I’ve been reading David Graeber’s Debt: The First 5,000 Years. I will wait to make any overall appraisals until I’m finished, but so far so good. Even if the remaining chapters are rubbish, it is an excellent contribution. I don’t think it is fair to make any critical comments until I do finish but there are a few nice things about the book I’d like to mention for now.
nothing is new
My primary complaint about monetary books for a popular or broadly-educated audience is the “everything is new” angle. Sometimes this is an actual argument the book is making. Sometimes it is just a flashy way to begin the book that catches the audience. “Wow! Money has turned into mere electrons or virtual gold in a video game! How do we make sense of this wild new world? Read on to find out.” Graeber refrains from any of that non-sense. I’ve always told my students that the most striking thing about money is not the recent emergence of new and exotic monetary forms (fiat, credit, virtual, etc.), but how ancient and typical the concerns about money as new and exotic are.
I was incredibly pleased to find this in Graeber’s introduction:
Admittedly, the usual impulse is to imagine everything around us as absolutely new. Nowhere is this so true as with money. How many times have we been told that the advent of virtual money, the dematerialization of cash into plastic and dollars into blips of electronic information, has brought us to an unprecedented new financial world?…The moment one casts matters on a broad historical scale, though, the first thing one learns is that there there’s nothing new about virtual money. (p17)
You tell em!
I’ve experienced an intellectual dilemma for some time now. I think that given the way the social sciences (and humanities) have been carved up, interdisciplinary work is necessary. This need not apply to any single individual. I appreciate an academic division of labor, but the gains from specialization are not reaped if we don’t engage in exchange. I also have many sympathies with economic sociology and anthropology. Nonetheless, there was something that annoyed me about some of this work done outside of (neoclassical) economics. It often offers case studies as evidence that neoclassical economics was unambiguously wrong.
Let me give an example from work that I do actually like. Zelizer (for example) uses the example of earmarking as evidence against the notion that money makes all things commensurable. That people earmark money, for different purposes, shows that money does not make all things commensurable. The coins in the groceries jar is socially different from the coins in the vacation jar. The commensurability argument was an important part of earlier sociologies of money, Marxian political economy, and implicitly neoclassical economics. I think Zelizer shows that when we abstract from the “social meanings of money” we lose something, or our understanding of behaviors change. I do not think she really disproves anything. I don’t think it is difficult for people working from a commensurability hypothesis to explain away most (all?) of Zelizer’s examples as complex cases of commensurability. Now this wasn’t a huge intellectual problem for me. I found that much economic sociology/anthropology overplayed the neoclassical economics is refuted angle, and underplayed the different theories explain things in different ways…with different consequences angle.
There is more to Zelizer’s case, but I still think we are more in the world of “different theories” than disproved theories.
Sometimes, matters are worse. I dislike having to take the side of neoclassical economics, but some criticisms are just wrong. Let me again give an example from a book I also like (I feel better nitpicking a book I would also recommend), Karen Ho’s Liquidated (link). The ethnography of wall street part (which is also the subtitle) is good, but I really don’t like Chapter 4 – “The Neoclassical Roots and Origin Narratives of Shareholder Value.” I can’t do full justice to it here, but she places much emphasis on the inability of neoclassical economics to recognize the complexity of the corporation. This critique fits within the anti-neoclassical narrative quite well. Society is complex and reducing it to rational agents randomly bumping into one another, or just one huge rational agent, misses much of what is interesting. Maybe this is a bit simplistic, but given the dominance of economics, this is a good sentiment. However, it sometimes misses the point.
One of the most egregious mistakes in neoclassical narratives of corporate history is their refusal to understand the history of stocks, shareholders, and the stock market as a phenomenon different from (though related to) the history of corporations, and thus constructed on a diverging set of values and historical trajectories. (171)
This chapter is very light on references to actual neoclassical economics. I kept wanting an example. It doesn’t seem accurate to me. I think economists have long known the corporation was messy. They have often abstracted from this mess when theorizing the firm. Without doubt, all the things Ho argues are important about the corporation – things she would qualify as contingent, historical, socially constructed, contested, culturally situated, etc. – are poorly treated in the history of neoclassical economics. Still it does not seem accurate to say they refused to see this complexity. Ho’s story is that this refusal created the shareholder value narrative. Because neoclassical economics had a crude one-dimensional (ahistorical, etc.) view of the corporation, they helped create this crude one-dimensional narrative and guideline. This seems wrong to me. In fact, it seems the opposite is the case. Couldn’t one say that it was the recognition that modern corporations were messy complexities, at odds with the theoretical firm, that fueled the attempts to transform it into something more suitably one-dimensional?
Now I don’t have a strong position on this. I haven’t done research on the topic. I could imagine being swayed by Ho’s primary argument given convincing documentation. Nonetheless, it is distressing to read what appears to be unfair criticisms of neoclassical economics. There are so many fair ones. It is really unnecessary. Don’t make me defend neoclassical economics!
Graeber’s book reminds us we can be pretty fair to textbook economics, and still quite viciously attack it.
I thought I was desensitized to criticisms of the textbook Mengerian barter myth. I understand why it needs to be repeated. It is indeed a popular myth. Some people couldn’t even imagine another origin of money. Nonetheless, it usually puts me in a “wake me up when this over” mood. Do not nap though! Graeber is really funny. There is the standard reference to Innes, and the like, but his criticism is really refreshing and does an incredible job de-naturalizing the barter story. One of the strongest features of the Mengerian myth is how “obvious” it seems. Imagine if we didn’t have money? Wouldn’t that make the mall such a drag? In the face of this common sense, obscure references to wergeld are not convincing to the skeptical reader. And certainly we find wergeld in Graeber, and a whole bunch of other anthropological evidence, but the scope of examples he uses and the straightforward way he describes actual non-monetary communities, leaves the Mengerian myth anything but obvious.
There is nothing more annoying than when an author attempts to de-naturalize something, and only further naturalizes it by presenting an alternative that is 95% jargon and 5% “if you didn’t understand what I wrote it is because of your ethnocentrism!” I’m not even saying work in this style is bad or unnecessary. It is just not something I can give to the average student who is convinced everything is already so obvious and natural. Graeber is.
Anyhow. I originally worried the book would be 10 parts modern monetary theory with a few parts “power.” When did I get so cynical?! I was wrong. I’m sorry. Ooops. The book is more than that, but I should finish it first.
 It is not that I’m not interested in the new. But I’m interested in it as a new repetition of the past. For example, I am interested in video game currency (real money trade) in part because, “wow, that is weird.” There is an undeniable weirdness when we can calculate exchange ratios between a new computer and buying a new agility-enhancing dagger for a computer game. Or compare standards of living between virtual avatars and living persons. Ok, this is weird and bizarre and new. But this weirdness-bizarreness-newness, and all the dilemmas it poses, are a really old story. It is this repetition of weirdness – and how we socially produce and then deal with it – that is interesting.
 One might say that Ho argues the neoclassical theory of the firm was performative. I would accept that point, but I think it was consciously performative. It was through the recognition of (at least some degree of) complexity that the simplicity of shareholder value was advanced. At the same time, I think it might be fair to say that neoclassical economics (on the whole) did refuse to see the contradictions (i.e. short termism) inherent to shareholder value itself.
 There is a similar dynamic with the Federal Reserve. I’ve never been a big fan of the Fed, but it is really hard not to be sympathetic to them when you have people wanting to murder Ben Bernanke because he is the leader of a vast islamo-communist conspiracy to debase our currency and culture. Please, there are other, much more fair and sane, criticisms that can be made!