Incongruent barter pre-monition
If you read no other part of [Debt: The First 5000 Years by David Graeber], look for his demolition of Adam Smith’s account of the emergence of barter among primitive peoples. Barter, [he] points out, isn’t something that emerges, and that acts as a precursor to the development of money: rather, barter is what we get in atomized societies when fiscal systems collapse and nobody trusts their neighbours. True primitive tribal societies run on interpersonal debt and/or honour systems: everybody knows what their neighbours owe them, so there’s no need to provide an immediate exchange for items of value received.
R. D. Baker [PDF]:
Whereas the standard economics textbook literature motivates the emergence of money by pointing to the inefficiencies of barter economies, there is virtually no historical evidence [for this. … This paper attempts] to hypothesize an origin of money which is more compatible with the organization of early societies. […] Barter is shown to be dominated by credit simply on the basis of bargaining power and the ability of a centralized middleman to complete transactions between agents. […] The organization of economic transactions around lines of credit is supported with historical evidence and is found in one of history’s earliest civilizations. The codification of the loan contract in ancient Babylon, when combined with the historical evidence and simple thought experiments about the viability of credit, demonstrates that credit systems are a more historically viable starting place for the emergence of money than barter.
last updated september 2014