[not_buying_it]

David Graeber has a nice way of explaining money arising from IOU's in Debt: the first 5,000 years. It makes a lot of sense and basically explains why the barter myth is so impractical that it could never have been a reality in any sizable community.

[maliker]

I liked his explanation of state-controlled currency evolving as a technology of war. I.e. the king needs to pay his soldiers something portable, dense with value, and hard to counterfeit, and precious metal coins fit those requirements. And then to guarantee that the coins are accepted for payment and hold their value, he imposes taxes that have to be paid by everyone using those coins. Pretty elegant and a system that, even as as a taxpayer, I hadn't thought carefully about.

[hnick]

Yes, the idea that taxes and debt existed before money to grant that money value was very eye opening, and an obvious model in hindsight.

Another example of someone in power saying "Hey, see this problem we created? Well, we also have the solution..."

[thaumasiotes]

Taxes certainly existed before state-issued currency, but the purpose was obviously not to grant value to the currency. (It can't have been -- this was before the currency existed.)

Ancient taxes were assessed in kind, most commonly in grain or labor. The reason was that the government wanted the grain or labor. The main benefit of taxing in metal is that grain is perishable and voluminous, not that it creates demand for more metal.

Consider a stylized section of Chinese history:

State-issued currency: copper coins (low value, accepted most places); paper notes (high value in the capital, hard to spend elsewhere)

Means of exchange: raw silver valued by weight

Form of taxation: silver

[hnick]

I was replying to the specific use case of creating a tax to grant value to a freshly invented currency by giving it to occupying soldiers as payment while requiring merchants to pay taxes using it. It was intended to speed up adoption because the merchants needed to get the coin for taxes so had to accept it as payment.

[thaumasiotes]

Do you know of such a tax? There are two types of freshly invented currencies:

1. Currency invented where there were just raw materials before. ("Conceptual invention")

2. Currency invented to replace or exist alongside other already-known currency.

In case 1, I believe the currency is generally an object that was already valuable, and therefore doesn't need support. Coins were usually able to trade a little above their value as measured in raw material because of the nominal standardization they provided.

Case 2 is not at all rare, and there are even cases of states deciding to make coins from a worthless material (iron) for ideological reasons. Everyone can have iron.

This seems like an ideal case for propping up the (otherwise too low to bother with) value of the ideological coins, but I'm not really up on the history of this kind of thing. I know the iron-coin states were often economic failures (e.g. Sparta). I know there were a lot of difficulties with paper money in China, but I don't know the details.

[hnick]

"Fresh" from the perspective of a population might be more accurate to what I'm saying - not invented from nothing (that was inaccurate wording). The book we're discussing goes into a lot of detail on this, more than I could having read it so long ago now.

The wikipedia article briefly mentions this: https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

"The author postulates the growth of a "military–coinage–slave complex" around this time. These were enforced by mercenary armies that looted cities and cut human beings from their social context to work as slaves in Greece, Rome, and elsewhere. The extreme violence of the period marked by the rise of great empires in China, India, and the Mediterranean was, in this way, connected with the advent of large-scale slavery and the use of coins to pay soldiers. This was combined with obligations to pay taxes in currency: The obligation to pay taxes with money required people to engage in monetary transactions, often with very disadvantageous terms of trade. This typically increased debt and slavery."

It occurred mostly in subjugated nations as a way to bring in the new money (from the perspective of the conquered, who saw no value in this foreign coin). It accelerated adoption in populations who had no familiarity with the system, and indeed may have been operating on non-monetary systems still (the book credits Alexander as wiping away many of the last vestiges of such economies).

Looking at the above passage, it has some resemblance to company scrip.

[searine]

I think I've been through that book twice now and it's still a fresh read. Highly recommended.

[QuesnayJr]

The last chapter is quite poor. The rest of the book is interesting, but I would be interested to hear an evaluation by experts in the historical periods he covers.

[Nicholas_C]

It has a compelling premise but the reviews for it are not too kind so it remains on my to read list.

[karatestomp]

A lot of the negative Amazon reviews, at least, comprise complaints that Graeber doesn't address or defend points that he actually does, usually a paragraph or two after they're raised. They don't claim the points are poorly defended or explained, but that they're not, when they 100% for sure are.

The book's very well-constructed that way, actually—make assertions that the thinking reader will have objections to or questions about, proceed to directly call out and address same in following paragraphs—but apparently some people's eyes go so red on reading something they don't immediately agree with that they totally miss the explanation and defense that follows. In short, many of them accuse the book of specific sins it did not commit. Others don't provide enough specific criticism to be analyzable, usually accusing it of the same sorts of problems but without enough details to tell whether the reviewer's just a bad reader like a lot of the other people dumping on it.

Possibly there are good negative reviews out there, but a good percentage of them seem to be folks who are, bluntly, not literate enough to read the book—though it's far from a challenging read.

[ksdale]

I picked it up because it is so frequently recommended on HN, and it is much less...academic(?) than I was hoping for. It gets recommended as a great explanation of debt, but it read a lot more like a very biased opinion about debt coupled with what felt like rather cherry picked history. I'm going to try reading it again, but the first time didn't go well...

[searine]

>I'm going to try reading it again, but the first time didn't go well..

All history is viewed through the eyes of the author's politics. I accept that, and set my personal politics aside and considered his history. One of the major positives of this book is its ambitious scope. The narrative spans millenia of history and I respect that ambition.

I don't agree with everything Graeber says but he proposes new ideas (to me at least). Those new ideas are fun to consider and think about.

[ksdale]

I agree completely with your first sentence. I feel like when reading history, though, there is what happened, and there is the story about what happened. Sometimes it's basically impossible to have one without the other, but sometimes it's not, and I think what's compelling about Graeber is the story he tells about debt, but it didn't feel to me like he tried very hard to disentangle his facts from how he felt about them. But like I said, I do need to read the book again.