by Brenda Rosser
re-posted from Econospeak with permission from the author
I’ve just begun to browse the pages of David Graeber’s 2011 book entitled ‘Debt – The First 5,000 Years’. Graeber is an anthropologist who makes no bones about the historical errors made by many economists on the evolution of markets and the use and nature of money.
On pages 44-45 Graeber writes:
“People continue to argue about whether an unfettered free market really will produced the results that [Adam] Smith said it would; but no one questions whether “the market” naturally exists….we simply assume that when valuable objects do change hands, it will normally be because two individuals have both decided they would gain a material advantage by swapping them. One interesting corollary is that, as a result, economists have come to see the very question of the presence or absence of money as not especially important, since money is just a commodity, chosen to facilitate exchange, and which we use to measure the value of other commodities. Otherwise it has no special qualities.
“….Call this the final apotheosis of economics as common sense. Money is unimportant. Economies – “real economies” – are really vast barter systems. The problem is that history shows that without money, such vast barter systems do not occur….It’s money that had made it possible for us to imagine ourselves in the way economists encourage us to do: as a collection of individuals and nations whose main business is swapping things. It’s also clear that the mere existence of money, in itself, is not enough to allow us to see the world this way. …
“The missing element is in fact…the role of government policy…”
Graeber goes on to explain how government foster ‘the market’. Laws, police, monetary policy, pegging the value of currency to precious metals, altering the amount of coins in circulation, regulating banks etc.
On page 49 Graeber asks a key question: “…what exactly was the point of extracting the gold, stamping one’s picture on it, causing it to circulate among one’s subjects – and then demanding that those same subjects give it back again?”
“This does seem a bit of a puzzle. But if money and markets do not emerge spontaneously, it actually makes perfect sense. Because this is the simplest and most efficient way to bring markets into being.”
Money brings markets into being. Not the other way around, as most economists would have it. If this is true then Graeber’s concluding thought has some authenticity: “Perhaps the world really does owe you a living.”