Libertarians’ History Problem 2

(breaking this into multiple posts because of trouble posting)
Part 1

How did private property begin?

Matt Breunig quotes the Libertarian economist Brian Caplan’s attempts to explain how private property first came to be:

“There are many clear-cut cases of righteous acquisition; once we understand them, we can use them to analyze fuzzier cases. What are some clear-cut cases? An individual living alone on an island grows some food, builds a house, carves a sculpture, or quarries some rock. If someone else shows up on the island, the new arrival seems morally obligated to respect that property [presumtively]. This isn’t just ‘seems to me’ or ‘seems to libertarians’; it’s “seems to almost everyone other than self-conscious socialist philosophers.” Other clear-cut cases: If two people mutually agree to pool their resources and effort, then split the rewards according to an explicit formula – whether 50/50, 90/10, or whatever. Or: I pay you ten pounds of food to build me a new hut.”

If you flatly insist that a person who builds a hut on a desert island isn’t morally entitled to exclude a new arrival from sharing it, there’s little left for me to say. Otherwise, we can build on these straightforward cases to credibly justify everything from real estate development to malls to multinational corporations. Doesn’t any big economic project in the modern world ultimately contain at least a small dose of theft? (i.e., doesn’t every skyscraper have at least one stolen brick in it?) Very likely, but in the real world, this rarely turns out to be a serious moral problem.

How Did Private Property Start? (Jacobin)

Let’s pull that apart bit by bit.

Reading it, I am immediately struck by the following: Caplan’s argument is ahistorical; it is simply a thought experiment. It does not make recourse to any actually documented historical facts or evidence that we know of. Given that property rights are at the very heart of libertarian thought, how can they be understood without recourse to actual history? How can it be justified? Perhaps this is the reason why “mainstream” economic thought has mostly abandoned historical inquiry and instead focused mainly on justifying currently existing conditions using sophisticated mathematical models and abstract formulas. Property rights, inequality and asymmetrical power relations are simply taken for granted as “natural” or “customary” and explained away or never seriously questioned (“…in the real world, this rarely turns out to be a serious moral problem.”).

There is a good analogy here with the libertarian explanation for the creation of money. That explanation is also a deductive thought experiment without recourse to any historical or anthropological data.

Libertarians posit an imaginary ahistorical society—again composed of isolated individuals pursuing specialized occupations—engaging in repeated barter transactions for everything they need which they cannot produce themselves. To reduce the transaction costs, they somehow—and without recourse to any centralized governing authority—come up with an item that has value not because it is intrinsically valuable, but because it can be used for exchanges, and they use this instead for trading in place of constantly bartering for things. Everyone agrees to accept this item in exchange. For various reasons such as scarcity, divisibility and durability, various metals became chosen as the standard, especially gold and silver. These metals became “real” money used by traders in markets. Later, as paper becomes more common, credit appears, representing gold and silver stored in a bank vault somewhere. Government then comes along and skims off (i.e. steals) a portion of this wealth from the producers peacefully engaging in mutually beneficial transactions in “free and open” markets which formed spontaneously without government aid or sanction. Or so the story goes.

The problem with this story is that it never actually happened! It, too, is ahistorical. This article in the Independent Australia summarizes the problems with this story, and then describes the evidence for how money was actually created based on the historical  and anthropological evidence:

According to the myth, money evolved naturally, without the intervention of power institutions of any kind. In this tale, which I won’t repeat here, governments enter the story of money rather late on, eventually messing up a naturally stable system of commodity money. The abandonment of the gold standard by the USA in August 1971 supposedly marked the final betrayal by modern governments of a naturally stable system which had no need for governmental institutions at all. Governments confiscate taxpayers’ money. Governments create inflation and instability. Governments are generally bad news. So goes the story.

The thing is that there is apparently no evidence that this is true. None at all.

The prominent anthropologist, Caroline Humphrey, is very clear:

‘No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there has never been such a thing.

The monetary historian and one-time adviser to the Secretary of State for Wales, Glyn Davies is equally clear:

‘On one thing the experts on primitive money all agree, and this vital agreement transcends their minor differences. Their common belief backed up by the overwhelming tangible evidence of actual types of primitive moneys from all over the ancient world and from the archaeological, literary and linguistic evidence of the ancient world, is that barter was not the main factor in the origins and earliest development of money.’

In the case of ancient Mesopotamia, in particular, there are good reasons for believing that what became the social institution of money developed in a different way entirely.

The development of farming allowed for the emergence of religious and governmental institutions. Soldiers, administrators and priests needed to be provisioned, and accounts had to be kept of how this was being done. Tributes and taxes had to be raised in order to make this possible. The earliest sense in which money existed was as a way of recording the value of such tributes and taxes. The earliest unit of money as a scoring system may have been weights (or shekels) of barley, in places like Uruk, at least 5,000 years ago and probably well before that.

Not that taxes had to be paid in barley. They were just valued in these units. You could pay your taxes or tributes in a wide variety of items that the temple community could find a use for, as anthropologist David Graeber explains in his Debt: The First 5,000 Years.

The invention of government, accounting, taxation and money appear to have created early markets, specialisation and trade, and even credit and finance. Money as a thing was whatever you needed to obtain to pay your taxes. Governments were then able to spend by issuing token money which could be used in the future to pay taxes back to the government. Perhaps clay tokens were the earliest form of token money and, in some ways, not all that much unlike a modern $50 note.

Running out of money, budget emergencies and other neoliberal myths (Independant Australia)

I’m seeing a consistent pattern here. Libertarian thought tends to not be based on any serious inquiry into historical contingencies, or on empirical data, but on hypothetical thought experiments. And these thought experiments tend to be highly sympathetic to the status quo. Thought experiments are not necessarily bad–after all, scientists use them all the time to help formulate hypotheses. But when they contradict everything we know about history, anthropology, archaeology, sociology and psychology, well then, maybe we should stop taking them seriously. For example, there’s this from Caplan:

“An individual living alone on an island grows some food, builds a house, carves a sculpture, or quarries some rock. If someone else shows up on the island, the new arrival seems morally obligated to respect that property.”

The thing is, the above scenario never happened either! The lone individual has never existed! A hypothetical society of one has never existed outside of novels and films about imaginary castaways (and libertarian thought experiments). How can you rely on an imaginary state of nature which never existed in history to justify your position? It’s similar to the absurd Hobbesian concept of solitary individuals “choosing” to unite and form a government ex nihilo based on shared interests. As Francis Fukuyama writes:

We might label this the Hobbesian fallacy: the idea that human beings were primordially individualistic and that they entered into society at a later stage in their development only as a result of a rational calculation that social cooperation was the best way for them to achieve their individual ends…But in fact it is individualism and not sociability that developed over the course of human history. That individualism seems today like a solid core of our economic and political behavior is only because we have developed institutions that override our more naturally communal instincts…

Everything that modern biology and anthropology tell us about the state of nature suggests the opposite: there was never a period in human evolution when human beings existed as isolated individuals; the primate precursors of the human species had already developed extensive social, and indeed political, skills; and the human brain is hardwired with faculties that facilitate many forms of social cooperation…Human beings do not enter into society and political life as a result of conscious, rational decision. Communal organization comes to them naturally, though the specific ways they cooperate are shaped by environment, ideas, and culture.
[Fukuyama; The Origins of Political Order, pp. 29-30]

Just like governments, property relations must have arisen in a social milieu, and speculating about hypothetical Robinson Crusoes is not credible scholarship. Why not at least make a serious attempt to understand what actually happened? Perhaps it’s because it would not reflect so kindly upon the thesis you’re trying to justify. It seems like backward reasoning to me: starting with the conclusion and coming up with ways to justify it.

Matt Breunig makes a similar point:

The problem with the case is that, by clearing out all other people from the island, it eliminates the liberty destruction that makes property acquisition so obviously problematic. What if instead of one individual washing up on an island, ten of them do? Then one of them asserts that certain resources and land areas are his and that those who do not respect that claim will be violently attacked? This is more analogous to a real-life case of property acquisition where there exists more than one human being. It also clearly presents the problem of property acquisition rather than trying to get around it by creating a hypothetical society of one.

Similarly, Caplan’s hypothetical agreement between more-or-less equal individuals to divvy up resources along some sort of predetermined and mutually-agreed-upon formula (“…whether 50/50, 90/10, or whatever…”) is inconsistent with what we observe. It is more characteristic of strangers bartering in modern-day market economies than any ancient or traditional societies that we know of:

“Other clear-cut cases: If two people mutually agree to pool their resources and effort, then split the rewards according to an explicit formula – whether 50/50, 90/10, or whatever. Or: I pay you ten pounds of food to build me a new hut.”

This scenario assumes a hypothetical closed transaction among relative strangers with no ongoing social interactions between them where each party expects to walk away roughly equal. We know that this, like the hypothetical Robinsonade society of one, is not what actually happened in the past. Instead, exchanges were embedded in a wider social fabric without explicit reckoning of who owed what to whom. The unspoken laws of reciprocity determined that every individual could be secure in the knowledge that their labor and goods would be reciprocated at some point in the future by others, with everything balancing out in long run.

What actually happens in practice is that when individuals knew each other, exchange was based on reciprocity; a gift would be given in the anticipation of it being reciprocated in the future (when they don’t know each other there is barter, but in such situations money cannot emerge because cowrie shells might be important in one society, and gold in another).

One of the most famous stories illustrating the role of reciprocal exchange has concerns an anthropologist who after spending some time with bushmen, gave one of them his knife. When visiting the group some years later, anthropologists discovered that the knife had been owned, at some point in time, by every member of the community. The knife had not been communally owned, its ownership had passed from one person to the next and its passage was evidence of a social network in the community, just as the motion of planets is evidence of an, otherwise invisible, gravitational field.

Lady Credit (Magic, Maths and Money)

Karl Polanyi makes the same point in The Great Transformation:

Ceremonial display serves to spur emulation to the utmost and the custom of communal labor tends to screw up both quantitative and qualitative standards to the highest pitch. The performance of acts of exchange byway of free gifts that are expected to be reciprocated though not necessarily by the same individuals a procedure minutely articulated and perfectly safeguarded by elaborate methods of publicity, by magic rites, and by the establishment of “dualities” in which groups are linked in mutual obligations—should in itself explain the absence of the notion of gain or even of wealth other than that consisting of objects traditionally enhancing social prestige.

…For it is on this one negative point that modern ethnographers agree: the absence of the motive of gain; the absence of the principle of laboring for remuneration; the absence of the principle of least effort; and, especially, the absence of any separate and distinct institution based on economic motives…[pp. 48-49]

Here’s anthropologist David Graeber describing the role that social relationships play in  reciprocity:

[Sociologist Marcel] Mauss didn’t really think of everything in terms of exchange; this becomes clear if you read his other writings besides ‘The Gift’. Mauss insisted there were lots of different principles at play besides reciprocity in any society – including our own. For example, take hierarchy. Gifts given to inferiors or superiors don’t have to be repaid at all. If another professor takes our economist out to dinner, sure, he’ll feel that he should reciprocate; but if an eager grad student does, he’ll probably figure just accepting the invitation is favor enough; and if George Soros buys him dinner, then great, he did get something for nothing after all. In explicitly unequal relations, if you give somebody something, far from doing you a favor back, they’re more likely to expect you to do it again.

Or take communistic relations – and I define this, following Mauss actually, as any ones where people interact on the basis of ‘from each according to their abilities to each according to their needs’. In these relations people do not rely on reciprocity, for example, when trying to solve a problem, even inside a capitalist firm. (As I always say, if somebody working for Exxon says, “hand me the screwdriver,” the other guy doesn’t say, “yeah and what do I get for it?”) Communism is in a way the basis of all social relations – in that if the need is great enough (I’m drowning) or the cost small enough (can I have a light?) everyone will be expected to act that way.

What is Debt? – An Interview with Economic Anthropologist David Graeber (Naked Capitalism)

I’m sensing a pattern here. What does it mean that libertarian arguments are dependent on hypothetical scenarios that fall apart under empirical scrutiny? Does it not mean that they should be discarded? It is possible that these views continue to be the economic and political orthodoxy only because there are a lot of special interests promoting them? Maybe this is behind the disturbing trend of claiming all of the humanities have been taken over by “Marxists.” It’s a good way to shut down the debate when the facts are not on your side.

Part 3

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