This article borrows heavily from Chapter 2 in David Graeber’s book Debt: The First 5000 Years – thanks Graeber!
The power of economic theory in our society is very strong and it holds a tight grip over our lives. Economic advisors shape a lot of our government policy, and economic rhetoric shapes a lot of our thinking. This is the reason I find it most interesting to unpick the assumptions of mainstream economics, and the particular assumption I’m interested in here is the myth of barter.
In pretty much all university economics textbooks the history of money starts with barter. The story goes like this: before money humans traded goods for other goods. After a while this got too complicated and so money was invented. After a longer while we complicated our economies even more by creating virtual money. This story became the founding myth of economics, promulgated by Adam Smith — a political economist from 18th century Scotland.
Over the subsequent centuries, in particular the last hundred years, it has come to light how untrue this story is, but mainstream economists have largely ignored the developments. You might be wondering: ‘why does it matter if the founding myth is wrong?’, and ‘why have economists deliberately tried to keep it?’ Because it props up the idea that the economy is separate to the rest of society, and that it can be studied in relative isolation using graphs and maths.
Here is a quote from David Graeber that explains it quite well:
“For there to even be a discipline called ‘economics’, a discipline that concerns itself first and foremost with how individuals seek the most advantageous arrangement for the exchange of shoes for potatoes, or cloth for spears, it must assume that the exchange of such goods need have nothing to do with war, passion, adventure, mystery, sex, or death. Economics assumes a division between different spheres of human behavior that, among people like the Gunwinngu and the Nambikwara, simply does not exist. These divisions in turn are made possible by very specific institutional arrangements: the existence of lawyers, prisons, and police, to ensure that even people who don’t like each other very much, who have no interest in developing any kind of ongoing relationship, but are simply interested in getting their hands on as much of the others’ possessions as possible, will nonetheless refrain from the most obvious expedient (theft) . This in turn allows us to assume that life is neatly divided between the marketplace, where we do our shopping, and the ‘sphere of consumption’, where we concern ourselves with music, feasts, and seduction.”
Graeber goes on to explain that this segmented worldview is so embedded in our textbooks as well as our ‘common sense’ that it takes a concerted effort to imagine it any other way.
In my humble opinion those with money and power in our society want to continue the illusion of economics as separate from everything else. It means, for example, that when a landlord is kicking out a tenant for not paying rent it is simply a question of economics, and not of the single parent of 3 children that just got fired because their workplace is cutting costs to keep the high profit rate for their shareholders. It means that when a company wants to dig a coal mine the main question is whether it is cost effective, not whether communities are displaced, biodiversity lost, indigenous culture disrupted, and so much more than can’t be measured in money, but will be given an arbitrary value as an externality — if it is given any value at all.
Neoclassical economics, which is pretty much the only strain taught in economics departments, and which underpins a lot of mainstream political understandings, needs to be questioned and undermined as we fight for a fairer world.
By Ani Seed
The Coburg Meddler 