The Origin of Money: Menger vs. Graeber

[@lucassantanna7792]

"In the beginning, there were a bunch of idiots randomly roaming around aimlessly holding chickens and berries, without knowing what to do with it. Then, one day, Government Man descended from heaven and pointed at a piece of paper and said "This is money. Trade chicken for money. Trade berries for money. And pay taxes to me". Humanity was saved. The end." -MMT

[@Scootercorn]

Basically

[@podzycie3567]

I think the conception of government as some sort of external "mothership" that just descended on mankind one day is shared by many libertarians as well, unfortunately. Using, e.g. Robinson Crusoe as a thought experiment can be useful for understanding concepts like opportunity cost but it has its limits too. MMT is just bonkers though lol.

[@tomi213]

1. Tribe shared among themselves. It's a honor based gift exchange system. People that were always asking for something without giving anything in return were shunned. 2. 3000BC in Sumeria temples( and palaces) collected taxes in grain, wool and other resources. These were used to feed landless people(widows and orphans) in temple workshops to create cloth and other things to be traded for silver, copper and other raw materials. There was very little metal in Sumeria so trading was necessary. Trading was organized by the temples. Price of silver was set by the temple/palace. They made standardized weights and purities, then created price lists for grain, wool, etc. These were used to determine how much of each resource had to be provided to meet tax obligations. Silver was mostly used by traders and palace/temple officials. Alehouses were also used in tax collection. People would run bar tab and then pay the debts after harvest. Commoners did not handle silver. 3. Actual coinage was first struct in Lydia(modern Turkey) around 600BC It evolved from electrum(silver-gold mix) to gold. Apparently there was some kind of international standardization among Mediterranean countries or city states, Mesopotamian countries and India. Most of the countries had gold coin that was around 130 grain(~8.4gram). These were India, Lydia, Persia,Rhodos,Thasos, Athen,Macedonia, Bactria. This was a standard set by temples, not bartering individuals. The coin represented value of an ox/cow which was traditionally given to temple for a sacrifice/feast. There was another standard of 260 grain coin in Babylonia and Phoenicia. There it was tradition to provide pair of cows to the temple.

[@jorden9821]

Very concise explanation. Read that Menger book years ago, and you make it very plain to understand in a good way. The explanation of the difference between the definition of money and “money character” was helpful.

[@oaqutc]

I am so lucky to see this video within 24 hours of it getting released! THIS IS EXACTLY WHAT I NEED

[@CPubi]

ah this topic again. always gets on my nerves just how in bad faith grabbers arguments were

[@rmschad5234]

"We know bureaucrats declared the meanings of symbols because our earliest records are them using symbols." Am I missing something or is this really their type of thinking?

[@BobMurphyAncap]

I am happy to see a better interpretation but that's what I thought when I read Graeber's treatment.

[@meygavox]

It's great that you talk extensively about the «flexible social credit» part, and the fact that «an account unit can’t emerge from such social credit». For me, it’s an element that wasn’t enough brought into the light in your book, and your explanation here helps a lot 👍

[@anonymousAJ]

I think Menger's account is missing the store of value aspect of money Money not only has to solve the double coincidence of wants problem, it also has to solve possible time differences between when our production occurs and when our desired consumption will occur This explains why the most durable commodity (gold) won out as money

[@Castle3179]

Menger treats being a stable store of value as an emergent phenomenon in money which might be inevitable but not essential to being money. Some amount of value storage is present in any exchangeable commodity and so store of value is not unique to money but the stability is a product of having such a large market that anything one might buy or sell will hardly move the general price level. Money being half of almost every transaction is only moved up and down by peoples aggregate spending/savings and money supply )by means of modifying aggregate spending/savings). A money doesn't need a secret sauce, like changing supply in response to changes in demand, to be stable, but rather having the large market makes money almost inevitably stable aside from supply manipulation.

[@anonymousAJ]

@@Castle3179 Right, I am arguing that feature is essential (because money needs to solve multiple problems, not only double coincidence of wants but also time difference between production and consumption)

[@troll_kin9456]

I think the quality you're describing is typically rolled into "Durability." But you're right that store of value or maybe Durability of Value is probably a better word for it, since it's not the physical integrity of the media through time that we really care about, so much as it is the integrity of its value. For instance, when dried tobacco was used as money in the Virginia colony, it didn't matter that tobacco leaves can easily crumple or tear, because the way in which tobacco leaves were used didn't require them to be physically intact to keep their value.

[@WycliffeCromwell]

​@@troll_kin9456 Durability and store of value are greatly different. Granite is durable, and so is plastic.

[@troll_kin9456]

@@WycliffeCromwell Yes. That's why I made that distinction in my comment.

[@meygavox]

First, thank you a lot for your videos and your work in general. I'm currently have the pleasure to read your book «Choices» for the second time. Thank you a lot for your insights.

[@PolicyFailureIsExpensive]

Is the foundation of money a system of barter or is the foundation of money a credit? Basically, if you are restored to a state of nature, do you protect yourself, your family, and your friends explicitly only if you immediately receive a physical good, or would services along with goods form the backbone of exchange? Surely physical goods are tremendously valuable. Surely services are also tremendously valuable. In terms of his question about how an entity would quantify the value of this credit, this is subject to the same principle of bargaining for physical goods. How much is a favor worth? This depends on supply and demand. I'd suggest the basic, immediate backbone of trade/economic exchange is credit rather than apples. This is a scary concept to those who rightly fear what masses of people become capable of when manipulated or otherwise put into harsh, disorganized conditions.

[@valerieprice1745]

He doesn't understand the use of raw materials, or the value of animals. They have an urbanized mentality, and just in time delivery conception of markets. He don't understand covenants (promises on word of honor). If we had to make household items, this gentleman would know that shells are used in ceramics to increase the strength and temperatures vessels can withstand. Gold and silver can be used to make the finest, smallest tools and heddles for textiles, not to mention thin wires, and the decorative uses likely grew out of the need for clothing fasteners. Horses weren't just transportation. They give milk and strong fiber. Sheep give wool. Textiles were also money in ancient times. Coins of gold, silver, and copper ensured a known weight without having to weigh them, and coins were likely first used to make items from the metals that were useful things. In the time of Avraham, silver was used to buy land. Nothing really changes. People just find new ways to do all the same things.

[@johnsircy9325]

Bob is always good. The value of money also includes time preference. The price of money are interest rates. That is one of many reasons the Fed is so insidious, in that they artificially set money prices.

[@bbcarps]

Hey Mr. Murphy, If you haven't please read Two Treatises on Competitive Currency and Banking by Lysander Spooner written in 1876. He was a Libertarian at that time and proposed the exchange of property of equal marketable value as a commodity for exchange as money "cash". His explanation takes away the subjective narrative of "purchasing power" of money rather than equity being objective thus real value. I'm convinced he's absolutely correct.

[@fireseyeoracle7207]

Hell. It all came from hell. 😂😢😂

[@abramgaller2037]

Man has had specie and token money going back a very long time. Egyptian beer coupons are one of the first uses of papyrus.

[@dimitristsagdis7340]

You don't need to know in advance/at the time of the transaction, the precise exchange ratios in a debt/credit-based societies. In a community the precise hours one owes during the next harvest or whatever doesn't have to be explicit. If during the harvest the person need a few more hours of help (e.g. because his son that usually helps had an accident and cannot help) then the neighbours would help more because they know when they are in need or somebody from their extended family is in need their neighbour will be in their debt and obliged to help, etc. Norms dictate what is a fair price. Also the dept/credit-calculus could be translated in social capital. E,g, the person or family that communities feels they ow more may have additional privileges, in comparison to other families that tend to be in their debt, etc. Like somebody offers you some candy or crisps you don't take the whole bag. There is a norm on how much you take when you put your hand in the bag, and this is culturally-specific. The key condition is that you have a community/society with members that are not transient and probably have additional ties; e.g. tribal, kinship, religion.... This is the solution Graeber offers. 'Money' emerges in transient communities (according to Graeber) because people come and go and the calculus of being in debt/credit, gift-giving, social capital, kinship, etc. breaks down. This (transitory nature) was the case in POW camps during WWII where prisoners may die anytime, they can be moved in and out to other camps, labour units, etc. So the Roman Empire minted gold coins for the legionnaires sent at the periphery of the empire so they could exchange with the non-Roman locals at remote places that was known they valued gold eg to buy a horse, blanket, or repair their saddle in remote places that were not part of the Empire, where legionnaires were transient and could not just confiscate things, requisition, or force the locals to work for them as the local non-Roman populations could turn against them. The legionnaires would take whatever the gold coin could buy them in that remote non-Roman community. They were price takers. So again there was no advance knowledge of what was the marginal price of money.

[@Daniel-d3v2r]

Exactly! You don't need to know in advance/at the time of the transaction, the precise exchange ratios in a debt/credit-based societies you just need to know social norms about exchange ratios.

[@IntotheAgora]

Great episode, Bob

[@frederickmorris2216]

Paper money was a record of taxes paid by a merchant in ancient China so they would not be overtaxed and other merchants would exchange goods and services for these records of tax paid..they had value because they where proof of payment of tax and no further goods could be taken by the tax collector for the ruler ..in Britain tax collectors simply came into your village and took what they wanted without providing any record on the premise that everything belongs to the ruler..

[@dimitristsagdis7340]

As to why they picked silver... these are operational choices dictated by path dependency, metallurgical knowledge, mineral deposits... it may have been anything else and we know of tribes using sea-shells or other commodities like salt (from where the word salary comes from).

[@ewinslow822]

Observing that some people at some time used something other than silver doesn't show that the choice of silver is arbitrary. The prisoners used cigarettes. That wasn't arbitrary and it wasn't silver. So what?

[@dimitristsagdis7340]

@@ewinslow822 I’m unsure if you agree or disagree with my comment

[@ewinslow822]

@@dimitristsagdis7340 you said "it may have been anything else". I disagree with that.

[@dimitristsagdis7340]

@@ewinslow822 I was answering to the question the video presenter raised and claim that Graeber didn't have an explanation to the specific choice of silver. At that time it couldn't have been cigarettes as they did not exist. Cigarettes did though exist in the POW-camps. Moreover, I qualify the 'anything' in that historical context as driven by path dependencies, knowledge, etc.

[@johnhopkins8165]

Curious as to your take about Lyn Alden's take on money/currency as essentially a ledger derived from some base money (naturally occurring or otherwise).

[@BobMurphyAncap]

I mildly pushed back on that claim in this discussion: kzbin.info/www/bejne/rGLNi2Bsdr6riNE

[@philosopherhobbs]

I really liked this video except one thing. While I agree that things like gold have no intrinsic value, the claim that nothing has intrinsic value and everything is “in the eye of the beholder” is irrational. Supposedly the phrase “value is in the eye of the beholder” means people believe that things have value, so it can't make sense to say nothing has value and value is in the eye of the beholder, especially if the one saying so believes anything has value. That's just saying I believe this thing has value and doesn't have value which is a contradiction. Something, even if it's not a material thing, has to be viewed as having intrinsic value. Actual, objective intrinsic value!

[@williambranch4283]

Wealth before money. Theocratic socialism before capitalism.

[@99Nafets]

Doesn‘t Mises‘ explanation make Bitcoin as money impossible? It was merely strictly a currency since the beginning.

[@maxwellhill4754]

1 hour to explain 10 sentences

[@dwaindibley4137]

The marginal utility of money is not its purchasing power. The marginal utility of money is in its use and acceptance as a medium of exchange and unit of account. And it's worth is in what it can buy. That, is the marginal utility of money and it is constant, it never varies. Add money, subtract money, it doesn't matter, the marginal utility stays the same.

[@BobMurphyAncap]

This is completely wrong.

[@troll_kin9456]

Holy cow, it's Dwain Dibley!

[@perpetualpeace6711]

1:02:00 1:10:00

[@emilybh6255]

Before money people just shared. It wasn't like they were taxed or had to pay to live. There was abundance for all. Just like there is for animals in Nature. Ancient and Medieval Irish are perfect examples where their lifestyles were documented.

[@gerhardtcustomknives]

Greaber seems to be grabbing at straws

[@The_Schizoid_Man]

26:01 Pause.

[@rutessian]

So much beating around the bush.. Graeber says... Menger says.. (summaries accompanied by a few relevant quotes, maybe) followed by your reasons why who is wrong is wrong..

[@politicalDayner]

Bob Murphy and the rest of the austrians took such an incredible L at the hands of anthropology that he's triggered to debate a dead man so many years later.

[@goldenplayroblox5985]

:D

[@AllanEvans-c3d]

For the source of MONEY consider Genisis 2.11, Genisis 2.12 and then consider Genisis 2.17.

[@wayneclements4184]

Incredibly poor argument.

[@troylynch7360]

No. Those verses just state that gold was located in Havilah. The Lord states moreover that the "gold of that land is good." This does not mean that Menger's analysis of the evolution of money was wrong. He is making the claim that certain commodities evolved and took the place of money. This was because those commodities had the inherent characteristics that enabled them to function as money.

[@Peter.F.C]

I thought this might be interesting to watch but then he starts off with such a high level of dishonesty and misrepresentation about one side of this issue that I know that it's a total waste of time to go any further.

[@ewinslow822]

How so?

[@ozowen904]

Can you elaborate?

[@ExPwner]

Troll

[@Bobatheman]

Figured as much

[@Peter.F.C]

​@@ozowen904 ​ Yes, I possess that capability.

[@Evolutionary-Capitalist]

23:37 thats objective value where the inherent properties of the good determine utility which is only perceived by people. the true source of value with money is objective. austrians need to get their stories straight.

[@_huahua0413_]

The reason why people can value money subjectively in the immediate future is because there is an objective exchange value of the immediate past. In other words, money makes exchange value universal, or rather, objective.

[@ewinslow822]

​@@_huahua0413_exchange value cannot be objective, since trade doesn't happen unless people have different opinions about the value of the things they're trading.

[@troll_kin9456]

Commodities of objective value would never be traded, except out of errors in judgment. If a gold coin were objectively worth more than a cow, nobody would ever trade a gold coin for a cow, and if the reverse were true, you could never find someone to trade you a cow for a gold coin, regardless of how many cows they have or how many gold coins you have. The entire phenomenon of interpersonal exchange relies on the subjective value of goods, including money.

[@Evolutionary-Capitalist]

@@troll_kin9456 it never ceases to amaze me how much ancaps dont understand or try to understand the STV. objective value is multivariable. objective value doesnt need to solely depend on the characteristics of the good. it also has critical factors like the objective context of the situation. thats why goods differ at different times for the same person. so you can have different objective values for different people at times to make an exchange profitable for both participants. but because value is objective, either participants can be wrong.

[@troll_kin9456]

@@Evolutionary-Capitalist Allow me to amaze you further by acknowledging that I have no idea what the STV is. An objective value that is contextual to each individual and only knowable by the individual themselves is subjectivity by another name. I can tell you that it's an objective fact that I prefer chocolate ice cream at the moment. But if you want to call my fleeting tastes objective, then I don't know what category of phenomenon is left that could be called subjective, and not objective.