Property, debt and the money supply

I have just finished reading David Graeber’s book “Debt: The First 5000 Years“. It is somewhat relevant to our topic here, and in any case it is interesting, so let me summarize it and give a brief review.

In the first part of the book, Graeber, who is an anthropologist, takes to task the traditional notion of economics whereby cash was invented to reduce the transaction costs inherent in a system of barter. I am not sure how original his thesis is, but it is persuasive. In a nutshell, Graeber says that we know very well this is not true. In fact, the ability of cash to serve as a general means of engaging in daily economic transactions is no earlier than the 19th century and even postdates Adam Smith’s Wealth of Nations. Apparently he knew this very well. Graeber says that Smith’s notion of the relationship between salaried worker and capitalist employer is not descriptive at all, but prescriptive, indeed utopian. In traditional societies, and Graeber quotes many examples, cash, when it exists, serves ceremonial, not transactional purposes. Rather, everyday transactions are carried out on credit.

Credit may mean a number of things. It may simply be a general expectation of reciprocity over time, which indeed may not even presuppose a predisposition to think in terms of personal or kin benefit at all (as per E.O.Wilson’s theory of multilevel selection). I have argued elsewhere that the role of emotions and empathy, and more particularly of shame, is to be understood against this background. On the other hand, in more complex societies, especially against the backdrop of taxation, as well as the standardization of weights and measures, credit becomes a matter of accounting records and ultimately transferable bearer instruments. Credit in this case can be standardized in terms of a commodity unit of account, even if the commodity itself is not exchanged. Official tables of correspondance between one commodity and another can also be promulgated by state authorities. Graeber argues that this antedates coinage, and a fortiori the general use of coinage, by a considerable margin. Thus the story of money is the story of debt.

This account occupies the first four chapters. As of chapter five, the book for me starts to come apart. In that chapter, Graeber attempts a moral philosophy of debt, but is clearly out of his depth in doing so. There are interesting elements in relation to slavery in chapters six and seven, but the point Graeber is trying to make is never clear. The rest of the book attempts a world history of money, and is disappointing. There is an omnipresent ideological underpinning to what Graeber says, and a disappointing lack of critical distance vis-a-vis the international financial economy. Regardless of its origins, one would have wanted an account which assessed its strengths and weaknesses in terms of serving the well-being of the human race today. Possibly even some thought-through proposals for change. Graeber is a long way from rising to this challenge; so much so that one is left wondering what the point in fact was of the analysis of slavery and of the moral nature of debt which he belabors.

That the book was going to fail in any such enterprise was for me obvious already from the title. Why 5000 years? Graeber argues that everything started, or at least starting going wrong, with the first agrarian empires. It is not at all clear why the fact of empire (however it is defined) is relevant. Humankind has been organizing itself into agriculturally based communities for at least twice this period. Such communities enabled community size to exceed the tribal unit for which our brain seems preprogrammed (known as Dunbar’s number). Once this happened, hierarchy and specialization became possible, property become a key issue, and it was no longer possible to keep track of a network of implied reciprocal obligations. There is every reason to date the development of formal credit systems, guaranteed by a central authority, to this date, rather than arbitrarily to begin at the dawn of written records.

Why does Graeber make what seems such an obvious mistake? In one sense, it is not of particular importance to his thesis. But there is, I think, a deeper reason. Graeber seeks to promulgate a romantic notion of the “human economy” in primitive societies (although he protests he does not). A “human economy” is an “economic system primarily concerned not with the accumulation of wealth, but with the creation, destruction and rearranging of human beings”. Logically, one supposes that “human economies” evolved, under the force of state formation (“empires”), into credit economies. Ignoring the fact that the purpose of the latter is hardly, per se, “the accumulation of wealth”, what type of society would be expected to be characterized by a “human economy”?

Graeber does not answer this question, but the examples he gives concern both hunter-gatherer and sedentary populations. And therein lies the rub, for these are organized on fundamentally different principles, and their economic systems reflect this.

Graeber says of this type of economy that “some are quite humane, others extraordinarily brutal”. Since, however, it is his own argument that the means of exchange relates directly to the exercise of violence, he should be more attentive to this distinction. In fact, what he misses is quite as basic as what Smith misses also. In the sedentary populations, property and intra-group violence have already arisen; and both credit and currency are used in a way which intrinsically recognizes and reinforces this, whatever their form and regardless of the keeping of written records. Graeber is blind to this because he accepts uncritically the monogamy myth, failing to see it as a primal form of violence, and this despite the rich variety in the sexual organization of the societies he mentions. He fails to see that monogamy is an outgrowth of property systems and not intrinsic to the human condition.

This matters, because human economies, according to his own definition, are about “organizing” human beings. Later, this means slaves. Before this, it means women in reproductive age. It is because property rights are already asserted by men over women that “human economies” have anything to ceremonially exchange. Absent this feature, the notion has no sense or raison d’etre.

Strangely enough, Graeber describes at length in his book rituals of exchange witnessed amongst Australian aborigines, whose social organization remained (or more probably returned to) one of hunter-gatherers. These economies therefore have a reasonable claim to incarnate principles which arose prior to “human economies”. And guess what: attitudes to sex are much more relaxed; indeed, sexual exchange plays a key part in the overall ritual of economic exchange between the tribal groups. In fact barter occurs in primitive societies only in an inter-group setting, and always within an overall context of socialization between the groups.

Rather than an inspiration for an economic theory truer to mankind’s basic nature, the “human economy” therefore seems to me to mark the beginning of where things went wrong. It would be hugely naive to appeal to such a model as a solution for the world’s economic woes.

Things certainly got for a long time worse before they started to get better. This, however, is no indictment of credit or currency as such. The behavioral assumptions of classical economics have been under attack for decades, and Graeber does contribute something. We are still lacking a better model. But the models of classical economies are perfectly good for most of the purposes to which they are put, and distinctly better than any guide to practical action which might emerge from Graeber’s views. We do not have to believe the myth of homo economicus, and we certainly do not have to accept the distribution of wealth and opportunity which history has bequeathed us. We can acknowledge the embedded violence in the economic system as it exists, and still use the science to improve the happiness of human beings – which is its foremost goal.

 

“Sex at Dawn” – a review

I have just finished reading Chris Ryan and Cacilda Jetha’s Sex at Dawn. The book is such a revelation that it is hard to know where to start. This is not only one of those books that will change your life. It’s going to change a whole lot else too.

The experience one has reading it is much akin to the one I had five years ago when I attended my first tantra workshop. A whole load of stuff that previously existed as isolated islands, unconnected, suppressed or misunderstood, suddenly falls into place – in this case not only things I have felt inside, but numerous aspects of the contemporary world as well. Reading the book launches me into filling in many of the gaps it leaves open, as well – something I will no doubt be doing over the next series of posts.

For those who don’t know, the books central thesis is that humankind evolved as a group-living, cooperative species in which sexuality was shared and played an important social role in building and maintaining group ties.

I am totally convinced. Not just by their breadth of argument, though it is impressive. Above all, it just. makes. sense.

There are enough summaries of the book elsewhere, from every conceivable viewpoint, so I won’t attempt another (though I would advise you to read it yourself). In this post, I want to try to qualify the book and give a preliminary assessment of its importance.

Although basing itself widely on earlier work and despite its conversational tone – which heaps ridicule on conventional thought – this is a book which is likely to be as fundamental to humankind’s self-understanding as was Darwin’s On The Origin of Species. In a way, it is a completion of Darwin’s thought. The voyage of self-discovery on which Darwin launched our species has now come into port; and whilst there is surely much still to be discovered and said and plenty of meat to put on the bones, the essential features of that destination are now known.

Coming to terms with them under the conditions of modern life is going to be more of a challenge. In the first place, Ryan’s and Jetha’s conclusions are going to be subject to a bitter rearguard action. Far too many vested interests, many of them household names, are going to find it difficult to climb down from the positions they have taken; and especially when assailed with so little pity. Such vested interests are not only in academia of course, but across the spectrum of society. It looks to me like we are in for the last, and I fear not universally peaceful act in the culture wars which started with Copernicus and Galileo.

It’s time to take sides in those culture wars, or as the authors challenge us in their closing chapter, very aptly, to “come out”. If you recognize yourself as a member of the species they describe, now is the time to say it. Subgroups defined on the basis of sexual orientation or preferences have fought numerous partial wars in the past (and go on, of course, doing so today). Now, though, we have an overarching label for all these struggles: human being. We should, and will likely need to, combine our forces.

What else is new? Closest to the epicenter, is the need to reevaluate love and its associated emotions. I want to say more on this in a future article because it is where I find the book most liberating and hopeful. Then, of course, there is the need to reevaluate and reimagine social institutions suited to the “sexual exiles” we now know we are (to use a term coined by Stephen Snyder, featured in an earlier post). This is already an agenda of unimaginable breadth – but it does not stop there. As an economist (yes, I am in reality an economist), I find an enormous set of related challenges in the need to reassess the fundamental and highly useful simplifying assumptions of mainstream economics regarding so-called “rational” behavior. Of course, this is not an entirely new agenda; but it is lent a great deal new weight by these insights into a model of human nature quite at odds, at least within a defined sphere, with neoclassical assumptions. The use of the term “households” to define the basic unit of consumption was already a (reluctant and awkward) concession to the commonsense understanding that there existed individuals within the boundaries of the welfare-maximizing economic unit other than its (presumably) titular head, whose welfare was part of the objective function that this “head” would endeavor to maximize (we are not told with what discount factor). Now, I think, we know that we are capable of being cynical – but not wired for it. Whatever the exact form is that such “wiring” takes. (This is a matter I have frankly no understanding of – if anyone can enlighten me).

In fact it is difficult to conceive of any area of the social sciences which will not now have to question its basic assumptions – from anthropology to (even) psychoanalysis: how do Oedipus and Elektra complexes look once we redefine the family unit?.  (A problem with the standard discourse of psychoanalysis which has always, of course, been quite a challenge to adequately theorize).

What Ryan and Jetha have achieved is what is correctly known as a paradigm shift. The course which human history is about to take has been set out by the seminal philosopher of science Thomas Kuhn. It will not be easy and it may not be nice: but there is no turning back until, eventually, the fact of our polyamorous ancestry is as much a part of our mental universe as the theory of evolution itself.

It’s my hope, of course, that in the inevitable onslaughts which will follow, the fundamentally beautiful human insights which follow from the book’s findings will not be lost from view. This is no crude defence of marginal sexual lifestyles. We are all a part of it, and all estranged from our core natures by no fault of our own. This calls for courage and conviction, but also empathy and compassion. Something, it turns out, we as a species are actually quite capable of.