Rosser, John Barkley - rosserjb wrote:
>         I am tempted to ignore James Ahiakpor, who has now decided to diss Wicksell.  OK, whatever.  But I do wish to differ with his strong claim about there never having been a pure credit economy.  The new book by David Graeber, "Debt," may be historically inaccurate, but it is not a priori completely implausible.  He argues that what historically preceded the appearance of commodity money in simple, hunter-gatherer societies was a pure credit economy.  In small social groups people help each other out, and everybody knows who has helped whom out and by how much.  These social credit accounts can be maintained as long as the group is small enough and the economy simple enough.  As it gets larger or more complicated, these accounts can no longer be properly kept, so impersonal money appears.  Again, wee do not know if this is really the case, but he provides at least some anthropological evidence for it.  Your straightforward claim simply is not as certain as you claim it to be, sorry, James.
>

Wicksell's pure credit system includes commercial banks, not the 
anthropological, "hunter-gatherer" society David Graeber may be 
describing.  The oddity of Wickesll's (mis)understanding of the process 
of interest rate determination in a commercial society also can be found 
in his claim: “... we have not ... come across anything which 
corresponds to the customary method of explaining how the rate of 
interest is determined by the supply and demand of ‘capital’.  It would 
appear rather that the rate of interest ... is completely subject to the 
discretion of the Bank” (1898, 75).  He also regards Mill’s (3: ch. 23) 
clarification of the classical “capital” supply and demand theory of 
interest, including the explanation that “Loanable capital is all of it 
in the form of money” (ibid.: 655), as having succeeded “merely ... in 
adding to ... confusion” (Wicksell 1898: xxv).   Such from "one of the 
two greatest monetary theorists of the nineteenth century"!  The meaning 
of "capital" was such a problem for so many dissenters from classical 
analysis.

Hopefully, when Barkley comes to recognize that in the market for goods 
and services, incomes are on the demand side; in the market for 
financial assets, incomes are on the demand side; and to demand money or 
acquire cash (outside of borrowing or stealing it), one surrenders one's 
income, his troubles with the law of markets applying at all times may 
cease.

James Ahiakpor

-- 
James C.W. Ahiakpor, Ph.D.
Professor
Department of Economics
California State University, East Bay
Hayward, CA 94542

(510) 885-3137 Work
(510) 885-7175 Fax (Not Private)