The entire discourse of the discipline of economics is based on the myth of Barter. Mainstream economist working in the tradition of Adam Smith have always been opposed to State theories of money, even though historical records counter Smith’s legacy that the existence of states and markets are somehow opposed. Despite Anthropologist’s complaint that barter is a myth, they like credit theorists have been unable to be convince because what we call “money” has existed in a number of different habits and practices and so a single definition has been difficult (p.52).
Keynesian orthodoxy assumes that capitalist market will not work unless capitalist governments play “nanny” i.e. engage in massive deficit “pump-priming” when the markets take a down turn (p.52). Ever since Richard Nixon’s 1971’s decision to unpeg dollar from precious metals, “floating currency regimes” all national currencies are “fiat money” i.e. backed by public trust alone and this has dominated world economy ever since (p.53). Keynes in his most famous work Treatise on Money concludes that whatever the origins of money for the last four thousand years money has been a “creature of the state” whereas individuals in making contracts with one another take debts and make payments (p.54), while the banks and credits cancel out as the borrower will have to return money to the bank. Graeber argues that Keynes though radical played safe carefully framed the problem reintegrated within mainstream economics of the day (p.54). Later neo-Keynesians took up an “alternative tradition” to answer the Myth of Barter. The alternative solution is “primordial debt theory” originally developed in France by team of economists, anthropologists and historians and classicists around Michel Agluetta and Andre Orleans, then Bruno Theret and now by neo-Keynesians in the US and UK (p.55). Core argument of primordial debt theorists is that monetary policy and social policy cannot be separated and they have always been the same thing as government is the guardians of debt that all citizens owe to one another, and which is the essence of society itself. They argue with evidence from Sanskrit religious literature that human existence is a form of debt, and the “sacrifice” paid to the gods was a form of interest. This argument is folded back neatly by Bruno Theret to state theory of money as the first kings were like “sovereign gods” so that the debt to the gods becomes a debt to the society that made us who we are (p.58).
Graeber argues that different theories of origins of money have ignored the evidence from anthropology especially of how economies in stateless societies actually worked and still work, while there is every reason to believe that our own money started the same way. E.g. use of cattle as money in eastern or southern Africa, shell money in Americas or Papus Ne Guinea. Economist argues these “primitive currencies” used simply to rearrange relations between people. Biggest critique of primordial debt theorists for Graeber is the initial assumption that the world is organized neatly into compact units called “societies” that we all agree to belong in, and today society is taken as a synonym for “nation”.
Auguste Comte’s early nineteenth century France “Positivism” and in his work on “Postivist Catechism” laid down the first explicit theory of social debt. In short we are all indebted to society since birth and only by dedicating our service to humanity can we repay. Thus for hundreds of years it has been assumed that state is the guardian of this debt that we all owe. For Graeber primordial debt is the “ultimate nationalist myth” i.e. we owe our life to serving the Nation, pay interest in the form of taxes and if and when needed with our lives too to defend the nation against enemies. The twentieth century trap is this dichotomy: that either there is the market where individuals imagine that they start out free not owing each other anything or there is the logic of the state where we are always indebted. In actuality states creates markets, and markets need the states, and neither can exist without the other in the forms that we recognize today.