to the effect that some people cannot think correctly, which are poor and cheap substitutes for actual arguments. I hope you will agree with this.

            As for your arguments themselves, I'm afraid that, like John Say, I find them utterly unconvincing. I am not indifferent to the state of the environment. Indeed, I began my academic life as a student of ecology (in fact I have a degree in Zoology and came close to finishing an MA in Marine Ecology). However, being older than you, I have lived through enough "environmental doom is drawing nigh" fads (Club of Rome; Paul Ehrlich; Acid Rain; and Global Cooling; among others) to be utterly unimpressed by the current version–and no less so after having immersed myself in the (real or avowedly) scientific literature bearing on it.

            I am happy, on the other hand, to join you in condemning aspects of the current "distribution" system, particularly w.r.t. water; but only in so far as you recognize, as many economists do, the part governments play in mucking up that system, e.g., by severely under-pricing water in California.

            As for economics, I know of know competent economist who regards as an economic "law" any proposition the reliability of which depends on the constancy of changeable parameters. Your criticism of the discipline (it matters not whether one chooses to call it a "science") may convince others who know little about it. But it doesn't pass muster with me–and remember, I am no slouch when it comes to finding fault with our profession!

          16. 'Maths and physics throw out just about all their texts every 100 years or so, why not economics?'

            I'm not sure why you believe this, as it's clearly untrue.

            I think you want to call out those who (blindly) appeal to tradition (and there is some value in doing so, where justified), but that's very different from suggesting — and you're suggesting this — that there is an expiry date on all books qua repositories of human knowledge and belief. Simply appealing to novelty is a dangerous road, esp. when it seems your hope is to discover the one True system that will save the world. Those kinds of systems decay much more rapidly than even every 100 years.

            I think it's been well established (within the last 100 years) that resilient political, economic, and other social systems are those that thrive under stress (are able to evolve and integrate responses to new challenges), and fragile systems are those that require all possible futures to be like the present (solutions cannot be derived from principles but must, a priori, exist within a finite set).

            I think recognizing that risk (such as seeking out and interacting with, even trading with, foreign societies) is an emergent property of successful societies (this is how they grow) is important.

          17. I prefer to live in the future, and shortly I will jump 8 hours into it. Unfortunately, there is a limited number of times I can do that, and they must be spaced out as well.

      2. I rather liked David's ideas about money as "yardstick" to measure debt. And since banking (ie, debt) seems to predate money by some considerable time, I don't think the idea is particularly controversial. I agree that his discounting of barter seems odd. Hence my rather superficial take on things (for a book that I'm writing for business readers at the moment) is that both barter as the driver for more efficient exchange and the monetisation of debt to implement that more efficient exchange provides an adequate narrative for looking at new technology and wondering where it might take us.

        1. No, it is a metaphor at best, and a bad one. One contracts a debt for some particular amount. If the debt is a monetary debt, the amount is an amount of money. It is never a question of some "other" underlying debt for which money serves as a "measure."

          1. But non-monetary debts (eg, barley) were well established long before money as a yardstick came along, so I'm not comfortable with treating the concept only as a metaphor.

    2. Some of us use facts and logic to make decisions, and others use emotions.

      Feeling others pain will not improve their lot. The purpose of computers, numbers and decimal places is to improve our standard of living. Our emotions at best show us some of our problems.
      Solving them requires facts and data and numbers.

      1. Solving logical problems and reducing someone's ability to survive to an arithmetic equation are not quite the same.

        1. You rant about the limits of Gaia, and then pretend that survival is not a question of arithmetic ?
          Absent feeding a crown of thousands with 5 loaves and 2 fishes, survival often devolves to mathematics. The question is not one of arithmatic – but of who decides – a government of idiots that places a low value on everything because it buys your finite nonsense, or individuals who can make their own choices, including producing more value such that their lives are better and their ability to survive is mathematically greater.

  6. While I am extremely dubious of what I sea as reading tea leaves by anthropologists in this and other areas, still why does it matter ?

    We evolved to what we have today. We did so primarily because it had advantages over what preceeded it.

    Graeber's rewrite of history only matters if you can demonstrate conclusively that there was a wrong turn somewhere.

    While I think he is wrong about the order, that does not matter. We arrived where we are becuase it worked better than what preceeded it. There is no returning to some point in the past and making a left turn instead of a right.

    1. I agree with these points, John. Still I think it important to straighten out the record regarding what economists' understanding of the history of exchange.

    2. "We evolved to what we have today. We did so primarily because it had advantages over what preceeded it."
      While I agree that one should operate on the presumption that there are in fact reasons for most things existing as they in fact do today, I feel as though blindly following this proposition leads us to the is/ought fallacy. IMO we should still study those reasons and revisit our views on occasion — at least every generation — in order to make sure those reasons are still every bit as valid as they once were and that our present schemes still make sense.

      Abolitionists were not wrong to question slavery, even though some argued that slavery existed because it was necessary or advantageous given the alternatives.

      People who sought democracy in the late middle ages weren't wrong to upend their Kings' respective apple carts simply because monarchies existed and were therefore more efficient or better than democracies. The actual monarchies in existence may have been more efficient or stable than the (few) actual democracies that had existed thus far, but that says nothing of their efficiency vis-a-vis a whole new democratic variant or whether the competitive advantages of medieval monarchies might have faded over time setting the stage for an upstart democracy or two to be more competitive than they were given the earlier conditions.

      1. There is a difference between weighing the strengths and weaknesses of what we have to choose our future, and rewriting the past.

        Graeber's argument is that the order in which out modern exchange system developed is different than previously perceived, AND that has some important moral meaning.

        The future might involve evolving to a system more strongly resembling his values, but if that is to happen, it must occur because it demonstrably delivers more value than what we have in present circumstances.

        Regardless, of the order in which the current scheme evolved, it did so because compared to what preceded it, it worked better at that time – just as monarchies came about because of their advantages and were replaced because of the current superiority of alternatives.

  7. The most surprising and least defensible aspect of the Atlantic's and Graeber's attacks on "economists," i.e. Adam Smith, Menger, et. al, is they seem to imply that the idea of a barter economy evolving into a monetary economy originated with them to justify their putative biases. The truth is that this theory was the common historical consensus in Western thought as far back as we can trace it, and also contained the same assumptions that barter itself only arose after a division of labor. Just as you mention that Aristole's measure of value influenced Smith, Aristotle also claimed that "Barter could have no place in the first community, that is to say, in the household, but must have begun when the number of those who composed the community came to be enlarged…those who came to be separated, had in common many other things which both parties were obliged to exchange as their wants arose," which led to barter. Then, "from this barter however arose the use of money, as might be expected." (Aristotle's main justification for the creation of money was that it was "easy of carriage.") The medieval legal theorist Paulus had the same idea about strangers leading to barter leading to money, as did, not surprisingly, Thomas Aquinas. So pace the Atlantic and I believe Graeber, this idea about the history barter was not some modern justification for imperialism or slavery, but a philosophical consensus stretching back before those supposedly modern ills were supposedly invented.

    1. Judge, I very much appreciate these remarks about Aristotle, who evidently also had a rather more sophisticated understanding of the role of barter and subsequent development of money than I was aware of.

  8. Good article. My twopence comes in two bits, as indeed the word “twopence”

    First, much of the trade between communist countries in East Europe before
    the collapse of communism was on a barter basis: i.e. no money changed hands.
    For example Russia sent crude oil to Czechoslovakia and the latter sent
    vehicles and machinery in return.

    Second, barter is all around us all the time, even in our supposedly money
    based economy. For example me and my next door neighbour (like all real men)
    have sheds in which we spend a lot of time doing practical things like welding,
    carpentry and so on. We’re always swapping bits and pieces: wood, steel, tools

    And, the standard marriage or boy friend / girl friend relationship is
    barter writ large. That is one party provides services for the other, details
    of which I won’t go into, and the other does various things in return, like the
    housework or whatever.

  9. Perhaps Dr. Graeber would find the following, and quite recent, example of money arising from an explicitly-created barter economy – more importantly a virtual economy, where coercion and status play a negligible role in the consummation of transactions – convincing?

    "…In September 2010, Valve Corporation launched a high-performance pure barter trading
    platform for the user community of one of their more popular games, Team Fortress 2. We
    have access to every transaction from that platform over a 661.4 day interval, involving
    thousands of distinct types of goods and over 200 thousand different traders.

    We analyze those data with several classic questions in mind. Given its best conceivable
    shot, how stable is barter? Were Adam Smith (1776, Book 1 Chapter 4), William S Jevons
    (1885) and Karl Menger (1892), among others, correct in predicting that commodity money
    will emerge to solve logistical problems inherent in barter? Do we see a unique medium of

    [Spoiler: It sure seems to.]

    Halloween and Its Candy Economy by Jeffrey A. Tucker

    "I'll give you three skittles for a tootsie pop"

    Kids collect candy, making it their own through work. Afterwards, they happily exchange candy to get more of what they really want. They create their own trading rules and money as they go.

    Barter and the creation of money as a common, bartered good isn't very complicated. Kids do it on the spot when they have something to trade.

    === ===
    This process of trading began at our house at 8pm and lasted for about 30 minutes, at which point, the children concluded that they had come as close as was possible to what they wanted most and so, that there was no more trading left to do.

    During the 30 minutes of active haggling, nine kids sat around the dining room table and participated in a hectic, yet orderly — if complex — interchange, bearing a good deal of resemblance to a Wall Street trading floor.
    === ===

  11. The modern vending machine should put paid to the idea that money is not a thing. If that were true, I'd expect to see Graeber stuffing dollar bills into the coin slots of any vending machine. Four quarters does not have the same value in that context as does one paper bill.

  12. Thank you, Dr Selgin, nice-to-read article.
    A question, since cash was not used,
    Would the Fed’s Operation Twist qualify as bartering?
    Or was it bartender Bernanke stirring the punch bowl?

    1. Twist + Forward Guidance = Twist and Shout
      (Excerpted from the Manual of McCartneyism-Lennonism)

  13. Eagerly awaiting your book ‘The Menace of Fiscal QE’.
    Shall we ever read something like ‘The Penance of Asset Inflation QE’ by Haruhiko Kuroda ?

  14. From the moneyless economics of the classical school there evolved modern, orthodox macroeconomics: the science of monetary society taught in universities and deployed by central banks.
    From the practitioners’ economics of Bagehot, meanwhile, there evolved the academic discipline of finance—the tools of the trade taught in business schools, used by bankers and bond traders.
    One was an intellectual framework for understanding the economy without money, banks, and finance. The other was a framework for understanding money, banks, and finance, without the rest of the economy.
    The result of this intellectual apartheid was that when in 2008 a crisis in the financial sector caused the biggest macroeconomic crash in history, and when the economy failed to recover afterwards because the banking sector was broken, neither modern macroeconomics nor modern finance could make head nor tail of it.”

    —Felix Martin

    1. I assume that this passage from Martin is supposed to bear upon my of criticism of Graeber. But I'm afraid I cannot see how. FWIW I'm no more impressed by Martin's book than I am by Graeber's. His suggestion of a dichotomy between macroeconomists and those who know their Bagehot would surprise most better monetary economists. I myself am a Bagehot fan of long standing (

      You'll find my thoughts on Martin's book here:

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