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1/ Why is it people refute barter ever existed by resorting to cheap rhetoric instead of substantive arguments?
In this thread, I will lay out why barter is _not_ a myth.
In this thread, I will lay out why barter is _not_ a myth.
2/ In Debt, Graeber attempts to provide anthropological evidence that contradicts the theory that barter came before indirect monetary exchange.
3/ Graeber claims that "if there were places where everyday transactions took the form of: 'I'll give you twenty chickens for that cow,' we'd have found one or two by now."-- that no example of a barter economy has ever been described, let alone the emergence of money.
4/ But upon deeper inspection, there are holes to Graeber's logic.
5/ To begin, In Origins of Money, Menger posits that money emerged spontaneously through an individual's self-interest -- that no single seed of conception led to a universal medium of exchange and no state compulsion throttled the transition from a barter to a money economy.
6/ Menger points out that in a state of barter, goods have varying degrees of salability. The more salable a good is, the more easily its owner would be able to exchange it.
7/ Furthermore, given the inefficiency of direct exchange he posits that the advantages of indirect exchange would become so obvious that the practice would have almost begun immediately.
8/ This would mean that direct exchange -- where goods are exchanged for other goods -- would last very briefly.
9/ Furthermore, "owners of relatively less salable goods would exchange their products for goods that they do not directly value, so long as the goods received are more salable than the goods given up." Hence, shrewd traders would quickly begin to engage in indirect exchange.
10/ Over time, the most salable goods would be the most desired. And the more accepted they were, the more salable they would become. Eventually, specific goods would outstrip others and become universally accepted. Et voila, money emerging on the market.
11/ It's important to note that this supposition in no way estimates how long the transition would take, which is the caveat to Graeber's claim: There is only evidence of markets based on money, not direct exchange. Hence direct exchange never happened.
Here is where that logic breaks down. (I appreciate Robert Murphy's reasoning specifically.) Since economic calculation is a pillar of economic rationality and civilization itself, it makes sense why Graeber finds no evidence of written records of barter.
But,
But,
13/ Furthermore, Graeber makes the argument that instead of barter, credit came first. Sure, forms of credit or gift giving may be adequate within small, trusted communities, but what about when exchange occurs outside these communities, amongst strangers?
14/ Claiming barter never occurred dismisses trade arising among strangers. Graeber even mentions this in his book. By claiming this as an exception, Graeber fails to understand that the exception alone should be indication that direct exchange existed before indirect exchange.
15/ (Aside: In the context of Bitcoin, this whole argument is actually kind of useless to begin with. Bitcoin eliminates the need to trust. So even if credit money did emerge first it doesn't matter now that nobody needs to trust anyone. cc: @misir_mahmudov @nic__carter)
16/ Graeber also claims a system of money as a unit of account developed first. "But, without having a network of antecedent barter pricing, how would these primitive people know how many units of the money to assign to each type of good and service?"
17/ It is hard to accept that merchants never engaged in barter but were able to use money prices invented by central planners.
18/ Finally, there are actual instance of communities developing money prices from scratch.
See "P.O.W camp": icm.clsbe.lisboa.ucp.pt/docentes/url/j…
Also check out Halloween and its Candy to understand how fast economies may have evolved from barter: mises.org/daily/3834/Hal…
See "P.O.W camp": icm.clsbe.lisboa.ucp.pt/docentes/url/j…
Also check out Halloween and its Candy to understand how fast economies may have evolved from barter: mises.org/daily/3834/Hal…
19/ All this to say that I don't think Graeber understands the claims that other people like Menger and Mises have made. Furthermore, in no way do any of his claims prove that the case for barter is actually wrong.
20/ Thanks to @davidgerard and @ahcastor for encouraging me to write this thread. Bitcoiners are amazing.
21/ Thanks to @mises, Robert Murphy, @NickSzabo4, and @saifedean for providing resources to help guide this thinking
