Prices without Money

Met a Brazilian guy last weekend whose grandparents are from the country. Like the real Pirahan country—no electricity.

not one of Daniel's relations

“They didn’t have any money,” he said, and we all thought, like, yeah, I bet they must be pretty poor; I sure don’t know any subsistence farmers. Then he clarified. “No, I mean, they didn’t use money.” Ohhhhh.

Daniel (the Brazilian) didn’t know this for sure, but it seems like once a price was established, it wouldn’t change.

Like, Grandpa brings the school a bucket of milk every morning, and his kid gets to go to school. Or maybe it’s three buckets a week. That’s the price system.

Now, it’s not like the school can just “raise the price” of tuition by 3%. Everybody in town — all producing non-fungible goods — couldn’t increment their payments uniformly. So I believe that prices must be more stable. (Just my guess.)

In addition, I bet that if there was a shock (e.g., cow goes dry), that there were strong social pressures to help out.

The one thing Daniel was sure about, is the role of reputation. If you’re short an egg, it’s up to you to make that right next time — bring the people an extra egg next week.

The whole thing seems much more communal, stable, and reciprocal, even though it’s surely less productive.

I wonder if the Amish are comparable in these respects?


One last speculative question. People don’t like change. Including price change. Is there a lot of economic literature about shocks in barter systems vs. money systems? What about “waves” of price change — huge momentary deltas that come in and slam the economic system, then are never seen again?

Tags: , , , ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: