What is money? A rabid free marketeer puts his foot in lots of notes

Fear the drunken sailors and their bottomless wallets

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And so on to our footnotes. This is something that David Graeber, a professor of anthropology at the London School of Economics, did in fact get right in his book Debt: The First 5,000 Years. It also ties into something that economic historian Karl Polanyi said about the good life. Polanyi tried to make out that exchange with people that you actually knew was more gratifying than impersonal transactions.

There's plenty who still believe this, of course: better the sausages from the butcher you know and talk to than something delivered impersonally from Amazon. It's the very web of those mutual exchanges which make up the society, and which make a society in which humans thrive.

Graeber points out that such a society has a series of debts embedded in it. Who last killed a pig and slid the fresh meat around has an impact on the societal expectation of who is next going to kill one and similarly share the flesh.

And it's Polanyi's web of obligations that comes first, debt being how they are recognised, and money simply becomes the way in which those debts are recorded. Little difference in concept between “It's Giles' turn to kill a pig” being common knowledge, “IOU part of a pig, signed Giles” and Fred having a £10 note with which to buy part of a pig from Giles.

Except, of course, money allows that tight chain of obligations to become entirely impersonal. Assuming that we all agree what money actually is then they don't have to be mutual obligations at all: they can be with anyone who is willing to cough up whatever in return for the money.

We should note that this is about the only thing that Graeber did get right in the book: he at one point claims that Apple was founded by waif refugees from IBM which is a bit of a surprise to many, including the Holy Toast of St Steve Himself.

At least one economics professor, to my knowledge (Brad Delong, for the curious among you) runs a section of his blog entirely devoted to the mistakes in the book. But this money-is-the-institutionalisation-and-anonymisation-of-debt is indeed what it really is. We might also say much the same thing by calling money the commodification and conversion into generally transferable debts of those mutual obligations.

At which point see above: this is really pretty much all that money is. But that's not actually what people wanted to know when they asked, as several have done, for that Full Worstall on what money is.

At which point onto footnote two, which is I think what people are really interested in: these modern theories about money and who creates it and who benefits.

Next page: Yup, more footnotes


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