Myths of Capitalism

Barter myth

The role of barter is often brought up in capitalist mythology to try to convince people that there is an underlying progression of human history and whatever follows something must intrinsically be better than the preceding period. So that whatever it’s flaws, capitalism must be better than what was before. The story goes that before money existed there was barter, this is in spite of the fact that there is no evidence in over 5,000 years of recorded history of this being a main mode of exchange between people anywhere.1

This myth lures people who see history as a linear and continuous process, where there is no regression and ceaseless progress on to something ‘better’ than before. When periods such as the Late Bronze age collapse2 and the European Dark Ages3 demonstrate the opposite and for most people their knowledge of the world doesn’t rival even what the ancient Greeks philosophised about; this view is surprising.

As mentioned there are no records of barter being the primary exchange mechanism of any society, just some instances when groups of strangers interact. “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money,” penned the anthropology professor Caroline Humphrey.4 Some of the first recorded texts known are records of money and debt from Sumerian cuneiforms from 3500 BC. The accounting of trade mainly consisted of records of numbers of sheep, goats, cattle and quantities of grain; denominated by silver, barley and ale5. The silver shekels, talents and minas were units of silver that could be exchanged with the equivalent amount of barley at the temple. Which shows using precious metals as units of measurement was a well developed idea by then.

The anthropologist David Graeber claims that debt and credit historically appeared before money, which itself appeared before barter6. By also observing ‘primitive’ societies to get an inkling of what life could be like before widespread trade developed, it can be seen that a lot of exchange in these societies follow gift economies or other credit (in the more general sense) processes.

Despite being supported by historic evidence (or lack of evidence to the contrary), the opposite narrative is usually found within the public consciousness. Why would this be? Possibly due to the need of capitalism for you to think of societies from the past as being uncivilized, irrational and simpler. But when you do look at texts from the early Sumerian period, you can see that most of the more general ideas that permeate modern culture (laws, medicine, poetry, education etc…) is already present there.7 So this is obviously a misconception or even an intended deception.

This myth is at the heart of Adam Smith’s imagining of primitive societies and the development of capitalist economics. It also has parallels what other economists do trying to imagine economies that are purely credit or purely money based. These speculative paths of thought on commodity money, credit money and fiat money systems; while interesting, are again just fabrications of reality and limited. Fanciful theories have been conjured up on how prices could be defined by the amount of money in existence (quantity theory), on whether the real economy has some ‘natural’ rates of profit interest for particular industries or the converse as with Keynes’ General Theory stating this rate is a purely monetary phenomenon.

Some tried to combine different models, such as Wicksell who presented a pure credit system model as “a precise antithesis to the equally imaginary case of a pure cash system, in which credit plays no part whatever”8. The strategy for developing applied monetary theory, he suggested, was to regard actual monetary systems… as combinations of these two extreme types. If we can obtain a clear picture of the causes responsible for the value of money in both of these imaginary cases, we shall, I think, have found the right key to a solution of the complications which monetary phenomena exhibit in practice. Wicksell has very little to tell us about how to go about the task of fashioning a viable synthesis from his two antithetical models9.

Homo sapiens have been around for around 300,000 years so there may have been a point in time where barter was the main method of exchange for commodities. But without any evidence, it is purely conjecture. Plus before the development of capitalism, there was feudalism, so nothing like barter. Indeed the barter myth is one of the most pervasive stories concocted by the capitalist faith, their own Genesis story.


Myth: Capital is Well-Defined

Monetary system

Free Market Drivel

Rational Actors

Private Property

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