It's a common belief that the natural state of capitalism is one divorced from the state. Just today, I saw mention of "anarcho-capitalism" in another thread. But based on my reading, that idea is seriously flawed from an anthropological and historical perspective.
All basic economics textbooks begin with a description of how currency, and markets, arose from primitive systems of barter. But that's completely inaccurate historically. This myth was originally given credence by Adam Smith in The Wealth of Nations, it's what David Graeber calls "the myth of barter" in his book Debt: The First 5,000 Years. Graeber spends an entire chapter of his book deconstructing this myth. In subsequent chapters, he looks at how currency systems actually did emerge. Barter, it turns out, is very rare in isolated cultures, and only entered into with strangers or borderline enemies. So this idea that barter somehow lead to the development of currency just doesn't hold up to scrutiny (he actually traces this myth to Adam Smith's The Wealth of Nations). Instead, Graeber ascribes to a theory in which currency emerged as a way to represent debt.
One situation in which currency often emerged, Graeber points out, is when an army was levied. The king would pay soliders in coin. At the same time, he would tax the peasants and require that it be payed in coin. Clever. The peasants suddenly have an incentive to engage in commerce with the soldiers, offering them food, clothing, etc., in exchange for coin, which they need in order to pay their debts. The coin represents a debt owed by the king, and can be used to pay off a debt owed to the king; this is what gives it value.
Graeber also points out that currency could emerge simply as a metric of value. To illustrate this, he discusses Charlemagne's currency, which was only in circulation for a few years, but was used for hundreds of hears to record the value of lands, cattle, and other property, even though it had long ceased to exist. It became a metric, useful for discussing value, but otherwise useless in conducting transactions.
I really can't do justice to this book. It brings in a lot of fascinating scholarship in anthropology, history, and sociology, but remains accessible in a way most academic monographs aren't. It's a nourishing book, full of new thoughts about debt, money, human relations, and the forces that shape history. I must warn you, Graeber certainly has an agenda. He is an avowed and active anarchist, and the tone of his book reflects this. But every author is biased on one way or another, and this book provides a fascinating counter-point to all of the rhetoric out there concerning economics and finance as a science, instead of as a flawed human endeavor, full of blood and sex and death.
One of Graeber's main points is that the market is not separate from the state, and it's a serious mistake to believe that it is, or that in it's natural state, should be.
So is this bullshit? Brilliance? Discuss!
P.S.: Don't worry if it looks like I put a lot of time into this thread. I just copied and pasted this from a remark I made in a conversation with a friend on a different forum. You're getting my forum sloppy seconds. I'm just curious what kind of a reaction this will get on WF, although I think I have a pretty good idea...
All basic economics textbooks begin with a description of how currency, and markets, arose from primitive systems of barter. But that's completely inaccurate historically. This myth was originally given credence by Adam Smith in The Wealth of Nations, it's what David Graeber calls "the myth of barter" in his book Debt: The First 5,000 Years. Graeber spends an entire chapter of his book deconstructing this myth. In subsequent chapters, he looks at how currency systems actually did emerge. Barter, it turns out, is very rare in isolated cultures, and only entered into with strangers or borderline enemies. So this idea that barter somehow lead to the development of currency just doesn't hold up to scrutiny (he actually traces this myth to Adam Smith's The Wealth of Nations). Instead, Graeber ascribes to a theory in which currency emerged as a way to represent debt.
One situation in which currency often emerged, Graeber points out, is when an army was levied. The king would pay soliders in coin. At the same time, he would tax the peasants and require that it be payed in coin. Clever. The peasants suddenly have an incentive to engage in commerce with the soldiers, offering them food, clothing, etc., in exchange for coin, which they need in order to pay their debts. The coin represents a debt owed by the king, and can be used to pay off a debt owed to the king; this is what gives it value.
Graeber also points out that currency could emerge simply as a metric of value. To illustrate this, he discusses Charlemagne's currency, which was only in circulation for a few years, but was used for hundreds of hears to record the value of lands, cattle, and other property, even though it had long ceased to exist. It became a metric, useful for discussing value, but otherwise useless in conducting transactions.
I really can't do justice to this book. It brings in a lot of fascinating scholarship in anthropology, history, and sociology, but remains accessible in a way most academic monographs aren't. It's a nourishing book, full of new thoughts about debt, money, human relations, and the forces that shape history. I must warn you, Graeber certainly has an agenda. He is an avowed and active anarchist, and the tone of his book reflects this. But every author is biased on one way or another, and this book provides a fascinating counter-point to all of the rhetoric out there concerning economics and finance as a science, instead of as a flawed human endeavor, full of blood and sex and death.
One of Graeber's main points is that the market is not separate from the state, and it's a serious mistake to believe that it is, or that in it's natural state, should be.
So is this bullshit? Brilliance? Discuss!
P.S.: Don't worry if it looks like I put a lot of time into this thread. I just copied and pasted this from a remark I made in a conversation with a friend on a different forum. You're getting my forum sloppy seconds. I'm just curious what kind of a reaction this will get on WF, although I think I have a pretty good idea...