Debt: the seed of civilization

In these days of anti-capitalist protest, it is important to know that keeping track of debts led to the inventions of counting and writing, and eventually gave voice to art. [This is based on “Money: the seed of civilization,” an article for the Texas Numismatic Association’s TNA News, vol. 53, no. 6, November/December 2011. Other text is derived from comments posted to the Econolog and OrgTheory blogs about the recent works of anthropologist David Rolfe Graeber. Citations are at the bottom.]

 As a numismatist and an advocate for the Austrian school of free market economics, I find David Graeber’s work fascinating. Von Mises, Hayek, and Rothbard were largely ignorant of numismatics, hence of the history, art, and science of the moneys in which they invested so much emotion and thought.  Nonetheless, Graeber’s left-wing anarchist fear of money validates the warning from von Mises that capitalists and socialists often agree on the facts; they disagree on what the facts mean.  Graeber does know the facts. 
The works of numismatists Charles Opitz and Robert Leonard on primitive money substantiate at least the broad outlines of Graeber’s conjecture. Underlying that, however, is the deeper understanding of “debt.” It begins as a social obligation: not the transfer of “stuff” but the acknowledgement of status and relationship.  Wampum was invented by Hiawatha to ameliorate conflicts in order to rally the local tribes against the French and English invaders.  Soon, those invaders, knowing money, adopted wampum as an ad hoc currency. 

Left anarchists are not alone in their fear of the marketplace. 

“The Money Masters” is a video you can watch on YouTube.  The argument is that the Rothschilds created debt-based fractional reserve banking to control the world.  This video was touted by two Objectivist websites, Rebirth of Reason (here) and Objectivist Living (here).  Like most American conservatives, Objectivists advocate for gold as the monetary standard.  Murray N. Rothbard (though purged from Ayn Rand’s inner circle) argued that anything other than 100% gold backing for currency is fraud.  Most conservatives agree with this argument.  F. A. von Hayek, a self-identified liberal, did not.  Hayek argued for complete laissez faire in banking and did not presume to predict what forms of money would compete best in which markets once the legal monopoly is removed. 

There is in fact no known example of a human society whose economy is based on barter of the ‘I’ll give you ten chickens for that cow’ variety. Most economies that don’t employ money — or anything that we’d identify as money, anyway — operate quite differently. They are, as French anthropologist Marcel Mauss famously put it, ‘gift economies’ where transactions are either based on principles of open-handed generosity, or, when calculation does take place, most often descend into competitions over who can give the most away. … [The] economists get it … precisely backwards. In fact, virtual money comes first. Banking, tabs, and expense accounts existed for at least 2 thousand years before there was anything like coinage, or any other physical object that was regularly used to buy and sell things, anything that could be labeled ‘currency’. (Graeber here.)

I agree with Graeber that ultimately money grew from ritual gift exchange, just as the turbine generator descended from the campfire.  However, it is erroneous to project ourselves on so-called “primitive” people, even by reading the reports of “early” explorers.  From your grandparent to your grandchild is five generations. Any longer period may be “forever.” Assimilation of neighbors, displacement by foes or weather, and the occasional brilliant idea are among the many factors that can be lost to time.  When European explorers, including anthropologists, first met other people, the assumption was too easy that they always lived here, spoke this language, ate these foods, married in or married out.  They may not have. 

We do have a good history of the evolution of debt to money.  Again, we too easily assume that coinage is the foundation of money.  It was not.  Sophisticated fiduciary documents are thousands of years older than the first coins.

Clay tokens were antecedents to writing

Starting about 8000 BCE, a system of small clay tokens standing for farm produce became common across the Fertile Crescent of the Middle East.  By 5000 BCE, the tokens were routinely stored in clay jars.  You cannot see into a ceramic envelope, so the tokens were also impressed on the outside to show what had been baked within.  Two thousand years later, rather than the tokens, pictographs of them were written on solid clay hemispheres.  In another thousand years, these became tablets with cuneiform writing. 

Pre-Literate Art from Catal Huyuk

Through this long development, large numbers such as 4, 5, 6, and 7 were invented.  Before about 5000 BCE they could not even be conceptualized: five was recorded as “three-one-one.” 

Also, starting about 3000 BCE, as inscribed on statues, these cuneiform characters recorded personal names. They also begged short prayers of the gods.  The first poetry only came about 2700 and the famous Code of Hammurabi dates only to 1700.  Most subtly, the ordered writing of merchants, left to right, up to down, lesser to greater, eventually gave painting and sculpture a vocabulary of space.  Before debts and contracts were invented, artistic space was open and unstructured. 

Neo-Sumerian cylinder seal

Prof. Schmandt-Besserat first published her findings in Scientific American in 1978.  Ovcr the next decade, visiting museum collections, she arrayed enough proof to fill a large two-volume corpus, Before Writing (University of Texas Press, 1992).  The essential facts and evidences were then condensed into a popular paperback, How Writing Came About (University of Texas Press, 1996).  A children’s book was published in 1999, The History of Counting.  Most recently (2007) the University of Texas Press released When Writing Met Art. 

The weakness in Graeber’s theory, like that of Marx’s communal prehistory, and even the self-sufficient yeoman of Jefferson's democracy, is that there was no Eden stolen from us by the Serpent of Debt, Commerce, and Division of Labor.  We now know a direct line of development from debt to numeracy, literacy, and the spatial vocabulary of art. 

Schmandt-Besserat makes clear that these early instruments were not money as indirect barter.  They were not passed from hand-to-hand.  However, they did record economic value and carried seals naming the parties.  In that, they foreshadowed the invention of coinage thousands of years later.  More subtly, this medium was like a modern bank draft because when these promises were paid and cleared, they were discarded. 

Debt led to writing by way of numeracy: inventories precede the Gilgamesh by thousands of years. We may be no more trapped and enslaved by debt than we are by literature, central heat, and the Hubble Telescope. If greed is good, then debt may be better.

Sources:

• Curious Currency: The Story of Money from the Stone Age to the Internet Age by Robert Leonard, Whitman, 2010. 
• Odd & Curious Money by Charles Opitz, First Impression, 1986. 
• An Ethnographic Study of Primitive Money by Charles Opitz, First Impression, 2001. 
• Debt: The First 5,000 Years by David Graeber (Brooklyn: Melville House, 2011)
• “Debt: The First 5,000 Years” (essay) by David Graeber online in many places including 
• MetaMute here http://www.metamute.org/en/content/debt_the_first_five_thousand_years
• And The Anarchist Library here http://theanarchistlibrary.org/HTML/David_Graeber__Debt__The_First_Five_Thousand_Years.html
• “Money and Politics - The Money Masters” posted by Michael Stuart Kelly to Objectivist Living 27 April 2007 - 08:07 PM here. http://www.objectivistliving.com/forums/index.php?showtopic=3514
• “‘The Money Masters’ Documentary,” posted by Mr. Jeremy M. LeMay (pseud.), to Rebirth of Reason, April 25, 2007. Here http://rebirthofreason.com/Forum/GeneralForum/1045.shtml
• “Graeber Book Forum Part 1” by Fabio Rojas posted to Org Theory, December 6, 2011, here http://orgtheory.wordpress.com/2011/12/06/graeber-book-forum-part-1/
• “On the History of Money,” by Arnold Kling, posted to EconLog, October 3, 2011, here http://econlog.econlib.org/archives/2011/10/on_the_history.html

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Art as Ordered Narrative

Money is Speech

City Air Makes You Free

Money as Speech and Peacemaking

Athens c. 450 BCE

“Francisco’s Money Speech” is a monologue from Atlas Shrugged.  If you do not know the soliloquy you can find it online at Capitalism Magazine courtesy of the Ayn Rand Institute.  As dramatic as it is, the essay is as negative as positive, a denial that money (or the love of it) is the root of all evil.  The broad and deep anti-capitalist prejudices in education and arts leave us with few investigations into the benefits of money.  Pink Floyd’s hedonist plaint, Gordon Gecko’s short “Greed” speech, and Larry the Liquidator’s “Amen” are about the top of the heap in common culture.  

Oddly enough, Ludwig von Mises agreed with Karl Marx that money derived from trade and that by natural selection, gold and silver became the best forms of commodity money.  (Compare Mises, Human Action, Chapter XVII “Indirect Exchange” with Marx, Capital Volume One; Chapter Two: “Exchange and Volume,” One Chapter Three: “Money, or the Circulation of Commodities.”)  In our time the across the political right wing, it is perhaps impossible to find anyone who describes themselves as conservative, libertarian or objectivist, who does not believe this.  

Summary of Traditional Moneys

In fact, money did not begin with trade, trade did not begin economic calculation, and the true power of money is not what you can get for it – though that is, indeed, powerful – but what it says to you and for you. ("The Technology of Ritual Exchange is now on the new Washtenaw Justice here)  Historically, in human and perhaps proto-human development, friendship came from the exchange of gifts.  When strangers met, giving and receiving almost anything at all avoided conflict. 

In The Economy of Cities, Jane Jacobs posited that the cities derived from permanent hunting camps, not from agricultural settlements.  Successful hunters exchanged their bounty, more for novelty than for need.  According to Jacobs, grains that were not eaten before the next gathering were tossed aside.  When they grew, agriculture was discovered within the city walls.  The need for space took agriculture outside.  According to her theory, where today we find pastoral people, somewhere near the center of their range, we can find a lost city.  

If gold and silver as money derived from trade as economic calculation, then tin and copper (and bronze) would be the basis for money.  And there is support for this.  We know bronze blocks the shape and size cowhides.  The first Roman metal money was in blocks of the stuff, weighing one pound, cast with the images of pigs and elephants. The value in silver and gold is that they can be exchanged for bronze.  At the same time, however, there is no doubting the beauty of precious metals.  That, too, is valid.  Durable, uniform and malleable, they excel over other pretty stones and attractive feathers.  But as such, they have no utility except exchange.  Fundamentally, the value in money is that it allows us to make peace.  Economic calculation then becomes possible, but that is not the origin of money.

Once coinage was invented, money took on a new dimension: it carried images, and eventually words.  For pre-literate and proto-literate people, coins spoke in symbolic images.  Ancient coins were read in a depth of meaning that even numismatists too often glide past.  But no one mistakes what Junius Brutus meant when he issued coins celebrating the Ides of March.  Roman imperial coins announced military victories and the subsequent enslavement of peoples, as well as the emperor's tours of the provinces, the liberality of his gifts to the people, and the renewal of his appointment to office by the senate.

Even in the Dark Ages, coins carried so many words that they had to be abbreviated.  Historically, in obedience to the Commandments, coins from Muslim nations displayed no images, but announced, “There is no god but God; and Mohammed is the prophet of God.”  In China, from ancient times to the 19^th century, the common cash coins carried four characters, at least two of which were the political message of the emperor, just as our presidents announced a “New Deal” or a “Great Society.”  In the 18^th and 19^th centuries, privately struck coins in England and America carried explicit political messages threatening revolution and touting our rights – and celebrating hard work and free trade with beehives and handshakes.  In America of the 1830s, one series of tokens lampooned Andrew Jackson as a jackass with a law degree; another showed the general, sword in hand, taking responsibility for an empty treasure chest.  Today, we use paper money and the typical Federal Reserve Note carries twenty different messages from the letter seal of the bank to the printing plate position, from the Eye over the Great Pyramid to “In God We Trust.”   

Pan American Airways

Stock certificates from the great age of capitalism carried vignettes.  Generic deities posed with wonderful machines.  Some of those demi-gods sported slide rules and calipers.  Goddesses of agriculture delivered bounties via railroad. The goddess of Gulf States Electric delighted her child with sparks from a generator.  

As the Internet eclipses print, we no longer purchase bank checks dressed up with icons and messages.  Electronic money is anonymous, surrendering its powers of speech and peacemaking.  But the foundation remains.  On the Internet, that overt trust is too easily exploited, but it could not be stolen by the dishonest if it did not exist.  Each exchange minimizes conflict and allows an opportunity for friendship. 

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Money is Speech

Money as Press and Speech

Start the Presses!

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