#031 The Satoshi Papers: Toward An Anthropological Theory of Money

In this episode of Bitcoin Study Sessions, the hosts delve into Natalie Smolenski's essay "Toward an Anthropological Theory of Money" from the anthology "The Satoshi Papers," exploring anthropological perspectives on money and its role in society, particularly focusing on debt settlement and Bitcoin's implications. Key Topics: Anthropology vs. Economics David Graeber's Debt Theory Money as a Technology Settlement vs. Payment Bitcoin and Psychological Ledger Political Legitimacy and Debt Market Types and Microtransactions Bitcoin as an Anarchist Technology Summary: The episode begins by highlighting the aspiration of the anthology to meet academic standards and discusses the challenging yet thought-provoking nature of Smolenski's essay. The discussion begins by stating that "money in all its forms is the ever-evolving social answer to the question of what people want in settlement of debts." This statement is used as the kernel of the essay. The discussion then moves to the relationship between anthropology and economics, noting the historical hostility of anthropologists towards economic studies, particularly concerning the focus on means over ends. Smolenski, an anthropologist with an appreciation for economics, bridges this gap by acknowledging individuals as cost-minimizing agents while considering cultural and social factors. The hosts then discuss David Graeber's theories on debt and money, particularly his Twitter exchange with Nick Szabo, emphasizing Graeber's endorsement of state and credit theories of money. Graeber's view is broken into three claims: first, that money is credit or debt and not a commodity; second, that accounting came before commodity money; and third, that real money is created by the state. Smolenski critiques Graeber's utopian vision of abolishing money and the state, favoring a more pragmatic approach that recognizes economic motivation and the importance of institutions. Smolenski's anthropological theory of money is described, defining money as a social institution and technology for reliably settling debts with the least sacrifice. The concept of settlement versus payment is explored, with settlement requiring the satisfaction of the creditor and involving a psychological ledger of moral sentiments. Failure to achieve settlement can lead to cycles of violence and social unrest, underscoring the importance of political legitimacy in ensuring creditors are satisfied. This is why, Smolenski contends, we have rule of law. The hosts further elaborate on the characteristics of money as a technology, emphasizing its role as the cheapest valuable that reliably settles debts. Bitcoin is presented as a technology that embodies these characteristics, offering scarcity, durability, portability, and fungibility. The conversation shifts to Bitcoin's potential to disrupt traditional notions of money and markets, with the hosts discussing whether this new technology for settling debts creates new problems in that they're now all market based. The episode concludes by considering the tension between prestige and mundane markets, with concerns raised about the potential for microtransactions to commodify sacred or incommensurable values. Despite these reservations, the hosts agree that Bitcoin's bottom-up nature and its ability to empower individuals and bypass traditional hierarchies make it a valuable technology for promoting social organization and political legitimacy. The conversation ends with an appeal for ongoing dialogue and debate on the future of money and its role in society.