13 Sep 2011

Left- and Right-Wing Anarchists Agree: Gene Callahan Can’t Read

Economics 44 Comments

[UPDATE: Gene emailed Graeber, explained things the way Gene was looking at them, and Graeber said, “OK he misread your post.” Yet all I did was claim that Gene said fiat money preceded commodity money; that is the title of Gene’s post, after all. I’ll let Gene decide if it’s appropriate to reproduce his full email exchange with Graeber in the comments.]

From Graeber’s latest response to me (on naked capitalism):

Last week, Robert F. [sic] Murphy published a piece on the webpage of the Von Mises Institute responding to some points I made in a recent interview on Naked Capitalism, where I mentioned that the standard economic accounts of the emergence of money from barter appears to be wildly wrong. Since this contradicted a position taken by one of the gods of the Austrian pantheon, the 19th century economist Carl Menger, Murphy apparently felt honor-bound to respond.

In a way, Murphy’s essay barely merits response. In the interview I’m simply referring to arguments made in my book, ‘Debt: The First 5000 Years’. In his response, Murphy didn’t even consult the book; in fact he later admitted he was responding at least in part not even to the interview but to an inaccurate summary of my position someone had made in another blog!

That “inaccurate summary” is this.

44 Responses to “Left- and Right-Wing Anarchists Agree: Gene Callahan Can’t Read”

  1. Bill Woolsey says:

    Perhaps I missed something, but isn’t the argument that credit existed before money?

    And further, credit helps avoid problems with a double coincidence of wants?

    And you know, it shouldn’t be to surprising that commodity money would arise in early cities where informal credit transactions might not be workable.

    By the way, in a poor agricultural society, where most people mostly produce a stable grain, and most people “spend” most of their income on that grain (including the farmers eating most of what they grow,) a “double coincidents of wants” isn’t too much of a problem.

    • Rick Hull says:


      I am pretty sure the argument is that credit existed before barter. What is missing is how the price of a good is established in credit units without barter.

    • John Hall says:

      I’m confused. Are you correcting Callahan or are you criticizing Graeber?

      You’re basically pointing out that Graeber argues 1) credit existed before money and 3) commodity money arises when you can’t make informal credit agreements. However, you also note that 2) credit is basically barter through time*. However, I felt like you left the conclusion (if you were criticizing Graeber) hanging that since money-less credit is a form of barter, how is his argument different from the Mengerian story?

      *You also qualify Graeber by acknowledging 4) that commodity money would only arise in non-primitive societies.

  2. Bob Roddis says:

    Graeber’s an Austrian and don’t know it.*

    [A]nd some direct exchange, particular[ly] with people in that vague middle ground between neighbors and strangers – but that exchange was based not on exact value equivalence – a concept that presumes the prior existence of money in the first place, and is therefore completely illogical to attribute to people unfamiliar with the use of money to buy and sell things – but a broad sense of owing someone a favor of a roughly equivalent sort. This need not be a material object at all, it could be help, or ritual sponsorship, or maybe your son is in love with your neighbor’s daughter, but let’s leave that aside for a moment. Insofar as it is goods, it would generate a system of vague ballpark equivalents. And this is indeed what one finds where there is extensive “gift exchange”: a rank system, whereby certain types of goods are seen as roughly equivalent to others, but not a proportional (i.e., monetary) system where you can say how many of this type of rank B objects is equivalent to one of these rank A objects.

    This is all Austrian-style analysis, emphasizing informal systems of exchange, not the infantile and artificial Keynesian “mechanical spinning top needs traction” model of an imaginary “economy”.


    No pretentious rebuke from His Lordship Lord Keynes, so it must be true.

    What’s up with this “exact value equivalence” stuff? There’s no such thing. We cannot measure each person’s valuation of anything with certainty. We can only assume that each person apparently valued the thing received over the thing exchanged. There’s no Austrian claim that these people who engaged in barter necessarily thought in terms of “exact value equivalence” and thus must have been thinking in terms of preexisting monetary equivalence. We seem here to have statist projection of objective values onto Austrians.

    *Derived from, “He’s a poet and don’t know it”. Detroit speak, you know.

  3. Mattheus von Guttenberg says:

    It seems I’m not the only person who’s constantly frustrated by Callahan.

  4. Greg Ransom says:

    Graeber’s account seems to be completely innocent of the growing body pre-historical evidence of world-wide barter exchange.

    And it seems over weighted with hoary anthropological dogma from generations ago.

    The guy does not come across as credible or reliable at all, whatever his intent.

    • Gene Callahan says:

      Greg: “Graeber’s account seems to be completely innocent of the growing body pre-historical evidence of world-wide barter exchange.”

      Greg, what you say he would be highly accurate, were it not completely false:

      Graeber: “All this is not to say that barter never occurs. It is widely attested in many times and places. But it typically occurs between strangers, people who have no moral relations with one another.”

  5. Greg Ransom says:

    “credit existed before money”

    Credit makes no sense at all in the case of the massive, pre-historic trade in all sorts of barter items.

    Did the Europeans use “credit” when they began trading with new peoples around the world? No.

    Did Lewis & Clark use “credit” on the way West? No.

    Special pleading isn’t science.

    And ignoring what is of interest in trade is not legitimate engagement of the issue at hand.

    • Wonks Anonymous says:

      He seemed to admit that distance trading between strangers was not based on credit (though see Leeson’s “Trading With Bandits” for a case in which it was!). But he doesn’t seem to think that counts, and he wants to focus on local trade between more socially connected people. Reminds me of Karl Polanyi saying intracity/town trade and international trade preceded the rise of the nation state, but intranational trade did not.

      • Cahal says:

        Can you two go to NC and raise your issues with Graeber? I’d be interested to hear his response.

      • Gene Callahan says:

        “But he doesn’t seem to think that counts…”

        No, what he says is that could not have led to a local commodity-based money. And he gives reasons why it couldn’t have. And the evidence shows that it didn’t. It probably reminds you of Polanyi in that Polanyi was actually basing his conclusions off of the evidence as well.

        • Greg Ransom says:

          Pre-historic long distance trade looks rather extensive and significant — and it certainly would have led to the evolution of more the increasing exchange of goods with money properties.

          To dismiss this phenomena in favor of anthropological studies of essentially contemporary peoples is not particularly compelling.

          Note well I’m going on Graeber’s interview remarks and not on his book.

          • Gene Callahan says:

            “To dismiss this phenomena in favor of anthropological studies of essentially contemporary peoples…”

            But that is not what he is doing. His main case study is ancient Mesopotamia!

  6. Greg Ransom says:

    Pre-historic trade moved goods across continents — it is absurd to think “credit” was the basis of this trade …

  7. Secret Agent says:

    Greaber’s book does not challenge the regression theorem at all.

    He even admits that in the temples, silver was used as a unit of account.

  8. Secret Agent says:

    Wow, I just checked out Gene’s blog, and he’s quite the jerk. What’s his problem?

    • RG says:

      Gene died, his profile has been overtaken by a 14 year old that is taking a public school intro to “econ” class.

    • Gene Callahan says:

      “Quite the jerk” in correctly interpreting Graeber’s findings? Or “quite the jerk” in “He disagrees with my conclusions”? Just curious as to which you mean.

      • bobmurphy says:

        Gene wrote:

        “Quite the jerk” in correctly interpreting Graeber’s findings? Or “quite the jerk” in “He disagrees with my conclusions”? Just curious as to which you mean.

        I’m just guessing here, but I imagine it has more to do with the frequent sarcasm, the flippancy, the mocking, etc.

        • Gene Callahan says:

          I don’t know, Bob… when I wrote for LRC, my sarcasm etc. were all “heroic.”

          • Wonks Anonymous says:

            Maybe you’ve always been an S.O.B, but now you’re their S.O.B rather than ours!

  9. MamMoTh says:

    It seems that leaving the Austrian dogma is harder than leaving the Scientology Church.
    Didn’t you ask Gene to confess something he was ashamed of when he joined your cult?

    • bobmurphy says:

      Yes. Gene confessed that he used to think the Treasury could eliminate its debt with a keystroke.

      • MamMoTh says:

        That’s mildly embarrassing indeed. A few keystrokes are needed. But with some extra programming you might be able to do it in a single keystroke.

        • Secret Agent says:

          I can do it. Just let me recharge my energy by eating some paper and I’m good to go.

  10. skylien says:

    What I think that is so weird, is how one can equate debt with money. But what unit does debt have? You cannot express a price in debt. Debt is completely beside the point of how money emerged. As well as if it is possible to create fiat money without ever linking it to commodities and don’t using force and this before there even was barter (if spot or not does not matter).

    • skylien says:

      Oh I meant: “The question is if it is possible to create fiat money without ever linking it to commodities and don’t using force and this before there even was barter (if spot or not does not matter).”

      “As well as if it is possible to …”

      • Gene Callahan says:

        “don’t using force”

        Skylien, if you don’t write remotely grammatical English, how is anyone supposed to know what you are saying?

        • skylien says:

          Sorry for my bad English Gene!

          What I meant was: Existence of debt does not prove anything. You can have debt in commodity money, fiat money and barter. Therefore the question is not if there was debt, but was there fiat money:
          1: without any link to a commodity
          2: without any usage of force/legal tender laws
          3: preceding any barter exchange

          That is what Graeber is trying to prove. For you it seems it would be enough if the first two hold: A switch from barter directly to fiat. I don’t think that you would care if it preceded barter, right?

    • MamMoTh says:

      Money is a fuzzy concept. One thing is money as unit of account, and another is the money thing as medium of exchange. So maybe it is necessary to distinguish both roles of money when studying their origin.

      • skylien says:

        I don’t think it is fuzzy. How can one of those concepts be without the other?

  11. Gene Callahan says:

    Bob, I see no evidence that Graeber read my blog post. It looks to me like you *told him you were responding to an inaccurate summary*, and he included that in his latest response.

    So it looks more like you agree with yourself that the summary was inaccurate.

    • bobmurphy says:

      Gene, I quoted you. [UPDATE: Maybe I didn’t quote you; I don’t remember. But for sure I said I got the idea from your post that fiat money preceded commodity money, and then I even quoted from Graeber to show what could have given you that impression.]

      I grant you, he might have simply pounced on my admission that I was responding to someone else’s blog post, since it confirmed his original suspicion that I am a lazy anti-scholar. But, I did quote you saying that his evidence showed fiat money preceded commodity money, and he didn’t bother to say, “Actually, there’s nothing wrong with that.”

      Just admit it, Gene: You overstepped when you described the situation on your blog. Perhaps I’m totally wrong as well, but I think you overstepped.

      • Gene Callahan says:

        Ok, so now Graeber himself has said my original post is fine.

  12. Bob Roddis says:

    1. It’s clear that Graeber has no familiarity with Austrian thought. Ignorant Acting Man is certainly not Homo Oeconomicus:

    This not only demonstrates that the Homo Oeconomicus which lies at the basis of all the theorems and equations that purports to render economics a science, is not only an almost impossibly boring person—basically, a monomaniacal sociopath who can wander through an orgy thinking only about marginal rates of return

    2. No wonder the human race lived in misery and impoverishment for tens of thousands of years. No barter and no money. Who was it who said in the comments that “barter preceded procreation, puddin’ head”? I think that’s the solution to the “problem”.

    3. What do I care if cavemen lived for a million years with a social system like Ayn Rand’s “Anthem”?

    • Gene Callahan says:

      Well, no, it is clear he does know at least Menger and Mises.

      • Bob Roddis says:

        If you want to be real picky, no one ever knows what anyone else is thinking.

        However, Homo Oeconomicus is not Ignorant Acting Man so the evidence suggests an unfamiliarity with Austrian thought on the part of Mr.Graeber.

        BTW, do you have a list of leftists who are familiar with Austrian thought?

        • Gene Callahan says:

          A list?

          Karl Polanyi knew Mises and Hayek well.

          • Bob Roddis says:

            I should have been more precise.

            Do you have a list of present-day leftists who are familiar with and understand Austrian thought, especially the role of prices for transmitting knowledge and information?

  13. John Hall says:


    I ran across this. I think it’s much clearer than his interviews and response to Murphy.

    I can get behind the argument that coinage was created to pay soldiers. However, I view “virtual credit” as merely intertemporal barter. To the extent that the temple ‘crats set the ratios based on ratios existing in the market, the argument is basically Menger’s. To the extent that “virtual credit” is a form of barter, the argument is, again, basically Menger’s. To the extent that people could pay their debts in barley, merely indicates that barley was effectively treated as money.

    • Gene Callahan says:

      “To the extent that the temple ‘crats set the ratios based on ratios existing in the market…”

      But there was no local “market” in these things, and that is NOT how temple bureaucrats set the ratios!

      • John Hall says:

        From the article: “Prices of certain commodities that were not produced within Temple or Palace holdings, and thus not subject to administered price schedules, would tend to fluctuate according to the vagaries of supply and demand.”

        You’re telling me that they didn’t, at least to some extent, observe what was happening in the market?

  14. Greg Ransom says:

    How do cows, the origin of writing, taxes and debts in Sumeria figure in Graeber’s story?

    Can someone summarize the most recent scholarly consensus on this?