Saturday, 27 February 2016

Barter didn’t precede money?

It has become fashionable of late to attack Adam Smith’s claim that barter preceded the introduction of money. For example the sub heading of this article reads, “Adam Smith said that quid-pro-quo exchange systems preceded economies based on currency, but there’s no evidence that he was right.”

So what sort of “evidence” would authors of the above sort of article expect to find? I mean do they think that cave-man societies would leave written records stored in libraries? Or they think Australian Aboriginees from 20,000 years ago would leave articles stored on 21st century hard discs describing how they did or didn’t engage in barter?

The reality is that Chimpanzees engage in barter: for example it is common for one chimp do do favors (like grooming) for another with a view to getting favors in return in the future. As for the idea that cavemen never swapped fur, meat etc with each other, the idea is straight out of cloud cuckoo land.

Moreover, barter was common between East European countries prior to the collapse of communism. E.g. Czechoslovakia sent machinery to Russia and Russia sent crude oil in  return. Cash was not involved in all those types of deals.

Barter is common today in the 21st century. For example the typical husband / wife or girl friend / boy friend relationship is to some extent a barter relationship. That is, for example, the male does favors for the female in exchange for sexual favors from the female.

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