Topic: Creation of the state, in seven easy steps. (Read 1386 times)

My own state / our own state is really not the goal here. No state. You can create small Utopia associations, as long as everyone else's rights are unaffected.

Do no harm... take no shit.

Your gold / bitcoin advice is sound.

That's essentially Graeber's argument: commodity money (coins) was introduced by the state as a means to get stuff from the people (mainly to pay armies with), and commodity money in the form of coins didn't emerge from the market (apart some examples that were not the basis for the large usage of coins in empires).  Peaceful free markets seemed to prefer credit money, and commodity money on large scales always was introduced by states (with big armies).


That is exactly the story that Graeber claims is not the slightest bit of historical proof for (except in international trade).  His point is that free markets, left alone by a state, develop credit money, of which there are plenty of historical examples, and that not a single historical case can be illustrated with the above process where on large scale, bartering happened, and from that, an intermediate good evolved that turned out to be gold (again, except international trade).  


No, Graeber is an anarchist.  His point is exactly that commodity money is introduced by states to oppress the people and to go to war with.  He claims that more advanced non-state commercial relations are based on credit, and not on exchange of intermediate goods.

I have to say I also believed the standard story, and I still think it has its value as a gedanken experiment in a trustless environment.  But I think that the important message from Graeber is that there is a second, much more obvious, solution to the "implausibility of the direct barter difficulty" and that is credit.  And for some or other reason, this has been left out from the economic tale - although when you think about it, credit money is all around us !  In fact, the rarity is commodity money.  

Now, there are illustrations of the emergence of commodity money, as you said yourself.  There are also the famous cigarettes in prison.  So that doesn't mean that the standard mechanism doesn't apply.  But, after reading Graeber's book, I come home with two things I didn't realize before:

1) credit money is also a solution to the puzzle of implausible direct exchange, one for which there are tons of historical evidence
2) the particular case of gold emerging as the preferred commodity money in the normal daily commercial markets has not the slightest bit of historical evidence.  Gold seems to play a role between kings, temples and in international trade, and the only actual historical records for introducing gold in commercial relationships apart from international trade come from states issuing coins, or from looting soldiers.  And not - that's Graeber's thesis - from a gradual preference of the market.

Now, not being a historian, it might very well be that Graeber tells us an erroneous story, but then I would guess that the market emergence of gold as the preferred commodity money in daily economic affairs is well illustrated historically - of which Graeber claims, no single bit of proof exists (that bartering turned into bartering pieces of gold, and in the end, that gold coins were calbrated pieces of gold to barter with).

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Gold fan OROBTC would like to chip in that it might be hard for any of us to create our own state.  But you can:

Be your own Central Bank!  Buy gold!

Bitcoin would also count...

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Almost all (even very primitive) societies have valued gold through the millenia.  Even the Incas (I am visiting Peru now).  In fact if I can get my camera working right in the coming days, I´ll try to send a link (to a photo) of a Peruvian "Una Libra" coin (approx. 0.23 oz Au) I just bought.

Yes, it is more like an effective trading activity with a money system is necessary to have the resources that a great king needs to suck blood from.

Any market, and markets will pop up everywhere, will have some good that is durable, compared to the other goods, divisable, compact etc, the money traits, and that will be preferred as a value holder to the next market. The money value could be small compared to the use value, but due to that commodity's liquidity, it will be non zero. That is really all that Adam Smith proposed. As markets develop, get larger and more global, at some point gold will be included, and that commodity has the best qualities. Bars, where you could cut off a length, is again a later development, then coins, which can be seen as a standardized size. The picture of kings could be seen as a quality stamp (but maybe it also was a marketing scheme for the king).

This isn't really rocket science, so why does Graeber and others have so much problems with it? For one, I think he is an apologist for the state, and can't really envision anything civilized without it.

Edit..: And for the debt, and the easy peasy solution to the debt problem: Cancel it, and start loaning again. It has been done for 5000 years, so why should that present a problem?

Well, if you read the second part of his book, you see that this is very often the case.  There is the example of the Hindou temples who store gold (forever) and issue obligations on that gold which are not redeemable, much like a central bank.

If you think about it, our current monetary system is entirely a credit-based system.  So yes, credit is a very important source of money.  When an IOU becomes indefinitely transmittable, it is in fact money.  In fact, it is an unavoidable source of money !


Indeed, this question remains unanswered in fact.  What is sure, is that gold did NOT emerge as the preferred intermediate asset in everyday commerce.  In fact, gold was almost never used as direct daily money.

Did it emerge from international trade (where it was used when ships unloaded in distant ports), or was gold already an expensive commodity by then ?  Did it emerge from demand by kings or by religions ?  After all, the only "free" economic agents back in those days were international merchants, kings and temples.  Most other people were or slaves or serfs, or were in any case such poor dudes that their weight in "the market" didn't play any role.

But if, say, a temple, or a king, was in demand for gold, that might have given a lot of value to gold as a commodity (not as an intermediate asset).  Gold then being an expensive commodity (because of the demand by king or temple), it could start to be used as an intermediate asset in special circumstances such as international trade.

But what's for sure, is that gold didn't emerge as the market-chosen intermediate asset where peasants traded their production against, say, some tools with the blacksmith.

There are two points in Graeber's book which seem to be somewhat contradictory.  First of all, he seems to assume already in all discussions where gold is mentioned, that it is ALREADY valuable.  It seems that the emergence of the value of gold predates the period he's discussing.
On the other hand, he claims that gold really became money because of soldiers, who looted (and could hence put their hands on a lot of stolen gold in temples and other places they destroyed), and then started trading small bits of that gold for their needs in goods and services, hence dispersing small chunks of gold throughout the population.
But, although it is historically documented, bites somewhat its own tail.   If gold wasn't already expensive, tradeable and a kind of generally appreciated asset, looting soldiers wouldn't take the initially untradable gold when looting.  It is only because it was already expensive and tradable that they did so.  But then they cannot be at the origin of the use of gold as universal "money".  Gold must then already be appreciated generally.
They can of course contribute a lot to the chopping up of big quantities of gold into small coins, and the dispersion of small amounts of gold throughout the population.  But in how much they contribute to the speculative value of gold as money is not clear to me.  If they didn't value it for starters, they wouldn't take it.

I have read half of the Graeber's book, which was interesting in many ways except economically.

About the rise of money, your debt solution in small communities is one. It is the gift economy. Problems with this in addition to the fact that it is only possible in small stable communities, is for instance that the debt is repaid at a random time, it is not necessarily exact, meaning what is paid back is sometimes not of the same value, there is no interest, but most importantly in my mind is that the need concept comes into play. It is not possible to become rich in a gift economy, therefore meagre savings and investments.

Other debt solutions can exist, for example of biannual markets, where debt could be written collectively or individually on whatever paper replacement were available, to be cleared on the next market. Here a problem is that life is risky, and you could not expect all the people to come back.

Another step would be debt obligations that were tradable like money, issued by respected members of the community.

Even though, we know that money, implying no time dependence, no risk and no interest, did arise frequenty all over. In Scandinavia it was first fish, then wadmal (the word means measured cloth, the name itself indicated its use as a unit of account), then metallic arm rings (baugs), then coins. This information is from the american Alexander del Mar. Note that in the case of fish and wadmal, some would probably call that barter, but the point is that the people trading at the time, did regard it as money as they primarily used it for further trading. Wee see also that current systems can also degrade into this type of commodity money in times when regular money is not available.

These systems must have been invented and reinvented, and must have existed simultaneously. Historically it might be interesting to find the very first occurrence of such a system. But in the development of money for the purpose of economy, this is not so interesting. The question is why is it gold, what did they do before gold etc is interesting as a fundation for understanding the money and value question.

So Graeber, making a big show out of his findings, haven't really added much more than some historical details and some entertainment.

Yes and no.  I read his (brilliant) book.  There's a lot of truth in it, and it is the first real documented work I know about on the origins of money.   However, Graeber's definitions of "market" and "money" are not those that libertarians use, and in fact, libertarians and Graeber  are much more in agreement than Graeber himself would probably like :-)

What Graeber calls "capitalism", I would actually call state-backed financiarism.  Graeber essentially shows that most money that ever circulated, was fiat money (even gold and silver were a kind of fiat money, as they were "printed" by slaves and mines conquered by empires), of which they used the seigniorage to finance military adventures, with the aim at getting even more gold and silver mines, and get even more military.  Note that apart from the mines, which are done away with, the FED, the IMF, and Bretton-Woods make the dollar printing and the fact that they make it accepted all over the world, more or less similar.

What is true, and what I learned from Graeber, is that free money found its origin not in "indirect barter" but rather in credit.... except for international trade.  When you think about it, this is in fact logical, and the economist's story about bartering turning into indirect bartering and the market picking an intermediate good, is a nice gedanken experiment, but for which there are boundary conditions that usually do not hold, simply because there is a much easier solution in most cases.

The first point is indeed that the gedanken experiment starts with telling how difficult direct barter is.  Well, if it is difficult, then it simply won't happen, until people are forced to !  So the error in the classical story is simply that there is no initial barter economy to begin with, on which indirect bartering can be built.... except in one circumstance: international trade.
So given that direct bartering is too difficult to be a significant economic relationship in everyday life, it won't be the basis for anything built on it.  What's the normal thing to do when there are tight social relations ?  It is to PROMISE.   You do that in your immediate environment too.  Can you lend me your car ?  I WILL wash it when I return it to you.  Could I have some milk please ?  I WILL give you something in return when you need something too.
In other words: credit.   
Credit can accumulate, and we can regularly "wipe the slate", or we can start transmitting debt.  In that case, we've invented credit money ! 

The problem with credit money is of course that you need regular interactions, that you need trust, in other words, credit is useful in small, socially connected, communities.  Credit money can use a common unit of account, but which is nothing else but the NAME of a commodity (an ox, a daughter, a piece of metal,....).

ONCE credit money exists, commodity money can emerge from it, by materialising the abstract unit of account.   Commodity money has the advantage of being "trustless".  The abstact promise of an ox is only worth what the promise is worth.  A real ox is a real ox.

So commodity money can arise where trust and regular social relationships are not possible: in international trade, outside of the supervision of states, and, as Graeber points out, during states of war, with soldiers.
However, I have the impression that Graeber turns around cause and effect.  He seems to indicate that commodity money somehow causes war and such.  No.  It is because there is war, that commodity money is more practical than credit money. 
That states use commodity money (with seigniorage - which is of course not possible with credit money except if issued by monopoly) to finance armies is not the fault of the commodity money, but rather of the violence of the state.  It is not the money that causes the violence, it is the violence that makes the money more practical. 

Markets and commodity money find their origin in lack of tight social links, and lack of trust.  War is such a situation. But not only war.  International trade is too.  So in our large-scale globalized economy, where it is impossible to find out whether we can trust credit on the other side of the ocean, it is pretty obvious that markets and commodity money would appear too.

Ah, that guy. I suppose you expect me to bring in some other cannon, but that would become an escalating war ending with Krugman.

Graeber is an anthropologist, you aren't.

They provide it all, huh? No can not accept that. All of the things you mentioned was invented before kings.

How could Step 1 ever be prevented?


Nice vid, but like most market-libertarians here, he doesn't understand or he cannot accept that, historically, trade, markets and money were an invention of rulers, kings, emperors, hence, the state. https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

Here is how you create support at home to start a war. It is the story about the Gulf of Tonkin incident, Vietnam, 1964.


http://www.pbs.org/pov/mostdangerousman/secrets2.php

A novel point from the film (to me anyway) is that the tyranny continuously expands, and the current state of affairs is built on the prosperity created by the previous, freer, era.

They guy's name: Stefan Molyneux.

You have the state religion perspective or the statist quo (a meme from a US libertarian politician, he also had "division of state and marriage"). http://insidebitcoins.com/news/jim-fulner-bitcoin-can-become-the-reserve-currency/32234

The modern state is built on the mafia model. Siphoning off value from the public under threat of violating basic rights, and using the proceeds to fund the extortion apparatus. If the victims does not know, but believe they are beneficiaries, that only means a less costly extortion organization.

The currently best position to be in for an individual, is to live in a state where previous freedoms led to great prosperity, and at the same time, know.

Creation of the state involves contribution from each and every individual from the society. You just can't afford to be dependent of Politicians of the state who promises to build a good state or a country Its a society that needs to contribute towards the betterment of the creation of the state

Yes I love that guy.

Here is a great video on this subject. The story of your enslavement:

https://www.youtube.com/watch?v=Xbp6umQT58A

More like ranting.

My excuse: I didn't know about that.

Raving