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Heads or Tails?

Two Sides of the Coin

Author(s): Keith Hart
Source: Man, New Series, Vol. 21, No. 4 (Dec., 1986), pp. 637-656
Published by: Royal Anthropological Institute of Great Britain and Ireland
Stable URL: http://www.jstor.org/stable/2802901
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andfromthebottomup('markets').Itisthusbotha token
and a commodity with a price. Most economic theoriesof money focuson one extremeto the
exclusionof theother.The currentideologicaldebatebetweenKeynesiansand monetarists leads
to unnecessarilywide swingsin publicpolicy. It is timeforanthropologists too to abandonour
predilectionforpolarisedargumentwhen makinga comparativestudyof institutions such as
money.The articlehas threemainsections.The firstlocatestheproblemofmoneyincontempor-
aryeconomichistory,showinghow theriseofEurodollarbanking,barterandplasticcreditcards
is undermining statecontrolofmoneyin theindustrial societies.The secondtracestwo influential
strandsin thehistoryof westernmonetarytheory,linkingthemto the contrastin nineteenth-
centuryeconomic thoughtbetweenEnglishutilitarianism and the Germanromanticreaction.
These strandsare broughttogetherin thework of Keynes,whose ideas dominateour century.
The thirdsectionappliesthesefindingsto a reanalysisof Malinowski'sTrobriandethnography,
suggestingthatthecommodity/token oppositionhas relevancefortheorganisationof exchange
there.The ethnography ofstatelesssocietiesaddsan essentialdimensionto oursearchforeffective
understanding of theforcesshapingthemodernworld.

The firstmodern ethnography,Argonauts of the westernPacific, told of a

complicatedexchangeeconomywhichfunctioned withoutmoneyand markets
as we know them. Malinowski used his findingsto beratethe insularityof
contemporary models of 'economic man', in effecttheideologywhich repre-
sentsan imageofwesterncivilisationas universal.We, hissuccessorsin British
social anthropology,have retaineda penchantforjuxtaposingexoticfactsand
westernfolktheories.But Malinowski'sexampleis deficientin severalways.
First,we should be more explicitlyaware of the concreteconditionswhich
stimulateour interest in some abstractproblemsratherthanothers.This means
askingwhat it is in theworld as we experienceit thatinformsour researches,
whetherdirectly indirectly.Second, it is no good takingpotshotsat vulgar
reductionsofeconomicideas,whentheintellectual historyofwesterneconomic
thought is itselfextremely plural,even A constructive
contradictory. readingof
thatintellectual historymight have servedMalinowski's ethnographicanalysis
betterthanthestrawmanhe choseto attack.Finally,whenhistoricalawareness
and a more sophisticatedintellectualapparatusare combinedwith our disci-
pline's standby of ethnographicfieldwork,the resultinganthropological

*The MalinowskiMemorialLecture,I986

Man (N.S.) 21, 637-56

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analysis offersa more secure foundationfor criticalunderstandingof the

worldin whichwe live.
As a syntheticvehicle for this task I have chosen the topic of money,
specificallyhow we are to assess its changingrole in exchangeeconomiesas
diverseas theTrobriandIslanders'and our own.1 Malinowskiinsistedthatthe
idea of money as 'currency'should be limitedto that universalmeans of
exchangeand standardof value whichis typicallyfoundin theformof 'coin of
therealm'.2Mauss tookhimto taskforthis,claimingthatMelanesianvaluables
should also be thoughtof as a sortof money.3In our own day, cash is rapidly
beingdisplacedby plasticcreditcards;and computerisedbarternetworkshave
arisenas alternativesto marketsbased on money.Ifwe want to makesenseof
such phenomena,it will not do to cling to a restrictive definitionof money
which explains more the preindustrial roots of modern civilisationthan its
continuingevolutionand potentialities.
The monetarytheoriesof economists ought to offera more effective
framework forthisanalysisthanpopularbeliefsandvernacularexpressions.But
a cursoryinspectionof the metaphysicsof monetarytheoryrevealsa stateof
affairsmoreakinto theologythanscience.4 Here we findtwo broadcamps,each
fixingon one side of money to the exclusion of the other and claiminga
monopoly of truthon the subject. The currentlabels for these camps are
'Keynesians'and 'monetarists';buttheyhave existedunderothernamesat least
sincetheEnlightenment and tookdefiniteformin thenineteenth century.
Their relativepositionsare summarisedin my lecturetitle.Look at a coin
fromyourpocket.On one sideis 'heads'-the symbolofthepoliticalauthority
whichmintedthecoin;on theothersideis 'tails'-the precisespecification ofthe
amountthe coin is worthas paymentin exchange.One side remindsus that
statesunderwritecurrenciesand thatmoney is originallya relationbetween
personsin society,a tokenperhaps.The otherrevealsthecoinas a thing,capable
of enteringinto definiterelationswith other things,as a quantitativeratio
independentof thepersonsengagedin anyparticulartransaction.In thislatter
respectmoneyis likea commodityand itslogic is thatof anonymousmarkets.
Heads and tailsstandforsocial organisationfromthe topdown and fromthe
bottom up, epitomisedin moderntheorybythestateandthemarketrespectively.
Most theoriesof moneygive priorityto one side over theother.It is as if,not
contentwith exploringthe ambiguous unityof heads and tails, politicsand
markets,economistsfeltcompelledlike gamblersto toss the coin-heads or
tails?-and, havingoptedfortheone thatlandsup, thendeniedtheexistenceof
the otherside, except in the minds of devil-worshippers.This Manichaean
medievalimpulseis deeplyembeddedin moderneconomic thought,and our
centuryhas seenthetwo sidesinflated intoan ideologicalstrugglebetweenstate
socialismand thefreemarketthatcould be thedeathof us all. Malinowskiwas
partofthisruinouspolarisation;and,ifwe areto do betterin future,anthropol-
ogists have to be capable of comparingtheirexotica with a more profound
pictureofideas and realitiesin themodernindustrialworldwhichsustainsus.
Conventional economic reasoningfails to enlightenus because it is so
unremittingly one-dimensional.The coin has two sides for a good reason
-both are indispensable.Money is at the same time an aspect of relations

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betweenpersons and a thingdetachedfrompersons. If we forgetthis, we

encouragesocial disastersand perpetuatethewild oscillationbetweenextremes
which has dogged monetarypolicy over the last century.For too long now
economic anthropologistshave been, at best, brokersbetweentwo separate
disciplines.Today's effortis an act of bricolage
froma vision of the anthropologistas a handymanwho can help repairthe
damagedone by professionals.

Themodern evolution
This is a time of unprecedenteddynamismin the form and institutional
organisationof money. Here I will offersome briefnotes indicativeof the
transformation we arelivingthrough.5Most of us have accessto fiveformsof
money-coins, banknotes,cheques, savings accounts and plastic. The rela-
tionshipbetweenthefiveis inherently unstable.The traditionalmoneyform,
known as 'specie'-i.e. coins containingprecious metalsequivalentto their
nominalvalue-now survivesonly in a specialisthoarders'marketforgold
coins. For two and a halfmillenniatheonlyalternative to speciewere notesof
credit,which took thepreciseformof bills of exchangein Europe about 6oo
yearsago. Coins werefirstmass-producedin Britainaroundi 8oo. Then, in the
second half of the nineteenthcentury,nationalpaper money emerged as a
widespreadsubstituteforboth specie and promissorynotesissued by private
banks. Base metalcoinagewas introducedafterthesecond world war, so that
both paper and metal versionsof the nationalcurrencynow became equally
worthless,beingdistinguished largelyby functionratherthancost of produc-
tion. In the meantime,privateindividualshave continuedto issue cheques
againsttheirbank accounts;and thissource of personalliquidityhas recently
been augmentedby the phenomenonof plasticcreditcards. It is temptingto
predictthatbeforelong thisdecentralised formof moneywill also be national-
ised, perhaps throughan adaptationof existingarrangementsfor national
insuranceand taxation.
In thecourseof thesedevelopments,thestatemonopolyof moneyhas been
subjectedto pressurefrombothabove and below, fromtheinternational sphere
of bankingand commerce,as well as frominternaldevolutionof controlover
liquiditywithinthe nationaleconomy. I wish to take these two aspects of
modernmonetaryinstitutions in order.
Galbraith(I975) remindsus oftheinsubstantial basis ofbanking.Banks take
moneyfromone partyand giveitto another;theythentryto persuadeboththat
theystillhaveit. The realreservesofwealthsupportinga bank'spromiseto pay
arenormallyminusculeand,in thecase ofnationalbanks,mostlyillusory.Seen
fromthispointof view, moneyis foundedon credit-it is a token,symbolof
somethingintangible.The principlesof financeare not those of commodity
exchange;and it could be arguedthatduringthe modernperiod bankinghas
assumedan increasingly dominantrolein themanagementof economicaffairs
at all levelsfromtheinternationalto thedomestic.
During the nineteenthcenturycreditwas based on the convertibility of

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money to gold, thereby,it was hoped, subordinatingthe scope forfinancial

manipulationto theneedfora stablemeansofinternational exchange.6 The gold
standardbrokedown betweenthetwo world wars; and it was replacedby the
agreementknown as BrettonWoods just over fortyyears ago. This was a
systemofstate-guaranteed moneywithfixedparityexchangeratesanchoredon
the reservecurrencies,principallythe dollar and sterling.In other words,
international tradewas based on confidencein theworld's strongesteconomy,
thatof theUnitedStates.BrettonWoods was underminedby highUS balance
ofpaymentsdeficitsat thetimeoftheVietnamwar; and international monetary
criseswerealreadypredictableannualeventsby theend ofthe I96o's.7
The OPEC oil priceincreaseand the attendantconvulsionsof world com-
moditymarketsin I973/74 put paid to thefixedparitysystem;and the I970's
saw a shifttowardsacceptanceofa relatively freemarketin currencies.This was
a timeof unprecedentedglobal inflationrates,fuelledby progressivedevalu-
ation of the dollar, the oil trade'sunitof account. Fear of runawayinflation
prompteda decisiveshiftin westernmonetarypolicy away fromKeynesian
techniquesofstatemanagementto whatwas thoughtto be thesafergroundofa
freemarketin money.The nextturningpointwas I979, whenOPEC soughtto
recoup the erosionof its dollarearningswith a second major pricerise. This
triggeredoffa run on the dollar which was met by a rapid escalationof US
interestratesto over 20 per cent. The United States remainsa magnetfor
free-floatingcapitalandthisdeflects theworstdomesticeffects ofa regimebased
on budget deficitsand high interestrates. The recentcollapse of oil prices
introducedanothershockto a worldeconomyalreadysuffering fromdamaged
confidenceand lower growthrates than duringthe boom years of Bretton
The lasttwo decadeshave also seen thefloweringof theEurodollarbanking
system. In consequence an incalculableproportionof all the currencyin
circulationis now beyond the controlof the stateswho issue the money-in
offshore bankingtransactions. Afterthesecondworldwar theRussiansand the
Chinese, legitimatelyfearingseizureof theirNew York dollar depositsby a
hostile US government,transferred the money to London and Paris. The
financialcrisisoftheearlyI970's led to a morewidespreaduse ofthisprocedure,
withLondonemergingas themaincentrefor'Eurodollarbanking'-i. e. dollars
held by a non-resident of theUS, usuallyin theformof a depositwitha bank
Offshorebankinghason averagea one percent.edgein theinterest ratesitcan
affordto offer,thisbeingthecost of keepingtheminimumdepositrequiredas
securityby law whenbanksaresubjectto nationalregulation.The oil pricerise
depresseddemandforloans in theindustrialcountriesand generatedan OPEC
financialsurplusmuch of which foundits way into the offshoresystem.In
consequencetheThirdWorldbecamethetargetofa massivesalesdriveforloans
by privatebanks.9A decade latertheprospectsforThird World development
are generallybleakand offshore investorsmustbe wonderingwhattheirpaper
assetsare reallyworth.Whatthenis thebasis of theEurodollarbanks' credit?
Not commoditiesnorstatepower,to be sure.Theircreditis based on thevalue
of outstandingloans. Defaulton any major loan would call into questionthe

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creditworthiness ofall theoffshorebanks,whichareofcourseoftensubsidiaries

of thedomesticbanks-Barclays, Chase Manhattan,CreditLyonnaisetc. The
banksinventedwhattheyhope is a formofinsuranceagainstdefault.Each loan
is farmedout to a consortiumofup to 200-300 banks.Ifthatloan weredeclared
in default,the banks would lay claim to any foreignassets of the country
involved,includingall its exports.More important,theircustomersmightbe
stampededintoa collectiverunon thebankwhichwould makethebankfailures
oftheDepressionyearsseemtrivialin comparison.It is notsurprising thenthat
In thisinherently unstablesituation,moneyitselfhas become a commodity
tradedin a purelyspeculativeway. The totalvolume of money sales is now
vastlyin excess of theamountneeded to financeinternational trade.Creditis
groundedneitherin real values nor in state-mademoney. On the Chicago
MercantileExchange moneyis tradedalongsidepork-bellyfutures;10 and the
continuingworlddepressionpilesup idle moneycapitalto fuelan endlessround
of speculativesurges.While mostpeople, ostrich-like, hope thattheproblem
will go away, vastfortunes aremadeby thosewho keep theireyesopen and the
international monetarycrisisdeepens.
Nor is money standingstill on the home front.The virtueof traditional
money forms-coinage and laterbanknotes-was thattheycould be trans-
portedeasilyand spentanonymouslyin a wide varietyof commoditytransac-
tions.Sincetheirvalue was objective,therewas no need to introducequestions
concerningan individual'screditworthiness. Moreover,complexnetworksof
exchange could be articulatedwithoutrequiringthe simultaneoustwo-way
transfer of commoditiesassociatedwith bartersystems.A further featureof
conventionalmoneyis closelylinkedto theactivitiesofthosepreindustrial states
who did mostto promote'coin oftherealm'.Governments havelong depended
on cashtransactions fortheirown sourcesofliquidity.Taxationand marketsare
symbiotic.Internalrevenuestoday are stilllevied almost exclusivelyon the
exchangeof goods and servicesformoney.But thetechnicaland institutional
underpinnings of state-mademoneyin its classic formhave been eroded by
postwardevelopmentsin telecommunications and computers-the so-called
'information revolution'.11
It is now easierto evade statecontrolat all levelsoftheeconomy;and money
has becomeless anonymous,morepersonalised.One signof thefirsttendency
is therevivalofbarterin theindustrialeconomies.12 Multinationalcorporations
swap bulk quantitiesof unsoldcommoditiesthroughbrokers:thus,forexam-
ple, an oil companyoffloadsioo,ooo gallonsofsurpluspaintin directexchange
for an off-seasonlease of an airline'shotel in the Bahamas. Meanwhile tax
lawyersarguewiththeInternalRevenueServiceabout theincomerepresented
by thisnon-market transaction.Barterhas,ofcourse,long beenthemainstayof
pulled Russia out of theinternational systemof commodity-basedcurrencies.
Today ThirdWorldcountrieswho lackthedollarsto participate innormaltrade
reachbarteragreementsamongthemselves.The largestoftheseto dateis a deal
involvingNigerian oil and Brazilian manufactures over a numberof years.

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More routinely,impoverishedneighboursin WestAfricaswap meatforgrain.

A recentreportof The Group of Thirtyestimatedthatbarternow accountsfor
8-Io percent.ofinternational trade,a halfofall armssales. They concludethat
barterdoes notyetpose a threatto themonetarysystem.
At a lower level, barternetworksforindividualbusinessesare springingup
throughoutNorthAmerica.13 Some of theseappearto originatein Oklahoma
City,wherethereis a largeMormon community.(Mormonswere forcedinto
thefederalpoliticaleconomymoreor less at gunpointa centuryago and now
theyareleadingthebacklashagainststatecontrolofbusiness.)In Californiaold
age pensionersexchange servicesfor points registeredon a Social Services
Departmentcomputer:gentlemanwillingto mow lawns meetsladyanxiousto
knitjumpers-and no moneychangeshands.In BritishColumbia an alternative
tradingsystemknownas LETS (Local ExchangeTradingSystem-with echoes
has taken root in several communities(Gabel et al. i985).
of laissez-faire?)
Membersneed a home computerand a telephoneto tradewitheach otherin
greendollars',an imaginarycurrencyequivalentto federaldollars.Creditand
debt are always exactlybalanced in the systemand anyone can inspectthe
bankingrecordof anothermember.Such local initiativesare not entirelynew;
less sophisticatedsubstitutesforscarcedollarsin theGreatDepression,accord-
ing to a reportof The Timesof 20June,I933, includedwooden cash and notes
stampedon real buckskinin denominationsof 'one buck' and 'halfa buck'.14
Barter, of course, is less vulnerableto inflationthan tradingmediated by
state-backedcurrencies.It is possibleto discernin phenomenasuchas thesethe
seeds of a tax revolt,with large chunksof the North Americaneconomy
withdrawingfrom the cash/taxnexus and public financesbeing subjected
to a cumulativesqueeze comparableto the fiscalcrisisof the later Roman
The second tendency-personalisation of moneyas information technology
catchesup withtheproliferation of transactions-is typifiedby the spreadof
plasticmoneyin our lives.16 Now a sellercan phonea computerand decideon
thespotwhetherto extendcreditto someonehe has neverseenbefore.Below I
will suggestthatpersonalidentityis intrinsicto the functionalequivalentof
money in primitiveeconomies such as thatof the TrobriandIslands. Now
moneyis once more bound up with tokensof personalidentity;but creditis
extendedto somethingratherlessthanthewholeperson,to a formalabstraction
ofindividualhumanbeings,to a cipherin a universeofnumbers.To all theother
manifestations of our alienationwe mustnow add thefearof beingdefinedby
machinesprocessingdigitalisedidentities.At the same time most of us now
experiencegreaterfreedomin opening up personallines of credit;and the
controlexercisedby governmentsover the moneysupplyis made to a corre-
spondingdegreeweaker.I have exploredthisaspectof what I call 'commodi-
tization'in anotherplace (Hart i982). The continuingevolutionof moneyis as
double-sideda phenomenonas coinage. The informationrevolutionclearly
exposes us to thethreatof ever more centralisedaccess to our personalcredit
rating,whileat thesame timeoffering a partialescape fromstate-mademoney
on a scale unequalled in westerneconomic historysince bills of exchange
supersededcoin oftherealmformedievalmerchants.

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Let us next see what lightis thrownon thesemattersby the discourseof


Moderntheories ofmoney
The greathistorianof economicideas,JosephSchumpeter,once said, 'There is
no denyingthatviews on moneyare as difficult to describeas shiftingclouds'
(1954: 289).17 My hubristicaim hereis to reducethiselusiveskyscapeto a few
simplified sketches.The problemofmoneywas intrinsic to thebirthofEnglish
economics.Locke and hiscontemporaries werefacedwitha crisisofconfidence
in thecoinoftherealm(theso-called're-coinagecrisis'),followingthetriumph
of Parliamentoverabsolutism.18 By theeighteenth centurymercantilist theory
leanedtowardsa positionlaterdubbed'metallism'.This statedthatthevalue of
currencyshould be tied to precious metalssuch as gold and silver,thereby
subordinatingits circulationto the functioning of markets.This 'commodity
theory'of money held sway in Britain rightinto thiscentury.Anti-metallists,
such as Barbon, held that'money is a value made by law'. The special term
'chartalism'was latercoinedforthisschoolwhichstressedtheseveralformsthat
moneycould take,includingpaperpromisesmade by privateindividualsor by
the government.The 'quantitytheory'of money associatedwith Bodin and
Hume took themetallistpositionto thepointof assertingthatpublicinterven-
tionin themoneysupply,withtheaimofstimulating economicexpansion,was
bound to fail in its intention.Hume argued that the volume of commodity
exchange was logically independent of money supply, so that,in a closed
economy, twice the amount of money in circulation would merelydouble
prices.This has led himto be claimedas an ancestorby MiltonFriedmanand to
be satirisedby Karl Polanyi(I944), who tartlyaskshow muchofsocietywould
be leftintactby sucha quantitative adjustment.19
The classicaltheorysystematisedby Ricardo (I8I7) and Mill (I848) drew
fromthesepreclassicalantecedents thenotionthatmoneywas theservantofthe
'Law of Value', a mere technicalprerequisiteof commodityexchangewhich
shouldbe removedas faras possiblefromthethreatofpoliticalmanipulationby
being tied to preciousmetals.The liberalsynthesisof the nineteenthcentury
foundinstitutional expressionin the promotionof freemarketsbased on the
gold standardunderBritishfinancialand industrialhegemony.Adherenceto
the gold standardmade it impossibleforgovernmentsto protecttheirpopu-
lationsfromexcessivefluctuations in markets;and thispointwas made spor-
adicallybyan undercurrent ofpopulistoppositionthroughout theVictorianera,
exemplifiedby Major Douglas whose theoryof underconsumption receivesa
doubled-edged endorsement from Keynes in theGeneral Theory.20
In mattersof monetarytheoryMarx adheredbroadlyto classicalorthodoxy.
The openingpassagesofCapital(i 887) makeitclearthatmoneyis a commodity
whose use is to facilitateexchangeand capitalis moneyputto accumulativeends
withintheexchangecircuit.Marx's maininnovationwas to drawfromHegel's
theoryofalienationthenotionof moneyand commerceas an estrangedburden
on thefreedomofmodernman.This allowedhimto developa phenomenologi-
cal analysisof money'sfetishised role in our understanding of social agency.21

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He also, of course,placed greatemphasison extractionof surplusvalue as the

key source of moneycapital.But in essentialshe subscribedto theprevailing
classicalview thatmoneywas subordinateto thelaws of commodityexchange
and as suchbestthoughtofas a specialisedcommodityitself.This was monetary
orthodoxyin theheydayof Britishindustrialexpansion.
The mostsystematicchallengeto thisorthodoxycame fromGermany.One
mandeservesto be recognisedas theauthorofa fully-fledged romantictheoryof
money-Adam Muller, who wrote A new theory ofmoneyin i8i6.22 Muller
negatedeverything thatBritishpoliticaleconomystood for-free trade,div-
ision of labour etc.-in favour of national self-sufficiency, the virtuesof
workingthe land and so on. Money forhim derivesits value fromthe trust
generatedwithina communityand is more specificallyan expressionof the
nationalwill. SchumpetervehementlyrejectsMuller's claim to therankof an
economist,speakingof... . a numberof wholly inoperativemetaphysical
conceptions'(I954: 42I). This is an inevitablereactiononce the intellectual
historianis committedto teleologicalreconstruction ofa processculminating in
twentieth-century anglophoneeconomic science. Such an approach reduces
Germaneconomicideas to thestatusofan aberrantsideshowfortheirrefusalto
extrudethe social and culturalcontextof economic life into the analytical
dumping-ground knownnormallyas ceteris paribusassumptions.23
The firstyears of this centurysaw the culminationof German monetary
theoryin Knapp's Statetheory ofmoney(I924) and Simmel'sPhilosophy ofmoney
(I978); Weberdevotesa long passageofEconomy andsociety (I978: I66-93) to a
discussionofmoneywhichdrawsheavilyon Knapp. G. F. Knapp gave us terms
suchas 'metallism'and 'chartalism',so thatitis his workthathas done mostto
crystallisethe opposition between commodityand token in the historyof
monetarytheory. Being an anti-metallist,Knapp set out to put fleshon
Barbon's dictumthat'moneyis a value made by law'. He believedthatmoney
was a standardof creditissued by the state and thatthe state's freedomof
manoeuvrein monetarypolicy should not be restrictedby an international
systemanchoredin thetimelessexchangeability of gold.
The commonintellectual inheritance
ofKnapp, Weberand laterPolanyiwas
Kant's dialecticofformand content(in essencetherelationship betweenmental
constructand materialsubstance). For Kant our world is made up of two
constituents a formsupplied by the structureof the mind and a content
suppliedby thesenses. In continentalsocial thoughtthisanalyticaldistinction
was latermade to informa contrastbetweenon theone handtheself-conscious
rationalityof state-madelaw and marketsand on the otherthe anonymous
everydayinfluenceof customs whose forcewas presumed to derive from
ancientmechanismsof collectivesurvival. Weber (I978: 85-6) argued that
formal and substantiverationalitywere in conflict,i.e. that the growing
dominanceof calculationin publiclifeimpairedour abilityto make adequate
social provisionformaterialwelfare.This distinction was takenup by Polanyi
(I957b) and made the basis for the mind-bogglinglyreductionistformal-
substantivedebatewhichdoggedeconomicanthropology intheI 960's and70's.
At thispointtheissue becomes more complicatedthana simpleopposition
betweenEnglishutilitarianism and Germanidealism.For one thing,Victorian

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Britainhad its romanticstoo-but thisis no place to explore the monetary

theoriesofMorrisand Ruskin.More significantly, Britishliberalswereas likely
to draw on themoralsentiments of Adam Smithas on Benthamiteprinciples.
For example,JohnStuartMill simultaneouslyplays down the importanceof
money in relationto freecommodityexchangeand decriesthe emphasison
money-making foritsown sake in Englandand America.Thus in one place he
says 'There cannotin shortbe intrinsically a more insignificant thingin the
economyof societythanmoney' (I848: 488); and elsewherehe inveighsvig-
orouslyagainstthe subordinationof public moralityto themindlessaccumu-
lationof money.25Money was notjust an instrument of trade,repositoryof
universalnaturalimpulse,a gold-basedbulwarkagainstabsolutism.It was also
theobjectofmoney-making and as suchshapedby all theabusesthatanti-social
capitalistscould inflicton theircontemporaries. Bagehot's lesserknown work
on Lombard Street(I9IO) representsa counter-current which emphasisedthe
moral dimensionsof bourgeois accumulation.Here trust,debt, banking,
'the Englishman'sword'-in a word, credit-definedmoney as an aspectof
relationsbetween persons,not as a thing,mere cash. We are remindedof
Durkheim'srefutation ofutilitarian
abstractionin Thedivision oflabourinsociety
(I933), when he speaks of the non-contractualelement of the contract
-the nexus of humaneinstitutions and values thatmakes marketbehaviour
possible. It is as well to rememberthatnot all Victorianswere unreconstructed
Benthamitesand social Darwinists.
Simmelreflects thispositionas a Germanliberal.26For himmoneyencapsu-
lates all the main strandsof social life. There is no essentialcontradiction
between capitalismand society,as both Marx and Weber held. Above all
Simmelemphasisedthemoralityof exchange,echoingMullerand prefiguring
Mauss. The rationalismofstatistssuchas Knapp and liberaleconomistssuchas
Ricardo equally abstractcommodityexchange fromits moral source-the
humanwisdom ofan anonymouseconomybased on trust.
Whatstartedas a simpleoppositionbetweencommodityand tokentheories
of money-between anglophoneeconomism and the German romanticre-
action-clearly needs to be modifiedto take account of two cross-cutting
nineteenthcenturyideologies. These are firstthe perceived contradiction
betweenmarketsand stateswhichsupposedthatanyonewho was in favourof
one mustbe againsttheother;andsecondKant'sanalyticofformand substance,
whichexplicitlyshapedmuchEuropeandiscourseand was implicitin themoral
discourseof some Britishliberals.I have summarisedwhat is a ratherdense
sectionof my argumentin fig. 1.27 The liberalpro-marketside equates social
progresswith capitalism,but splitsinto formaleconomicsand a substantive
emphasison trust.The statistside sees capitalismand societyas contradictory,
butsplitsintoa formaltheorylookingto rationallaw and government policyfor
antidotesand a substantiveconstructof thestateas nation, Volkor narod,in a
Therearethusthreetypesoftheoryopposed to theclassicalorthodoxywhich
regardsmoney solely as a commodity,subject to the laws of competitive
markets.These are all tokentheorieswhichinsistthatmoneyis a symbol for
somethingintangible,an aspectofhumanagency,notjusta thinglikea lumpof

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FORMAL Economics Policy

SUBSTANTIVE Credit National
Trust Institutions

C = CommodityTheory
T = Token Theory

FIGURE I. Theories c. 1goo.


coal. Money as trustlocatesvalue in themoralityof civilsociety;itsfulcrumis

the managementof creditand debt in human relations-as illuminated,for
example,by Mauss's greatwork The gift(I967), SO revealinglyinterpreted by
thelastMalinowskilecturer, JonathanParry.28Money as theexpressionofstate
policy emphasisesthe role of law and governmentintervention-a tradition
stretching fromBarbon to Knapp and beyond.The populisttheoryof money
stressestheaccumulatedinstitutions of a nationas a necessaryframeworkfor
marketsand finance.Americaninstitutionalist economics-with itsrootsin the
politics of WilliamJenningsBryan and Henry George and the writingsof
Veblen,Commons and Ayres29_vhil is a majorvehicleforthistendency;as arethe
RussianNarodnikswhose theoriesso infuriated Lenin.30
This discussionpreparesthe way foran assessmentof the pivotalfigurein
twentiethcenturysocial thought.In seekingto overthrowEnglish monetary
theorybetweenthe wars, Keynes was bound to recapitulateelementsof the
predominantly Germancritique.The detailsof Keynes'srecommendations are
unimportant here.31He proposedthatthestatemanipulatedemandand invest-
mentthroughcontrolof theinterestrateand thesize of thepublic debt. This
representedexplicitrecognitionthat unemploymentcould not be brought
down by adherenceto the practicesof the gold standardyears. For all his
credentialsas a social democrat,Keynes belongs squarelywith Knapp in the
elitistbox of formalstatism.Not forhimthefolkwisdomof masssocial action
or eventhatofa humanisedbourgeoisie.He wroteforthechosenfewwho effect
policyand thoughthimselfwithsome reasonto be one of them.In characteris-
ing the motivesof the capitalistclass as 'animal spirits'he both echoed the
Scottishenlightenment's emphasison therole of thepassionsin humannature
and the recentattentiongiven to the non-rationalfoundationsof supposedly
rationalbehaviour,a recurringthemeoflatenineteenth-century Germansociol-
ogy and of Max Weber'sworkin particular. 32
Keynes's greatestlegaciesare BrettonWoods, thepostwarmonetaryorder
whichwas smashedin theI 970's,33andthewelfarestateswhichwerebuiltfrom
theproceedsof thoseboom years.RichardNixon's announcement, just before
hisdownfall,that'we areall Keynesiansnow', is as good a markeras anyofthe

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end of the greateconomist'sinfluence.The confidenceof westernnationsin

statefiscalpolicy was shatteredby an inflationwhich underminedthe price
mechanismand much else in theirmarketeconomies. By the mid-ig80's
conservativeregimesdogmaticallyopposed to 'Keynesianism'runtheUnited
States,Britain,GermanyandJapan.Theircreedis 'monetarism',a revivalofthe
old liberalismand of the commoditytheoryof money. Its most vigorous
exponentsare Milton Friedmanand othermembersof the Chicago school.34
They makean explicitlinkto thequantitytheoryoftwo centuriesago. Moneyis
just a thingwitha functionand a price;any governmentinterference will have
unintendedconsequenceswhose effectsare on balancelikelyto be negative;so
thatit is bestto concentrateon ensuringthatmarketsare efficient.As always,
politicalpracticeis more confusingthanprofessedideology. One has only to
thinkofReagan's massiveKeynesianreflation ofdemandthroughexpansionof
the US public debt in the light of his alleged adherenceto 'supply-side
There is thusa long historyunderlyingcontemporary fashionsin monetary
theory.Anthropologists are notimmuneto absorbingthesepolarisedcurrents
of mnodern ideas; but priorexposureto theirhistorymighthelp to make our
borrowingsfromeconomicthoughtless vulgarthanbefore-less confusedand
more self-conscious.While being more respectfulof a pluralintellectualtra-
dition,we shouldalso be open to thenotionof economicsas a formof secular
theology.Relationsbetweenpersonsand thingsare typicallyfetishised as two
contradictory camps, thoughtof as statesand markets,abstractactors in a
Manicheanuniverseof good and evil whichonlyhas room forone side of the
coin at any time.It is surelythecase thatthecoin has two sides and thatwhat
mattersis theirrelationship, ofpoliticsand marketsin a
moving social whole.
I now turnto an ethnographic settingwheremoneyand marketsas we know
themareapparentlyabsent-Malinowski's TrobriandIslands.

Ethnographic analysis
ThroughoutArgonauts ofthewestern Pacific(I922), Malinowskiemphasisesthe
contrastbetween kula and gimwaliin Trobriandeconomy.35The firstis a
ceremoniousexchangeof gifts(personalornaments)and it carriesgreatsocial
prestige.The second is an undignifiedhaggling,individualbarter;its social
significance is minimaland it frequentlyaccompaniesthekula,perhapsunder
thelatter'sumbrella.Trobrianderssay thatthetwo typesofexchangearein the
starkestpossiblecontrast:theone epitomisinggenerosity, theotherselfishness.
Malinowski lists seven types of transactionfrompure giftto trade (I922:
I77-9I). The lasttwo are'ceremonialbarterwithdeferred payment'(including
thekula)and 'trade,pureand simple'(typically gimwali).But ratherthanrehash
thewell-knownkulastoryhere,I wantto drawyourattention to two subsidiary
examplesnotedbriefly by Malinowskiin thiscontext.
Coastal and inlandvillageson Kiriwinaarein thehabitofexchangingfishfor
yams or vegetables,allowinga measureof divisionof labour betweenfishing

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and agriculture.Sometimesthisexchangetakestheformof ceremonialpresta-

tions(wasi)involvingcommunityleaderson thepatternofkula.But we aretold
that,whereno wasirelationship existsbetweenvillages,individualbarterat the
householdlevel(vava)is normal.So, whereasin one case a big manhandsovera
job lot of fishto his counterpart,allowinghim to rationthemout among his
followersand to organisea futurereturnofyamsin similarfashion,in theother
individualswanderfromhouse to house tryingto geta reasonabledeal forthe
quantityof commoditiestheyhave to sell.
Three featuresof thisoppositionare worthnoting. i) The degree of for-
malisationof the social processes involved-the presence and absence of
ceremony.36 2) The time intervalbetween the two moments of exchange
(givingand thereturn)-theirseparationby a delayin wasi,theircollapseintoa
simultaneousequivalencein vava.373) The level of conflicttoleratedin the
price-setting mechanism-the generosityof gift-giving as a meansof avoiding
conflictand hagglingas an expressionof confidencein thepartners'abilityto
containaggression.The factthatthetwo institutions fallneatlyintopairedsets,
eachtheother'snegation,suggestsa routinisedresolutionofsocialambivalence.
Formalisationof exchange-ceremony, separationof the moments of ex-
change, conflictavoidance-reflectshigh social distanceand weak political
order,bringingbig men and corporateorganisationintoplay. Informalinter-
personalhagglingreflectslow social distanceand strongpoliticalorder. The
issue is whetherindividualsbelongingto different groupsfeelfreeto riskthe
conflictinherentin barterwithoutinvokingall thedanger,magic,prestigeand
hierarchythatgo with ceremonialexchange.Thus one formis a temporary
social frameworkerectedin the relativeabsence of society;the otheris an
atomisedinteraction predicatedon thepresenceofsociety.This has to be spelled
out,followingtheexampleofbothMarx andMauss, becauseitis oftenassumed
thatindividualismis in contradiction withsocial order,ratherthan,as thiscase
suggests,beingpredicatedon it.38
My argument,whichis admittedlya speculativeextrapolationfromincom-
pleteethnography, is thatthetwo typesaredifferent meansofsecuringthesame
ends, namelycirculationof commoditiesbetweenindependentcommunities.
Individual barteris favouredwhen the general peace is such as to allow
commoditiesto flowat theirequivalentvalues;whereasceremonialexchangeis
a temporaryconstructof peace based on alliancebetweenleadersof communi-
ties at war, with politicalinterventionin the distributionof commoditiesan
inevitablecorollary.Thus thekulavaluablesaretokensof personalresponsibil-
ity,namingthe networksof big men whose reputationssecurepeace forthe
trade.39 Obviously barter can and does take place within the temporary
framework ofkula,whichshouldbe seenas a highlyvisibleversionofthatsocial
glue thatDurkheim(I933) insistedliesmoreinvisiblybehindtheanonymityof
One furtherpoint. Although Malinowski speaks as if these institutional
arrangements werecongealedin aspicforever,myanalysislendsitselfto a more
dynamicinterpretation. Thus a breakdownofpoliticalrelationsbetweencoastal
andinlandvillages(i.e. war) mightoccasiona shiftfromvavato themoreformal
wasi.Equally, unpredictable in supply(failureof thefishcatchor a

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yam glut)mightunderminetheprice-setting mechanismof barterand require

theintervention of big men as rationingor stockpilingagents.The Trobriand
economymaythusbe represented as oscillatingbetweentwo typesoforganisa-
tionof commodityexchangein responseto imperfections bothof thepolitical
orderand of supplyand demand. Normal conditionsgrantlow-level agents
considerableautonomywhichis supersededby high-levelregulationwhenthe
environment is especiallyuncertain.Big menmayaffect to despisehaggling-it
is not,afterall, theirstock-in-trade-butwe would be ill-advisedto takeat face
value statementsthat formal exchange and ordinarybarterhave nothing
whatsoeverto do witheach other,a rhetorical exaggerationof theirconceptual
and practicalcomplementarity.40
So, althoughthereare no coinsin Trobriandeconomy,thetwo sides of the
coin have theircounterparts in local economic institutions. There is political
authority and thereare marketsof a sort.Theirinteraction is flexibleaccording
to variableconditionsaffecting trade.The questionhas beenaskedfromtimeto
timewhetherthe kulavaluablesare a formof money.41Malinowski answers
emphaticallythattheyare not,by whichhe meansthattheyare not moneyas
definedby thecommoditytheoryofliberalorthodoxy.Clearlytheyare tokens
ofinterpersonal relations,a sophisticated deviceforrankingpoliticalcreditin an
unstableenvironment of tradeand war betweencommunities.In consequence
one ofthemostcomplexcommercialorganisations in thepreindustrial worldis
carriedout withoutbenefitofstatesor merchants underconsiderablehandicaps
of transport, communications and ecologicalinstability. PerhapsMauss (I967:
94) was rightto suggestthatenablingexchangein thisway oughtto be counted
one of thefunctionsof money.Whenstatesinventedcoin of therealm,credit
was shiftedfroma personalbasisto theobjectivevalueofthecontentsofa man's
pockets.Privatenotesofcredit,suchas cheques,supplieda personaldimension
to money;and todayadvancedinformation systemshave expandedthisdimen-
sionin theformofplasticcreditcards.It maynotthenbe ridiculousto thinkof
kulavaluablesas moneyafterall.
I shouldadd some briefcommentson thepossibleapplicationofmydualistic
perspectiveto thepreindustrial stateswhoseeconomyrestedso heavilyon coins
made frompreciousmetal.The pathof commodityexchangeappearsto have
been universallyproblematicforarchaiccivilisations.42 Usury, debt bondage
and gross inequalitiesof wealth provoked popular revolutionsat regular
intervalsin theancientMediterranean43. The emergenceofdemocraticpolitical
theoryin theGreekcitystatewas thus,as Fustelde Coulanges (i 866) andWeber
(1976) insist,largelya responseto theclasspolarisationand economicchaos of
the preclassicalperiod (roughly800-500 B.C.). Later,conservativetheorists
suchas Platoand Aristotlepromotedeconomicmodelsbasedon self-sufficiency
and low divisionof labouras an antidoteto Athens'sescalatingdependenceon
maritimetrade.This in turnwas canonisedby themedievalscholasticsas a bias
againstmarketsin favourof a systemof landed propertywhere the natural
harmonyof God, kingand theearthrestedon responsibleself-management.44
The pointof thisexcursionis to revealthetruesourceof theidea thatheads
and tails are in irreconcilableconflict-the Aristoteliantheodicyof Europe's
middle ages-which Adam Smith(1776) stood on its head by preferring the

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rationalanarchyofmarketsto theclumsydirigisteefforts ofa corruptcourtand

its clienteleof oafishlandowners.To summarise,commodityeconomy was
understoodto be in contradiction withsound publicpolicythroughouttheera
of agrarianstates.Oscillationsbetweenthetwo producedbothrevolutionsand
institutionsdesigned to contain the contradiction.Economic thoughtwas
overwhelmingly andhostileto trade.Modernliberalorthodoxy
is bestthoughtof as thenegationof all that.But thecontradiction continues,as
do itsattendantoscillations.Modernmonetarypolicy,however,is less flexible
than Trobriandinstitutional practicebecause it is still governedby a quasi-

Concluding remarks
I have suggestedthat ethnographicanalysisneeds to be complementedby
greateropennessto intellectualhistoryand by a journalisticawarenessof the
eventsunfoldingin ourtime.Moreover,I am committedto thepropositionthat
theethnography of statelesssocietiesadds an essentialdimensionto our search
foreffective understanding ofthemajorforcesshapingthemodernworld.45
Many of the distinctivefeaturesof our civilisationwere formedduringthe
5,ooo years of agrarianstates. Far frombeing the enlightenedoffspringof
industrialism thatwe fondlyimagineourselvesto be, we arerathertheconfused
by-productof social and technicalprocesseswhose implicationsare maskedby
thepersistence ofpreindustrial culturalassumptionsand institutions.Therecan
be littledoubtthatthelegacyof agrariansocietyis unravellingbeforeour eyes;
but we need thebenefitof long-run,wide-anglevision-of an anthropological
vision-if we areto have muchchanceofsortingout theelementsoftheeraour
generationsaresettingin train.
The chiefcharacteristic of preindustrial statesis theirpreoccupationwith
states,i.e. with fixity,permanence,the absolute. Their religionsanchor all
experiencein thesingle,aprioristic truthofa universalCreator.Theirmonarchs
providea centralpointof coherencein a fragmented society.Their citiesare
centredon the'pivotofthefourquarters'(Wheatley1971). So it is too withtheir
money,whichis presumptively immutable,objective,a thingunitinga quasi-
divineroyalauthority withthetimelessvalue of gold and silver.
Much of themonetaryhistoryof thelast i 5o yearshas been a losingbattleto
retaina fixedstandardformoney. The role of economistsin thisprocesshas
largelybeen to divideinto two warringcamps splitby thedefinitionof what
money'really'is. Some have soughtto pin moneydown as a commodityand
othershave sought refugein the power of nation-states.Their intellectual
rigidityhas precludeda dialecticalsynthesisof money'stwo sides,namelythe
relationshipbetweenpersonsand thingsin a social world dominatedby both
statesand markets.46 Insteadwe have witnessedtheunseemlydebacle of wide
rejectionof theoppositepointof view. This is whatI meanby referring to one
strandofeconomicthoughtas 'seculartheology'.
Keynes is a crucialfigure,not just forhis influenceon moderneconomic

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institutions, butbecausehe sethimselffirmly againstthepretencethateconomic

sciencecan protectus fromconfusionand errorwithits deductivelogic and
mathematicaltechniques.47In thisrespecthe deservesto be placed alongside
Max Weberas a sympathetic criticof theliberaltraditionin economics.One of
theinferences to be drawnfrommyargumentis thatGermandialecticalreason
offersat the very least a conceptual frameworkfor resolving intellectual
difficulties posed by the Anglo-Saxon preoccupationwith naming unam-
biguousentitiesin therealworld.48Ifwe remainfixatedon whatmoney'really'
is, we shallbe unableto grasptheinterplayof forcesthatmakesup its history
and continuingevolution.
This is thevalue of Trobriandethnography. The Melanesiansare not bound
by a staticdoctrineof social principle.They have not developedstatesand are
extremelywaryof establishedpoliticalofficein any form.Yet theyare aware
thatcommodityexchangedepends on flexiblesubstitutionof freeindividual
barterandregulatedcommunaltransfers. This is, roughlyspeaking,thepractice
ofmoderntreasury departments-pragmatic ofopposingaimsin
responseto changingcircumstances. But at thehighesttheoreticallevelitseems
thatpragmatismis insufficient. We need to know on what solid foundation
moneyrests-on commoditiesor statesor what?I believethatthe core of an
answerlies in the shiftinghierarchyof creditrelationsthatmake up modern
markets-a less substantialfoundationthan most of us seem willing to live
with.In thisrespectour plastic-toting yuppiecultureis nearerto Malinowski's
kula ringthaneitheris to traditional'coin of the realm' or to the nineteenth
centuryexperiment in gold-backedcurrencywhichhas done so muchto shape
modernwesternattitudesto money.49


Withone or two veryminorchanges,thepresenttextis thesame as theoriginallecture,givenon

March I3th, I986 at theLondon School ofEconomicsand PoliticalScienceunderthetitle'The two
sides of money'. Subsequentelaborationand documentationof theargumentare restricted to the
notes and textcitations.I am gratefulto Mick Brown,JohnBryden,JohnCoates, Eduardo da
Fonseca,ErnestGellner,Tony Giddens,ChrisHann, CarrieHumphrey,JohnnyParryand Marilyn
Strathern fortheircommentson earlierdrafts.
1 This is not theplace to reviewtheanthropologyof money.Crump's Thephenomenon ofmoney
(I98I) is a remarkable synthesiswhichhas influenced myown enterprise morediffusely thancan be
acknowledgedin footnotes.Einzig's Primitive money(I949) is stillan indispensableintroductionto
thesubject.Gregory'sGiftsandcommodities (I982) addressessome of themoregeneralissuesraised
here. Those readerswho would prefermore explicitreferenceto the major figuresof economic
anthropology-Firth, Sahlins, Douglas, Godelier, Bohannan and Dalton-will generallybe
disappointed.My debtto thesecolleaguesis, however,immense.
2 See his article'Primitivecurrency'(I923) and thecommentin Argonauts on Seligman'susage:
'Currency as a rule means a mediumof exchangeand standardof value, and none of the Massim
valuablesfulfilthesefunctions'(I922: 499).
3 Mauss (I967: 93-4) adds a long footnoteto Thegift 'on theprincipleadoptedin discussingthe
idea of money'. 'In thisview . . . thereis moneyonly when preciousobjects . . . are made into
money-when they are named, impersonalized,detachedfromany relationshipswith moral,
collectiveor individualpersonsotherthanthe authorityof the statewhich mintsthem. . . The
above definition can coveronlya secondarytypeof money-our own'. (p. 93) He prefersto stress
thepurchasingpower of primitivevaluables-'. . . thesepurchasinginstruments could serveas a

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means to countwealthand make it circulate'(p. 94); and concludesthatthe formsof moneyare

morepluralthanMalinowski'srestrictive definition implies.
4 I use neither expressionas a termof abuse. Economics,like evolutionarybiology,standsas a
bridgebetweenmedievalcosmologyand themodernaspirationto place our collectiveaffairson a
rationalfooting.The economicsof moneyis a disciplineall by itself;Clower (I971) is one meansof
5 This is not a scholarlyguide to modernmonetaryinstitutions; and referencesare kept to a
minimum.My sources rangefromrecentjournalismto an unsystematicselectionof economic
historytextbooks.The most recentBritishmonographon the extraordinary monetarydevelop-
mentsduringour timesis Hamilton's Thefinancialrevolution (I986), whichcontainsa glossaryof
what is trulya fast-breaking terminology.Moffitt'sThe world'smoney(I983), Samson's The
money-lenders (I98I) and Galbraith'sMoney:whenceit came,whereit went(I975) offera rangeof
popular introductionsto the subject. Institutionalinnovationis now so rapid that up-to-date
knowledgecan onlybe gainedfroma dailyreadingoftheFinancialTimesor WallStreetJournal.
I believe that anthropologistsmust offerinexpertsummariesof the industrialworld, if our
ethnographicfindingsare not to be ghettoised.It is easier to be proved wrong when a topic
commandstheattention ofhundredsofprofessionals fromseveraldisciplines,saferbyfarto stickto
reportingunknowntribeswiththe interpolation of occasionalabstractcommentaryon the great
dividebetween'them' and 'us'. My pointis that'we' are extremelydiverseand are caughtin the
middleof profoundupheavals.Anthropologists can and should make a concretecontributionto
understanding thesedevelopments.
6 Polanyi'smasterpiece, Thegreattransformation (I944), representsthegold standard,along with
the balance of power system,the liberalstateand the self-regulating market,as an institutional
7 The BrettonWoods systemwas effectively abandonedin I 947-48 and rediscovered,alongwith
convertiblecurrencies, a decadelater.Itsheydaywas I958-7I. For mostoftheperiodimmediately
followingthesecond world war nationalprotectionist regimesdominatedmonetarymanagement,
in violationof theinternational spiritof BrettonWoods.
8 The definitionis Hamilton's (I986: 245). Eurobankingin general refersto non-residents
holdingdepositsofanycurrency somewhereotherthanthenationalterritory ofthestateissuingthat
currency.The Eurodollarmarkethas grownwithina decadefroma fewhundredmilliondollarsto
$300 billionsa yeartoday.
9 Samson (I98I) providesa vividaccountof loan peddlershawkingtheirwaresaroundsome of
theThirdWorld'sless savouryregimesin the I970's.
10 Whereasmarketswere once traditionally specialisedand Chicago was hog-butcherto the
world, the recenttrendhas been towards 'financialsupermarkets'competingacross the board
worldwide. Financialfuturesnow represent90% of total volume on the Chicago Mercantile
Exchange,whichwas a frontrunner in themoneymarketrevolutionofthemid-i97o's.
11 For a recentsummary,see Office of Technology Assessment,US Congress Effectsof
informationtechnology onfinancial
servicessystems(I984); also Hamilton(I986: 30-49) who citesWalter
Wriston'smaxim 'The information standardhas replacedthe gold standardas the basis of world
12 There have been severalrecentconferences on barterwithinand betweenindustrialnations;
but seriousacademicanalysisof emergenteconomic institutions of thissorthas not come to my
13 These exampleswere gathered informally duringa period(I975-83) spentteachingin North
14 Deerskinwas a unitof accountin theearlyNorthAmericanfurtrade;hencethepopularterm

fora dollar-'buck'.
15 Weber'sclassicessay,'The social causesof thedeclineof ancientcivilization'(I 976: 389-4 I ).
shows how theflightfromcentraltaxationcontributedto thefeudalisation of the Roman empire
16 The spread of plastic money deserves more attentionthan it appears to get from social

scientists.Crump (I98I: I29) mentionsthephenomenon,withspecialreference to taxation.

17 Readerswho wish to explorethe historyof economic ideas should startwith Schumpeter's

magisterialHistory ofeconomicanalysis(I 954).

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For Locke's economicthoughtand itshistoricalcontext,see Vaughn(I980).
19 See Schumpeter (I954: 3 II-I7) on thequantity theory;alsoFriedman& Schwarz(I963) and
Polanyi (I944: I92-93). Polanyi's critiqueof liberalismin Thegreattransformationis devastating.
Money, he says, is a fictitious commodity,sinceit is not producedby labour. It should ratherbe
conceivedof as an expressionof society'sneed forcommerce.Money is both a commodityfor
purposesof international tradeand a tokenof domesticpolicy. In thislattercapacityits supplyis
bound to be used to protectcitizensfromdepression,war-inducedshortageand variousformsof
economic calamity.Such measureswould in turnundermineattemptsto foundtheinternational
economicorderon gold or some othercommodity.
20 'Major Douglas is entitled to claim,as againstsome ofhisorthodoxadversaries,thathe atleast
has not been whollyoblivious of the outstandingproblemof our economic system.Yet he has
scarcelyestablishedan equal claimto rank-a private,perhaps,butnota majorin thebravearmyof
heretics-with Mandeville,Malthus,Gesell and Hobson, who, followingtheirintuitions,have
preferred to see thetruthobscurelyand imperfectly ratherthanmaintainerror,reachedindeedwith
clearnessand consistency and byeasylogic buton hypothesesinappropriate to thefacts.'(I936: 371)
21 The fetishism of commodities(Capital Vol. 1 I970: 7I-83) is an idea whose day has certainly
arrivedin anthropology.See Taussig (I980), Bloch (in press)and Appadurai(I986) forinteresting
commentary on Marx's phenomenology.
22 Versuche einerneuenTheoriedesGeldes.Schumpeter'sdistasteforMulleras a Germanromantic
is extreme:'Such interpretations of metaphysicalmeaningsare by natureincapableof tellingus
anythingthatwe do not alreadyknow about therelationssubsistingin theempiricalworld . . . I
have no intentionof parallelingthe ignorancethatfailsto appreciatethe tasks and methodsof
analysisby equally ignorantfailureto appreciatethe tasksand methodsof philosophicvision or
interpretation of meanings. . . theseare two different worldsthatdo not touchanywhere'(I954:
23 The mostcommonword foreconomicsin nineteenth-century Germany(Sozialpolitik;cf.also
Nazionaloekonomie) speaks of the huge gulfbetweennationalintellectualtraditions.One of the
earliestuses of theterm'economics'is in thename of theinstitution whichsponsoredthislecture
(foundedin I 89 I).
24 A good selectionof arguments fromtheformalist-substantivist debatein itsheydayis Leclair
and Schneider(I968). Economic anthropologytoday boasts of almost as many positions as
practitioners.(See Ortiz I983). Weber repeatedlymade the point thatany work of comparison
requires the dialectical ability to make empirical distinctionswithin a unifyingconceptual
framework,thatis, to embracebothsamenessand difference-apointthatwas lost in theheatof
25 Of Americans Mill wrote'. . . thelifeofthewhole ofone sex is devotedto dollarhuntingand
of theotherto breedingdollarhunters'(Mill I965: 755).
26 Simmel's Thephilosophy ofmoney(I978), recentlyrevivedin Englishtranslation, is a complex
masterpiecewhichdeservesto be placed among theclassicsto whichanthropologists pay routine
homage. Frankel'sMoney:twophilosophies (I977) drawson Simmel,along withMarx and Keynes,
to makea neo-liberalcase foremphasisingtrustin monetarytheory.
27 The typologyof theoriesis ideal. Greatthinkers neverfiteasily into such boxes, but their
epigonesoftensplitintoopposed campsalongsimplifiedlinesofthesortidentified here.
28 See Man (N.S.) 21, 453-76. My lecturewas designedin partto be complementary to his:
whereasI emphasisethe outsidecontextof economic anthropology,Parryfocuseson the inside
storyofour discipline'spreoccupationwithexchange.
29 Veblen(I904), Commons(I934) andAyres(I944) arethemostprominent ofthis
school. TheirfollowerssustaintheJournal ofeconomic issues.
30 Lenin The development in Russia(I899). See also Hussain and Tribe (I98I) forthe
31 Keynes's two greattheoretical works,the Treatiseon money(I930) and Thegeneraltheory of
employment etc.(I936), arereasonablyaccessibleto non-specialists.But hisEssaysinpersuasion(I93 I)
offera readablepointofentryto histhought.
32 Beforethe romanticsgave the word its modernmeaning,'the passions' referred mainlyto
internalisedsourcesofpassivity-in theworkofHume and Smith(e.g. Thetheory ofmoralsentiments
I793) to thosenaturaland culturalconstraintswithineachofus whichstandopposed to theexercise

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of freedomthroughreason.In thisrespecttheScottishEnlightenment anticipateda centraltenetof

Germanidealism-the tensionbetweenthe rationaland the non-rational,betweenthe conscious
and theunconscious,thatwe tendto associatewithNietzsche,Freudand Weber.
33 AlthoughKeynes was undoubtedlyone of the two major figuresat the BrettonWoods

conferencein I944, the finalversionof the new international orderthatemergedowed more to

Americaninterests thanto hisown preconceivedscheme.
3 See e.g. Friedmanand Schwarz(I963) and Hayek (I973-79).
3 Althoughthedistinctionis basic to his argument,Malinowskiprovidesonly a fewscattered
glimpsesoftradein hisethnography. Thereis a generaliseddescription ofgimwalion pp. I 89-I90 of
Argonauts. The examplesof tradebetweenkulavisitorsand hostson pp. 362-364 leave ituncertain
how farfixedratesof exchangeor a sliding-pricemechanismoperate. Malinowski emphasises
haggling,butit would notbe remarkableifsomelong-distance exchangeswerebasedon normalised
ratios.Wasiand vavaarementionedonlybriefly on pp. I 88-I90. Much ofmyanalysis,therefore, is
an inventionforwhichthe essentialinformation is largelymissing.I have been able to draw for
comparativeinsightson therecentexplosionin Melanesianethnography(especiallyJ. Leach & E.
Leach I983), on severalfilmsabouttheTrobriandsand on a visitto Papua New Guineain I972. My
debtto MarshallSahlins'sStone-age economics willbe obvious-see especiallyhis chapter'Exchange
value and thediplomacyof primitivetrade'(I972: 277-3 I4). Nevertheless,I rejecttheconceptual
oppositionof social totalityand individualanarchywhichinformsmuchof the book. My prime
purpose in tellingthe storythisway is to cast doubt on the prevailingutilitarianorthodoxyin
anglophoneeconomicanthropologywhichin a sensestemsfromMalinowski(see ParryI986). I do
notwish to suggestthatceremonialexchangeand barterinstitutions everywherecorrespondto the
idealtypicalcontrastdrawnin thissection.
36 'I shallcall an actionceremonial, ifit is (i) public;(2) carriedon underobservanceof definite
formalities;(3) if it has sociological,religiousor magicalimport,and carrieswithit obligations'
I922: 95).
37 Mauss (I967) makes the timingof the two momentsof exchangetheformalcriterionfor
distinguishingbetween giftsand marketpurchases.Rejectingthe ideological appearanceof a
contrastbetweenthetwo basedon altruismand egoism,heemphasisesthesocialinequalityinherent
in gift-givingand theequalitymade possibleby simultaneouscommodityexchange.
38 Humphrey(i985) linksindividualised barterto economicdisintegration on the Nepal-Tibet
border.The collapseofpoliticalauthority and povertycombinethereto inhibittheuse of moneyin
trade. See also my shortessay on barter(Hart in press). The empiricalpermutationsof social
organisationand tradingmechanismsare more pluralthanmy presentanalysismay be takento
39 Uberol's (I962) reanalysis stressesthispoint.
40 Parry(I986) arguesconvincingly thatMalinowski'soppositionbetween'puregifts'and 'trade,
pureand simple'belongsmoresecurelyto theideologiesof commercialcivilisationsthanto tribal
societiessuchas theTrobriands.Nevertheless,I am convincedthatsome suchdualismis recognised
in Trobriandculturalcategories-'He conductshis Kula as ifit weregimwali'(Malinowski I922:
96)-even if the contrastis exaggeratedboth by the ethnographerand by his more aristocratic
41 See notes2 and 3 above.
42 Most of thestandardworkson ancienteconomy(e.g. FinleyI973; HeichelheimI964) stress
ordermore thandisorder.But Weber (I976: 38-79) was well aware of the pathologiesattending
43 The Hebrew institution ofjubileewas one routinisedresponseto thesepathologicalfeaturesof
economyinthecitystatesand kingdomsofMesopotamia,IranandtheLevant.This was thecustom
of freeingdebtslaves once everyfifty yearsand allowingpeople who had been evictedfromtheir
homesbackto theirown land.The implicationofthisand moreradicalmeasuresofdebtcancellation
was thatan economybasedinparton commoditiesand moneyled to impoverishment ofcitizenson
a scaleinsupportableby a polityclaimingpopularlegitimacy.
44 See Polanyl (I957a). Mandel (I968: 690-8) provides a breezy and polemical historyof
economic ideas in preindustrialcivilisations.Polanyi epitomisesthe Aristoteliantraditionin
45 Britishsocial anthropology's historicalmission,triumphantly announcedin African political

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systems (Fortes& Evans-PritchardI940)-namely to expose the intermediate levels of corporate

social lifeobscuredby moderntheoriesof thestateand, I would add, by markettheories-is even
morenecessarytodaythanhalfa centuryago, sincepostwardevelopmentshave made thesepublic
ideologiesmorepervasive,moredeeplyentrenched in popularunderstandings oftheworld.
46 Such a rigidpattern maybe moretrueof theBritishtwo-partysystemand of rivalrybetween
thesuperpowersthanofsome otherindustrialand industrialising nations.It could be arguedthatin
GermanyandJapanthecontradiction betweenstatesand marketshasneverbeena prominentfeature
of politicaleconomy. Bismarckinventedthe welfarestate as a necessaryadjunct of industrial
capitalistexpansion;Hitlertook theidea further; and thepostwarWirtschaftswunder restson theidea
thatsocial democracyand capitalismreinforceeach other.As the Britishcontemplatetheirown
creepingdeindustrialisation, theymightalso dwellon thehistoricalsymbiosisofstateand capitalin
Japanwhichhas so farallowed thatnationto avoid the excessesof laissezfairethatare so dear to
47 See note20 above.
48 'Nominalism'is thephilosophicalposition(associatedwiththemedievalhereticDuns Scotus)
which denies thatuniversalshave any objectivereferencein the real world, being rathermere
abstractions.Leach (I96I) took up such a position when he accused Radcliffe-Brownand his
followersof 'butterfly collecting'.Despite this,thehabitof conductingethnographiccomparison
withreference to supposedlyobjectiveanalyticalcategories,such as 'money' or 'unilinealdescent
groups',dieshardin Britishsocial anthropology.
49 A shortpoem, whichI composedsome timeago, bearson thecentralphilosophicalthemeof
Two sidesto everypoint.
Well fancythat-
A pointthat'sflat.


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