History of Myth of Barter

-Adam Smith used it in 1776 to create discipline of economics as a moral philosophy professor
-Aristotle used it in 330BC, speculating that families must have started by producing everything they needed themselves, then gradually specializing and trading, so money naturally developed to make trade easier
-During age of exploration barter stories disappeared because everyone was discovering old-fashioned tribes and weren’t none of them bartering. “Most sixteenth- and seventeenth- century ravelers in the West Indies or Africa assumed that all societies would necessarily have their own forms of money, since all societies had governments and all governments issued money.”
-Back to Smith: he vigorously objected to idea governments create money. Following in John Locke’s footsteps. Locke thought Govt begins in need to protect private property and operates best when limited to that. Smith added that property, money, and markets were older than political institutions, and were the very foundation of human society. If govts “should play any role in monetary affairs, it should limit itself to guaranteeing the soundness of the currency. It was only by making such an argument that he could insist that economics is itself a field of human inquiry with its own principles and laws– that is, as distinct from, say, ethics or politics.”

pg 24-5

Myth of Barter

“Just about every economics textbook employed today sets out the problem the same way. Historically, they note, we know that there was a time when there was no money. What must it have been like? Well, let us imagine an economy something like today’s, except with no money. That would have been decidedly inconvenient! Surely people must have invented money for the sake of efficiency.

The story of money for economists always begins with a fantasy world of barter. The problem is where to locate this fantasy in time and space”

What does it mean when we reduce our moral obligations to debts?

“A debt is the obligation to pay a certain sum of money. As a result, a debt, unlike any other form of obligation, can be precisely quantified. This allows debts to become simple, cold, and impersonal– which, in turn, allows them to be transferrable. … if one owes forty thousand dollars at 12 percent interest, it doesn’t really matter who the creditor is; neither does either of the two parties have to think much about what the other party needs, wants, is capable of doing– as they certainly would if what was owed was a favor, or respect, or gratitude. One does not need to calculate the human effects; one need only calculate principal, balances, penalties, and rates of interest.”

pg 13