This is a fascinating interview with David Graeber, an anthropologist, about the origins of money.

For years now I’ve been convinced that where is something curiously wrong with the presumption that “the books balance.”  One way I talk about that is to ask: “Wouldyou rather die with people owing you, or with you owing them?”  Graeber gets into this in the interview; arguing that exchange exists against a deep background of existing relationships; that the entire myth about the market arises from a simplifying assumption of early economists where they start from a surely impossible initial state where the participants have no existing relationships; i.e. the books begin balanced and we continuously strive to get back into that lonely atomized state.

Graeber outlines a sharply different story about money from the usual just-so-storywe have all been told.  The fairy tale he is dismisses goes like so: barter comes first with individuals exchanging A for B.Over time traders recognize that some commodities are money like – their value is durable, they store easily, their value is easy to decern – and these commoditiesthen become units of exchange.  Later tokens appear that represent these commodities,and at that point it’s off to the races.  Graeber highlights a problem with this story, e.g. that anthropologists haven’t found any examples of this in practice.  I am surely exaggerating, but I come away wondering if barter actually exists.  He says the only place it appears to happen is when an existing currency regime collapses.

Graeber says nope.  He argues, and I think this is exactly right, that what happensfirst is that exchange takes place in the form of “I’ll give you A, and you’ll owe me.”  The “owe me” clause is part of the social sphere.  It’s in the set of books that balance only very roughly.  I’d argue the entire idea of such books coming into balance is fairly toxic to the social sphere.

In this telling the emergence of money is largely as a means to keep a measure of the extent of outstanding debt.  And curiously one place that debt appears is betweeninstitutions (clubs) and thier members – in that context the club members draw uponthe benefits of the club and in turn they accumulate a debt to that club.  In time,as the institution becomes more formal and it’s members more alienated from it themanagement of this debt becomes more formalized.  The club then introduces membershipfees, or taxes.  Money becomes that which the King will accept to pay your taxes.

It’s worth reading the entire interview, because money (reified obligation) has a design flaw; the debt trap.  And there are complex currents about it’s interplay with a societies presumptions about what is moral; and thus a societies morality.  He has fascinating things to say about slavery; debt forgiven, cycles between money as commodity (for example gold) and money as virtual, and on and on.  And possibly most importantly the balance a society based on virtual money most find between protections for debtors v.s. creditors.

Theorizing about money is fun, but try not to forget; studies have shown that 97.3% of those who do it are nuts.

Speaking of clubs … I’m now 18th in line at the public library to borrow their single copy of Graeber’s book: Debt: The First 5,000 Years.