> A major argument of the book is that the imprecise, informal, community-building indebtedness of "human economies" is only replaced by mathematically precise, firmly enforced debts through the introduction of violence, usually state-sponsored violence in some form of military or police.
> A second major argument of the book is that, contrary to standard accounts of the history of money, debt is probably the oldest means of trade, with cash and barter transactions being later developments.
Makes sense. Academics always discount the intelligence of past people.
People seem to naturally pledge loyalty and do favors for each other, it makes sense that “debt” would be a primary medium of exchange.
If anything, barter is more complex than a promise, as without money how do you evaluate the value of a sheep vs a bunch of grain or some service? Is building a wall worth more or less than sex? How do the two match up against the sheep? How do you trade for fractional value?
The big difference innovation was the organized trading of debt and shares of enterprises a couple hundred years ago. The rest is probably been a thing since cavemen.
"Academics always discount the intelligence of past people."
...except maybe in the discipline of history, some of whom love to overestimate the greatness of past individuals.
It also sounds like you are worshiping some kind of idol of the token of exchange. One main function of law is to allow for promises far more complex than any simple transaction.
> you are worshiping some kind of idol of the token of exchange
Sure. If defining a word by what it is and then applying that definition to past people is “worshiping” an “idol”. I would call it “adhering to” a “definition”.
Fact: History, as a written corpus, pins the “invention” of a lot of things on white people, when Arabs, Chinese, or Mezoerican people “invented” those “fundamental economic tools” thousands of years before. Stock and debt being good examples.
> contrary to standard accounts of the history of money, debt is probably the oldest means of trade, with cash and barter transactions being later developments.
In fact, this is the standard history of money. It's been a long time historians are aware of this and im the 1920s Allyn Young was already complaining about economists talking about barter as the historical foundation of economy.
Sadly, the story about barter is still being taught today in curriculum of economics because it's part of the classical narrative.
Although to be fair the author points out that credit was ubiquitous and there were spot and future markets for most commodities, and it was an mostly an endowment economy with little or no production.
Right. Fundamentally, money is a common form of transferable debt. The web of repayment becomes so complicated that nobody bothers to track it and everybody agrees to the fiction that money can be used as a universal payment against any debt. It greatly simplifies trading.
The invention of "bank money" (money that only exists in ledgers) was an optimization of this as it no longer required the movement of the debt carrier (money) across large distances but rather movement of information about debts. This was the foundation of Banking in Italy and it helped kick off the Medici families domination of Florence and the gains made from moving information (rather than the costs of moving money) improved European trading and funded the Renaissance.
People and governments try to cheat the system by debasing the debt carrier and reducing its value, or by acting as middlemen in the exchange of debt carriers (currency converters, brokers, etc.). Inflation has sunk more than one large empire.
Inflation is just one of the many things that affect an economy, among others like the ratio of unemployment, level of private debt, natality, life expectancy, etc.
The monomaniac obsession about inflation doesn't really make sense from and economic point of view. It comes from the Chicago school of economics, thanks to the charisma of Milton Friedman and how his political views resonated with the mindset of the cold war, but IMHO it doesn't bring much to the comprehension of the world.
But I'm not sure you were answering to the right comment anyway.
Another point that Debt: The First 5000 Years makes that I thought was very interesting - while there's social pressure for everyone to move from being more indebted to less indebted to others, however trying to pay it down to exactly 0 is an anti-social move that implies "I don't need you, don't want to be needed by you and don't want to be in relationship with you any more". He gives examples of societies where you always return gifts with other gifts, but being careful never to return a gift of the exact same type and value. Or of situations where someone pays a parent back for the debt of caring for them as children, and what such an action means.
Indebtedness to each other is the appropriate state of humans in community.
The NAP comes from libertarianism, which is as far as you can get from anarchism.
Anarchism means free cooperation between people with no transcendental rule apart "everyone is equal", while libertarianism (and the NAP) means "private property is paramount".
Anarchism was born in the 19s century as a part of the socialist movement, while libertarianism is an alt-right movement which grew in the US during the cold war, as a reaction to socialism.
Both anarchism and libertarianism have one thing in common though: both are adolescent utopian fantasies, completely unworkable in the real world because they are not evolutionarily stable strategies.
What is and is not an evolutionarily stable strategy will always be defined by the environment in which populations exist. A change in environment will disrupt any equilibrium. Capitalism as it exists now, for instance, might seem to be an ESS, but a change in conditions could change that. Similarly, on a long enough timeline, the vast, vast majority of strategies (so far) have proven non-viable. Doesn't mean they don't work for some groups, or for a time.
(I suspect your downvotes are from mudslinging with 'adolescent' and 'utopian', which sort of clash with/give the lie to your air of dispassionate analysis)
I didn't intend for it to be dispassionate. The NAP doesn't work because it would require a suspension of the laws of physics. If you are unwilling to engage in violence on principle then your resources will get taken from you by someone or some thing who is less willing to be bound by principle. It's really that simple. Anarchists and libertarians who subscribe to the NAP are no different from the adherents/victims of Ramtha's School of Enlightenment who think they can use quantum mechanics to cause objects to materialize with the power of their minds. I think the adjectives "adolescent" and "utopian" are quite apt in both cases. (And it doesn't surprise me a bit that I'm getting downvoted. Adolescent utopians and cult leaders rarely react well to being called out. But I care about the truth more than I care about HN karma.)
There's a bit more to it than that. Anarchism grew out of 19th century libertarian socialism. So not all forms of libertarianism are far removed from anarchism, though the attitude towards private property is indeed the most striking difference between anarchists/libertarian socialists, and libertarian capitalists/anarcho-capitalists.
One thing mainstream economists and marxist economists agree on that is that the modern financial system (capitalism, debt based money supply, etc.) could not exist without a very strong and established legal system with key features: commodification of virtually all tangible assets, tort, contract law, along with of course the ability to enforce the judicial system by force.
But that's because our system enables - has to enable - transactions between total strangers. In the past a lot of the economies were local and between people who had to deal with one another again and again. There is plenty of human behavior enforced purely by human hard-wired or culturally enforced behavior. It is much stronger than most people realize because it's a constant hum in the background. The state and the tools you mention took it a level or two higher and enabled more complex and more dynamic structures.
Link rot for academic sources is ridiculous. Several of the links to academic paper PDFs are broken. There really should be a better way of dealing with this. I guess university IT departments remove user accounts when a professor or researcher leaves the school, and that results in deletion of all files on their personal academic sites. Would be nice if there was an accepted, standard way of "rolling over" these files to the next school where the person ends up.
I think the main problem is the posted document referring to sources without giving even the title of the papers it refers to. Only a link, nothing else. This a very non-standard way to use references.
While I do appreciate the role of a proper citation, I'm reluctant to do it for blog posts (as opposed to my actual papers) both because it's time consuming and because for most people, links are a more natural and readable format.
If you are interested in this type of stuff The Baroque Cycle by Neal Stephenson is an entertaining read that touches some of these topics circa 1650-1720 in Europe. More specifically the switch from bills of exchange to the foundation of some central banks on which currencies are based.
TBC got me started on an exploration of the history and ideas of money -- also touched on in Cryptonomicon -- but it's only just a start. Though an entertaining one.
Don’t forget that every debt (and I like the small one of the news agent) expands the money supply; you reduce it every time you pay your cc bill or cash that check.
> A major argument of the book is that the imprecise, informal, community-building indebtedness of "human economies" is only replaced by mathematically precise, firmly enforced debts through the introduction of violence, usually state-sponsored violence in some form of military or police.
> A second major argument of the book is that, contrary to standard accounts of the history of money, debt is probably the oldest means of trade, with cash and barter transactions being later developments.
* https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years