Commodity exchange units-of-account almost certainly predate 3500 BC temple state-money. Neoclassical Econ is still nonsense.

Mainstream economists long ago accepted simplistic ideas of a market economy as a basis for analysis (with “money” merely a veil and thus safely ignored), making their entire opus largely useless.

To avoid this error, better scholars highlight the profound social-organizing roles of currency systems: The tax/tax-credits system and the banking systems that build-out from it (the former organizes public goods, the latter, private production).

For modern states these systems began to develop after the period of modern state formation from around 1500 AD on. Remarkably, however, research shows that “modern” tax-credit systems date back to the very first states (Sumer, 3500 BC) and the dawn of history (record-keeping and writing stem from the same accounting base as the first tax systems in ancient southwest Asia).

However, it is unnecessary to suggest (e.g., as in Bell [Kelton] and Henry 2001, Graeber 2011) that the origins of “modern money” some five and a half thousand years ago
1) must have no commodity exchange element in them or else we end up somehow “neoclassical” and
2) overreach to argue that they did not have a still older important period of pre-3500 BC temple/state development.

It is not only perfectly possible for there to be a role for (very) early exchange for understanding the origins of currency systems. It is almost surely necessary.

Fact: There cannot be formal liabilities without formal assets.

It is conceivable the first tax unit was a newly invented word/unit/measure “decreed from on high.” The temple imposed this liability and it could be paid by the (now formal) newly decreed unit (asset). (Once this had been earned/spent in to the economy).

However, this does not accord with the general consensus on the emergence of initial units of measurement from customary uses and measures.

Perhaps more importantly, in their (entirely understandable) zeal to reject anything remotely neoclassical, the scholars mentioned above have accepted uncritically a myth of their own (from Smith and other non-anthropologists centuries ago): that somehow the emergence of commodity units-of-account would have happened from market-like exchange within groups. Since ancient and “primitive” groups were egalitarian and property-less, this, they correctly point out, could not have happened.

However, although the latter observation is correct, the overall premise is entirely misguided. In-group relations were indeed likely based on group production, group identity, kinship, redistribution, gifts, spheres of exchange, status, reciprocity etc., and surely not market-like. However, ethnographic studies give little room to think that in-groups gave any of these considerations to out-groups.

Trade relations, that were at least to some degree market-like most likely occurred between groups (I show here that something precisely like what Graeber suggests Humphrey showed not to happen is shown to happen in that very paper between the Lohmi and other Himalayan groups).

And it is precisely areas with high and growing size and numbers of groups (allowing for ever greater likelihood of group interaction) that we see the first states forming (e.g., “Organizational complexity and demographic scale in primary states”; see also Algaze 2008 for aspects of the “Sumerian takeoff” and trade).

Moreover, we know there was exchange in areas for many thousands of years before the ~3500 BC time period of the first tax/tax-credit systems, some of it potentially of the type associated with commodity exchange in ethnographic and historical accounts. (For some potentially relevant factors the timeline stretches to ten thousand or more years before Sumer see “Notes on time-potential” below).

The basis for much of the literature on the lack of market exchange within societies stems from the groundbreaking work of Karl Polanyi (1944). Yet Polanyi himself writes:

“Long-distance trade often engenders markets, an institution which involves acts of barter, and, if money is used, of buying and selling, thus, eventually, but by no means necessarily, offering to some individuals an occasion to indulge in their propensity for bargaining and haggling.” Polanyi 1944, pp. 61-62.

“We have dealt with the beginnings of external trade. Markets developed naturally out of it where the carriers had to halt as at fords, seaports, riverheads, or where the routes of two land expeditions met.” Polanyi 1944 p. 63.

Polanyi (1944, p. 283) also approvingly cites Weber: “The function of money as a general medium of exchange originated in foreign trade” (General Economic History, 1927[1923], p. 238).

and “In any case the oldest commerce is an exchange relation between alien tribes” (Weber, p. 195).

Polanyi further cites several others saying essentially the same (p. 283).

Before 3500 BC Sumer

We also know there were earlier cases of social stratification, storage, much older pottery and especially basketry (indicative not just of storage of [potentially tradeable] surpluses but also possible origins of standardized measures, especially of volume of grains). Besides handfuls and amounts harvestable from areas of land, physiological measures, such as the amount of grain/beer/bread or water a worker might need in a day/month, would of course potentially be far older than 3500 BC.

Given what we know of modern commodity exchange in “primitive” groups, the customary emergence of measures, and the many thousands of years of known trade before 3500 BC, it seems far more likely that units-of-measurement/account arose before State or temple decrees. Early formal obligations would have been agreed—or decreed as societies become ruler-based—in these.

Either the unit-of-account predates “state money” or at best can be seen as co-evolving with increased social complexity and the emerging class that would increasingly impose liabilities and eventually formalize them in the first record-keeping, tax/tax-credit system.

Fictitious Commodities

Polanyi’s work is groundbreaking and foundational. His idea of labor and land as “fictitious commodities” is extremely astute: commodifying these, making these inherently social things respond to markets, is neither natural nor beneficial.

Polanyi also includes “money” in his trio of fictitious commodities, summarized here:

“[Polanyi] defines ‘commodity’ as something produced for consumption. Obviously land and labor are not produced, and money is not consumed, and therefore they cannot be commodities.”

However, Sumerian tax/tax-credits were likely in-kind, specifically in grain, especially barley. The tax-credit “unit” at that time was indeed both produced and (literally) consumed. The base unit of the Sumerian chartalist system was simultaneously a tax-credit and a (very real) commodity.

As discussed in a companion post, for the origins of currencies—not their subsequent histories but their primordial origins—it can be no other way.

A note on the Great Transformation

The Great Transformation is Polanyi’s 1944 thesis that we cannot correctly analyze pre-capitalist (and even less, ancient) society using modern market perspectives. [Note that Sahlins studied with Polanyi and was Graeber’s dissertation advisor; much of the emphasis—important but misplaced in this particular context—on the lack of in-group exchange stems from/cites this single intellectual lineage].

The “great transformation” emphasis is not wrong because ancient peoples were somehow market-oriented in a modern way. Indeed they were not.

It is misleading for precisely the opposite reason: Modern society is nowhere near—and never has been in 6000 years—as market-oriented as the Smithian/mainstream economics fantasy. Moral considerations/obligations, “gentleman’s agreements,” customs, relationships, administered pricing by groups, strategic pricing, strategic investment: all of these dominate today as they did 200 years ago and as their analogues would have in traditional societies. There is no conventional price mechanism even in our modern economies (i.e., neoclassical economics is bankrupt from a micro level as well as macro level).

We are not so different from the ancients as we imagine. In their inter-group dealings, they had thousands of years to develop commodity units of exchange with “the other,” and didn’t need simplistic price mechanisms to arrive at the grain measure units-of-account the Sumerians much later made formal, and that we see time and time again in “primitive,” non-state societies using either grain or salt for inter-group exchange.

References and Notes

[This entry is cut down from a longer draft; the works below inform much of it, although some are not cited in this condensed blog post]

Algaze, Guillermo. 2008. Ancient Mesopotamia at the Dawn of Civilization: The Evolution of an Urban Landscape. University of Chicago Press.

Bell [Kelton] Stephanie and John F. Henry. 2001. Hospitality versus Exchange: The Limits of Monetary Economies. Review of Social Economy. 59:2.

Desan, Christine. 2010. Coin Reconsidered: The Political Alchemy of Commodity Money. Theoretical Inquiries in Law, 11:1.

Henry, John F. 2004. The social origins of money: The case of Egypt. In Credit and state theories of money: The contributions of A. Mitchell Innes, ed. L.Randall Wray. Edward Elgar.

Ingham, Geoffrey. (2006) Further reflections on the ontology of money: responses to Lapavitsas and Dodd, Economy and Society, 35:2, 259-278.

Papadopoulos, John K. and Gary Urton, eds. 2012. The Construction of Value in the Ancient World. Cotsen Institute of Archaeology, UCLA.

Polanyi, Karl.1944 (2001). The Great Transformation: The Political and Economic Origins of Our Time. New York: Farrar & Rinehart/ Boston: Beacon.

Sahlins, Marshall. 1972. Stone Age Economics. Chicago: Aldine • Atherton.

Semenova, Alla. 2011. The Origins Of Money: Evaluating Chartalist And Metallist Theories In The Context Of Ancient Greece And Mesopotamia. Dissertation, University of Missouri-Kansas City.

Smith, Monica L. 1999. The Role of Ordinary Goods in Premodern Exchange. Journal of Archaeological Method and Theory, Vol. 6, No. 2, 1999. [Smith concludes in a study of xxx India XX century that “households’ need for goods promoted the establishment and maintenance of trade networks long before the advent of state-level political structures.” p. 130.]

Related work

The well-known work of Denise Schmandt-Besserat (e.g., section above fig. 5) continues to be illuminating. Other work nuanced in interpretation that sheds some light on these issues (these happen to be on Central America and China):

Baron, Joanne. 2018. Ancient monetization: The case of Classic Maya textiles. Journal of Anthropological Archaeology. 49, pp. 100-113.

Baron, Joanne. 2018. Making money in Mesoamerica: Currency production and procurement in the Classic Maya financial system. Economic Anthropology. 5/2 pp. 210-223.

Flad, Rowan. 2011. Salt Production and Social Hierarchy in Ancient China: An Archaeological Investigation of Specialization in China’s Three Gorges. Cambridge University Press

For an example of how intensely the related concepts of population increase/cultural complexity-increase are in dispute, the following are interesting:

Population size does not explain past changes in cultural complexity. PNAS April 19, 2016 113 (16) E2241-E2247

Understanding cumulative cultural evolution. PNAS November 1, 2016 113 (44) E6724-E6725;

Reply to Henrich et al.: The Tasmanian effect and other red herrings. PNAS November 1, 2016 113 (44) E6726-E6727;

Notes on time-potential [under construction]

Citing and integrating the following would turn this into a long-term project, too much for a blog post. However, these sources are suggestive of the immense time periods before 3500 BC for trade, storage/surplus developments, basketry and pottery (indicative 1. of surplus storage and 2. important as possible sources of standardization).

Obsidian

Khalidi, Lamya et al , Bernard Gratuze, Gil Stein, Augusta Mcmahon, Salam Al-Quntar, et al.. The growth of early social networks: New geochemical results of obsidian from the Ubaid to Chalcolithic Period in Syria, Iraq and the Gulf. Journal of Archaeological Science 2016

Frahm, E., et al. 2016. Caucasus connections? New data and interpretations for Armenian obsidian in Northern Mesopotamia, Journal of Archaeological Science: Reports.

at Domuztepe. Obsidian was carried to this Late Neolithic settlement from Pokr Arteni, a distance of 670 km linearly, N800 km on foot, and N1000 km through the Euphrates river valley.

Such diversity implies that the inhabitants of Domuztepe had access to a broad network of obsidian distribution during the Halaf period. (p 18)

we have tangible evidence of material from Armenia arriving at Domuztepe during the Late Neolithic

Weaving/Basketry, Pottery

Bard, Kathryn A. 2015. An Introduction to the Archaeology of Ancient Egypt. Wiley.

[Bard, p 88, Faiyum region Nile Valley 5500-4500 BC, regional association of baskets explicitly with grain storage a thousand years before the Sumerian takeoff]

Evidence of weaving in the Czech Republic 27,000 years ago. Likely for clothes, but suggestive of how early basketry could have developed.

Similarly suggestive even if in a different part of the world, a fragment in Peru, thought likely to be “a rush trap or basket,” dated to ~11,000 years ago.

Wu, Xiaohong et al. 2012. Early Pottery at 20,000 Years Ago in Xianrendong Cave, China. Science 29 Jun 2012: Vol. 336, Issue 6089, pp. 1696-1700. Link

Salt

Hoi, Elise. 2011. Salt of the Early Civilizations: Case Studies on China. Penn History Review. Volume 18 Issue 2.

Antiquity of key developments

(these, of course, can be related to gift, status or other reasons; their sheer age, e.g., 77,000 years before Sumerian culture, illustrate the magnitude of time for customary units of exchange between neighboring groups to develop before Sumerian culture)

Bouzouggar, Abdeljalil et al. 2007. 82,000-year-old shell beads from North Africa and implications for the origins of modern human behavior. Proceedings of the National Academy of Sciences June 12, 2007 104 (24).

Social Hierarchy, Social Networks

The_growth_of_early_social_networks P 744

Formalized prehistoric interaction networks in the Near East are documented from as early as the Pre-Pottery Neolithic A (PPNA; 10,000–8500 BCE), and their growth and impact was increasingly visible thereafter. During the Pre-Pottery Neolithic B (PPNB; 8500– 7000 BCE), social hierarchies develop in tandem with increasingly complex social networks, affecting the reach of cultural expressions and material goods, and encouraging genetic intermixing between regions (Ibáñez et al., 2015). P

Miscellaneous

Note this passage from Desan 2010, p. 382. (discussing a much later time period, but interesting):

and just above that (Desan 2010, p. 381):

Desan 2010 p 381 barleycorn origins, silver

Note this dialogue in Sahlins 1972 (citing Hogbin); an example (between communities as we have emphasized) of two groups interacting in a “haggling” manner:

This is a useful map for an overview of the main regions/”civilizations” discussed above, and some important later trade regions (e.g., Persian Gulf etc.; note, of course, it does not include Anatolia, Eastern Mediterranean, Black Sea/Caucasus).
The map is not intended to show these larger civilizations as the “groups” discussed above. Rather, leading up to this map, each of the regions themselves would have been made up of scores if not hundreds of family groups and bands, coalescing over the millennia into larger tribes, villages, small and then larger polities. Relevant processes include, sedentarism, cultural change, population growth, the slow but sure drop in transport costs over time etc. We know the latter two happened; they unavoidably would have raised, ever higher, the inevitably and degree of inter-group contact.[Add here data on density of settlements from Algaze 2008]

Below, from Scott, James C. 2017. Against the Grain: A Deep History of the Earliest States. Yale University Press. (Introduction, kindle edition):