The Myth of the Barter Economy: How did pre-coinage economies work?

[The Minsky Moment]

Well, that was my point when I made my comment in the opening post. Once the community is city sized trade is by barter.

To be clear I wasn't disagreeing with you, I was disagreeing with the article.  You identified an obvious flaw which is that once you have settlements of tens of thousands of people - something that begins to occur a very long time ago - the kind of ritualized gift economy they are talking about doesn't work as the sole means of distribution.

This isn't really a debatable question - we have clear written evidence in the 3rd millenium BCE of exchange using a pricing system with a fixed commodity numeraire.  A practice which certainly goes back further than that.

And once you have city-states or states led by city-based rulers, those practices and norms flow into the countryside as well - e.g. "temple based" economies are used to organize peasant production outside the city gates.

The assumption in the article that coinage creates the exchange economy is just wrong.  It is debated how significant an impact the spread of coinage had.  There was a convenience advantage and it could allow less administrative overhead as compared to say metal ingots or bushels of grain in account ledgers.  But the earlier coinages seem to be as much about prestige as convenience. The pre-coinage Babylonians and Egyptians were capable of operating diversified economies before they learned abut coins from Lydia and Greece (or India?) One big advantage that proved very significant is that coins are a convenient way to pay soldiers away from their home areas.  For a very long time, you can trace the growth of trade based on where empires and kingdoms placed military garrisons. 

[Oexmelin]

Yeah, pretty hard to argue the fur trade in  what was to become Canada was based on a gift model.  Although the indigenous peoples the fur traders interacted with may also have engaged in gift economy exchanges in other contexts.

Not really. In fact, it's a pretty standard point, one that I routinely make in my intro classes, for instance. This is why trade between strangers was such a fraught proposition in ancient societies: it existed outside the regular framework for exchange, and always existed on the brink of violence. Hence the intimate association between trade and trickery, between trade and the exceptional, spiritual-touched individual who performed it. It required pretty substantial ritualistic appeasement to be reintegrated within the regular "lifeworld", to make the stranger symbolic family for instance, or to create a space that suspended normal rules of conduct. One of the big transformation of 17th century Canada was precisely the encounter between a non-monetarized economy and one substantially monetarized, i.e., a European world where transactions could be routinely conducted with strangers (and which carried  minimal responsibilities towards the other) and an North American world where transactions required a pretty hefty commitment to alliance and brotherhood.

[The Minsky Moment]

It is far from being nonsense. It is, as the article mentions, pretty basic anthropology. The article confuses things a bit however. What anthropologists assert is that barter - the sort that relies on tables of equivalencies - *co-exists* with monetarized economy; it does not precede it.

Which makes it nonsense, since the entire thesis of the article is that the gift-based economy precedes the monetized economy and that the latter doesn't come into existence until "money" (by which they mean coinage).

[crazy canuck]

Yeah, pretty hard to argue the fur trade in  what was to become Canada was based on a gift model.  Although the indigenous peoples the fur traders interacted with may also have engaged in gift economy exchanges in other contexts.

Not really. In fact, it's a pretty standard point, one that I routinely make in my intro classes, for instance. This is why trade between strangers was such a fraught proposition in ancient societies: it existed outside the regular framework for exchange, and always existed on the brink of violence. Hence the intimate association between trade and trickery, between trade and the exceptional, spiritual-touched individual who performed it. It required pretty substantial ritualistic appeasement to be reintegrated within the regular "lifeworld", to make the stranger symbolic family for instance, or to create a space that suspended normal rules of conduct. One of the big transformation of 17th century Canada was precisely the encounter between a non-monetarized economy and one substantially monetarized, i.e., a European world where transactions could be routinely conducted with strangers (and which carried  minimal responsibilities towards the other) and an North American world where transactions required a pretty hefty commitment to alliance and brotherhood.

I accept that as entirely accurate.  But it only describes one half of the transaction.  To put my thought more precisely, it is difficult to argue the European fur traders thought they were engaging in a gift exchange model.

[Oexmelin]

There was a convenience advantage and it could allow less administrative overhead as compared to say metal ingots or bushels of grain in account ledgers.  But the earlier coinages seem to be as much about prestige as convenience.

The problem is that we have temples that are apparently quite happily stockpiling ingots, or clay tablets for a very long time without apparently the need to use them.

One big advantage that proved very significant is that coins are a convenient way to pay soldiers away from their home areas.  For a very long time, you can trace the growth of trade based on where empires and kingdoms placed military garrisons.

Slight nitpick: there is no reason to pay soldiers if they can't do anything with the coin. Its value must be enforced by forcing taxes (or tribute) to be paid in coin, and it then becomes a token for the wheat armies will take. It's less about paying soldiers than it is about sustaining armies far.

[Oexmelin]

Which makes it nonsense, since the entire thesis of the article is that the gift-based economy precedes the monetized economy

That is clearly, obviously true.

and that the latter doesn't come into existence until "money" (by which they mean coinage).

That is the part that confuses the whole thing.

[The Minsky Moment]

Slight nitpick: there is no reason to pay soldiers if they can't do anything with the coin. Its value must be enforced by forcing taxes (or tribute) to be paid in coin, and it then becomes a token for the wheat armies will take.

Which is still true today . . .

[Oexmelin]

I accept that as entirely accurate.  But it only describes one half of the transaction.  To put my thought more precisely, it is difficult to argue the European fur traders thought they were engaging in a gift exchange model.

True. But Europeans hadn't completely gotten rid of rituals of gift-giving, nor had they removed entirely commercial exchange from non-market consideration that mutual understanding wasn't possible. (Which is also true of our own societies today, though perhaps to a much lesser extent).

[The Minsky Moment]

The article reminds me of the libertarian fantasies about "spontaneous order" - e.g. that complex exchange based systems will simply spring into being in the absence of state coercion. It's the flip side of this fantasy.

[Oexmelin]

Which is still true today . . .

Of course. It's quite hard to un-invent money once that is done, hence its longevity being tied to states (or proto-states). Though it is quite surprising how  such a simple point is often hard for undergrad to grasp. The value of money (and its invention) is often assumed to be for the convenience of trade, i.e., the starting point of the article.   

[Oexmelin]

The article reminds me of the libertarian fantasies about "spontaneous order" - e.g. that complex exchange based systems will simply spring into being in the absence of state coercion. It's the flip side of this fantasy.

What't the flip side exactly?

[The Minsky Moment]

In both cases there is a narrative about a "natural" social order that is subverted by external repression.  In one case the natural order is communally utopian in nature in the other it is capitalistic.

[Valmy]

However, while I could see that working in a hunter gathering band or even a small agricultural village, I have a hard time seeing how that works as the polity is scaled up to the size of a city.

Yes it is probable that within small kin-groups and communities where huge social pressure can be brought to bear you don't need some kind of formalized economic system. However, once you are dealing with strangers you do. And when China is trading tea with Tibet for Horses they probably are not "gifting" they are trading on organized quid pro quo exchange rates.

Dumping on people from the 18th and 19th century or earlier for perhaps not having 100% of all data available that we have now in formulating their theories always pisses me off. Like "OMG Darwin missed with one small thing!!!11" Wow I am impressed 21st century person.

[Valmy]

In both cases there is a narrative about a "natural" social order that is subverted by external repression.  In one case the natural order is communally utopian in nature in the other it is capitalistic.

The "natural order" required huge amounts to stifling and conforming communal control it seems to me. You don't fuck with others because you are afraid of what they might do to you, or worse being expelled from your community which back in the day wasn't exactly a death sentence but close to it. I can see the advantages and comforts if you like your community and your place within it but the conformity and social control doesn't seem very utopia-esque to me.

It is just another social system with its advantages and disadvantages.

[Oexmelin]

In both cases there is a narrative about a "natural" social order that is subverted by external repression.  In one case the natural order is communally utopian in nature in the other it is capitalistic.

And they themselves are set up against claims that either hierarchical states or the pursuit of interest are natural developments or natural conditions of the human experience.

I think you are overreaching in your criticism. As I said, I think the author does a disservice to the actual state of the research, but it seems disingenuous to claim there weren't considerable repression at the heart of state- and empire-building. Similarly, there has been historically many more "communally utopian" societies than there has been states and empires, and these societies have been around for much longer in humanity's history. Whether or not you want to ascribe that to nature is a different thing altogether, but it seems quite evident that this state of being eventually was displaced by the rise of considerably unequal societies. As for what these communally utopian societies have been - and I prefer the term of "communities of consensus" - anthropologists have been pointing out for years just how demanding these societies are for the individuals, and how a semi-permanent, low-level warfare against other groups is often one of their dominent feature. An anarchist anthropology like Graeber wasn't really interested in recreating pre-industrial societies, but rather to undermine the kinds of myth that we use to make any other arrangement impossible.