From gift and credit to money — did markets make us Homo Oeconomicus?

Via Chris Bertram on Crooked Timber I read an article by David Graeber, a social anthropologist, called „On the Invention of Money – Notes on Sex, Adventure, Monomaniacal Sociopathy and the True Function of Economics“. It is sufficiently long to really cover all these topics, and I agree with Bertram that it is „one of the most informative and entertaining pieces I’ve read in a long while“. Do read the whole thing!

The core argument is about how money came to be — which in most economic textbooks is explained as a logical development from a barter trade system, where you have to find somebody with a complementary need and offer in the marketplace. But this assumption about our economic past is soundly refuted by actual anthropological and historical research. It is very fascinating to follow the research as to what are actual probable pathways to money usage. And how economic activities were organized before that tells us a lot about how the economic system shapes even deep-rooted human qualities. The bottom line there is that behavior in accordance with „Homo Oeconomicus“ models probably only really came about after markets were invented. And it is because economists cannot (or don’t want to) imagine a human being with different ways of decision-making that they persist on the „money developed from barter trade“ myth despite solid evidence to the contrary. This is, again, in the service of not acknowledging the own status as a „reflexive“ social science which not only describes but also strongly influences human behavior and social processes.

So, first of all, how did people go about their business before money was around?

Anthropologists gradually fanned out into the world and began directly observing how economies where money was not used (or anyway, not used for everyday transactions) actually worked. What they discovered was 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. What they never found was any place, anywhere, where economic relations between members of community took the form economists predicted: “I’ll give you twenty chickens for that cow.” Hence in the definitive anthropological work on the subject, Cambridge anthropology professor Caroline Humphrey concludes, “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing” [2]

A gift economy (even though that should not be read to imply selflessness) was probably the most common modus operandi among people who had established relationships, with rough judgments of equivalence between different kinds of goods:

a. The great flaw of the economic model is that it assumed spot transactions. I have arrowheads, you have beaver pelts, if you don’t need arrowheads right now, no deal. But even if we presume that neighbors in a small community are exchanging items in some way, why on earth would they limit themselves to spot transactions? If your neighbor doesn’t need your arrowheads right now, he probably will at some point in the future, and even if he won’t, you’re his neighbor—you will undoubtedly have something he wants, or be able to do some sort of favor for him, eventually. But without assuming the spot trade, there’s no double coincidence of wants problem, and therefore, no need to invent money.

b. What anthropologists have in fact observed where money is not used is not a system of explicit lending and borrowing, but a very broad system of non-enumerated credits and debts. In most such societies, if a neighbor wants some possession of yours, it usually suffices simply to praise it (“what a magnificent pig!”); the response is to immediately hand it over, accompanied by much insistence that this is a gift and the donor certainly would never want anything in return. In fact, the recipient now owes him a favor. Now, he might well just sit on the favor, since it’s nice to have others beholden to you, or he might demand something of an explicitly non-material kind (“you know, my son is in love with your daughter…”) He might ask for another pig, or something he considers roughly equivalent in kind. But it’s almost impossible to see how any of this would lead to a system whereby it’s possible to measure proportional values. After all, even if, as sometimes happens, the party owing one favor heads you off by presenting you with some unwanted present, and one considers it inadequate—a few chickens, for example—one might mock him as a cheapskate, but one is unlikely to feel the need to come up with a mathematical formula to measure just how cheap you consider him to be. As a result, as Chris Gregory observed, what you ordinarily find in such ‘gift economies’ is a broad ranking of different types of goods—canoes are roughly the same as heirloom necklaces, both are superior to pigs and whale teeth, which are superior to chickens, etc—but no system whereby you can measure how many pigs equal one canoe. [3]

The most common actual barter on the other hand is in long-distance trade, where people knew which goods the other party had, and that they had something to offer themselves which the others wanted. Graeber makes the argument that for that instance, there is no need to invent money when you can instead operate on the basis of „traditional fixed equivalences“. Instead, money would make you much more vulnerable to being robbed, and indeed it seems the Phoenicians, famous long-distance traders of the Classic World, adopted money usage very late.

And even in such trade among non-familiar groups, a social aspect seems to have been at least as important as the economic one:

The second example is the Gunwinngu of West Arnhem land in Australia, famous for entertaining neighbors in rituals of ceremonial barter called the dzamalag. Here the threat of actual violence seems much more distant. The region is also united by both a complex marriage system and local specialization, each group producing their own trade product that they barter with the others.

In the 1940s, an anthropologist, Ronald Berndt, described one dzamalag ritual, where one group in possession of imported cloth swapped their wares with another, noted for the manufacture of serrated spears. Here too it begins as strangers, after initial negotiations, are invited to the hosts’ camp, and the men begin singing and dancing, in this case accompanied by a didjeridu. Women from the hosts’ side then come, pick out one of the men, give him a piece of cloth, and then start punching him and pulling off his clothes, finally dragging him off to the surrounding bush to have sex, while he feigns reluctance, whereon the man gives her a small gift of beads or tobacco. Gradually, all the women select partners, their husbands urging them on, whereupon the women from the other side start the process in reverse, re-obtaining many of the beads and tobacco obtained by their own husbands. The entire ceremony culminates as the visitors’ men-folk perform a coordinated dance, pretending to threaten their hosts with the spears, but finally, instead, handing the spears over to the hosts’ womenfolk, declaring: “We do not need to spear you, since we already have!” [9]

In other words, the Gunwinngu manage to take all the most thrilling elements in the Nambikwara encounters—the threat of violence, the opportunity for sexual intrigue—and turn it into an entertaining game (one that, the ethnographer remarks, is considered enormous fun for everyone involved). In such a situation, one would have to assume obtaining the optimal cloth-for-spears ratio is the last thing on most participants’ minds. (And anyway, they seem to operate on traditional fixed equivalences.)

How did a need for money actually arise, then, and how could it happen? There are two answers — first as unit of calculation that was hardly ever handed over physically for long-distance trade and use in most notably temple bureaucracies. For this reason they usually took the form of equivalencies between „a common long-distance trade item [and] a common subsistence item“, e.g. silver and grain. Second, and to me quite surprisingly, it probably developed out of the legal system, where there was a need for specifying the appropriate compensation for material and moral offenses:

For example, Welsh and Irish codes contain extremely detailed price schedules where in the Welsh case, the exact value of every object likely to be found in someone’s house were worked out in painstaking detail, from cooking utensils to floorboards—despite the fact that there appear to have been, at the time, no markets where any such items could be bought and sold. The pricing system existed solely for the payment of damages and compensation—partly material, but particularly for insults to people’s honor, since the precise value of each man’s personal dignity could also be precisely quantified in monetary terms.

Here’s how Graeber sees the concept of Homo Oeconomicus as our natural state (which is implicit in the assumption that trade before money could only have taken the form of barter) refuted by these findings:

[…] it goes back precisely to this notion of rationality that Adam Smith too embraced: that human beings are rational, calculating exchangers seeking material advantage, and that therefore it is possible to construct a scientific field that studies such behavior. The problem is that the real world seems to contradict this assumption at every turn. Thus we find that in actual villages, rather than thinking only about getting the best deal in swapping one material good for another with their neighbors, people are much more interested in who they love, who they hate, who they want to bail out of difficulties, who they want to embarrass and humiliate, etc.—not to mention the need to head off feuds.

Even when strangers met and barter did ensue, people often had a lot more on their minds than getting the largest possible number of arrowheads in exchange for the smallest number of shells.

See the barter story above for illustration of the last point. The final argument is what all this implies for the role of Economics as a science, which is basically my old idea about necessary but mostly absent „reflexivity“:

At this point, it’s easier to understand why economists feel so defensive about challenges to the Myth of Barter, and why they keep telling the same old story even though most of them know it isn’t true. If what they are really describing is not how we ‘naturally’ behave but rather how we are taught to behave by the market—well who, nowadays, is doing most of the actual teaching? Primarily, economists. The question of barter cuts to the heart of not only what an economy is—most economists still insist that an economy is essentially a vast barter system, with money a mere tool (a position all the more peculiar now that the majority of economic transactions in the world have come to consist of playing around with money in one form or another) [10]—but also, the very status of economics: is it a science that describes of how humans actually behave, or prescriptive, a way of informing them how they should?

In a way, this really is an old argument: Whenever somebody tries to tell you a certain way of going about things, from gender roles to economic activities and social structures, is „natural“, they probably have an interest in you not looking for alternatives too hard. The sad thing is that they sometimes might not even be aware of this themselves, because their benefiting from the status quo is part of their unquestioned privilege.

(See the original article for all the references in [brackets])

Datum: Sonntag, 18. September 2011 13:11
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