Sep

4

 David Graeber is a brilliant guy; and, if your mind is not completely put off by the Marxist undertone, his book on Debt has some very good history. He also understands money's origins far better than the guys across the hall in the economics department. Money, he writes, exists because the king and his scribes need something to collect in taxes on which they can earn the rewards of seignorage. As Graeber points out, if it were simply a matter of collecting enough grain and gold, then the tax farmers could go on collecting the grain and gold. But, with what our American Constitution calls "Coin", you have a standardized Measure of wealth that the government both produces and collects and produces more and collects more; and, with each transaction, the scribes can collect an interest beyond the value of the metal itself. Graeber's explanation for how this alchemy begins is also sound; money has its origins in war. You can keep peasants working in the field with simple force; but you need to pay soldiers to make certain the sharp ends point away from you.

Where Graeber fails - utterly - is in his understanding of the origins of debt. He makes a great deal of the existence of debt bondage and the fact that peasants could end up losing their chattels to money lenders and out of that creates the equation of debt=slavery. But, as his own investigations should have shown, outright slavery has always been the far larger evil. When Adam Smith wrote that "the property of every man in his own labor is the most sacred and inviolable foundation of all property" he was not talking about the abuses of debtors' prisons.

So, why does Graeber focus on debt at the root of all evil? Because, if you are trying to mount a campaign to abolish debt as the root of all the world's misery, you cannot acknowledge that people have an inclination to deal with one another and will, if allowed, begin swapping credits all on their own. You will not find a single reference to Hayek in any of Graeber's writings that are online (I just did a search and came up empty); after all, if you acknowledge Hayek's wonderful insight - that a system of money that finds its origins with war and absolute authority can evolve over time into one of individual rights to property and open dealings in credit - then how can you rescue the labor theory of value and find capitalism as a vestigial appendix to be lopped off?

You have to believe that "kings, throughout history, …..normally encourage markets, for the simple reason that governments find it inconvenient to levy everything they need (silks, chariot wheels, flamingo tongues, lapis lazuli) directly from their subject population; it's much easier to encourage markets and then buy them. Early markets often followed armies or royal entourages, or formed near palaces or at the fringes of military posts. This actually helps explain the rather puzzling behavior on the part of royal courts: after all, since kings usually controlled the gold and silver mines, what exactly was the point of stamping bits of the stuff with your face on it, dumping it on the civilian population, and then demanding they give it back to you again as taxes? It only makes sense if levying taxes was really a way to force everyone to acquire coins, so as to facilitate the rise of markets, since markets were convenient to have around. Here is Graeber's explanation for how markets developed: "since kings usually controlled the gold and silver mines, what exactly was the point of stamping bits of the stuff with your face on it, dumping it on the civilian population, and then demanding they give it back to you again as taxes? It only makes sense if levying taxes was really a way to force everyone to acquire coins, so as to facilitate the rise of markets, since markets were convenient to have around."

Yeah, right. Merchants were convenient to have around; markets were those pesky things that even the merchants were tempted to believe they and the king could abolish.


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