Some 5,000 years ago, anthropologist David Graeber and I battled over his scathing critique of the standard economist (and Mengerian) account of the origin of money. He insisted that I read his book before sputtering more nonsense, and so I got The American Conservative to get me a copy. My review is now online. The intro:
This book is just as audacious as its title suggests: Graeber, an anthropologist, walks the reader through the history of debt. How seriously does the author take his task? Consider: he devotes the 38 pages of Chapter 5 to constructing “A Brief Treatise on the Moral Grounds of Economic Relations.” Inasmuch as Graeber takes aim at the economist’s standard account of the origin of money, his book presents a formidable challenge. Yet on close examination, Graeber’s ambitious and scathing assault largely misses the mark.
And a choice paragraph from the body:
Graeber unwittingly makes even more concessions to the Mengerian account when he later writes: “In the marketplaces that cropped up in Mesopotamian cities, prices were also calculated in silver, and the prices of commodities that weren’t entirely controlled by the Temples and Palaces would tend to fluctuate according to supply and demand.” So what the historical record actually shows us is a Sumerian economy in which merchants used silver in actual spot transactions when trading in the outside marketplace and Temple authorities kept track of internal bookkeeping operations through the use of silver valuations. And Graeber thinks it so self-evident that the causality ran from the Temple bureaucrats to the merchants that he actually says of the Mengerian account, “rarely has an historical theory been so absolutely and systematically refuted”!
However, lest you think me a doctrinaire, I do concede this much:
Although Graeber’s critique therefore misses the mark in one obvious respect, nonetheless he does seriously challenge the standard Mengerian account, in a way I’m embarrassed to say that I had never even considered when teaching the fable to my own students. Specifically, Graeber points out that barter spot transactions would really only be necessary between strangers who might not see each other again. In contrast, neighbors could engage in credit transactions even before the use of money had developed. For example, if one farmer had eggs to sell, while his neighbor didn’t have anything he wanted at the time, then the first farmer could simply give them to his neighbor, saying, “You owe me.”