Money, Markets, and the State: Robert Breedlove & Natalie Smolenski Refute Anthropologist David Graeber’s Theory of Money.

Is it a store of value? Is it a medium of exchange? Is it a unit of account? People tend to develop deeply entrenched, almost tribal points of view on these questions. This debate was initially sparked when journalist Michael Casey quote tweeted Vitalik Buterin, saying, “All you crypto gold bugs need to listen to Vitalik, because money was a medium of exchange long before it was a store of value.” Nick Szabo responded by arguing that historical and ethnographic evidence shows ample documentation of money being used as a store of value long before anything resembling modern currency existed. Someone then asked him, “What do you think of Graeber’s theory of money as debt?” Szabo responded that Graeber was working from a very narrow definition of money, which caught Graeber’s attention. The two then engaged in a back and forth debate on Twitter, with several others jumping in. I followed this debate in real time, and at the end of the day, the disagreement seemed to revolve around whether money was fundamentally a store of value. Graeber appeared hostile to the idea that it was. So, I decided to read his work closely to understand his approach to value. Graeber has two major works on value. One is his 2001 book, “Toward an Anthropological Theory of Value”, which Elaine cites in the Twitter debate. She points out that Graeber himself describes money as a store of value, though he does not systematically elaborate a theory of money until “Debt: The First 5,000 Years”. That is the book I focused on in this paper, examining his argument in depth. At one point, Graeber claims that money is, in effect, nothing more than a unit of account. This is likely what led to Szabo’s contention that Graeber was operating from a narrow definition of money. Indeed, such a claim suggests a particularly restrictive narrative. However, Graeber goes further. He fully subscribes to the credit state theory of money. Despite his clear hostility toward economists he repeatedly asserts that they are “dead wrong about everything” and questions why anyone takes economics seriously his theory of money draws from three major economists: 1. Alfred Mitchell Innes, who developed the credit theory of money 2. Georg Friedrich Knapp, who wrote “The State Theory of Money” 3. John Maynard Keynes, who was responsible for translating Knapp’s work into English and cited it at the beginning of his “Treatise on Money” to argue that all money is state money. Graeber subtly builds his argument throughout his work, leading to a moment where he asserts: “A coin is effectively an IOU.” He continues, “Conceptually, the idea that a piece of gold is really just an IOU is always rather difficult to wrap one’s head around, but something like this must be true because even when gold and silver coins were in use, they almost never circulated at their bullion value.” This claim is highly questionable for several reasons. First, gold, when used as money, is a self settling mechanism , not an IOU. When someone pays with gold, they are not deferring settlement but rather finalizing the transaction immediately. Second, Graeber seems unaware of the concept of monetary premium. The idea that different use cases for the same commodity can result in different market valuations. The fact that gold coins might circulate at a different value than raw gold does not prove that gold is an IOU; rather, it reflects market pricing based on various factors. This debate highlights the need for greater dialogue between anthropologists and economists. Each field has valuable insights into the concept of value, but they often speak past one another. On Bridging Economists and Anthropologists I believe you mentioned offline that someone , perhaps an anthropologist , once said that economics is essentially the “anti-anthropology.” Yes. That was Marshall Sahlins, arguably the most influential anthropologist of the 20th century. He passed away recently, but a few years ago, he wrote a paper in which he stated, “Economics is the anti anthropology.” Sahlins was Graeber’s mentor, dissertation advisor, and longtime intellectual collaborator. They co-authored books together and were in deep intellectual dialogue. Both Sahlins and Graeber viewed economists as apologists for capitalism, which they saw as inherently evil. From their perspective, economics as a discipline is pure ideology rather than a producer of legitimate knowledge. From my point of view, this is obviously incorrect. There are ideological economists, just as there are ideological anthropologists. They simply have different methodological approaches to studying value. Instead of dismissing each other outright, these fields should be synthesized. Which Economists Were They Criticizing? Were Sahlins and Graeber specifically targeting Keynesian economists? Or Austrian economists? Because Austrian economists, for example, argue that all action is an expression of value. I’m not sure what a Keynesian definition of value would be, though most economists today accept that value is subjective. So who, exactly, were they referring to? That’s a great question. Mostly, they were targeting neoclassical economics, which is often caricatured as a discipline obsessed with building abstract models that fail to predict real world outcomes. However, even Keynesian and other economists draw on neoclassical traditions. What’s interesting is that Graeber and Sahlins actually had a lot in common with Austrian economics, but they never engaged with Austrian economists because they saw them as ideological enemies. Since Austrians advocate for free markets and individual liberty, and anthropologists tend to be skeptical of markets, they dismissed Austrian ideas without reading them. For example, Graeber outright rejects the idea of “free markets,” claiming that all markets are state created. He argues that markets emerged primarily because states issued money to fund wars. Graeber was an anarchist, but paradoxically, he wanted to abolish the state in order to abolish markets. Ironically, Graeber’s 2001 book develops an action oriented theory of value, which is quite similar to Austrian economics. However, because of his ideological opposition to markets, he refused to engage with thinkers like Mises, Hayek, or Menger. Instead, he focused on Keynesians and neoclassical economists, despite frequently caricaturing their positions. Graeber’s View of Money and Social Consensus In “Debt: The First 5,000 Years”, Graeber argues that money is a creature of the law, and law is social consensus. Does this mean he believes that only the state can establish social consensus, and that the state then establishes money to create markets? Yes. From Graeber’s perspective, true money is issued by a state. He argues that money did not enter human history until coinage appeared, which aligns with some other anthropologists, like Keith Hart, who claim that money is coinage. The problem with this view is that it conflates two distinct concepts: 1. The legal definition of money (what a state designates as legal tender for settling debts) 2. The intrinsic value of a commodity (such as gold, which has been valued across cultures for millennia) Keith Hart attempted to reconcile this contradiction by arguing that money must be both state issued and market valued. However, this isn’t a coherent theory, it tries to be two things at once without fully accounting for either. Graeber takes an even stronger stance: he denies that commodities have intrinsic value altogether. He claims gold has no intrinsic value, which is simply false. Gold has clear use value. It is beautiful, does not tarnish, and is used for adornment and in technology. Anything with a market price, by definition, has use value. Social Consensus Without the State Graeber’s claim that only the state can create social consensus is demonstrably false. The internet itself proves otherwise. Protocols like HTTP, TCP/IP, and blockchain consensus mechanisms exist without state enforcement. Other examples include: The calendar, which existed before the state and allows coordination Common law, which evolved through precedent rather than central authority Islamic law, which historically provided a decentralized legal framework for trade This highlights a broader issue: modern anthropologists struggle to imagine non state forms of social organization as positive forces.