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Yap essence of money

by das monde Fri Jun 26th, 2015 at 04:10:02 AM EST

This is almost a lazy quote diary, except my primary inspired source is in Dutch. So this is a sketchy translation, with a few quotes in English from elsewhere.

Yap is a small island of just 100 km2, some 1500 km to the east of Philippines. Until the end of the 19th century, it was one of the most isolated and disregarded islands on Earth. In 1903, an American anthropologist visited the island for two months. Soon he published a lively book on Yap's social hierarchy, religion and... the most remarkable economy. What can be amazing about the economy based on fish, coconuts and sea cucumbers? Well, John Maynard Keynes was impressed in his early years.

The money system on Yap is really jaw dropping. A damn heavy, hard currency...

for centuries, the main form of currency on this tiny Micronesian island was stones. Very large stones. Looking like Claes Oldenburg sculptures of oversized bagels, the stones -- or rai, as they're called -- can stand as high as ten feet and weigh several tons each.

While these carved stones may not look like big bucks to an outsider, some have enough value to purchase a new house.


Here is a rich girl:

A certain type of mineral called aragonite was prized by the Yapese in making rai. Aragonite, a white limestone that glistens, was only found on the island of Palau some 250 miles away, necessitating a long and arduous journey by canoe with a heavy rock in tow (see map below). The stones were quarried in the mountains of Palau and shaped into discs with holes in the centre. The holes allowed the stones to be carried on long poles, facilitating transportation.
The value of each rai depended on its size, but also on its provenance -- if explorers died during the expedition to retrieve a stone, it acquired a higher value. A transaction did not require the physical exchange of a disc, merely the acknowledgement of a transfer of ownership. In fact, one of the rai stones in active circulation sits on the bottom of the Pacific Ocean, having tumbled from a canoe during a storm on the way back to Yap. Islanders agreed on its value after hearing the story of how it came to rest on the ocean floor.
The richest family was "enjoying" the stone (that no one saw!) for a few generations. Or alternatively, it is tricky to make out rai facts and fiction.
In 1871, the Irish-American David Dean O'Keefe was shipwrecked near Yap and was helped by the natives. Later he assisted the Yapese in acquiring rai and in return received copra and trepang, which were valuable exports in the Far East. O'Keefe provided the Yapese with iron tools. As a result, a form of inflation set in and rai stones acquired with his help were less valuable than more ancient ones. His Majesty O'Keefe is the story of his life on Yap.
the Germans bought control of Yap from the Spanish in 1899. In order to motivate Yapese to work on improving the island's road system, the Germans marked a certain number of rai with black crosses, indicating that the government now claimed these stones. To regain control of their rai, people had to labour on the road system. It was in this way that Yap got its first roads.
Here is money as trust, a belief, a cultural agreement, an authoritative story, brute power. Electronic blips plus IMF rules. A civilization driver and social hierarchy builder. Modern overlords O'Keefes as great vampire squids wrapped around the face of humanity. One man's asset is another's schuld. How would we do without all of this?

Display:
The bit about the one at the bottom of the Pacific calls to mind the "coppers" of several northwest coast indians. Their value increased with their piecemeal destruction. (I would cut off a piece of my copper and give it to you, publicly of course. That elevates me and puts you in debt.) Their are numerous tales about the ultimate conspicuous destruction: publicly throwing your copper off a canoe into deep water. Its inaccessibility made it in effect priceless.

All part of their complex ritual economies, which included the potlatches, where wealth and the social status it conferred was increased by giving it away.

Experience keeps a dear school, but fools will learn in no other. -- Dr Johnson

by melvin (melvingladys at or near yahoo.com) on Fri Jun 26th, 2015 at 01:07:21 PM EST
Homo oeconomicus has a long history.

Can we call this a Fail, though? Its absurdity says yes, but the benefits during the years before inflation?

The idea of money itself seems to fill an atavistic psychological need.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Jun 26th, 2015 at 02:21:09 PM EST
About two months ago I wondered how much "seamless" population control significance is there in extreme marriage, coming of age rituals in isolated Pacific societies. Cases of "traditional" cannibalism, infanticide are most frequent there as well. Thus, reading about Yap I immediately asked myself, does this monetary system makes sense in the context of limiting population growth. The answer is definitely yes. For one thing, the dangerous 400km transports by canoes take a percentage of able, hunky, wannabe guys out of life and procreation. And more crucially, the social inequality enshrined by the stones consistently determines procreation odds of the Yappians.

The surprising Yap story appears to be less than widely known, even to economic geeks. Is it hazardous to spread it? The current civilization direction seems to be taking "the best" out of available cultures to build a stable global wealth hierarchy, possibly with population sustainability in hazy upscale minds.

by das monde on Sat Jun 27th, 2015 at 02:56:25 AM EST
[ Parent ]
das monde:
Thus, reading about Yap I immediately asked myself, does this monetary system makes sense in the context of limiting population growth. The answer is definitely yes. For one thing, the dangerous 400km transports by canoes take a percentage of able, hunky, wannabe guys out of life and procreation.

Unless taking out a percentage of "able, hunky, wannabe guys" limits the number of children per woman, it does not matter to population growth. A society can lose a large part of young guys and still grow as quick as it can, provided social norms allows for men being father to the children of more then one woman. For example if the society allows for polygamy, or if average life span is shorter for women (for example by death by childbirth) and society allows for men to remarry, or if it is matrilinear and does not pay close attention to fathers at all.

If you want to look at factors limiting population growth, it is all about women and children. At what age do women start to have sex? Do women on average survive to menopause or die earlier? These two determine the age interval for bearing children. Then it is the question of time between live births, which is largely determined by breastfeeding, other practises that limits fertility and health (in particular, syphilis increases the risk of spontaneous abortions). Then you have childrens survival, and in many societies surviving until your fifth birhtday was a fifty/fifty shot.

So infanticide (in particular of girls) does keep population growth down, teenage boys doing dangerous things doesn't do much on its own. If teenage women goes stone-trecking on the other hand, then it does affect population growth.

das monde:

And more crucially, the social inequality enshrined by the stones consistently determines procreation odds of the Yappians.

Is this something you have read about the Yappians, or something you infer? And in particular, would that be procreation odds of women, men or both?

by fjallstrom on Sun Jun 28th, 2015 at 03:03:24 PM EST
[ Parent ]
Unless taking out a percentage of "able, hunky, wannabe guys" limits the number of children per woman, it does not matter to population growth.
Indeed, it seems more like a way to minimize the collateral damage from testosterone poisoning.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jun 28th, 2015 at 03:19:22 PM EST
[ Parent ]
If you want to look at factors limiting population growth, it is all about women and children. At what age do women start to have sex? Do women on average survive to menopause or die earlier? These two determine the age interval for bearing children.

If it was a part of an effective means of population control, it would had to have been part of delaying the age at which women start to have sex, involving young women being taught to reject scrubs who aint got no stones.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sun Jun 28th, 2015 at 07:23:11 PM EST
[ Parent ]
Curbing male population does not affect the population growth on its own, right. But the mechanical focus on female procreation definitely leads to limited imagination how nature or cultures may indirectly address population growth limitations, especially on isolated small islands.

Human cultures are not arbitrary whims for entertainment. Robert Anton Wilson has said:

It is sometime mistakenly stated that there are no universal sexual taboos. This is not true. There is one omni-purpose taboo which exists in every tribe.

That taboo stipulates that sexuality shall not be unregulated by the tribe.

As it is often denounced, sexual repression in most cultures disproportionally addresses female sexuality. Definitely no relation to potential population growth, right?

On a more biological side, women do not have to be taught to discriminate against scrubs without stones or without balls to meet a cultural-economic challenge. Even if testosterone brawls do not look pretty, a woman does want her own man to be exceptional - and able, hunky, testosterone stocked guys do very well for them. That is how the bioeconomic population check works naturally to territorial birds and hierarchical primates: a male represents resources he can control, while females are "disciplined" to choose those with enough chest. If the resources (or able guys) are limited, there are easily fewer females reproducing.

by das monde on Sun Jun 28th, 2015 at 11:00:08 PM EST
[ Parent ]
That is how the bioeconomic population check works naturally to territorial birds and hierarchical primates: a male represents resources he can control, while females are "disciplined" to choose those with enough chest. If the resources (or able guys) are limited, there are easily fewer females reproducing.

And among primates, how hierarchical humans are is influenced by our culture.

If you look at human population spread across the globe and then growth in areas that we have spread to, even to the extent of being willing to undertake the extra work of settled agriculture if pressed to by population pressure ... bioeconomic population checks on humans do not seem to be very strongly effective.

Its an open question in human biology how reluctant or willing women of reproductive age will be to settle for a less than ideal sexual partner, and a question that different cultures resolve in different ways.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Jun 29th, 2015 at 09:25:53 AM EST
[ Parent ]
The "not very effective population checks" are a clear feature of the industrial revolution era. With unprecedented technological-medical progress and uncovered bonanza of energy resources, yeah, the population was generally growing exponentially indeed, including in wannabe countries. But can the progress be taken for granted? We are just entering an era of definite limitations and a scientific analysis of them.

Some 300 years of the industrial progress is very little in evolutionary terms. Its genetic impact is tiny, especially with the Darwinian selection actually weak (with almost everyone reproducing, and consistently more resources for each generation). It can hardly compare with millennia of humanoid evolution, touching frequently both the boundaries of extinction and overrun of enhabitted environment. Sustained non-hierarchal societies are still an exception for rare progress times, for what we know.

And right, academic knowledge of female choices is tiny. There are reasons to suspect that it would rather stay that small.

by das monde on Mon Jun 29th, 2015 at 10:09:20 AM EST
[ Parent ]
The "not very effective population checks" are a clear feature of the industrial revolution era.
The entire recorded history of Europe disagrees with you about that.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jun 29th, 2015 at 12:05:08 PM EST
[ Parent ]
The subject of my statement was the industrial era, worldwide. All I imply about other times is that the exponential population growth is less clear for them.

The "entire recorded history of Europe" is an interesting case, especially since the Crusades. The ever cutting edge military "competition" complements Catholic birth rates nicely. The colonialist expansions were bringing resources to European imperial centers way before the industrial revolution, right. We can say that Europe has its own way of dealing with resource totals. In that way the European history  confirms rather than falsifies significance of resources.

by das monde on Mon Jun 29th, 2015 at 08:45:30 PM EST
[ Parent ]
The "not very effective population checks" are a clear feature of the industrial revolution era.
implies very clearly that it was not a feature of the preceding epochs.

Which is wrong, as anybody who has even cursory familiarity with European economic and demographic history would know.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jun 29th, 2015 at 11:50:35 PM EST
[ Parent ]
Rlight, that implies that it is not a feature of anything else, anywhere anywhen. And that there was no Europe exceptionality in the last thousand years.
by das monde on Tue Jun 30th, 2015 at 01:06:16 AM EST
[ Parent ]
"The "not very effective population checks" are a clear feature of the industrial revolution era."

Human population has been growing exponentially since very early on ~ the industrial revolution break is in terms of the rate of growth.

And if that is growth burst in a transition from high birth rate / high death rate demographics to low birth rate / low death rate demographics, it may be masking the opposite move. There are a number of "developed" economies which are below replacement, despite having the resources to support population growth ... something which would not happen under the pre- industrial revolution demographics.

It can hardly compare with millennia of humanoid evolution, touching frequently both the boundaries of extinction and overrun of enhabitted environment

I was explicitly referring to one result of that evolution, homo sapiens [sic] sapiens [sic]. Looking at, first, the extensive population explosion over almost all habitats on the face of the earth, then the intensive population explosition which necessitated the development of intensive agriculture, and then the industiral revolution population explosion ... the empirical evidence seems to be that, broadly speaking, given human populations, and given the opportunity, then somewhere or other there is a human population that is exploding.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Wed Jul 1st, 2015 at 08:38:38 PM EST
[ Parent ]
Human population has been growing exponentially since very early on
How early on? Seven billion is just 32 exponential doublings since Adam and Eve. Accepting the Biblical 6000 years, the populations must be growing at a meager 0.38% annual rate. (Wanna assume total K millenia? Take the K-th root 1.023, or roughly divide 2.3% by K.) Since when the humanity broke away from bio-economic limitations for primates?

The industrial evolution rate change was clear, indeed. Perhaps most populations were growing at >1% rate most of the time - but the "exceptional" setbacks are parts of the game, and their probability increases with the population number approaching habitat limitations. As for the modern demographic transition... I would not take it for granted. It is hard to delineate how much emancipation, austerities are natural or labored.

by das monde on Thu Jul 2nd, 2015 at 06:29:26 AM EST
[ Parent ]
(Wanna assume total K millenia? Take the K-th root 1.023, or roughly divide 2.3% by K.)

That's still exponential growth ... since from at the very latest the second diaspora from Africa (as its conceivable that the first diaspora along the southern Asian coasts to Australia was more or less linear growth).

Its not logistic growth if keeps on growing at a growing rate. Since, evidently, logistic growth at a ceiling population that falls short of the population to fill up Africa, Eurasia and the Americas at a hunter gatherer density would have left big chunks of one or more continents empty of humans ... as we see big chunks of multiple continents empty of pretty much any other single species of primate.

Its not logistic growth with a ceiling at hunter gatherer densities worldwide if the growth continues to lead to population densities that require the additional work of settled agriculture.

Discussing how many doublings its been since what some evidence, including genetic evidence, suggests was passage through a demographic bottleneck in southern Africa is not disputing whether or not its exponential growth ... its only about estimating the exponential rate.

As far as demographic transition ... I deliberately phrased it as a potential, rather than a certainty. Its hard to sit writing in Beijing, now at twice the population of my home state of Ohio and still growing, and take it as a certainty.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Jul 2nd, 2015 at 06:47:06 AM EST
[ Parent ]
BruceMcF:
Its hard to sit writing in Beijing, now at twice the population of my home state of Ohio and still growing, and take it as a certainty.

According to Rosling, China is at its peak. What is more, it has a 200 million decline in the pipeline as larger generations die and smaller are born.

Beijing will probably keep growing though, I think capital size is mostly a reflection of concentration of power.

by fjallstrom on Thu Jul 2nd, 2015 at 03:16:14 PM EST
[ Parent ]
Its at a peak, which is going to cause a "restucturing" in many sectors, including the University sector (just read a China Daily article about Tsinghua and Peking University trying to steal each other's top applicants) ...
... but my comment was not regarding current trends and projections, but regarding how certain we can be about how closely the outcome will follow the projection. There are quite a large number of one child families with the child born when the mother is relatively young, and so over the coming decade a Baby Boom of fairly impressive absolute magnitude is feasible, even if social norms lean against it at present.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu Jul 2nd, 2015 at 10:08:55 PM EST
[ Parent ]
The exceptional feature of humans is that they are apt to expand their resource base gradually or frequently. The industrial revolution is just the most momentous example. That allows humans to keep their "exponential" growth rate almost continuously. However, I would be interested to correlate the growth rate fluctuations  with resource "revolutions" and overshots, rises and falls of civilization centers. How direct are estimates of, say, the population estimates of the imperial Rome? Could we detect any demographic transitions then?  
by das monde on Thu Jul 2nd, 2015 at 09:59:52 PM EST
[ Parent ]
World population estimates, according to Livi-Bacci, A concise history of world populations:

10,000 BC - 6 millions
400 BC - 153 millions
0 - 252 millions
200 - 257
600 - 208 (Justinian plague)
1000 - 253
1200 - 400
1340 - 442
1400 - 375 (Black plague)
1500 - 461
1600 - 578
1700 - 680
1750 - 771
1800 - 954
1850 - 1241
1900 - 1634
1950 - 2520
2000 - 6236

das monde:

Perhaps most populations were growing at >1% rate most of the time

Looks that way, yes.

das monde:

but the "exceptional" setbacks are parts of the game, and their probability increases with the population number approaching habitat limitations

But it is not planned or genetic.

by fjallstrom on Thu Jul 2nd, 2015 at 03:14:18 PM EST
[ Parent ]
How evidence-direct are the estimates?

Let's translate the numbers into implied doubling periods:
10000 BC - 400 BC: 2055 years;
400 BC - 0: 556 years;
0 - 200: 7056 years;
200 - 600: minus 1311 years ("decay");
600 - 1000: 1416 years;
1000 - 1200: 303 years;
1200 - 1340: 972 years;
1340 - 1400: minus 253 years;
1400 - 1500: 336 years;
1500 - 1600: 306 years;
1600 - 1700: 427 years;
1700 - 1750: 276 years;
1750 - 1800: 163 years;
1800 - 1850: 132 years;
1850 - 1900: 126 years;
1900 - 1950: 80 years;
1950 - 2000: 38 years.

That is a wild variation. And the industrial "singularity" is staggering, isn't it?

For comparison, the implied biblical doubling period is about 190 years.

by das monde on Thu Jul 2nd, 2015 at 10:11:00 PM EST
[ Parent ]
Post-1500 that's a stable superexponential trend. Prior to that, the resolution is too poor to distinguish between an exponential and a superexponential trend.

I cannot prove, but would not be surprised to find, that a large part of the superexponentiality of the post-1500 is simply an artifact of more fine-meshed census efforts. Getting better at counting almost always means you find more of what you are counting.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jul 3rd, 2015 at 03:56:19 AM EST
[ Parent ]
das monde:
How evidence-direct are the estimates?

Livi-Bacci gets the numbers (except 1950 and 2000, those are from the UN) from Essai sur l'évolution du nombre des hommes on JSTOR.

by fjallstrom on Fri Jul 3rd, 2015 at 05:24:40 AM EST
[ Parent ]
das monde:
Even if testosterone brawls do not look pretty, a woman does want her own man to be exceptional - and able, hunky, testosterone stocked guys do very well for them. That is how the bioeconomic population check works naturally to territorial birds and hierarchical primates: a male represents resources he can control, while females are "disciplined" to choose those with enough chest. If the resources (or able guys) are limited, there are easily fewer females reproducing.

But here is where your imagination limits you. You are describing your view of drivers in a monogamous, patriarchial and patrilinear society. Maybe the Yap society did look like that, but maybe not.

For example if it was not polygamous, patriarchial and patrilinear, then limiting the number of guys does not need to limit the number of married women. If it was matrilinear and patriarchial, the providers in question are the kids uncles and not chosen as sexual partners.

This is why I asked if you had read some study about Yappian society, because otherwise it looks like projection.

Anyway, from the wikipedia article I found The Stone Money of Yap by Cora Lee C. Gillilland from 1975. And though it focuses on the stones rather then the society, it is enough to refute your basic model of population control.

There were several currencies on Yap and (small by later standards) stone money appears to have been exclusive for the chiefs until the 19th century (possibly related to their seats of power). In the early 19th century Palauans appears to have brought stones as tribute to chiefs on Yap. But with European trade focusing on Palau later in the 19th century power shifted to Palau and Yappians who went on European ships to Palau had to pay for the priviledge to cut the stones.

So there does not appear to have ever been any period of lots of young Yappian men taking themselves out of the population by stone trecking.

by fjallstrom on Mon Jun 29th, 2015 at 04:18:56 PM EST
[ Parent ]
Specifics of the whole culture can turn the birth rates either way, surely. But if the culture of a small isolated island favors high birth rates, that will turn out unfortunately within a few generations.

What I suggest is that the Pacific cultures should be geared towards suppressing birth rates, and it must be interesting to analyze their peculiarities in the light of limitations of their habitats. The Pacific cultures are certainly one of the most peculiar in the world - even if the region was settled late.

Jared Diamond considers a few cases in the book "Collapse". In particular (pg 286-293), he describes a small Tikopia island (of just 5 km2) that has been continually inhabited for 3000 years. Several methods of population control were used: contraception, abortion, infanticide, celibacy, suicide, reckless sea voyaging, a momentous war centuries ago. At one point (around 1600 AD) they exterminated all pigs to preserve the soil.

If you are a smart respected fellow living on a small Pacific island, you might wonder at some time how many generations will fill the island beyond the comfort limit for your family. What do you do then? Initiate a wide discussion how the population should be controlled? Ask the elders whether they considered that? Talk with your closest fellows and decide to rig the culture towards sustainability? Use the respect you have and go for a political domination, keeping the population agenda non-obvious?

I downloaded a few text on the Yap islands, though not have time to look through them. But I suspect patriarchy, hierarchy to be present, as they facilitate population limitation pretty inherently and relatively mildly. The economic system (with the big Rai stones at the end of the monetary spectrum rather than firmly exclusive for the chiefs, for what I read) may allow certain degree of meritocracy - as fictitious in practice as it is now globally. The economy effect on population growth is not direct, but I do not see it refuted. The global economy now is just 7 years away from the start of a possibly steady downturn. Sure, the downturn is driven politically, but the motivation behind the politics could be nothing but population numbers.

I can imagine your favorite spectrum of possible society models, without hierarchy and patriarchy as well. The problem is, those models do not address inevitable population limitations neither explicitly nor inherently. Deep down, you would check female fertility, right? Welcome to the club!

by das monde on Mon Jun 29th, 2015 at 09:56:34 PM EST
[ Parent ]
das monde:
I can imagine your favorite spectrum of possible society models, without hierarchy and patriarchy as well. The problem is, those models do not address inevitable population limitations neither explicitly nor inherently.

But they do.

Want fewer kids in a non-industrial society? Give women the power over how many kids they give birth to. Women invest most per kid, and in a non-industrial setting takes a mortal risk for every kid.

Then add long breast-feeding period for each kid to decrease fertility and some knowledge of herbs that induce abortions.

Now you have your hippy stone age society. Not that far from what many believe stone age societies looked like (in the absence of proof I remain agnostic, stone age societies were imho probably very diverse).

The command-control structure that you seem to want to place as a control on population growth is more likely to been the reverse (though as far as I know actual policies to affect population growth is a phenomena of the 19th and 20th centuries).

Hierarchial, patriarchial agriculture societies has tended to have more kids then more loose nomadic societies next door. And over all, that has been a succesful strategy. Outbreed the neighbours, take their land with or without genocide (the expansion of Europeans that is connected to the industrial revolution saw quite a few of those).

But we have entered a new, interesting world. In 1900 the birth rates had come down to reproduction rates in Sweden, England, France and Germany (according to Livi-Bacci). Since then more and more countries has joined the club where the command-control structure needs to bribe women to keep above reproduction rate. Where that will take us remains to be seen.

by fjallstrom on Thu Jul 2nd, 2015 at 03:49:20 PM EST
[ Parent ]
If women education, empowerment decreases the chances that they would pop up babies, then we could be liberally saved. But the exceptions of Israel, red US states show that women empowerment is not sufficient by itself - or that empowerment cracks could strongly work against. The liberal empowerment is evidently more social than genetic phenomenon - but it requires a high level of society resources. What if only Scandinavia can keep this up for a century?
by das monde on Thu Jul 2nd, 2015 at 10:30:23 PM EST
[ Parent ]
education, not "empowerment".  Empowerment is a weasel word.


Experience keeps a dear school, but fools will learn in no other. -- Dr Johnson
by melvin (melvingladys at or near yahoo.com) on Thu Jul 2nd, 2015 at 10:42:49 PM EST
[ Parent ]
No. In Israel, Haredi women are better educated than men (assuming you don't count religious studies). Empowerment is the problem.
by gk (gk (gk quattro due due sette @gmail.com)) on Fri Jul 3rd, 2015 at 11:54:19 AM EST
[ Parent ]
Who was Alexander Hamilton? Militarism, High Finance and Checking the Democracy.
In the later days of the [indepedence] war, the high-finance types that Hamilton saw as critical to the strength and greatness of an independent America were getting worried that the domestic war debt -- multiple tiers of state and federal war bonds they'd invested in -- would never be funded with regular interest payments, and might even be wiped out completely. They weren't wrong. Ordinary people, non-bondholders, were agitating within the states for radically discounting bond payouts to face value and equalizing burdens and payoffs.

What Hamilton, Morris and others wanted to do is to assume all this debt as a federal responsibility -- centralizing the relationship of government to wealth -- and reliably fund it. People writing about Hamilton recently seem unable to face this fact, which he cogently explained: he worked hard (Madison did too!) throughout the 1780's to swell the federal debt, not reduce it. He, Washington, Madison, and Morris were nationalists, and they knew that great nationhood is possible only if it has access to a concentration of wealth. Anyway, before there was a nation, they had no power under the Articles of Confederation to directly tax people in order to fund these bonds, so they tried to get Congress to alter the Articles and pass such a tax, an impost on foreign goods. This proposed impost was only a wedge: after people got used to it, Morris said, Congress could start passing other tax laws, collecting money earmarked for bondholders' interest (tax-free, of course) from people who would never own a bond and "open the purses of the people," as Morris put it, really concentrating wealth upward [...]

But the army's officer class had not been paid what it was promised -- a fact due partly to Morris's preference for paying investors over soldiers! -- and so the nationalists saw a chance of joining military force to wealth and forcing Congress to pass the impost for funding the bondholders. What if the troops simply refused to lay down their arms unless the officers -- and crucially, to Hamilton and Morris -- the bondholders were funded?

by das monde on Sat Jun 27th, 2015 at 03:53:02 AM EST
by das monde on Sat Jun 27th, 2015 at 04:01:35 AM EST
That girl rocks! ;)

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Sat Jun 27th, 2015 at 09:14:04 PM EST
Naked Capitalism is weighting in into the fundamental question:

The Standard Definition of Money is in Error

The standard definition of money is given in terms of its three functions:

    1: Money is a medium of exchange.
    2: Money is a measure of value.
    3: Money is a store of value.

Number 1 is at best misleading. Numbers 2 and 3 are simply wrong, and these things are easy to show. It is also easy to show that this is important.

First, the actual definition of money:

    1: Money is a token, or instrument, of demand, which is exchanged for goods or services. Or simply: Money is demand.
    2: Money is a measure of demand.
    3: Money is a store of demand.

[...] Money is not a store of value. Can it reliably be a measure of value? Economically worthless things may be in much demand, and therefore command a price beyond their value. Yachts, for instance. Economically valuable things may be in little demand, or supplied at prices below their value. Water, for instance. With money, you have demand for these things, at the prices they are offered. But their prices do not reflect their economic value, only the amount of demand, the amount of money, which must be exchanged for them [...]

So because money is demand, or more exactly a token or instrument of demand, it serves as a `medium' of exchange: Because money is not demand for any particular good or service, but is demand for any offered good or service, it may be exchanged for any offered good or service. Money is a medium not in the sense of being an environment for exchange, but in the sense of being a generalized instrument.

To my taste, this mixes up two answers to "Demand of what?". If the demand for anything in general is meant, I do not see that money as we know it is badly necessary.  If the demand for money itself is meant, then we have a self-perpetuating meme-instrument, right. But money is introduced for very tangible purposes - thus the definition should not be self-referential. Demand is just a story that advertisers or consumers themselves tell. The political power aspect is still not present in the new definition.
by das monde on Tue Jun 30th, 2015 at 11:01:22 AM EST
Note that this piece from Naked Capitalism perpetuates an error, in omitting money as a standard of deferred payment from the mainstream definition of money.

If the demand for anything in general is meant, I do not see that money as we know it is badly necessary

If what is meant is effective demand, then the discussion makes sense, but then if we ask what converts "desire" demand into effective demand, then its the willingness of the supplying party to accept the instrument in exchange, and something that people in general are willing to accept in exchange would have exchange value.

In other words, this passage is playing a semantic game:

Money is not a store of value. Can it reliably be a measure of value? Economically worthless things may be in much demand, and therefore command a price beyond their value.

(1) It is supposing "economic value" that is distinct from exchange value, (2) tacitly assuming that all discussion of value involves that "economic value" (3) following from that supposition, it clearly will be the case that there will be things with substantial exchange value and little or not "economic value", and from demonstration of a supposed example, (4) it is concluded that money does not store "economic value", which has been assumed to be the only thing that "value" can mean.

But then, all along, if money is a more or less effective store of value, it is exchange value that it is storing, so conflating all "value" with an "economic value" that is supposed to be distinct from exchange value is begging the question ... building the conclusion into the assumptions.

And the assumption in question is a purely semantic one, that "value" always and everywhere refers to "economic value", and never to exchange value.

But to the extent that a current effectively serves as a store of value, what has always been exchange value that it stores.

So this argument goes much deeper into the past than forgetting everything we learned following the 1930's work of Keynes and Kalecki ... it is forgetting the 1700's and early 1800's work of Smith, Ricardo and Mill.

At least it is forgetting the work of the classical political economists to re-invent the wheel ... to rediscover the distinctions between use value, production value and exchange value, under newly invented language ...

... rather than forgetting the work of Keynes, Kalecki and their followers in order to pretend that the previous falsified theories of the economy had not been falsified.

But money is introduced for very tangible purposes - thus the definition should not be self-referential.

Except that if it is not introduced for economic interaction with an already money using economy, money as such does not seem to have been introduced ... rather, tax accounting with portable instruments is introduced, and money evolves from the portable tax accounting instruments.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Jul 1st, 2015 at 08:59:05 PM EST
[ Parent ]
"But to the extent that a current effectively serves as a store of value, what has always been exchange value that it stores."

But to the extent that a currency effectively serves as a store of value, it has always been exchange value that it stores.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Jul 1st, 2015 at 09:00:24 PM EST
[ Parent ]


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