Graeber, Once More

Adam Smith, barter, Carl Menger, David Graeber, history of money
"David Graeber," by Internaz, CC BY 2.0

David Graeber NewAfter I published my recent post on "The Myth of the Myth of Barter," I tweeted the link to it to David Graeber himself, as I thought his response might be interesting.

Was it ever!  Before you could say Jack Robinson, Graeber let loose a fusillade of tweets, each more vicious than the last, calling my post "wildly simple-minded & wrong," "one of the most embarrassing examples of ideological blindness & arrogant stupidity I've ever read," and that sort of thing.  Graeber even asked, in apparent disbelief, "This guy was a professor somewhere?"  Think what you will of his understanding of monetary economics, or of his scholarship in general: when it comes to vitriolic hyperbole, Professor Graeber is no dilettante.  Indeed, there were a lot more barbs besides these, and there have no doubt been others since.  But as Graeber has blocked me on Twitter, presumably to prevent me from replying, I can no longer retrieve most of them.*

But interesting as Graeber's response was, it fell rather short of the sort of substantive reply I'd hoped to elicit from him.  The closest Graeber came to that was a tweet claiming that my post was just a rehash of arguments Robert Murphy had made some time ago, to which Graeber had already responded, and another saying that he wasn't about to waste his time repeating what he'd already said.

In fact I'd read Graeber's reply to Murphy.  What's more, I quoted from that reply, to which I supplied a link, in my original post, which I would scarcely have been tempted to do had I believed it answered my own complaints about Graeber's work.

As a matter of fact, it does nothing of the sort.

My complaints, you may recall, were (1) that Graeber had wrongly accused Smith and Menger of supposing that there was no alternative to either barter or monetary exchange — that is, of supposing that there were no such things as gift-giving and other sorts of non-quid-pro-quo goods transfers, or societies that relied upon such — and (2) that Graeber lacked a proper grasp of some of the most elementary principles of economics, and of the modern theory of value in particular.

Far from defending his work against either of these complaints in his reply to Murphy, Graeber repeats there the very assertions that prompted me to complain in the first place.  Once again he declares that Smith, Menger, and Jevons "[a]ll assumed that in all communities without money economic life could only have taken the form of barter" and that "economists originally predicted all (100%) non-monetary economies would operate through barter."  Anthropologists, in contrast, "discovered … an at first bewildering variety of arrangements, ranging from competitive gift-giving to communal stockpiling to places where economic relations centered on neighbors trying to guess each other’s dreams."

Here I cannot resist quoting again the most relevant passage from Menger's 1892 essay, "Geld":

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.

That Menger wrote this more than three decades before the 1924 publication of Marcel Mauss'sThe Gift, and therefore well ahead of what Graeber describes in his book as "the vast anthropological literature…starting with" that work's appearance (p. 90, my emphasis), only makes Menger's understanding all the more impressive.

Graeber can insult me all he likes.  What he cannot do is pretend that I have not shown one of his most basic claims to be flat-out wrong, at least when it comes to the economist responsible for the most famous and complete elaboration of the theory that money was an outgrowth of barter.  (That Graeber is also wrong about Smith will seem no less evident to anyone who bothers to read that profound and circumspect Scotsman with a modicum of generosity.)

Nor does Graeber's response to Murphy supply any reason for me to modify my assessment of his understanding of basic economics.  On the contrary:  he repeats here as well his view that "money is simply a mathematical system whereby one can compare proportional values, to say 1 of these is worth 17 of those."  This, as I said before, is what Aristotle believed;  it is also what economists stopped believing around 1871.

In his reply to Murphy, as in his book, Graeber recognizes that barter does occur, saying that it "typically occurs between strangers," as if this were an exception of little importance.  But as I said in my earlier post, it is precisely through trade between strangers that non-commercial societies give way to commercial ones;  and it is in enabling this transition that money comes to acquire great importance.

But can money really develop, as Smith and Menger suggest it can, as a spontaneous outcome of trade among strangers?  It is regarding this possibility only that Graeber's reply to Murphy offers some new arguments.  Graeber insists that money can't emerge this way, because trade among strangers is a matter of "occasional interactions among people never likely to meet each other again," and "because rare and occasional events won't lead to the emergence of a system of any kind."  If, on the other hand, "there are ongoing trade relations between strangers…it's because each side knows the other side has some specific product(s) they want to acquire — so there is no 'double coincidence of wants' problem" for money to overcome:

You don't cross mountains, deserts, and oceans, risking death in a dozen different ways, so as to show up with a collection of goods you think someone might want, in order to see if they happen to have something you might want.

Really?  If you ask me, that last sentence seems to contain a reasonable description of what countless merchants did in fact do for centuries, and what many still do to this day.  What's far-fetched is Graeber's contrary suggestion that traders never crossed mountains etc. unless they were absolutely certain that they could trade whatever they brought with them for whatever was to be had where they were headed.  And it is precisely because trade was risky that traders had reason to "show up" at markets where goods they wanted were on offer equipped with goods of their own that they imagined were relatively "saleable" (to use Menger's term) in the markets in question.

Now, one has only to introduce the possibility that stranger A might first cross mountain B to acquire good C from stranger D so as to then cross mountain E in the hope of using C to acquire F from stranger G, together with other such possibilities, to have the ingredients it takes to allow Menger's (or, for that matter, Smith's) theory of money's development to go through.  Allowing for the particular salience of certain goods — their popularity as ornament or in ceremonial uses — makes the development all the more likely.**

In short, Graeber's supposed refutation of the possibility that money can develop through trade among strangers amounts to little more than a completely unwarranted assertion to the effect that, because overcoming the "lack of a double coincidence" hurdle is risky, no one will bother trying, notwithstanding the potential gains to be had by doing so.  That assumption may seem reasonable to one who believes, as Graeber does, that trade is a zero-sum game.  But it is not reasonable in light of economists' understanding of voluntary exchange as a source of mutual gain. More importantly, it is not what persons who actually venture to engage in trade believe.

I suspect that, if he responds to this post at all, Graeber will simply maintain, by way of another burst of ≤140-character philippics, that I still haven't undermined any of his book's more important claims.  Still it would be nice if, instead of pretending to have already answered my arguments, or merely being nasty, he would attempt to offer a substantive reply.  After all the obloquy, I could use a weal tweet.


*Nor can I tweet this post to him.  But that needn't stop some of you from doing so 😉

**Don't get your knickers in a twist, my chartalist friends:  I do not intend to deny that public authorities and other such "big players" may play an important part in influencing this process.