The Myth of Barter

In his book, Debt: The First 5000 Years, David Graeber writes at length about the myth of barter. It’s the origin story of money, taught in every introductory economics class. Once upon a time, there was no money. So people used to barter to get the things they need. If Henry had too many potatoes and he needed shoes, he would trade them with Alfred the shoemaker. But what if Alfred didn’t want potatoes? Or what if he did want potatoes, but Henry didn’t need shoes? Barter necessitated a double coincidence of wants. Money was introduced to resolve this issue.

It’s a quaint story. Easy to understand and imagine. Unfortunately, there’s no evidence that it ever happened.

A professor of anthropology in the London School of Economics, Graeber goes into detail about a number of fascinating systems that various societies and cultures developed to distribute goods and labour amongst its members prior to the emergence of money. None of them resembled the land of barter described in economics textbooks.

Why is this important?

The myth of barter is an expression of some fundamental assumptions about human nature that underpin the study of economics. It assumes that people will only give something if they can get something. That we’re built for competition, not cooperation. That greed, and self interest are the primary drivers of human behaviour.

If this land of barter is indeed a myth that has never existed, it suggests that the assumptions it is based on are also flawed. If that’s true, then perhaps we can open our minds to an economic system that reinforces the best innate characteristics of human nature rather than the worst. If we can do that, the possibilities are very exciting indeed.