By now everyone knows where money came from. Our remote
ancestors started swapping things they had too much of and
others wanted. This barter ran into a bottleneck. It wasn't always
easy to find someone who both wanted want you had and had
what you wanted. For many natural products, the timing of
supply and demand may simply not coincide. So some objects
were valued not just for their consumption, but as tokens that
most people would be willing to hold to swap with something
else in future. It might be salt or ox-hides, but metals became
the most common items to be used in this way. Gold, silver
and their ilk were scarce, attractive, useful, durable, portable
and divisible. They became the prototype of commodity money.
The restrictions of barter were lifted as soon as sellers would
regularly accept these money tokens, knowing that they could
be exchanged at any time for whatever they wanted to buy.
The money stuff succeeded because it was the supreme barter
item, valued not only as a commodity in itself, but also as a ready
means of exchange with everything else.
This is a myth of course. What does it tell us? That money is a
real thing and a scarce commodity. That it rose to prominence
because it was more effective than existing practice. That it
originated in barter, the timeless, 'primitive' form of exchange.
What else does it tell us, about society, for instance? Well, almost
nothing. When Adam Smith first told this story, in a book published
at the same time as the Americans declared their independence,
he claimed that the "Wealth of Nations" resulted from the slow
working out of a deep-seated propensity in human nature, "to
truck, barter and exchange one thing for another" (p.17). He
went on, "It is common to all men, and to be found in no other
race of animals, which seem to know neither this nor any other
species of contracts�. Nobody ever saw a dog make a fair and
deliberate exchange of one bone for another with another dog.
Nobody ever saw one animal by its gestures and natural cries
signify to another, this is mine, that yours; I am willing to give this
for that." He concluded that the distinctive human propensity to
make exchange contracts probably originated in the evolution of
reason and speech.
Here too not much is said about the social conditions necessary
for such behaviour. But at least Smith acknowledged a degree of
social complexity in the transactions: the ideas of contract, private
property (mine and yours) and equivalence (fairness), none of
which could plausibly be traced to the non-human world. His latter-
day successors have not shown similar modesty, routinely claiming
that the markets of fin-de-si�cle Wall Street are animated by
impulses that are not just eternally human, but shared with the
animals too, or at least the primates. Thus one recent expos� is
called Monkey Business: Swinging Through the Wall Street Jungle
(Rolfe & Troob, 2000 -- every page number has the icon of a
swinging monkey beneath, lest we forget). More seriously, Inventing
Money is the story of Long-Term Capital Management, once the
largest hedge fund in the world. Its founders had won Nobel Prizes
in economics for their contribution to financial theory and its failure
in 1998 was as damaging to Wall Street as the East Asian crisis and
the collapse of the Russian rouble in the same year. It begins with a
section entitled, 'The origins of trading':
"In chimpanzee communities, individuals exchange gifts (such as
fruit or sexual favours) within a group to cement alliances, and punish
those who attempt to cheat on such mutually beneficial relationships.
Anthropologists believe that early humans started trading in much
the same way. The word they use to describe this behaviour is
'reciprocity' and our personal relationships work on this basis."
(Dunbar 2000:2-3).
The author finds it necessary to claim that Wall Street culture in
the 1990s is an example of human nature, a nature that we even
share with the primates. That is to say, LCTM may have gone
wrong, but the system of trading it exemplifies is as primeval as
motherhood. This is one way of arguing that 'there is no alternative'
to the free market (TINA was a favourite expression of Mrs.
Thatcher's). If we can show that there are alternatives in history
or just that the story on view is a defective representation of social
reality, we thereby increase our choices. But first let us look more
closely at what Dunbar actually said.
There are some loaded words here that scholars normally have
difficulty untangling, even with the benefit of dictionaries, never
mind on the basis of observing chimps who don't talk at all --
communities, exchange, gifts, sexual favours, group, alliances,
punish, cheat, mutually beneficial relationships, anthropologists
believe, trading, reciprocity, personal relationships. That's a lot
of metaphysics piled onto the observation that chimps sometimes
hump each other and may pass on the odd bit of fruit. Notice also
that trading is assimilated to politics and personal relations more
generally, on the basis that "anthropologists believe" such human
behaviour emerged "early". There are thus two claims being made:
that the private property complex essential to trading is natural,
therefore inevitable, and that it underpins most other important
things in our lives.
Adam Smith seems almost cautious in comparison. When he sought
to demonstrate exchange without the use of money, he drew on
reports of 'primitive' exchange from eighteenth century North
America, describing natives bartering beaver for deer skins in what
was no doubt a typical scenario from the fringes of the contemporary
world fur trade. It is always unreliable to draw inferences about
prehistory from present-day behaviour at the margins of civilization.
It is one thing to imagine two noble savages swapping animal skins,
quite another to work out how living people contrive such an exchange
as an ongoing social practice. So, for our purposes, ethnographic
descriptions of exchange in societies that have traditionally known
neither states nor merchants nor even money offer material for
thinking about how people might build their own economic communities
now. This was after all once the main reason for doing anthropology.
It was understood that states and capitalism were an unsatisfactory
basis for society, the one being out-of-date and the other a recent
anomaly, so that the study of stateless societies might offer clues to
doing better in future. At the very least, by widening the scope of
knowledge beyond our own situation, we are able to test claims about
its universality.
Traders are unusual people. We might say intuitively that something
belongs to someone either because they made it or because they
found it and intend to use it. Traders own things they neither made
nor will use, but they still claim the right to the value of their sale. At
the same time, they are willing to give up their goods unconditionally
in return for payment; and their customers then have the right to do
what they like with what they have bought. This kind of behaviour is
so commonplace in our world that it seems reasonable to think of it
as eternal. It is in fact quite rare within the range of known human
societies. What gives buyer and seller confidence that they each
have exclusive rights to dispose of the commodity? It is the power
of state law reinforcing their contract and usually offering similar
support for the money involved. They can operate as isolated
individuals only because of the huge social apparatus backing their
exchange.
Think of a situation where property is not backed up in this way. A
group of nomads herd cattle in the dry savanna, far from the reach
of any state. They can hold onto those cattle only if they mount
effective resistance to other groups who might try to steal them. In
such circumstances, an individual's property rights are a function of
being a member of the group, all of whom have some claim on the
cattle, since they all must defend them together. Trading the cattle
would then be a far from simple matter. The same problem arises
when a peasant tries to raise a loan on the security of family land.
If he fails to pay back the loan, the land must be sold to the bank.
But it is often unclear who actually owns the land and sometimes
where it begins and ends. The citizens of advanced capitalist
societies are not immune either. Other family members will have
something to say if we try to sell off grandma's jewels. But this last
example is not economically central, as the cattle and the land are.
For us, most of the things we own were once bought for money
through trade.
If trading is a special institution, usually involving money, how else
have people circulated objects between themselves? We have already
encountered barter and the classical economists' assumption that
money arose in order to simplify a cumbersome form of exchange.
Barter is a spot transaction where two parties exchange goods taken
to be equivalent. Each has what the other wants. It is obviously a
difficult kind of transaction to pull off. The timing and the quantities
must be right and you have to agree on what each is worth. Both
sides must also have the right to dispose of their goods without
involving others. There is a risk of conflict in any haggling. How much
simpler for me to persuade you to give up your goods in return for
money which you can then hold for purchases from others in different
times and places. You can see their point. What is not convincing is
that such a complicated arrangement as barter would be prevalent
before people thought of inventing money.
Barter is often found where markets using money prices are ineffective,
usually because of a shortage of liquidity. Thus the Argentinians, in
the recent crisis of their national currency, the peso, flocked to barter
clubs. People had a fair idea of what their goods were worth because
of the co-existent markets they didn't have enough money to participate
in. The North American fur trade in the eighteenth century would be
another case in point. The ratio of beaver to deer skin was broadly set
by the world market, but cash was scarce on the frontier. Nigeria and
Brazil, being short of foreign currency, once arranged to barter oil for
manufactures, knowing the price of each on world markets. This
arrangement was closed down after Britain and France complained
that their market share was being usurped by unfair trade. One of
the fastest-growing sectors of trade today consists of commercial
barter networks (b2b), allowing businesses, for a commission, to swap
unsold goods directly between themselves.
Barter does not require faith in any currency or other medium. What
you see is what you get. More important, it allows trade to continue
when the currency is lacking. It is cumbersome because both sides of
the swap have to coincide. Apart from that, barter resembles normal
trading quite closely, especially in its assumptions about property
relations. It is easy enough to conceive of barter as markets without
money. Perhaps this is what recommended it to the economists as a
possible precursor of markets based on money. All that is missing is
the money. Everything else is business as usual, especially the
condition of exclusive private property in the goods traded. Barter is
not much of an alternative then, just an inferior market mechanism.
What other candidates are there for moving goods around? We have
already been introduced to the idea of 'reciprocity' as a key concept in
economic anthropology. The author of this idea thought that the
original form of exchange was contained in the gift.
Marcel Mauss was a co-operative socialist. He was therefore
interested in how we make society where it did not exist before,
as voluntary association, and especially in what keeps it going,
the glue of social relations. Anthropologists had recently (in the
1920s) written about stateless societies with elaborate exchange
systems conducted by means of giving rather than trading; and
this recalled to his mind some practices of the ancient Celts,
Indians and Romans. The free gift appears to be an act of pure
selflessness, a bit like the ideal of parenthood. So how are social
relations established or maintained through gifts? What binds us
to these relations? The gift seemed to hold the key to this and it
turned out not to be so free after all. Mauss found the roots of
society itself in what he called the rule of reciprocity, which he
took to be a human universal.
What do we do when we would like to make a social connection?
We offer a gift. Diplomats bring rare items from their homeland;
boys offer flowers or chocolates on a date; middle class guests
bring a bottle of wine; lonely travelers put themselves at the mercy
of unknown hosts. What do they hope to achieve by this?
Acceptance of the gift implies reciprocity, a return in future, at least
the expectation of kindness. Mauss concluded that human beings
were bound by giving in three stages. First, there was the obligation
to give; second, the obligation to receive; and third, much the most
important for his theory, the obligation to make a return, to reciprocate.
I give to you so that you will give to me. Although market economy has
evolved a long way from its origin in the gift, all forms of exchange
share this fundamental logic.
For Mauss, the essence of the gift was that it should not be
reciprocated immediately. It would be impolite to return it at
once, since this would constitute a canceling out of any
interdependence created by the act of generosity and therefore
no basis for projecting the relationship into the future. There is
thus both a material and a spiritual aspect to the construction of
relations over time. And these relations are highly personal. It is
as if the gift contains a spirit compelling a return to its source.
Mauss speculated that the origin of this institution lay in sacrifice.
Out of fear and insecurity, human beings made gifts to the spirit
powers who they imagined controlled the world, in the hope that
they could compel concessions in return. The awful sense of that
religious alienation then attached itself to gift-exchange between
human beings. And, as anthropologists know all too well, the so-
called free gift is never free, since it exercises some kind of hold
over the recipient. If we don't return the gift in kind, then we must
defer to the giver. Parents, the ultimate givers, ask for nothing but
deference from their children. Whoever heard of parents and
children being equal? The surprising fact of giving therefore is that
it generates social inequality.
We all know what to do if we wish to avoid becoming too closely
involved with people through this kind of deferred exchange. We
pay our own way, go Dutch, split the bill into equal parts. This is
also the ethos of market exchange. I pay my money and I walk
away free. Markets largely dispense with the unequal ethos of
giving by making the exchange simultaneous and impersonal,
removing time, person and spirit, in the end society itself, from
the circulation of objects and money. But Mauss pointed out that
markets are more than just spot transactions for cash. Many
contracts have a time dimension. We work first and are paid our
wages afterwards. We pay the rent before we occupy the lodgings.
And of course the whole principle of loans and credit is buy now,
pay later. We are constantly giving or receiving in ways that
require us to project society into the future as the expectation of
reciprocity, as contracts in other words. Mauss wanted the citizens
of capitalist societies to see the logic of giving that still underpins
our complex interdependence-- and not just at weddings and
Christmas. Exchange is more than the interplay of private interests,
more than the coercion of state laws. It is the way that human
beings reconcile their individuality with belonging to others in society.
If that is difficult to grasp, then perhaps the economic activities of
remote South Sea islanders will make it clearer.
In the Western Pacific, off the coast of New Guinea, a complex
system of inter-island trade once flourished without benefit of
merchants, markets or money and without centralized authority
(states). The people shared a common culture with elaborate
material needs that could not usually be met out of local resources
alone. The islands were not self-sufficient: one would be rich in
sago palms, another in stone or clay, while yet another may be
noted for a particular kind of fish. How could these specialist items
circulate between islands in the absence of any guaranteed peace?
Long-distance trips are fraught with danger, making the unrestrained
competition of commercial barter too risky. So an alternative method
evolved, based on the exchange of valuables between leaders of
expeditions and their hosts. Kula is both the practice of exchanging
these valuables and the name for the tokens themselves. The
leaders emphasize an ethos of generosity in handing over these
valuables as gifts to their partners in other islands. They deny that it
has anything to do with ordinary commerce. Nevertheless, a lot of
mundane trading goes on under the umbrella of these kula
partnerships.
It works like this. Very few communities in the region have official
chiefs. Instead there is an unstable pattern of political leadership
in which "big men" (leaders without office) compete for followers.
If people from island A want to acquire a commodity x from island
B, they organize a canoe expedition under the leadership of a big
man who has a longstanding partnership with a big man in island B.
They take with them kula valuables, of which there are two types:
red necklaces and white armshells. These valuables are named and
the history of transactions involving the more famous ones is well
known. Big men vie with each other to attract the best pieces to
themselves. On this occasion the big man from A will set out carrying,
say, red necklaces only and no other commodities. The canoes arrive
empty-handed except for the necklaces. The big men from A and B
will discuss which white armshell the latter may bring the next time he
visits A. In the meantime their followers strike up partnerships, make
promises of valuable exchange and load up the canoes with commodity
x. They may also haggle over other individual items, safe in the peace
secured by their leaders. The canoes return home and, when an
expedition from B arrives some time later, carrying white armshells, the
process is enacted again in reverse, with commodity y being loaded into
B's canoes.
The relationship between gift and barter as modes of exchange is
perhaps revealed more clearly in another example. Kula is a
ceremonious exchange of personal ornaments as gifts. Gimwali is
an undignified haggling, individual barter, "trade pure and simple"..
The contrast between them is as great as that between generosity
and selfishness. On one of the bigger islands, coastal villagers
exchange fish for yams or vegetables with landlocked villages,
allowing a measure of specialization between fishing and agriculture.
Sometimes the exchange takes the form of gift exchange between
community leaders (wasi, following the pattern of kula); where there
is no such relationship, individual barter at the household level (vava,
like gimwali) is normal. So, whereas in one case a big man hands
over a job lot of fish to his counterpart, who rations them out among
his followers and organizes a future return of yams, in the other
individuals wander from house to house trying to get a reasonable
deal for what they have to sell. The first is marked by ceremony,
separation of the moments of exchange and conflict avoidance; the
second by informality, simultaneous exchange and haggling. Thus
one is a temporary framework erected in the absence of society,
implying high social distance and weak political order. The other is
an atomized interaction reflecting a relatively strong social order. In
one case, society has to be made visible by means of the gift; in the
other, it is the invisible background to barter, but a necessary presence
nonetheless.
Wasi and vava are thus different means of securing the same ends, the
circulation of commodities between independent communities.
Individual barter is favoured when the general peace is such as to
allow commodities to be exchanged at their equivalent values;
ceremonial gift-exchange is a temporary construct of peace based
on alliance between leaders of communities at war, with political
redistribution of commodities an inevitable corollary. A breakdown
of political relations between coastal and inland villages might
occasion a shift from vava to the more formal wasi. Equally,
unpredictable fluctuations in supply (failure of the fish catch or
a yam glut) might undermine the price-setting mechanism of
barter and require the intervention of big men as rationing or
stockpiling agents. Exchange thus oscillates between two poles
in response to imperfections both of the political order and of
supply and demand. Normal conditions grant low-level agents
considerable autonomy which is superseded by high-level
regulation when the environment is especially uncertain. The
reputation of big men hangs on their generosity, so they affect
to despise ordinary commerce. But we should not rely on their
rhetoric to deny the complementarity of gift and barter in practice.
Perhaps we can now take stock of the place that gift and barter
occupy in the conventional myths of market origins. Markets and
barter alike depend on an evolved social order which becomes
invisible the more effective it is. Each depends on private property
and tolerance of a degree of individual conflict in exchange. The
essential equality of the parties to a given trade, reflected in the
assumed equivalence of the money and commodities exchanged,
is the result of a complex evolution, not a simple expression of
human nature. At another level, a contrast can be made between
markets and gift-exchange in which "we" moderns are selfish
individuals, whereas "they", the primitives, serve only the interests
of their communities. By labeling one practice primitive and the
other modern, we imply that the direction of social evolution is,
however regrettably, towards economic individualism. Mauss
profoundly rejected this argument and so do we. First of all,
market economy rests on social institutions (including state-
administered laws) as well as on individual interests. Then too,
the gift still flourishes in pockets of capitalist societies. Equally,
systems like the kula reveal a rampant egotism on the part of
competing leaders which hardly squares with the stereotype of
primitive communism.
All of this no doubt sounds pretty esoteric -- South Sea islanders
and defunct Scottish philosophers. But the conventional wisdom
about money, markets and their alternatives perpetuates a
blindness to what matters in economic life that can have
devastating consequences. The Cold War was fought in the
name of the State and the Market. One side was society
centralized a single agent, the other society dissolved into
individual atoms. The United States, which operates the largest
collective in the world, the Pentagon, claimed to represent 'free
enterprise' against the 'Evil Empire'. Reagan and Thatcher
denigrated the state while assiduously building up its strength.
No wonder it was impossible to conceive of society as both an
economic association of individuals and a political order.
After the fall of the Berlin Wall, Eastern Europe and soon afterwards
Russia renounced state socialism. Hooray, say all of us. The
obvious candidate as a replacement was liberal democracy and
its twin the free market economy. After a decade of neo-liberal
conservatism in the West, this recipe was in the ascendant.
Privatization was the slogan of the hour. The former socialist
societies actually paid consultants to help them privatize their
economies. The notion that western market economies rested
on a complex history of political institutions, like their states, for
instance (whisper the word), had no place in liberal rhetoric. All
the effort went into establishing private property and supplying
the money needed to lubricate the markets. Deregulation was
the order of the day, not the erection of a suitable political
framework. The result we all know. The state was weakened
beyond repair; the economy went into a tailspin; and the
consequent void was filled by gangsters.
These criminal mafias bear comparison with the big man societies
who make up the kula ring. Without a framework of lawful institutions,
commerce could on
ly take place under the umbrella of a temporary
framework erected by powerful individuals and their gangs. Violence
was everywhere close to the surface. Contracts were personal and
the gift economy took its most sadistic form ("He made me an offer
I couldn't refuse"). This is what feudal Europe was like before the
Italian Renaissance invented modern states, law and bureaucracy
capable of guaranteeing an impersonal order necessary for
commerce, or what Emile Durkheim called "the non-contractual
element of the contract". If we remain unaware of this history, if
the social infrastructure of markets is invisible and unheeded, how
can we prevent ourselves from sinking back into barbarism, as we
cheerfully encouraged the Russians to, after they lost the Cold War?
These questions are central if we set about building economic
community where it did not exist before. If anything has emerged
from the above review, it is that both the individual and the collective
are indispensable to economic order, both the personal and the
impersonal. It is a profound error to assume that the superficial
individualism of commerce was either primeval (the barter origin
of money) or has evolved from its antithesis in the gift. Only the
strongest of social infrastructures operate so effectively that they
are invisible, thereby allowing the actions of many individuals
flourish. When they are weak, a few leaders assume personal
responsibility for general interests. But at all times, it is the unity
of individual and collective interests that counts. We have to pay
attention to both sides, not oppose them in some fruitless re-
enactment of twentieth century ideology.
Keith Hart
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