tag:blogger.com,1999:blog-179083172024-03-19T01:47:07.227-07:00UnenumeratedAn unending variety of topicsNick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.comBlogger351125tag:blogger.com,1999:blog-17908317.post-5821019721234010842018-03-23T10:54:00.001-07:002018-03-23T14:56:25.990-07:00The many traditions of non-governmental money (part i)<span style="font-size: large;">The central bank of the United States, the Federal Reserve, has put out<a href="https://files.stlouisfed.org/research/publications/page1-econ/2018/03/01/bitcoin-money-or-financial-investment_SE.pdf"> “educational material”</a> on Bitcoin for teachers and students (including a quiz!). The Bitcoin parts are odd enough, but this and a subsequent blog post will focus on the following statement: “traditionally, currency is produced by a nation's government.“ Is that a fair representation of monetary traditions? At the very least it is quite incomplete. This two-part series will proceed back in time, showing some of the many examples non-governmental money, in order to fill in some of the gaps.<br /> </span><br />
<span style="font-size: large;">Privately issued IOUs and privately minted coins are covered here in part (i) of the series. </span><span style="font-size: large;">These IOUs can more specifically be described as bearer promissory notes, and even more specifically, when issued by banks, bank notes<span style="font-size: large;">. </span></span><br />
<br />
<span style="font-size: large;"><span style="font-size: large;">The Bitcoin public blockchain implements a global settlement layer ("layer 1" in bitcoin parlance). </span>The closest historical analog to the Bitcoin settlement layer is not to the bank notes, nor even to the coins (despite its name), it is to the monetary metal that for most of monetary history from ancient civilization to the 20th century ultimately underlay the IOUs. This "metal layer" of historical money systems will be covered in part (ii) of this series, as will some even more ancient forms of non-governmental money.</span><br />
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<u><span style="font-size: large;">Bank notes</span></u></h3>
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<span style="font-weight: normal;"><span style="font-size: large;"><span style="font-size: large;">Higher
layers of the bitcoin ecosystem, which can include exchanges
(centralized or decentralized) as well as more trust-minimized systems
such as <a href="https://lightning.network/lightning-network-paper.pdf" target="_blank">Lightning</a>,
correspond most closely in our rough historical analogies to checking accounts (which, although often counted by economists as part of the money supply, and not created or managed by governments, will be so familiar to most readers that they will not be covered in this series) and to private
bank notes. In these higher layer monetary systems, a more computationally (or for bank notes physically)
efficient medium is substituted for a less efficient medium (for bank
notes, often the underlying metal), usually (as is the case with checking accounts, bank notes, and centralized bitcoin exchanges alike) at the cost of
increasing trust and thus vulnerability and risk in the system.</span></span></span><br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSC2rwnre_Hm-McZVtnlvFl2SroTSeQpj5Tsyi_UeRZom4Dr065huKubFNzNBWnF22Hef1GCYqVwBvXyU1TxYoDttrkMKIAchnVQNpusLaJXZ5sFCMr7NzMNSJOE-3qk5mbzL5/s1600/One+Pound+Note+1945+North+of+Scotland+Bank+Limited.JPG" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="899" data-original-width="1600" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSC2rwnre_Hm-McZVtnlvFl2SroTSeQpj5Tsyi_UeRZom4Dr065huKubFNzNBWnF22Hef1GCYqVwBvXyU1TxYoDttrkMKIAchnVQNpusLaJXZ5sFCMr7NzMNSJOE-3qk5mbzL5/s640/One+Pound+Note+1945+North+of+Scotland+Bank+Limited.JPG" width="640" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;"><span style="font-family: inherit;"></span>Bank
note (bearer promissory instrument) issued by the North of Scotland
Bank, 1945. Many banks besides central banks have issued bank notes that
circulated as
currency. <a href="https://en.wikipedia.org/wiki/George_Selgin" target="_blank">George Selgin</a> and <a href="https://en.wikipedia.org/wiki/Lawrence_H._White" target="_blank">Lawrence White</a> among others have done
extensive work in <a href="https://en.wikipedia.org/wiki/Free_banking" target="_blank">this area</a>. Knowledge of the long
history of non-governmental money was one of the inspirations of the original invention
of trust-minimized cryptocurrency. This practice continues to this day in Hong Kong and Scotland.</span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3zb_ge1eTIKJYGlWzHi5DLUgwHqCO_7oD2kmvaLWswmcsT73TcOaCtW2CeDrsSw_odpzDRUQbkCpgKRFkQ9yPKzPT2qI1QDHgxEnf8A7FnQ6nPBCqpqsCwLLA9Q1bk9Eq0Q3Y/s1600/PrivateBankNoteStockholmEnskildaBank1876.JPG" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="899" data-original-width="1600" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3zb_ge1eTIKJYGlWzHi5DLUgwHqCO_7oD2kmvaLWswmcsT73TcOaCtW2CeDrsSw_odpzDRUQbkCpgKRFkQ9yPKzPT2qI1QDHgxEnf8A7FnQ6nPBCqpqsCwLLA9Q1bk9Eq0Q3Y/s640/PrivateBankNoteStockholmEnskildaBank1876.JPG" width="640" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;">Stockholms
Enskilda Bank note, Sweden, 1876. Critics have said that decentralized note
issue, following the same principles of fractional reserve and maturity
mismatch as central banks, were just as or more prone to runs on the bank. Defenders
have argued that competition between note-issuing banks formed a
peer-to-peer system where banks could redeem competitors' notes, making
it more reliable and robust form of fractional reserve banking than a central bank run or managed fractional reserve.</span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPzsjDJESrn40KiGdalvvtpxQjMORXCIlcFVhRIOQk7j7zGAD28osv1Ir1IF5H1mUE7-gzoc2w26-GUhKy25BtxSDId5vyAwZg1s5qYk3i3cxxxw92jUZeFTOsdJb5Fda8IftI/s1600/PrivateBankNoteHSBC2009Cropped.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="465" data-original-width="900" height="330" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPzsjDJESrn40KiGdalvvtpxQjMORXCIlcFVhRIOQk7j7zGAD28osv1Ir1IF5H1mUE7-gzoc2w26-GUhKy25BtxSDId5vyAwZg1s5qYk3i3cxxxw92jUZeFTOsdJb5Fda8IftI/s640/PrivateBankNoteHSBC2009Cropped.png" width="640" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;"><span style="font-size: x-large;"><span style="font-family: inherit;"><span style="font-size: large;">Hong Kong & Shanghai Banking Corporation (HSBC) bank note, 2009. </span></span></span></span></td></tr>
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<tr align="left"><td class="tr-caption"><span style="font-size: large;">Ipswich
Bank, a "country" (non-London) bank in England, 1820s (this instance
unissued). Traditionally country banks, like the Bank of England,
redeemed for specie, i.e. the official coin, which contained a standard
weight of monetary metal (usually in this era silver). After 1833, Bank
of England notes became legal tender which holders of country bank notes
had to accept in lieu of specie.</span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYIcIXOkFhzwJcAK6HuHOko4KyuAT1PL6iUL5uWUlD-mqgGB_4dclzYnFlbl6rYGbXYX2aIUDNSuWxFlqtSPXd2Tm5ZnxSHAWLGCav7SI1-Mq7ii_qgv8VmVjRYgH8Vkf4wFi7/s1600/PrivateBankNoteCandaBankPrinceEdwardIsland.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="477" data-original-width="1099" height="275" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYIcIXOkFhzwJcAK6HuHOko4KyuAT1PL6iUL5uWUlD-mqgGB_4dclzYnFlbl6rYGbXYX2aIUDNSuWxFlqtSPXd2Tm5ZnxSHAWLGCav7SI1-Mq7ii_qgv8VmVjRYgH8Vkf4wFi7/s640/PrivateBankNoteCandaBankPrinceEdwardIsland.jpg" width="640" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;">Bank of Prince Edward Island note, Canada, 1871</span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6KowtWNHROEhmDN3MDpYIUobOtTSlhNCUFT7gT8TVF8M4ZrmmvaB6j7033mact6SClM637qusb-vSERuQ5A2IowlH03DSqjCx5yZai1b56k6PCriR0pydIH7cswv_ulVQQ3ds/s1600/PrivateBankNoteMechanicsBank1856.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="687" data-original-width="1600" height="274" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6KowtWNHROEhmDN3MDpYIUobOtTSlhNCUFT7gT8TVF8M4ZrmmvaB6j7033mact6SClM637qusb-vSERuQ5A2IowlH03DSqjCx5yZai1b56k6PCriR0pydIH7cswv_ulVQQ3ds/s640/PrivateBankNoteMechanicsBank1856.png" width="640" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;">Mechanic’s Bank note of 1856, Augusta, Georgia. Before our Civil War, most paper money in the United States was
privately issued.</span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeX50TND0O5OZCir0nb2WG_qQO7V3oNnvIsxStsvuAPe3idKbVJPkBFtNval7BmSuAYRvKqR6eur4IpXqzd0zkyw5rBI696Q8L_wROrO1x3U4VwHyRrOvOasMz22eZo6xxFpdM/s1600/BooneCountyBank20Large.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="330" data-original-width="700" height="299" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeX50TND0O5OZCir0nb2WG_qQO7V3oNnvIsxStsvuAPe3idKbVJPkBFtNval7BmSuAYRvKqR6eur4IpXqzd0zkyw5rBI696Q8L_wROrO1x3U4VwHyRrOvOasMz22eZo6xxFpdM/s640/BooneCountyBank20Large.jpg" width="640" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;"><span style="font-family: inherit;">Boone County Bank note, Lebanon, Indiana 1858. "<span style="-webkit-text-stroke-width: 0px; background-color: white; display: inline !important; float: none; font-variant-caps: normal; font-variant-ligatures: normal; letter-spacing: normal; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">During
this era the U.S. had no central bank and paper money was issued by a
variety of private banks. Some was even issued by manufacturing and
retail companies. This money was backed by gold, silver, real estate,
stocks, bonds, and a wide variety of other assets. You can no longer
cash them in, but they are now worth often substantial sums as
collectibles...the note designs were more varied and creative than
modern money, and were remarkably free of </span></span></span><span style="font-size: large;"><span style="font-family: inherit;"><span style="-webkit-text-stroke-width: 0px; background-color: white; display: inline !important; float: none; font-variant-caps: normal; font-variant-ligatures: normal; letter-spacing: normal; text-align: start; text-decoration-color: initial; text-decoration-style: initial; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">politicians' faces." <a href="https://unenumerated.blogspot.com/2008/05/bank-notes-from-free-banking-era.html" target="_blank">Source</a></span></span></span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBZ9KC3PtrqueDsmCwUJBWVEsW7LWuy_7sMSsTLLFXowlTFATzbLb9HI9GwrDpiHTUGJO2LZRKV3-9I6aSSu3zEw8-U_GvIScruP3y6VTyU5ecRVetuK8iT0X44oH4iujHKRSS/s1600/BankOfDeSotoLarge.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="360" data-original-width="837" height="274" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBZ9KC3PtrqueDsmCwUJBWVEsW7LWuy_7sMSsTLLFXowlTFATzbLb9HI9GwrDpiHTUGJO2LZRKV3-9I6aSSu3zEw8-U_GvIScruP3y6VTyU5ecRVetuK8iT0X44oH4iujHKRSS/s640/BankOfDeSotoLarge.jpg" width="640" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;">Bank of De Soto note, De Soto, Nebraska, 1863. Critics have called this era of U.S. private bank note issue the "wildcat banking" era. Collectors sometimes call surviving private bank notes "broken bank notes", because notes from banks that were quickly or never redeemed are much more likely to have survived in reasonable to excellent condition.</span></td></tr>
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<tr align="left"><td class="tr-caption"><span style="font-size: large;">Hagerstown Bank note, Hagerstown, Missouri, 1850s (this instance unissued). Some other scholars within the Federal Reserve remembered the private note-issuing era in the United States; their central bankers' view of it can be found <a href="https://www.minneapolisfed.org/research/qr/qr931.pdf">here</a>. </span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQCc3Khnl3vB0L14Mu91x1RObX1KHEjfMjtzD1DhSI-9pUpt4W3Pgtypyh0LEVHBbfadIUNdLbkFe8vNXoHriMKGWurp_JgV7pbfd3linlObzEfg6m0MbOdBK7hyphenhyphenCumD5RPcrO/s1600/Jiao_zi_SongDynastyNote.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="537" data-original-width="308" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQCc3Khnl3vB0L14Mu91x1RObX1KHEjfMjtzD1DhSI-9pUpt4W3Pgtypyh0LEVHBbfadIUNdLbkFe8vNXoHriMKGWurp_JgV7pbfd3linlObzEfg6m0MbOdBK7hyphenhyphenCumD5RPcrO/s400/Jiao_zi_SongDynastyNote.jpg" width="228" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;">Jiaozi, a bearer promissory note
from the Song Dynasty. The earliest jiaozi were issued in Sichuan province by
merchants to relieve their fellow merchants of the high costs of transporting
the heavy government-issued iron coins.</span><br />
<br />
<span style="font-size: large;"><span style="font-size: large;">Gordon Tullock wrote of bearer promissory notes in an earlier time and different part of China, </span></span><br />
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<span style="font-size: large;">By A.D. 700-800 there were shops in China which would accept valuables,
and, for a fee, keep them safe. They would honour drafts drawn on the items in
deposit, and, as with the goldsmith's shops in Europe, their deposit receipts
gradually began to circulate as money. It is not known how rapidly this process
developed, but by A.D. 1000 there were apparently a number of firms in China
which issued regular printed notes and which had discovered that they could
circulate more notes than the amount of valuables they had on deposit. [<a href="https://www.scribd.com/document/147318013/Tullock-G-Paper-money-in-Mongol-China-pdfullock-G-Paper-money-in-Mongol-China-pdf" target="_blank">Source</a>]</span></div>
</blockquote>
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<u><span style="font-size: large;">Coins</span></u></h4>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnVpNU3i1uQmQxBAUNiwhDA85u4mShj5Fo793jK6ZeFfjaj47pgMXkOst64ZJXYfLH_hjkz-ExS3Mcb-4ASE3q9MuPV6mseNZ29mxS5G2AXbiZGss-dLaeEvIEPnmq9nmDVTKo/s1600/PrivateCoinEdwardNightingaleHalfPennyBrass1670s.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="394" data-original-width="808" height="312" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnVpNU3i1uQmQxBAUNiwhDA85u4mShj5Fo793jK6ZeFfjaj47pgMXkOst64ZJXYfLH_hjkz-ExS3Mcb-4ASE3q9MuPV6mseNZ29mxS5G2AXbiZGss-dLaeEvIEPnmq9nmDVTKo/s640/PrivateCoinEdwardNightingaleHalfPennyBrass1670s.png" width="640" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;"><span style="font-size: large;">A brass half-penny issued by grocer Edward Nightingale, probably dating from the early 1670s. </span></span><span style="font-size: large;"><span style="font-size: large;"><span style="font-size: large;"><span style="font-size: large;"> [<a href="https://archive.org/download/dudleytradesmens02perk/dudleytradesmens02perk_bw.pdf" target="_blank">Source</a>]</span></span>
While in most times and places, coinage was a royal or otherwise
political monopoly, there
were a number of important exceptions where coins were minted privately
and successfully circulated as currency.</span> Per monetary historian Glyn Davies, during the English Commonwealth, Protectorate, and early
Restoration occurred “a vast issue by
merchants, manufacturers, and municipalities, between 1644 and 1672, of copper
tokens, mostly of farthings and halfpence.” [<a href="http://library.uniteddiversity.coop/Money_and_Economics/A_History_of_Money-From_Ancient_Times_to_the_Present_Day.pdf" target="_blank">Davies</a> p243] </span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja8I82FjzTvZCs_6YWkMbzCrWlRcvEIfmzF-3ehRoYHFlo2cu4ebkUJ-9TXJPj0cwcoYMriPBd6EGlHfX1B875S3a_NdWcOf7PnQA_OUGC1a-9IOFdWbxqR1ak9OfVtdc_m1SB/s1600/PrivateMintAngleseyMiningCompanyDruidHalfpenny.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="286" data-original-width="291" height="393" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEja8I82FjzTvZCs_6YWkMbzCrWlRcvEIfmzF-3ehRoYHFlo2cu4ebkUJ-9TXJPj0cwcoYMriPBd6EGlHfX1B875S3a_NdWcOf7PnQA_OUGC1a-9IOFdWbxqR1ak9OfVtdc_m1SB/s400/PrivateMintAngleseyMiningCompanyDruidHalfpenny.jpg" width="400" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: small;"><span style="font-size: large;">Anglesey & Mines druid half-penny, England, 1788. </span></span><span style="font-size: small;"><span style="font-size: large;">"From 1787 to 1797, private
merchants and industrialists issued 600 tons of custom-made 'commercial' copper
coin, which was more copper coin than the Royal Mint had supplied during the
previous half century." [<a href="http://www.independent.org/store/book.asp?id=75" target="_blank">Source</a>].</span></span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0ey_2O8wV4TD1lzx3Xz4nTINOmsVK6pi1HzRmW7GmWkyunJEDWkQw5igPHQ6xboEuOydNpYjI5m6x1-buqh8cLDQSQmZGhjDDiyjlYebwZkA3o9jQ5gp3cWJh7CjXHJXXhAW0/s1600/PrivateMintCoinCoalbrookdaleShropshire1792.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="202" data-original-width="400" height="201" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0ey_2O8wV4TD1lzx3Xz4nTINOmsVK6pi1HzRmW7GmWkyunJEDWkQw5igPHQ6xboEuOydNpYjI5m6x1-buqh8cLDQSQmZGhjDDiyjlYebwZkA3o9jQ5gp3cWJh7CjXHJXXhAW0/s400/PrivateMintCoinCoalbrookdaleShropshire1792.jpg" width="400" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;">Ironbridge coin, minted by Coalbrookdale Works, Shropshire, England, 1782. In the industrial revolution, factories had to attract workers with frequent pay that could be spent at bargain shops. The Royal Mint was not producing low-denomination coins, so factories minted their own or used the coins minted by another firm. A good review by Jeffrey Hummel of George Selgin's excellent analysis of this era here.</span></td></tr>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhG1NZPISDMNPG8EwVPrk0hiEGkT43M4bY_qdUE1y44XC0Fkb70rqBhlmVIHgCGmR3qXv3qSi_gPKFNzGZB2_E8O0fhJbnTcjkDPv3-2ELtiqYP_C2HaZPTdsDbplEwaSsBCST5/s1600/PrivateMintSilverCoinsSezchuan1912.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="627" data-original-width="983" height="408" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhG1NZPISDMNPG8EwVPrk0hiEGkT43M4bY_qdUE1y44XC0Fkb70rqBhlmVIHgCGmR3qXv3qSi_gPKFNzGZB2_E8O0fhJbnTcjkDPv3-2ELtiqYP_C2HaZPTdsDbplEwaSsBCST5/s640/PrivateMintSilverCoinsSezchuan1912.png" width="640" /></a></td></tr>
<tr align="left"><td class="tr-caption"><span style="font-size: large;"><span style="font-size: large;"><span style="font-size: large;">Privately minted coins from Sichuan province, China, 1912. </span>While the minting of private coins, especially imitations of official
coins, was often banned in order to secure a royal or other political monopoly, the industrial revolution was not the only time
or place where private entities minted. </span>Private coinage was by no means even limited to the Anglosphere. </span><span style="font-size: large;"><span style="font-size: large;">Nevertheless, the vast majority
of coins in the numismatic record were minted by or under the license
of kings, emperors, elected officials, and other kinds of political leaders, and these are also the kinds of coins prized by political historians as the most durable records of a leaders' reign. </span></span></td></tr>
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<span style="font-size: large;">In part (ii) of this series we will explain and give a few examples of the monetary metals themselves, usually mined and processed by private entities. For most of monetary history, from ancient civilization until recent times, the monetary metals were the ultimate "O" in the IOUs -- the substances that bearer promissory notes were most often redeemed for -- and constituted the most common contents of the coins themselves. </span><span style="font-size: large;">The
various forms into which monetary metals could be shaped, including
coins, were sampled and assayed for their metal content when used
outside of the locale where they were issued or covered by legal tender
laws.</span><br />
<br />
<span style="font-size: large;">Part (ii) will also explain why these metals, not any of their particular forms, are the closest analog we have to Bitcoin in monetary history. Finally, we will cover some the many other forms besides coins that these metals could take, the monetary and quasi-monetary functions of these forms, and get some glimpses of even more ancient forms that were the common ancestors of modern money and modern jewelry. Part 2 can only scratch the surface of this vast topic and will refer the reader to more in-depth works including those of this author.</span>Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com13tag:blogger.com,1999:blog-17908317.post-3418729523954794452017-03-29T00:25:00.000-07:002017-03-29T01:04:59.810-07:00Collecting metal: the inner and outer worlds of jewelry, coins, bullion bits, and odd shiny things<div class="p1">
<span style="font-family: "georgia" , "times new roman" , serif;">Millions of millennia ago, in our own Milky Way galaxy, but far upstream of where we are today, two neutron stars spiraled around each other, each embodying the mass of a sun but smaller and faster than a speeding planet. Each of these tiny gigaworlds, millions of times denser than our sun, had been produced, not by a mere exploding star, but by a far more powerful supernova. Each supernova, burning a nuclear fire with a far greater power density than a normal star such as our sun, had besides a neutron star also produced a cavalcade of new elements. For elements lighter than iron, this nuclear fusion releases energy; but for elements heavier than iron, including copper, silver, and gold, nuclear fusion requires a net energy input as well as astronomical power densities. Our supernovae were powerful enough to create many metals, including copper and silver, from the fusion of lighter elements. But they were not powerful enough to create gold. Gold awaited the current, far more powerful and rarer event. </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Our two stars, fortuitously set into collision course by two separate supernovae, approached each other and then, captured by each others’ gravity, entered a death spiral. They collided in an unimaginable explosion, unleashing a power density far greater than that of a mere supernova and trillions of times greater than if a mere mountain-sized asteroid had hit the earth. The collision was so intense that it created a black hole and a burst of extremely high energy light called gamma rays. Escaping the black hole along with the gamma rays was a spray of new, heavier metals, including gold. This gold-rich cloud in part expanded and in part coalesced, participating in the subsequent formation of new solar systems, including our own. Due to this collision of rare intensity, our unusual solar system was seeded with astronomically rare heavy metals such as gold along with the more common supernova products such as copper and silver. [<a href="https://www.cfa.harvard.edu/news/2013-19#sthash.JnW4KQ0q.dpuf" target="_blank">Source</a>]</span></div>
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<tr><td class="tr-caption" style="text-align: left;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"><i>Copper (Cu), Silver (Ag), and Gold (Au) sit on top of each other on the periodic table, sharing many electrical, chemical, and material properties that enhance their durability and divisibility. Gold, the heaviest, required the most extreme conditions and energy to form, as all elements were generated, from lighter elements. Copper required easier conditions to form and is thus much more common, with silver in between.</i></span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif;">Billions of years later, naked apes evolved with hypertrophied brains and clever hands, living on a planet in this gold-dusted solar system. They dug out the gold and silver they could find and separated it from the more common earth. Other more common metals were more useful for concretely usable tools; instead they fashioned the precious metals into what looks to our eyes like jewelry. They formed these precious metals into shapes both repetitive and unique, bragged about them, displayed them, stored them as “treasure”, “wealth”, and “money”. They fashioned gold and silver into wearable objects, transferred them to each other or stole them, even injuring or killing each other in pursuit of them. They used the gold and silver to pay each other compensation for those and many other injuries. People transferred gold and silver to each other in order to satisfy important obligations as well as to obtain items of more direct and obvious use. Since the most important such obligations happened at many of the most fitness-critical junctures of life – marriage, death, injury, war – gold and silver, as treasure and as money, came to be greatly desired.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Some metal collectibles came in a wide variety of artistically skilled forms. Others came in the form of coins: labeled, mass-produced pieces of metal stamped by the blow of a hammer or cast in molds, whereby a mostly-trusted brand named their alleged value. Still others came in forms that look odd to us, resembling neither coins nor fancy jewelry, but rather utilitarian-looking pieces that manage to make precious metals ugly, and that might have been worn but that look, long before the era of factories, like they were mass produced. . People around the world wore gold jewelry proudly, and globe-straddling monetary systems, on which economies were said to be based, were defined around gold and silver objects and debts denominated in weights of those metals.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">We can think of collectibles as coming at us at two levels, like railroads and trains, or like pipelines and the oil they carry. At the most basic or “inner layer” is the metal itself that constitutes the substance of the collectible: occasionally iron, more typically copper or bronze for the less valuable collectibles, and the precious metals, especially gold and silver, for the more valuable money and treasure.</span></div>
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<i><span style="font-family: "georgia" , "times new roman" , serif; font-size: small;">The “protocol stack”, or distinct layers of cultural understanding, for objects made out of precious metals: the natural, rare, and durable substance itself, versus the particular forms given to it as artwork, jewelry, coins, etc.</span></i><br />
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<span style="font-family: "georgia" , "times new roman" , serif;">So important is the “lower layer” of the traditional cultural understanding of gold and silver, the natural substance itself, evaluated by its weight rather than by any value added via the craftsmanship or its form, that Europeans of earlier generations evolved a word for it: bullion. Bullion is the metal itself, considered and valued only for its substance. Jewelry, coins, and other ways of shaping precious metals are just various forms of the underlying bullion.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">The famous gold/silver ratio (exchange rate) operates at this basic level. The cost and supply of precious metals, given the technological similarity of the means for mining and processing each, are dominated by their natural origins in the stars above and the geology below.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"><i>Viking hoard unearted in Watlington, Scotland: silver coins, small ingots, and jewelry. Why were were coins (“money”) so often stashed with jewelry (“ornament”)? And what is up with those lumps? </i><i>[<a href="http://www.britishmuseum.org/about_us/news_and_press/press_releases/2015/viking_hoard_found.aspx" target="_blank">Source</a>]</i></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Besides their different origins in neutron star collisions and supernovae respectively, once our solar system had formed, the way our earth and its moon were formed may have also been important: when another planet collided with an earlier form of the earth, and the resulting debris clouds reformed into the earth and moon as we know it, heavier metals tended to stick with the heavier body while the lighter ones (which don’t include precious metals) tended to stick with the moon. Another theory holds that this collision did not matter: practically all the mineable concentrations of gold sunk to the center anyway; the gold we mine today came from a spate of later asteroid bombardment, said asteroids also being formed in the gold-rich dust of our early solar system.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">More local geology also played a role in where we have found gold and silver: equatorial Africa was formed with more gold than Europe, and Europe and Bolivia with more silver than China. As a result, the value (in terms of other kinds of goods) of gold and silver could vary significantly across the planet, as well as the exchange rate between the two precious metals. Only with modern transportation and ubiquitous markets has the gold:silver price ratio, as well as the exchange rates between precious metals and other goods, converged on ratios that hold the world over.</span></div>
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<h4>
<span style="font-family: "georgia" , "times new roman" , serif;">Spheres of transfer and local distinctions</span></h4>
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<span style="font-family: "georgia" , "times new roman" , serif;">In 1959 Paul Bohannan [1] coined the phrase “spheres of exchange” to refer to moral or legal distinctions made between different types of exchange. Often one set of collectibles was expected to be used in one kind of exchange, and another distinct set in another. Since there are several important kinds of wealth transfer besides exchange, we can generalize Bohannan’s idea to the concept of spheres of transfer.</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span><span style="font-family: "georgia" , "times new roman" , serif;">In Western cultures (and many other modern cultures under their influence), for example, we make a strong distinction between money, meant for the rapid turnover of earning and spending, and heirlooms that are expected to stay in the family for generations, with feelings of guilt or shame occurring if we have to sell a family heirloom.</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span><span style="font-family: "georgia" , "times new roman" , serif;">But it’s fine to use an heirloom ring for a marriage. Similarly, we make a strong distinction between stocks and bonds on the one hand and decorative wealth objects such as jewelry and artwork on the other.</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span><span style="font-family: "georgia" , "times new roman" , serif;">So strong is our taboo that if a Western archaeologist finds a wearable (as in forager days they mostly were) collectible, it is automatically and dogmatically labeled “ornamental” or “symbolic”, with wealth-related uses seldom considered.</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span><span style="font-family: "georgia" , "times new roman" , serif;">(It also doesn’t help that shells, often scarce and precious treasures in indigenous environments, look like cheap tourist knick-knacks to modern eyes).</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span></div>
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<tr><td class="tr-caption" style="text-align: justify;"><i style="text-align: start;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: small;">The transition from shell to metal: beads fashioned from copper (dark) and from Spondylus (spiny oyster) shells (light). The shells, transported by foot (probably by many feet and many hands) hundreds of miles from the Aegean Sea, had for thousands of years been popular in the Danube river basin when the world’s earliest metal artifacts were invented there. The first copper and gold artifacts were beads fashioned to substitute for the Spondylus beads in Danubian jewelry. [<a href="http://isaw.nyu.edu/exhibitions/oldeurope/pdf/spondylus.pdf" target="_blank">Source]</a></span></i></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif;">Legal or moral sanctions discourage transfer of objects from one sphere to another.</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span><span style="font-family: "georgia" , "times new roman" , serif;">In feudal European societies it was shameful and often even illegal to sell or mortgage land: a lord’s duty was to preserve his land and devise it intact to his eldest son. In modern Western society, weddings are one sphere of transfer (where a gift of a finger-ring is expected, as well as some household items from the guests and a feast or party thrown by the parents), whereas commerce and legal remedy in civil law is another (where payment of money is expected). Some aspects of our bodies (such as ownership of humans or payment for sex or body organs) are off limits to monetary compensation – one is expected to donate an organ, not to sell it – while many others are not (most health care, for example). All of these spheres can involve transfers of objects of substantial value, but it is disgraceful and/or illegal if they are the too obviously the wrong ones for the given sphere.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"><i>The world’s oldest gold artifact – a small bead from the lower Danube river basin (4,600-4,500 BC). [<a href="http://archaeologicalnews.tumblr.com/post/148745489421/archeologists-find-what-may-be-worlds-oldest-gold" target="_blank">Source</a>]</i></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><br />In the modern West, we consider the realm of jewelry and the realm of money to be very separate spheres of transfer. It is considered either a shameful betrayal or a grim necessity if the winner of an Olympic or Nobel Prize medal or a Super Bowl ring sells it to raise money. The finger-ring is a central feature of modern weddings, but few things would offend a typical modern bride more than being paid a bride price, she or her kin being indemnified by money as if she, as we would see it, were a prostitute on long-term contract. Meanwhile, our economists obsess over money while touching on the subject of jewelry hardly at all, and certainly not as any sort of form or variant of money. We moderns can hardly imagine confusing such seemingly very different things, and indeed the very idea offends our sensibilities. But in many non-Western and earlier Western cultures this was far from the case. For them the fundamental protocol layer, the substance itself, is cherished for its own sake, and forms the great majority of the value of the item, while its protocol layer two, the “outer layer”, the particular form it has been fashioned into, while often of considerable interest, is usually quite secondary in determining its value for purposes of the display and transfer of wealth.</span></div>
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<tr><td class="tr-caption" style="text-align: justify;"><i style="text-align: start;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: small;">Recycling of gold jewelry in the United States: usually to be recast as bullion bars for central bank and gold exchange-traded-fund (ETF) reserves, or for export to Asia for making jewelry for which the gold content is far more important than in the West. Occasionally cast into gold coins for “gold bugs” and collectors.</span></i></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif;">This modern Western restriction involves the more culturally local aspect of gold and silver, namely the particular form it takes (jewelry vs. coin), even though these objects are made out of the same underlying substance, and traditionally were mainly prized for the content by weight of that substance. Even in our own culture we have businesses that serve to transfer gold and silver from one sphere to another. Nevertheless, economists and other academicians often act as if money and jewelry are scientifically and objectively very distinct objects, when in fact this is a cultural convention that is largely confined to the modern West. </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Globe-trotting gold dealer Roy Sebag has [<a href="https://medium.com/@roysebag/the-gold-jewelry-standard-a-continuous-system-from-ancient-times-to-present-day-57e16fb63522" target="_blank">described</a>] the differences between Asian and Western views of jewelry. As he describes it, over $2 trillion worth of jewelry is owned by about 2 billion people in India and China alone, constituting a much larger fraction of their wealth on average than in the West. The metal content of the gold jewelry constitutes the vast majority of its sales price and its assessed value as collateral, as it also does in Brazil, Russia, and most other countries outside of Western Europe, the British Commonwealth, and the United States. In the latter countries, precious metal content constitutes only a small fraction of the sales price or pawning value of jewelry. “Jewelry is money” is how Sebag summarizes his observations of the modern Asian jewelry market.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"><i>In cultures without a strong distinction between decorative jewelry and money, they often didn’t even bother melting it down to switch from coins to lower velocity but more displayable forms of wealth. Roman gold coin minted c. 400 AD, converted in the 7th century into an Anglo- Saxon pendant: [<a href="https://twitter.com/caitlinrgreen/status/575061782743613441" target="_blank">Source]</a> [<a href="https://twitter.com/caitlinrgreen/status/698431519191216128" target="_blank">See also</a>]</i></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">While the “lower" or "inner" layer of the metal collectible “protocol stack” is its natural substance, its “upper" or "outer" layer is the particular form it takes. Sometimes it is mass produced (as in coins and common bead shapes) and sometimes it is a unique work of exquisite and rare craftsmanship. Form and style is the “protocol layer” of gold artifact most highly valued and distinguished in modern Western jewelry; but it is far less valued, compared to the natural substance itself, in the vast majority of Asian and pre-modern Western jewe</span><span style="font-family: "georgia" , "times new roman" , serif;">lry.</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span><span style="font-family: "georgia" , "times new roman" , serif;">As with [<a href="https://unenumerated.blogspot.com/2017/02/conflict-and-collectibles-among-yurok_87.html" target="_blank">pre-metal forms of collectibles</a>], the form of metal collectibles can be sub-divided, in a way generalizable across nearly all known cultures, into treasure (typically of high value and not as an object fungible or divisible, unless melted down destroying the particular object) and money (objects such as coins that are meant to be efficiently transferred and combined with other such objects to create the particular amount of value needed).</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Metal or metaled treasure has taken the form of gilded objects, sculptures, various utilitarian objects enhanced artistically and made out of the scarcer metals, as well as jewelry. Treasure was, and sometimes still is, typically used for heirlooms, displays of wealth, as collateral for loans of money, and for large wealth transfers. In traditional societies these wealth transfers usually accompanied fitness-critical events. They often occurred at marriages, deaths, to satisfy obligations entered into to end wars, and as compensation for major injuries, as well as in helping to facilitate trade.</span></div>
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<tr><td class="tr-caption" style="text-align: justify;"><i style="text-align: start;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: small;">The Stollhoff hoard – copper spirals and axe blades as well as gold discs from the upper Danube river watershed (modern Austria), c. 4000 BC. Spiral armbands were among the earliest large items worked from native copper, in the middle Danubian basin (modern Hungary) c. 5000-4500 BC.</span></i></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif;">Money as this work defines it, on the other hand, can be distinguished from treasure by its fungibility and divisibility. In our Western tradition metal money and coins are practically synonymous, but with cross-cultural observations, as for example in [2] and [3], and even in modern Asia as Sebag has observed, the distinction between money and jewelry is far less clear-cut – with the proviso that in his mind, as well as in the minds of the jewelry customers and suppliers he observed, it is the divisibility and fungibility of the substance itself, not its form, that is paramount. Nevertheless, a significant fraction of the forms jewelry comes in, such as beads and constant-width wires, could be treated by their users if they so desired as fungible and divisible without destruction of even the form of the object. Indeed, such forms in jewelry, especially in the archaeological record, are more common than would seem likely if solely artistic and never monetary considerations had been involved in their original design. As a result of bringing their cultural assumptions to bear, endless energy has been wasted by Western observers trying to distinguish non-Western “money” or “primitive money” from non-Western “jewelry”.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"><i>Boringly standard, divisible, and fungible, in its particular form as well as in the underlying metal, but boasting neither the kings and dates on coins desired by historians nor the fine craftsmanship of unique work beloved of museums, and categorizable by the dominant academic ideologies as neither money nor art nor ornament, so it sits packed in boxes in the cellar of the Danish National Museum, like many other such mundane but important artifacts underneath museums around the world. About 2,000 small gold spirals were buried in a fur-lined wooden box in Denmark between 900-700 B.C. [<a href="https://twitter.com/ticiaverveer/status/816748922836287488" target="_blank">Source</a></i><i>]</i></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Law and “money”</span></h3>
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<span style="font-family: "georgia" , "times new roman" , serif;">Western (roughly speaking, European-derived) law, which now dominates the world, can be very flexible when it comes to applying itself to money. When supporting money with legal institutions, it tends to take a definition far more narrow the “medium of exchange and store of value” definition beloved of economists. When discouraging undesired forms, amounts, or velocities of money, on the other hand, law sometimes takes in a far broader scope of objects than Western economists think of as money. </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">One of the more common modern legal definitions of “money”, used for laws that facilitate and support financial interchange (such as contracts for goods, checks, collateral for loans, etc.), is that money can only be an official government currency (see <a href="https://www.law.cornell.edu/ucc/1/1-201#Money" target="_blank">for example</a>). By definition, no substance or form of matter or pattern of information of any kind, regardless of how it functions or how it is used, can be money, if has not been authorized or adopted by a government. You cannot write a legal check in any of the United States for ounces of gold or Bitcoin, because gold and Bitcoin are not, per the Uniform Commercial Code, “money”. </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Such definitions, while quite necessary to understand if you hope to deal with money in the majority of modern countries with such laws, are hopelessly specific to a certain kind of culture and politics, as well as being scientifically unsound as a basis for reasoning about even just the role of money in exchange even in cultures living under such laws, much less its actual much wider role in wealth transfers and in other cultures without such laws. Thus outside of this section we will neglect such official definitions of money in this work. Instead we use the objective definition presented here. This is certainly not the only possible definition of “money”; many far wider, far narrower, and very conflicting definitions of this word have been used in the ethnographic, anthropologic, archaeological, and economic literatures, usually implicitly rather than consciously, thereby causing the reader to join the author in being hopelessly confused about the subject.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Thus when enforcing rules for modern financial institutions, modern law uses a very narrow definition of money; the many other ways of storing and transferring wealth are not allowed to benefit from these advanced institutions. But when cracking down on alleged abuses of money, law often restricts a far wider array of objects used to store and transfer wealth. A great illustration of the monetary nature of jewelry is given by the current (as of this writing) Indian demonetization law. The crackdown includes gold and focuses on its natural substance, not its mere form as coin (“money” to modern Western eyes) as opposed to jewelry (supposedly “ornament” not “money”). Under Indian law it is all subject to stringent controls alongside the notes and coins: </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"> …the rules governing when tax officials could seize gold: Nothing would happen “if the holding is limited to 500 grams per married woman, 250 grams per unmarried woman and 100 grams per male.” It also said that there would be no limits on jewelry “provided it is acquired… from inheritance.” [<a href="https://www.bloomberg.com/view/articles/2016-12-04/after-demonetization-modi-should-do-no-more-harm" target="_blank">Source</a>]</span></blockquote>
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<span style="font-family: "georgia" , "times new roman" , serif;">When Mongol conqueror Kublai Khan issued paper currency in late medieval China, to make this poorly trusted scheme work his government confiscated gold and silver, jewelry and coin alike, gems and pearls as well as gold and silver, in a forced exchange for the paper notes. [7]</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Bullion bits and odd shiny things</span></h3>
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<span style="font-family: "georgia" , "times new roman" , serif;">Divisible and fungible metal forms such as coins, small thin ingots (hack-silver), <a href="https://unenumerated.blogspot.com/2016/12/weigh-and-deliver-compensation-and.html" target="_blank">arm-rings and wire</a>, and beads have to a greater or lesser extent, depending on the culture, been used for small or frequent payments made to people who commonly need to make small acquisitions (such as the wages of soldiers and laborers), as well as to round out a value of a large wealth transfer to a specific desired value, that otherwise mostly constitutes treasure, indivisible and of a unique value somewhat different than the value desired, via custom, law, or negotiations, for the wealth transfer. </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">W.B. Dickinson observed the ubiquity, both as archaeological artifacts in many far-flung parts of Eurasia and in widespread use in East Asia and Indian Ocean regions, of precious metals (bullion) in wire, coil, and arm-ring, in bullion forms that looked more utilitarian than decorative, and noted the wear on such artifacts indicating that at least some had probably passed from hand to hand with a velocity more coin-like than treasure-like. He observed that their existence extended</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">throughout countries extending from Syria, Arabia, Egypt, Socotra, the Persian Gulf to Ceylon, China, Japan, Siam, and the whole East, to the south-west coast of Africa, to the north of Europe, to England and to Ireland. That the people of so many places, and in so various ages, should have formed their bullion and other metals into this particular form solely for the purpose of barter, without attaching to it any monetary character, seems a conclusion very difficult to arrive at…these forms were to all intents and purposes the money of the respective lands.[4]</span></blockquote>
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<span style="font-family: "georgia" , "times new roman" , serif;">Larger ingots, and modern central bank gold bars, and ingots of intermediate value, such as the medieval Chinese silver sycee, also called 元寶: <a href="http://elaineou.com/2016/06/30/china-and-%e5%9c%93-and-%e5%85%83/" target="_blank">“primary treasure”</a>. Originally “sycee” was Cantonese for “fine silk”, when that costly cloth was a main form of treasure; later it was superseded as treasure by the boat-shaped silver ingots, which inherited the word “sycee”, since it by then had become the generic term in Cantonese for “treasure”. </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Even though large ingots come in a standard form, divisible and fungible at large granularities of value, they can by our organizational scheme more properly be categorized as treasure than as money, since they were typically used like treasure in larger wealth transfers and as collateral for loans or (during the recent historical gold standard era) issues of debt-money.</span> </div>
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<span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"><i>Silver stamped sycee ingot. [<a href="http://periodictable.com/Items/047.14/index.html" target="_blank">Source</a></i><i>]</i></span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;">Our distinction between treasure and money, it should be apparent, is not clear-cut and is not of crucial economic or political importance. More important and much more scientifically observable is the distinction between collectibles like coins, beads, and works </span><span style="font-family: "georgia" , "times new roman" , serif;">of laborious or uncommon craftsmanship on the one hand, and non-collectibles of concrete utility or trivial decoration on the other. I have described this distinction with many examples and much explanation in</span><a href="https://unenumerated.blogspot.com/2016/07/artifacts-of-wealth-patterns-in_15.html" style="font-family: Georgia, "Times New Roman", serif;" target="_blank"> Artifacts of Wealth</a><span style="font-family: "georgia" , "times new roman" , serif;"> and </span><a href="http://nakamotoinstitute.org/shelling-out/" style="font-family: Georgia, "Times New Roman", serif;" target="_blank">Shelling Out: The Origins of Money</a><span style="font-family: "georgia" , "times new roman" , serif;">.</span></div>
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<i style="text-align: start;"><i><span style="font-family: "georgia" , "times new roman" , serif; font-size: small;">The collectible continuum – more like money as we go towards the top left, more like treasure as we go towards the bottom right.</span></i></i></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">The main differences between ingots and traditional treasure were that the latter were also used as displays of wealth, whence their highly varied forms, which served to show off often high levels of craftsmanship as well as the precious metal itself.</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span><span style="font-family: "georgia" , "times new roman" , serif;">A great variety of very subtle and clever techniques were developed for maximizing the surface area covered by a given weight of gold or silver, more bling for the buck, since the metal was the main feature of the show.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">A great many cultures were observed to use non-coinage metal objects as money (by our definition), or treasure, or both, and a great many more probable such cases are implicit in the archaeological record. We can only mention a fraction of these as examples in this work.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">In Viking Iceland, silver rings (by weight) were used along with cloth and cattle to pay wergeld (compensation for injuries) and bridewealth, as well as a standard of value for exchange:</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span><span style="font-family: "georgia" , "times new roman" , serif;">Frithof breaks his ring in pieces and distributes it to his followers, so that they shall not be impecunious in the underworld. Rings were used in marriage payments and wergeld, the latter being estimated by haugatal or ring tale. A silver ring weighing 12 ounces was the compensation for the loss of a thrall, 100 rings or 100 head of cattle for a freeman. </span><span style="font-family: "georgia" , "times new roman" , serif; font-size: 15px;"> ([2] p284)</span></blockquote>
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<span style="font-family: "georgia" , "times new roman" , serif;">Ring-money and hack-silver were also made and used in the rest of the pagan European north, including Scandinavia and early Anglo-Saxon England. In Celtic Ireland, “rings” in the form of divisible coils of gold or bronze were used along with cattle and slaves in injury compensation and bridewealth. ([4], [2] p287, [3] p238). </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">In Homeric Greece, injury compensation, slave sales, and bridewealth often included gold by weight. ([5] p27, [11], [3] p91). In Rome before the introduction of coinage, bronze or copper ingots were used, per the Twelve Tables, to pay compensation for injuries.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Non-coinage silver was also common until recent times in the vast Indian Ocean trade region as well as a number of inland cultures of south Asia. In Burma silver by weight was used for exchange and bridewealth: </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">anybody wanting to transact business on the market must be provided with a lump of silver, a hammer, a chisel, weighing scales and weights.. he then quotes a price in weight. Thereupon they proceed to cut off from the lump of silver a corresponding piece which is then weighed. Often the operation has to be repeated several times until the correct weight is achieved. </span><span style="font-family: "georgia" , "times new roman" , serif;">([3] p95)</span></blockquote>
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<span style="font-family: "georgia" , "times new roman" , serif;">In Siam, gold and silver “flowers” and “leaves” were used for bridewealth and tribute. ([2] p215, 219); various weights of silver “lumps” (small ingots) were also in widespread use ([3] p93).</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">In the Hormuz and Lars in the Persian Gulf, and in some other parts around the Indian Ocean, were made the “fish-hook money” or silver larins used widely in the far-flung Indian Ocean trade. Such silver wires were accepted by weight across a dizzying variety of cultures. [2] p192-196</span></div>
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<tr><td class="tr-caption" style="text-align: left;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"><i>Larins, or silver wires bent double, and often stamped by maker; current in the very extensive Indian Ocean trade before and during the Age of Exploration. “If any suspect the goodness of the Plate it is the Custom to burn the Money in a fire red hot, and so put it in water; and if it be not then purely white it is not Currant Money.” ([2] p196)<span style="text-align: start;"> </span><span style="text-align: start;">Such a technique would have worked for assaying a wide variety of wire-, coil-, or ring-like silver objects.</span></i></span></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif;">Bronze bells manufactured in China were used to make high-value payments in several parts of the Chinese trading periphery, such as the Philippines. ([3] p84). In the Philippine lowlands, metal luxury goods (kettles, gongs, and jars) as well as gold beads were used for a variety of wealth display and transfer purposes ([2] p265). In China bells were the first objects that were uniquely metallic; other early metal objects such as knives, beads, etc. had been made out of other materials much earlier. Thus the Chinese adopted the word and pictograph of a bell 金 for metal (and even for gold in particular). Metal spades were styled 錢, which, via the spades that became stylized and stamped to invent early coins, became the Chinese term for “money”. [</span><a href="http://elaineou.com/2016/06/28/china-and-%e9%8c%a2/" style="font-family: Georgia, "Times New Roman", serif;" target="_blank">Source</a><span style="font-family: "georgia" , "times new roman" , serif;">]</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"><i>Among the early coins – defined as standardized metal objects stamped with a standard value -- were the Chinese bronze spade money, c. 475-221 BC </i><i>[<a href="http://elaineou.com/2016/06/28/china-and-%e9%8c%a2/" target="_blank">Source</a>]</i></span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;">Copper crosses, rods, and similar shapes were popular forms of bridewealth and payment for exchange in the many cultures of the Congo ([2] p78-80). The Thonga, in what was then Portuguese East Africa, used brass rings along with mats, baskets, cattle, and beads for bridewealth, injury compensation, and fines. ([2] p104-5). The Ndebele and Nguni of Zimbabwe used brass rings and cattle for bridewealth and exchange. ([<a href="https://www.britannica.com/topic/Ndebele-Zimbabwean-people" target="_blank">Source1</a>], </span><span style="font-family: "georgia" , "times new roman" , serif;">[</span><a href="https://en.wikipedia.org/wiki/Lobolo" style="font-family: Georgia, "Times New Roman", serif;" target="_blank">Source2</a><span style="font-family: "georgia" , "times new roman" , serif;">], and [2] p105)</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">The people of Alor, a small island north of Timor in Indonesia, used brass gongs, pigs, and (for small change / rounding out of a specific value) arrows for exchange, bridewealth, burial feasts, and “complicated financial transactions” to build large clan houses. ([3] p84-6). Brass gongs and beads were also used for bridewealth by some cultures in nearby Borneo ([8] p10). Such gongs were used for injury compensation, bridewealth, large exchanges (memorialized in ceremony), and in peace-making payments also among the hill tribes of Siam, Burma and India ([2] p204-6, ) Brass pots and metal knives, axes, and hoes formed the largest part of the bridewealth of the Lakhers and Maras of the Lushai hills in India. ([8] p207). </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Most peoples indigenous to the Pacific Coast of America used shell beads as treasure or money (for example the <a href="https://unenumerated.blogspot.com/2017/02/conflict-and-collectibles-among-yurok_87.html" target="_blank">Yurok</a>). Among the few who also used copper were the Kwakiutl, who fished for abundant salmon and lived in villages in the Pacific Northwest. They used blankets and flat copper sheets (similar in form and function to hack-silver) for bridewealth, tribute, distributions to followers (roughly similar to wages paid to soldiers and laborers), and distributions at funeral ceremonies. According to the anthropologist Frans Boas who observed them, these copper sheets served the “same function as a high-denomination bank note for us [early 20th century European-Americans].” ([2] p15, 300)</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">In their elaborate marketplaces, Aztecs used as payment gold dust measured out by volume from bone vials:</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">The moment we arrived in this immense market, we were perfectly astonished at the vast numbers of people, the profusion of merchandise which was exposed for sale, and at the good police and order that reigned throughout…instruments of brass, copper, and tin [and] gold dust as it is dug out of the mines, which was exposed to sale in tubes made of the bones of large geese…The value of these tubes of gold was estimated according to their length and thickness, and were taken for exchange, for instance, for so many mantles [of] cacao nuts, slaves or other merchandise.[5]</span></blockquote>
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<span style="font-family: "georgia" , "times new roman" , serif;">The Aztecs also used metal money modeled on hoes (or axes) as a medium of exchange, along with cocoa beans for small change. Gold dust was also used for purchases in some parts of Siam.[3 p93].</span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;">Why did such a wide variety of cultures use, and in some cases independently invent, the use of copper and its alloys, silver, and/or gold as a store of and medium for the transfer of value? Copper, silver, and gold have the same outermost electron cloud, giving them similar electrical, chemical, and material properties, such as resistance to oxidization -- albeit due to subtleties in this cloud gold resists oxidization better than silver, which resists it better than copper. These properties enhance their durability and divisibility. Their malleability and low melting point allow them to be recycled and formed into desired shapes and makes them readily divisible. Heating the metals hot enough to glow, an ancient low-tech form of spectroscopy, allows the metals to be distinguished from fraudulent materials. (We know now that the electron cloud around each atom gives, unique for each element, off a pattern of light at unique wavelengths, seen by the eye as a unique color).</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Coins</span></h3>
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<span style="font-family: "georgia" , "times new roman" , serif;">Metal stamped or cast with the brand of a highly reputable mint – often highly reputable because they were a large creditor that consistently accepted the coin in satisfaction of obligations -- had a significant, though not always decisive, advantage over other forms of metal money. Where the need for a fungible and divisible money that could change hands rapidly at low transaction costs was paramount, it came to displace other forms of metal money, and even significant amounts of treasure often ended up being recycled into coins. Coins could change hands in a reasonably secure manner with much less frequent </span><span style="font-family: "georgia" , "times new roman" , serif;">need for weighing and assaying operations. Coins spread quickly, though not until modern times universally, from their origins in Greek and Chinese city-states.</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span><span style="font-family: "georgia" , "times new roman" , serif;">In the Middle East and Europe coins were stamped; in China they were cast.</span><span style="font-family: "georgia" , "times new roman" , serif;"> </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Alongside coins grew marketplaces. As the Aztec gold dust, Persian Gulf larins, Burmese silver “lumps”, and many other examples too numerous to mention demonstrate, coins were not necessary for the existence of marketplaces, but they did help make them more efficient and widespread. The Greek conqueror Alexander the Great looted the treasuries of the Near East, converting low-velocity treasure to high-velocity coinage, making his soldiers and Near East tradesmen better-paid in the process. The subsequent Hellenistic, Roman, Persian, and Arabian empires were built on such coinage, as were medieval, Renaissance, and early industrial-era European economies. The European exploration explosion was fueled by the search for precious metals and their use to trade around the globe. </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">As Peter Swetz, translator of <i>The Treviso Arithmetic</i> observes that a favorite textbook example, the alligation problem, which involved the mixing of substances in various ratios, was exemplified by the reminting of coins. “[T]he value of money [coin] was not determined by its face value, but rather its content of precious metal…throughout the sixteenth century, chapters on alligation in arithmetic books were particularly intended for German mint-masters …[and]…Italian goldsmiths.” This was not the only use of alligation – it also could be applied to compounding medicines, the mixing of wines, and to metallurgy more generally – but it was the most valuable and compelling example of the technique. Here is one of the problems as set forth for the student:</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">A merchant has 46 marks 7 ounces of silver in which he knows there is 7 ¼ ounces of fine silver per mark. He wishes to reduce the purity of his silver to less than half [the example also serves to warn the apprentice merchant of such sharp practices], down to 3 ½ ounces of fine silver per mark. The question asks, “how much brass must be added to accomplish this”? </span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;">Thereafter follows multiplication and division using some Renaissance-era shortcuts suitable for this kind of problem. And <i>voila</i>, the minter’s coins have been successfully reduced in value (hopefully along with their stated face value – the textbook does not mention that aspect) and increased in number.</span></div>
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<tr><td class="tr-caption" style="text-align: justify;"><i style="text-align: start;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: small;">Touchstone and needles used by traditional European goldsmiths for assaying gold, silver, and copper, whether as coins or as jewelry. Each needle presents the visual difference made by different percentage compositions of the three metals.</span></i></td></tr>
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<span style="font-family: "georgia" , "times new roman" , serif;">Outside of this western Eurasian area, however, many non-coinage forms of money persisted and forms of debt and fiat money represented by paper were invented. </span><span style="font-family: "georgia" , "times new roman" , serif;">When paper debt-money reaches the West, with bills of exchange to send money across hostile lands and later bank notes representing vaults hopefully full of gold, we have reached a more recent period of monetary history and our minds have ventured far beyond the origins of money. We will end here.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Non-Internet References</span></h3>
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<span style="font-family: "georgia" , "times new roman" , serif;">[1] Bohannan, Paul (1959). "The Impact of money on an African subsistence economy". The Journal of Economic History. 19 (4): 491–503. </span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">[2] A. Hingston Quiggin, <i>A Survey of Primitive Money: The Beginnings of Currency</i>, Muethen & Co. Ltd., 1949</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">[3] Paul Einzig, <i>Primitive Money in Its Ethnological, Historical, and Economic Aspects</i>, Pergamon Press, 2nd ed. 1966</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">[4] W.B. Dickinson, “In Defense of Ring-Money as a Medium of Exchange”, The Numismatic Chronicle and Journal of the Numismatic Society, v. 16 (April 1853)</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">[5] Grierson, Philip (1977) <i>The origins of money</i>. London: The Athlone Press, University of London.</span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
<div class="p2">
<span style="font-family: "georgia" , "times new roman" , serif;">[6] Howard J. Erlichman, <i>Conquest, Tribute, and Trade: The Quest for Precious Metals and the Birth of Globalization</i>, Promethus Books 2010. Aztec gold dust quote on p97, quoting Bernal de Castillo in The True and Full Account of the Discovery and Conquest of Mexico and New Spain</span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">[7] Weatherford, Jack (1997).<i> The History of Mone</i>y. Crown Publishing Group. ISBN 978-0-307-55674-5</span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpSLGChuLRZbJDvsPn8I0Hxjqyp0XQjGvb3mQYexMCcSIeFUQHxxHx0awmrl_0m4p-vCjw4ePWA-HVZcyHHXBlPsSJhX3fK1sJsbPqqlk2ueI5u1FsacCzR-mNN7NlpLKT3R0m/s1600/TrialOfPyx.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="177" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpSLGChuLRZbJDvsPn8I0Hxjqyp0XQjGvb3mQYexMCcSIeFUQHxxHx0awmrl_0m4p-vCjw4ePWA-HVZcyHHXBlPsSJhX3fK1sJsbPqqlk2ueI5u1FsacCzR-mNN7NlpLKT3R0m/s320/TrialOfPyx.png" width="320" /></a></div>
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<span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"><i>Jurors examining gold coins in a recent <a href="https://www.youtube.com/watch?v=UZQfA2cRHJs&feature=youtu.be" target="_blank">Trial of the Pyx</a>. This assay and audit of the British Royal Mint has been conducted periodically <a href="http://www.royalmint.com/discover/uk-coins/history-of-the-trial-of-the-pyx" target="_blank">since the Middle Age</a>s. Isaac Newton and many other luminaries have been involved. It is structured much like an actual court trial, with a presiding judge, a jury of laymen, and a second jury of expert goldsmiths. It also includes the most advanced assay techniques available (today including detailed spectroscopy). The purpose of this <a href="https://www.thegoldsmiths.co.uk/company/today/trial-pyx/" target="_blank">elaborate audit and ceremony</a> is to ensure and to communicate to outsiders that the mere local cultural form is “pure”, i.e. that the coins accurately label and embody the actual amount of the actually desired natural substance. The British love their traditions and the Trial of the Pyx continues to this day.</i></span><br />
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</style>Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com4tag:blogger.com,1999:blog-17908317.post-71556951916129132172017-02-23T23:48:00.000-08:002017-02-24T00:07:50.970-08:00Conflict and collectibles among the Yurok
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<span style="mso-bidi-font-family: Times;">Until about
11,000 years ago all humans were foragers, living by hunting, gathering, or
fishing.<span style="mso-spacerun: yes;"> </span>To study human evolution, and
in particular the interest of this author, the long evolution of <a href="http://nakamotoinstitute.org/shelling-out/]" target="_blank">collectibles</a> -- non-fungible treasure and fungible
money -- we must try to reconstruct the nature of our ancestral forager
cultures.<span style="mso-spacerun: yes;"> </span>The ancestors of the vast
majority of currently living people lived in areas that, due to their relative
ecological abundance, have for centuries or millennia since been given over to
agriculture. </span></div>
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<span style="mso-bidi-font-family: Times;">One possible
way gather evidence about our ancestral cultures is to study what small
fraction of their artifacts have been preserved by time and dug up by archaeologists. Fortunately one of
the desirable features of collectibles is their durability, so that a
disproportionate number of <a href="https://unenumerated.blogspot.com/2016/07/artifacts-of-wealth-patterns-in_15.html" target="_blank">such artifacts</a> survive. Another way is to study recent
observations that travelers, missionaries, ethnologists, colonial officials,
traders, and the natives themselves made and recorded about forager cultures
that existed in recent<span style="mso-spacerun: yes;"> </span>times (albeit not
ancestral to the vast majority of today’s humans, but “cousins”), before these
cultures were too severely disrupted by the many global waves of disease and
migration since Columbus.</span></div>
<div class="MsoNormal">
<span style="mso-bidi-font-family: Times;">With extremely few
exceptions,<span style="mso-spacerun: yes;"> </span>forager cultures either did
not undergo long-term recorded observation by ethnologists before severe
disruption to their native institutions (e.g. most indigenous American tribes,
Andaman Islanders, Ainu, west coast Australian aborigines), or lived in
nutrient-poor wastelands beyond the main streams of human evolution (Kalahari
desert, Australian outback, Arctic, American and Canadian Plains, etc.), living
in cultures far more dispersed and mobile than is likely for the forager
ancestors of most current humans. Some may have been young refugee cultures
fleeing the effects of the Columbian Exchange (for example, the </span><a href="http://lchc.ucsd.edu/mca/Mail/xmcamail.2014-12.dir/pdf2Yb7JAO0ZG.pdf" target="_blank"><span style="background: white; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Pirahã</span></a><span style="font-family: Times; font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">
</span><span style="mso-bidi-font-family: Times;">may have lost some important
language features common to practically all other human languages).</span></div>
<div class="MsoNormal">
<span style="font-family: Times; font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><br /></span></div>
<div class="MsoNormal">
<span style="mso-bidi-font-family: Times;">By the time of
Columbus, the Americas were the only continents with foraging cultures living
in rich ecosystems – all other rich ecosystems had been converted to
agriculture (as had many, but far from all, in the Americas). Most American
foragers were soon disrupted beyond recognition by the massive waves of
post-Columbian diseases and immigration. The Yurok was a group of indigenous
American foragers with shared language and customs. They lived in a rich dense
ecosystem, yet furthest away from these biological and cultural tsunamis that had
overwhelmed the rest of the post-Columbian Americas. The unique position of the
Yurok and some of its neighboring language groups, especially the <a href="https://en.wikipedia.org/wiki/Hupa" target="_blank">Hupa</a>, and Karok or <a href="https://en.wikipedia.org/wiki/Karuk" target="_blank">Karuk</a>, (who occupied areas further up the
Klamath River), and the <a href="https://en.wikipedia.org/wiki/Tolowa#History" target="_blank">Tolowa</a>
(who occupied the coast further northern into Oregon and the lowest reaches of
the Rogue River) can be visualized by comparing the Yuroks’ territories (their
population lived almost entirely within a few miles of the Pacific Coast and
the lower Klamath River) at the end of the 19<sup>th</sup> century to the
growing American railroad network.<span style="mso-spacerun: yes;"> </span>The
Pacific Northwest tribes more famous to anthropology had already been severely
disrupted by the time they were studied by ethnologists. <span style="mso-spacerun: yes;"> </span>With no ongoing contacts with white immigrants
until <a href="http://www.yuroktribe.org/culture/culture2.htm" target="_blank">1849</a>, the Yurok and Hupa
did not experience substantial disruption “</span><span style="background: white; color: black; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">until
much later than other tribal groups in California and the United States”.
Ethnologists such as Goddard and Kroeber were able to interview Yurok and Hupa people
who had living memories of a minimally disturbed forager culture, including
some who still practiced much of the lifestyle.</span></div>
<div class="MsoNormal">
<br /></div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjG0jnFWTV6PiE08vZxI83UDnQNMVuDDqNda6oE_e0IABh_eBDiYjttupVYCNHmSRssIaL6RxAbMrVxZiM-B85UbiVeFGs950V-QDcBHzbKUGANtzXftDIOQOCodL0DjyjQMElP/s1600/Yurok0.png" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjG0jnFWTV6PiE08vZxI83UDnQNMVuDDqNda6oE_e0IABh_eBDiYjttupVYCNHmSRssIaL6RxAbMrVxZiM-B85UbiVeFGs950V-QDcBHzbKUGANtzXftDIOQOCodL0DjyjQMElP/s320/Yurok0.png" width="120" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
<div class="MsoNormal">
<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt;">Railroads (red) within c. 300 miles of the Pacific
coast of the United States in 1890, vs. the extent of the Yurok tribe (blue) at
that time. The Yurok were among the last tribes in the rich ecosystems of the
American Pacific coast to succumb to the overwhelming influences of Western
immigration.<span style="mso-spacerun: yes;"> </span>As a result, recorded
observations of the Yurok are almost the only ones we have of a forager people
in a rich ecosystem in a nearly undisturbed and long-term equilibrium state.</span></i></div>
</td></tr>
</tbody></table>
<div class="MsoNormal">
<span style="background: white; color: black; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">The Pacific Coast of
North America features uneven seasonal rain patterns that make it difficult to
support early forms of agriculture.<span style="mso-spacerun: yes;">
</span>Thus, even in nutrient-dense environments such as those populated by the
Yurok , this region was dominated by forager groups.</span><span style="mso-bidi-font-family: Times;"></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="mso-bidi-font-family: Helvetica;">Even though the
Yurok didn’t have agriculture they did have permanent settlements due to the
rich salmon fishing on the Klamath River. </span><span style="mso-bidi-font-family: Times;">When they finally encountered<span style="mso-spacerun: yes;"> </span>the
post-Columbian wave of disease, immigration, and modernity in the mid 19<sup>th</sup>
century (possibly also encountering some of the waves of <a href="http://news.nationalpost.com/news/canada/everyone-was-dead-when-europeans-first-came-to-b-c-they-confronted-the-aftermath-of-a-holocaust" target="_blank">disease</a> that hit the
Pacific Coast as early as the 18<sup>th</sup> century), almost every technology the Yurok and
their indigenous neighbors had could probably have been encountered in similar
form along many Eurasian coasts before the dawn of agriculture over ten
thousand years ago, and perhaps even twenty or more thousand years ago.<span style="mso-spacerun: yes;"> </span></span><span style="mso-bidi-font-family: Helvetica;">Yurok was one of the very few such cultures, quite possibly similar
to cultures that existed as long as tens of thousands of years ago, whose old
customs were observed and recorded before they converted to modern law, money,
and technology. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="mso-bidi-font-family: Helvetica;">The closest
19th century railroad to the Yurok was hundreds of miles away, in contrast to the
more famous tribes of the Pacific Northwest, which were much more disrupted by
immigrants and their new laws before their customs were carefully observed and
recorded. </span><span style="mso-bidi-font-family: Times;">The Yurok were one of
the very few forager cultures living in an abundant ecosystem, yet observed
within recent memory of a probably largely undisturbed long-term equilibrium
cultural state, and the recorded observations of this culture will almost
surely remain among the very few such records.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times; mso-no-proof: yes;">The Yurok lived in permanent
but very small villages. In 1900 their population was probably (per Kroeber) around 2,500
people living in over <a href="http://www.yuroktribe.org/culture/" target="_blank">50 </a>such villages: a handful of families per
hamlet.<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;">
</span>This represented a population substantially reduced by immigrant-introduced
disease. Since this is estimated to have killed off <a href="http://www.yuroktribe.org/culture/culture2.htm" target="_blank">75%</a> of the Yurok population in the
second half of the nineteenth century – compared to the 95% death rate of other
indigenous Californians -- the original population may have been around 10,000.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times; mso-no-proof: yes;">The plurality of the <a href="http://www.yuroktribe.org/culture/" target="_blank">Yurok diet</a> was salmon; they also caught steelhead
trout, lamprey eel, sturgeon, and candlefish on the lower Klamath River. <span style="mso-spacerun: yes;"></span>Yurok also gathered acorns and shellfish and
hunted large game (elk, deer, and sea lion).<span style="mso-spacerun: yes;">
</span>Salmon were caught by nets, and during the height of salmon migration in
temporary weirs. They were finished off with long spears.</span>
</div>
<div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 31.5pt; margin-top: 4.4pt;">
<span style="color: black; mso-bidi-font-family: "Times New Roman";">The aboriginal
territory of the Yurok people encompassed riparian lands along the lower forty
miles of the Klamath River, from its confluence with the Trinity River, its
major tributary, to the Pacific Ocean. It also included coastal lands from a
few miles north of the river's month south to Trinidad. … The river was their
world. North, south, east, and west did not exist for them. The only directions
were upriver or downriver. </span><span style="mso-bidi-font-family: Times; mso-no-proof: yes;">[Lufkin]<span style="mso-spacerun: yes;"> </span></span><span style="color: black; mso-bidi-font-family: "Times New Roman";"></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 27.0pt; margin-right: 31.5pt; margin-top: 4.4pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Lacking
animals or vehicles to ride, the Yurok often walked. But their main way to
travel long distance was by canoe, in both ocean-going and river-borne forms.
The two most strategic locations for the Yurok were </span><span style="color: black; mso-bidi-font-family: "Times New Roman";">Welkwaw,</span><span style="mso-bidi-font-family: Times;"> at the mouth of Klamath River, and Qu’nek,
at the convergence of the Klamath and Trinity rivers.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">What the
Yurok could not eat during the spring and fall salmon migrations they preserved
by <a href="http://visityurokcountry.com/pauls-famous-smoked-salmon-jerky/" target="_blank">open-pit smoking</a>.<span style="mso-spacerun: yes;"> </span>Food and other goods were stored in the many
baskets weaved by Yurok women. Salmon smoking, combined with the other abundant
food sources of the lower Klamath River and ocean environments, made their diet
reliable year-round, despite the boom-or-bust nature of the salmon migrations,
and let them settle in permanent and relatively dense habitations, in contrast
to inland foragers, recently surviving examples of which lived in far sparser
populations and generally moved once to several times per year to follow game.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">The Yurok
had no state, government officials, chiefs, or even clan heads. Among the
highest income earners were shamans, usually elderly females, a role that might
be best described in modern cultural terms as combining the role of priest with
that of medical doctor. On the other hand, most important property was owned by
and most important wealth transfers decide by individual adult males, generally
not by females, no matter their earnings, nor by groups. These individuals
sometimes owned fractional shares in some kinds of economic property, for
example in customarily defined spots for salmon fishing.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Inheritances,
and the minority of claims that were not simply individual, were distributed
among variable groups of males defined by their kin distances to the deceased
or the bride.<span style="mso-spacerun: yes;"> </span>There were no fixed kin
groups; instead “a group of kinsmen shades out … and integrates with others.”
(Kroeber p392). Exogamy and endogamy were also defined this way, with respect
to the variable group that was one’s particular relative kin, rather than with
respect to fixed villages, clans, or any other such groups sometimes found in
other forager cultures.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Forager
societies in general, and indigenous Californian societies in particular, were
usually quite violent, <a href="http://www.sciencedirect.com/science/article/pii/S0278416513000603" target="_blank">particularly where populations were more dense</a>.
<span style="mso-spacerun: yes;"> </span>Next only to environmental nutrient
density, violence was probably the main barrier to <a href="https://unenumerated.blogspot.jp/2017/02/money-blockchains-and-social-scalability.html" target="_blank">social scalability</a>
among foragers. Reducing and mitigating this violence so as to allow family and
economic institutions to work was a predominant function of indigenous social
institutions. Violence took every form from one-on-one to small-scale,
gang-like wars, typically between small kin groups.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">A leaderless
and policeless social order like that of the Yurok depended more on custom and
supernatural sanctions than modern legal systems do. </span><span style="mso-bidi-font-family: "Menlo Regular";"><span style="mso-spacerun: yes;"> </span></span><span style="mso-bidi-font-family: Times;">Yurok
law contained a multitude of specific and negative taboos. </span>The common
expectation that all sides should follow customary rules and, where
appropriate, customary property valuations and exchange rates, reduced
negotiations and arguments, and thus reduced disputes, and thus reduced the
violence that was often engendered by disputes. <span style="mso-spacerun: yes;"> </span><span style="mso-bidi-font-family: "Menlo Regular";">“Both
marriage and [injury compensation] were definite, commercial, negotiated
transactions ; all property possessed a value fixed by custom, or by previous
changes of ownership, but negotiations were a cause of much dispute, each side
claiming as much as it dared, and usually ending in compromise.” (Quiggins
p296)</span><span style="mso-bidi-font-family: Times;"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: "Menlo Regular";">The
following kin had priority for </span><span style="mso-bidi-font-family: Times;">inheritance
of the largest pieces of property:</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo2; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="mso-bidi-font-family: Times;">sons, but if none</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo2; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="mso-bidi-font-family: Times;">brothers, but if<span style="mso-spacerun: yes;"> </span>none</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo2; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="mso-bidi-font-family: Times;">brothers’ sons</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Property
rights included incorporeal property, often bundled with corporeal
property.<span style="mso-spacerun: yes;"> </span>For example dance outfits,
often made at great labor out of deer-skin and rare woodpecker scalps,
demonstrating wealth as splendor and usually passed on as heirlooms,<span style="mso-spacerun: yes;"> </span>always came bundled with prayers and spells
that only the owner of a particular dance outfit could use. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">“[E]very
invasion of privilege or property must be explicitly compensated”. Compensation
usually arrived at by “negotiation of the interested parties and their
representatives, and by them alone” – no chiefs etc., just strong custom and
respect for agreements. “Revenge causes two liabilities [to be compensated in
money and treasure] where one lay before.” (Kroeber p390-2).</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">For the
purposes of customary exchanges, bridewealth, and compensation for injuries, the
value of property was “either fixed by custom, or can be valued by consideration
of payments made for it in previous changes of ownership.” (Kroeber p392)<span style="mso-spacerun: yes;"> </span>Yurok law was “almost fully resolvable into
claims for property”.<span style="mso-spacerun: yes;"> </span>When faced with a
judgment or agreement ending a vendetta,<span style="mso-spacerun: yes;">
</span>if a defendant could not cough up the specified value in property,
generally in the form of <i style="mso-bidi-font-style: normal;">dentalia </i>money
and non-fungible treasure, he or she became a slave of the plaintiff (the
victim or a deceased victim’s next-of-kin). </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Such debt
slavery was the only way a slave could be created among the Yurok, since they
took no male prisoners in the small-scale, gang-like warfare in which ad-hoc
kin groups and allies sometimes engaged when disputes remained unsettled. They
either adopted or returned the women and children prisoners as part of
peace-making settlement (which indeed was not qualitatively distinguished from
the settling of smaller instances of violence).<span style="mso-spacerun: yes;">
</span></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">If a defendant
in a dispute refused to either pay the agreed or adjudged compensation or
submit to debt slavery, vendetta remained. The main outcomes of disputes were
either continued violence, debt slavery, or (the most usual case) a final
transfer of wealth that sufficiently satisfied the disputants, their kin
groups, and third parties to bring an end to vendetta.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Yurok law
was “almost fully resolvable into claims for property” (Kroeber 1925).<span style="mso-spacerun: yes;"> </span>If a defendant could not pay, he or she
became a slave of the defendant or of a deceased defendant’s next-of-kin. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">The Yurok
had at least two common kinds of procedures for settling disputes. The first
was direct negotiations between the disputants, usually including kin or
allies. The second was a procedure whereby each side picked two jurors, who
also acted as intermediaries between the two parties, who would not meet.<span style="mso-spacerun: yes;"> </span>The first method was more dangerous, as
arguments often escalated into violence.:</span></div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgznrNzL4QsJhSbBKw0WXn9cJacm350EaoJwmgABi-MtNsoRocERPXEiYl6hcs7sbEDAl-jgLklSlHGJa-u-8Wf3Wh1fh3JCc6g_b2m4H9zKWwrxb3a2c5k9Ut7xYnDEZBJVtfG/s1600/Yurok1.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgznrNzL4QsJhSbBKw0WXn9cJacm350EaoJwmgABi-MtNsoRocERPXEiYl6hcs7sbEDAl-jgLklSlHGJa-u-8Wf3Wh1fh3JCc6g_b2m4H9zKWwrxb3a2c5k9Ut7xYnDEZBJVtfG/s320/Yurok1.png" width="114" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt;"><span style="mso-spacerun: yes;"> </span>(Quiggin p294)</span></i></div>
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<span style="mso-bidi-font-family: Times;">Among the
Yurok…as typical among less specifically organized people, the ‘court’ was less
definite, but it was nevertheless there. An aggrieved Yurok who felt he had a
legitimate claim engaged the legal services of two nonrelatives from a
community other than his own. The defendant then did likewise. These men were
called ‘crossers’; they crossed back and forth between the litigants.<span style="mso-spacerun: yes;"> </span>The principals to the dispute ordinarily did
not face each other during the course of the action.<span style="mso-spacerun: yes;"> </span>After hearing all that each side had to offer
in evidence and pleading as to the relevant substantive law, the crossers
rendered a decision for damages according to a well-established scale that was
known to all. For their footwork and efforts each [crosser] received a piece of
shell currency called a ‘moccasin’.<span style="mso-spacerun: yes;">
</span>(Hoebel p25, citing Kroeber, ‘Yurok Law’, <i style="mso-bidi-font-style: normal;">22<sup>nd</sup> Intl. Congress of Americanists</i>, 1924, p 551).</span><span style="font-family: Times; mso-bidi-font-family: Times;"> </span></div>
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<i style="mso-bidi-font-style: normal;">Dentalia </i>(<a href="http://www.yuroktribe.org/culture/" target="_blank"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";">terk-term</span></i></a><span style="background: white; color: black; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman";"> in the Yurok
language)</span><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"> </span>was a fungible form of
collectible – essentially money, and called such both by early Western
observers and by the Yurok themselves when they translated their language into
English.<span style="mso-spacerun: yes;"> </span>Most of the economic and legal
functions of <i style="mso-bidi-font-style: normal;">dentalia </i>shells had been
by the 20<sup>th</sup> century either take over by dollars or <span style="mso-spacerun: yes;"> </span>obsoleted by the move to the Western legal
system and the abolition of shamans and bridewealth. </div>
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<br /></div>
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<i style="mso-bidi-font-style: normal;">Dentalia</i> shells
were counted individually or in groups of five.<span style="font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">
</span>The value of a <i style="mso-bidi-font-style: normal;">dentalium </i>shell
was judged by its length, longer shells being disproportionately rarer. The
length of <i style="mso-bidi-font-style: normal;">dentalia</i> shells judged with
respect to length between finger creases, or by tattoos which themselves had
been made by shells of standard length. (p396).<span style="mso-spacerun: yes;">
</span>The technique was the same among the neighboring Hupa:</div>
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<br /></div>
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<span style="font-size: 11.0pt; mso-bidi-font-family: "Menlo Regular";">As all hands and
arms are not of the same length it was necessary for the man on reaching
maturity to establish the values of the creases on his hand by comparison with
money of known length. He had a set of lines tattooed on the inside of the
forearm. These lines indicated the length of 5 shells of the several standards.
This was the principal means of estimating money. The first 5 on the string
were measured by holding the tip of the first shell at the thumbnail and
drawing the string along the arm and noting the tattooed mark reached by the
butt of the fifth shell (Goddard, 1903, p. 446).</span></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOTKyHuldRNyCRGiMub-p-iYwu-ZT5HzSFNrefQpmvf1Dt6rJpB7BPt4Om0olcLaNdMIIO6P9MFIKQeWES4JCIF8tYNJnMjojDSbtvEBqH29qx-r4nM129jdwXAHV6seatmKMe/s1600/Yurok2.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="271" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOTKyHuldRNyCRGiMub-p-iYwu-ZT5HzSFNrefQpmvf1Dt6rJpB7BPt4Om0olcLaNdMIIO6P9MFIKQeWES4JCIF8tYNJnMjojDSbtvEBqH29qx-r4nM129jdwXAHV6seatmKMe/s320/Yurok2.png" width="320" /></a></td></tr>
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<i><span style="background: white; color: #323232; font-size: 11.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Mr. McCann [a Hupa, a language group upstream of the Yurok,
with many similar customs] “measuring </span></i><span style="background: white; color: #323232; font-size: 11.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-style: italic; mso-fareast-font-family: "Times New Roman";">dentalium<i> shell
money against tattoo marks on his forearm. Photograph by Pliny E. Goddard,
Hoopa, Humboldt County, 1901 (15-2947).”</i></span><i><span style="color: #323232; font-size: 11.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"> <span style="background: white;">Credit: Hearst Museum
Berkeley.<span style="mso-spacerun: yes;"> </span>[<a href="https://cardinalguzman.wordpress.com/2013/03/31/the-history-of-tattoo-part-3-the-indians/" target="_blank">Source</a>]</span></span></i><span style="font-size: 11.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"></span></div>
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<br /></div>
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Collectibles served as money (fungible, divisible, and
transferable wealth) or as treasure (displayable and transferable wealth). The
chief collectibles of the Yurok were:</div>
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<br /></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHDsQW9ksCKo0lA3cdKddtjFKLqq1aEi6Jpd1z61mdikDPKamK1G4BQx0QKVsTuacBzcSMyyYQvLiCxQnkXVEFtydITzgTVON1IAmeyKl4PvXL3JBCGeHa_Y6stA-GJ8usvkZo/s1600/Yurok3.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHDsQW9ksCKo0lA3cdKddtjFKLqq1aEi6Jpd1z61mdikDPKamK1G4BQx0QKVsTuacBzcSMyyYQvLiCxQnkXVEFtydITzgTVON1IAmeyKl4PvXL3JBCGeHa_Y6stA-GJ8usvkZo/s200/Yurok3.png" width="197" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt;">A splendid headdress featuring woodpecker scalps, from
the nearby Tolowa people, 1924. [<a href="https://www.washington.edu/cartah/projects/tolowa/pict12.html" target="_blank">Source</a>]</span></i></div>
</td></tr>
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<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="mso-bidi-font-family: Times;">Size-ranked
<i style="mso-bidi-font-style: normal;">dentalia </i>constituted the most common
media for satisfying obligations, a standard counter-performance for exchanges,
and as a standard of value for determining the total value of a wealth transfer,
usually from custom, sometimes by negotiation, or a combination thereof, for a
given situation. <i style="mso-bidi-font-style: normal;">Dentalia </i>made up a
substantial part of nearly all, but usually less than half of most, of the
value of the largest wealth transfers (shaman or doctor fees, injury
compensation, and bridewealth).</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l3 level1 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="mso-bidi-font-family: Times;">Woodpecker
scalps came in two sizes, exchanged at a 6:1 ratio.<span style="mso-spacerun: yes;"> </span>Besides a store of value they were used to
add splendor to dance headdresses and regalia.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l3 level1 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="mso-bidi-font-family: Times;">Deerskins
(used in dances; the very rare albino pelt was quite valuable)</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l3 level1 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="mso-bidi-font-family: Times;">Large
blades of obsidian or flint (the larger ones, either by being rarer or harder
to make, could be quite valuable) </span><br /><span style="mso-bidi-font-family: Times;"></span></div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBBGK2pZR-A99fseb5fJdXbZi9gGjY7xf5tIlBKASQet30Egq7os_nYkk0eKP7FO2oQNIG8g7XpTQV_ESOjZx19g4mU3mvTrdtDekszga6llB2CershWMBnGo6RfHjgzD03vnQ/s1600/Yurok4.png" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBBGK2pZR-A99fseb5fJdXbZi9gGjY7xf5tIlBKASQet30Egq7os_nYkk0eKP7FO2oQNIG8g7XpTQV_ESOjZx19g4mU3mvTrdtDekszga6llB2CershWMBnGo6RfHjgzD03vnQ/s320/Yurok4.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt; mso-bidi-font-family: Times;">Yurok or Karuk obsidian
treasure blades displayed at the Denver Art Museum. The Yurok and their
neighbors, like most other indigenous American tribes, used obsidian in
practical axes, knives, and arrowheads. But they also knapped blades out of
rare large pieces of obsidian and used them for wealth transfer and ceremonial
display [<a href="https://stephenbodio.blogspot.com/2011/10/denver-art-museum-california-indian.html" target="_blank">Source</a>]</span></i></div>
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<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqPguMrG6kCu9Inulzdc9b7cvKZ4XrceBDr6I1JTdGhfYdB_RSb-U1L9oxas2rdM9cF3pWAWJiyhiKrUAN_TgYW-lROPKBXYxJNKIDdzdRHH3IyljtG8IdWtU0z5eucXzgbRU2/s1600/Yurok5.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqPguMrG6kCu9Inulzdc9b7cvKZ4XrceBDr6I1JTdGhfYdB_RSb-U1L9oxas2rdM9cF3pWAWJiyhiKrUAN_TgYW-lROPKBXYxJNKIDdzdRHH3IyljtG8IdWtU0z5eucXzgbRU2/s320/Yurok5.png" width="220" /></a></td></tr>
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<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt;">Hupa in dance regalia made out of albino deerskin,
which was very rare, and thus valuable as a collectible. [<a href="http://www.edwardscurtis.com/Small%20Prints/Volume%2013/default.htm" target="_blank">Source</a>].<span style="mso-spacerun: yes;"> </span>Ethnographers themselves followed the
collecting instinct: most ethnographic evidence was selected in favor of the
rare and alien and against the regular and normal. </span></i></div>
</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">An unsettled
vendetta could result in a disproportionate response leading to war. <span style="mso-spacerun: yes;"> </span>Yurok customary law made “no distinction …
between murder and war.” (Kroeber p420).<span style="mso-spacerun: yes;">
</span>War deaths and murder were settled by the same injury compensation rules
(blood money).<span style="mso-spacerun: yes;"> </span>Yurok peace settlements
involved the same settlement dances and kinds of wealth transfer (albeit
usually on a larger scale) as individual homicide cases,.<span style="mso-spacerun: yes;"> </span>They did not include tribute, which meant the
victors often had to pay more compensation than the vanquished.<span style="mso-spacerun: yes;"> </span>Krober recounts one such war (p422):</span></div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_recnT6_v3eT1wUGQmFDRJTCnwQkR6zVeaAWXvFQv9LZZ64IqVFgaoalHSgLW2y2trzkOk_EnyDa6kD6UfxJ7gEwxWCeexW8RssvtluvxYUsucRpCLPXkxgsFEqS5-QbKwddn/s1600/Yurok6.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_recnT6_v3eT1wUGQmFDRJTCnwQkR6zVeaAWXvFQv9LZZ64IqVFgaoalHSgLW2y2trzkOk_EnyDa6kD6UfxJ7gEwxWCeexW8RssvtluvxYUsucRpCLPXkxgsFEqS5-QbKwddn/s320/Yurok6.png" width="224" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt;">Hupa arrows for fighting and hunting [<a href="https://anthromuseum.missouri.edu/grayson/americasarchery/1994-0897-0691-0675hupa-arrows.shtml" target="_blank">Source</a>]</span></i></div>
</td></tr>
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<span style="mso-bidi-font-family: Times;">“A feud of some
note took place between [the villages of] Sregon and Ko’otep. When the leading
man [richest man and leader of this war party – not a permanent official] lost
his brother by sickness, he accused an inhabitant of [one of the small villages
of] Wohtek or Wohkero of having poisoned him. The suspect was soon killed from
ambush. After this a Sregon man was attacked and killed at Ko’otep, which is
only a short distance from Wohtek. The act involved the people of Ko’otep,
which was at that time a large village. After a time, settlement was proposed,
and the two parties met at an open place below Sregon to conclude the
negotiations. Each side was ready to make a customary [settlement] dance, when
some one fired a shot. In the fight that ensued, a [village of] Meta ally of
the Sregon people was killed. The headman of Sregon now went down river with
his friends and lay in wait at an overhanging and bush bank near Serper, where
the current takes boats close in to shore. When a canoe of his foes came up, he
attacked it and killed four of the inmates. The feud went on for some time.
Sregon, never a large village, fought, with only some aid from Meta, against
Ko’otep, Wohtek, and Pekwan, but lost only 3 men to 10 of their
opponents’.<span style="mso-spacerun: yes;"> </span>The headman at Sregon was
sufficiently wealthy, when settlement came, to pay for all the satisfaction he
had earned [i.e. the blood money for the 11 men killed by his side]. He once
said with reference to this experience in this and other feuds, that open
battles often took place without anyone being killed. Somehow men are hard to
hit, he philosophized: arrows have a way of flying past a human being when a
hunter is sure to strike a deer at the same distance….”<span style="mso-spacerun: yes;"> </span>(Kroeber p422)</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Because <i style="mso-bidi-font-style: normal;">dentalia </i>was the main way to avoid
violence and enslavement, win the best bride, and pay for spiritual and medical
services, the Yurok in consequence had a strong desire to acquire <i style="mso-bidi-font-style: normal;">dentalia:</i></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .5in; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; tab-stops: 28.0pt 56.0pt 84.0pt 112.0pt 140.0pt 168.0pt 196.0pt 224.0pt 3.5in 280.0pt 308.0pt 336.0pt; text-autospace: none;">
<span style="font-size: 11.0pt; mso-bidi-font-family: "Menlo Regular";">They are firmly convinced that persistent
thinking about money will bring it. Particularly is this believed to be true
while one is engaged in any sweat-house occupation. Asaman climbs the hill to gather
sweat-house wood always a meritorious practice, ... he puts his mind on <i style="mso-bidi-font-style: normal;">dentalia</i>. He makes himself see them
along the trail or hanging from fir trees eating the leaves. ... In the
sweat-house he looks until he sees more money-shells perhaps peering at him
through the door. When he goes down to the river he stares into it and at last
may discern a shell as large as a salmon, with gills Working like those of a
fish. . . . Saying a thing with sufficient intensity and frequency was a means
towards bringing it about. A man often kept calling ' I want to be rich ' or '
I wish <i style="mso-bidi-font-style: normal;">dentalia</i> ' perhaps weeping at
the same time…(Kroeber 1925, p 41)</span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjetSylpg7BmziWDSXrYtjlRhXWRGDyxI2mFvD58gIXn1jiLQYlvgOJ0eaNdwN-Ni2lU0Oaw9wGnekoR6I0qjsz1CYbWWmBG60yihRgrLFz6tRd8wVrqDtX3mQWJgxz2Uj0XQaW/s1600/Yurok8.png" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="256" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjetSylpg7BmziWDSXrYtjlRhXWRGDyxI2mFvD58gIXn1jiLQYlvgOJ0eaNdwN-Ni2lU0Oaw9wGnekoR6I0qjsz1CYbWWmBG60yihRgrLFz6tRd8wVrqDtX3mQWJgxz2Uj0XQaW/s320/Yurok8.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt; mso-bidi-font-family: Times;">Tolowa man measuring a </span></i><span style="font-size: 11.0pt; mso-bidi-font-family: Times;">dentalia <i style="mso-bidi-font-style: normal;">shell string “thumb to shoulder”.<span style="mso-spacerun: yes;"> </span>[<a href="http://www.edwardscurtis.com/Small%20Prints/Volume%2013/default.htm" target="_blank">Source</a>]</i></span></div>
</td></tr>
</tbody></table>
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<tbody>
<tr style="mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 128.8pt;" valign="top" width="129">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">Length of
shell (estimated by length between finger creases or tattoo marks that had
been measured from standard shells; translated into English inches)</span></i></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 115.1pt;" valign="top" width="115">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">Shells to
a string of “thumb to shoulder” length (about 27 and ½ inches)</span></i></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.75in;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">Rough
typical value of shell in c. 2010s U.S. dollars, based on c. 1900 dollar
value in trade with white immigrants and internal exchange after
incorporation of U.S. money</span></i></div>
</td>
</tr>
<tr style="mso-yfti-irow: 1;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 128.8pt;" valign="top" width="129">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">2 ½</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 115.1pt;" valign="top" width="115"><br /><div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">11</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.75in;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">$150</span></i></div>
</td>
</tr>
<tr style="mso-yfti-irow: 2;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 128.8pt;" valign="top" width="129">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">2 5/16</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 115.1pt;" valign="top" width="115">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">12</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.75in;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">$90</span></i></div>
</td>
</tr>
<tr style="mso-yfti-irow: 3;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 128.8pt;" valign="top" width="129">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">2 1/8</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 115.1pt;" valign="top" width="115">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">13</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.75in;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">$30</span></i></div>
</td>
</tr>
<tr style="mso-yfti-irow: 4;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 128.8pt;" valign="top" width="129">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">2</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 115.1pt;" valign="top" width="115">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">14</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.75in;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">$15</span></i></div>
</td>
</tr>
<tr style="mso-yfti-irow: 5; mso-yfti-lastrow: yes;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 128.8pt;" valign="top" width="129">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">1 7/8</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 115.1pt;" valign="top" width="115">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">15</span></i></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.75in;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">$7.50</span></i></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">The <i style="mso-bidi-font-style: normal;">dentalia </i>used by the Yurok and
neighboring tribes came via repeated transfers from distant parts north.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Dentalia</i>
are found on the Pacific Coast above the 49<sup>th</sup> parallel. <span style="mso-spacerun: yes;"> </span>In the waters off the Vancouver and Queen
Charlotte Islands, indigenous peoples dredged live shells from a sea bottom
tens of feet below the surface.<span style="mso-spacerun: yes;"> </span>“</span><span style="mso-bidi-font-family: "Menlo Regular";">They let down long poles to which
are attached pieces of wood fitted with spikes or teeth, between which the
shells become fixed.”</span><span style="mso-bidi-font-family: Times;"> Shells
harvested live have, even many decades after having been killed, a different
color than the dead <i style="mso-bidi-font-style: normal;">dentalia </i>shells
that commonly wash up on many Pacific Coast beaches. The former were valued as
scarce collectibles; the latter were not, and were not used by the Yurok or
their neighbors.</span><span style="mso-bidi-font-family: "Menlo Regular";">
(Quiggins, p293-4)</span></div>
<br /><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtESTWaWZG2vJZg3KjhQ1nNMmL16u1NOLAoAKCNi4lUhQFguMDZkFj3vfqMoWUqvjGGjOY4SyBzGa4KcHMlLhrGg01r5ZUrx9GtZAdaF1X-NosSvMYdb3rXpLYLzDOAGXuwwW_/s1600/Yurok7.png" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtESTWaWZG2vJZg3KjhQ1nNMmL16u1NOLAoAKCNi4lUhQFguMDZkFj3vfqMoWUqvjGGjOY4SyBzGa4KcHMlLhrGg01r5ZUrx9GtZAdaF1X-NosSvMYdb3rXpLYLzDOAGXuwwW_/s320/Yurok7.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
<div class="MsoNormal">
<span style="background: white; color: #333333; font-size: 11.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Dentalia
<i style="mso-bidi-font-style: normal;">shell string and Northern California elk antler
purse for holding it. Probably Hupa. 1800s. <span style="mso-spacerun: yes;">[</span><a href="https://www.pinterest.com/pin/127930445636349594/" target="_blank">Source</a>] </i></span><i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"></span></i></div>
</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Yurok cosmology
– their view of the shape and size of the universe -- was largely bounded by
their personal experience and defined by the topology of the Pacific Coast and
the flow of the lower Klamath River and its immediate tributaries. <i style="mso-bidi-font-style: normal;">Dentalia </i>were obtained from transfers
down the Pacific Coast, from tribes further north, including trade in various
treasures and slaves with some Pacific Northwest tribes. “They speak in their
traditions of … strange but enviable peoples … who suck the flesh out of the [<i style="mso-bidi-font-style: normal;">dentalia</i>] univalves.”<span style="mso-spacerun: yes;"> </span>(Kroeber p394)<span style="mso-spacerun: yes;"> </span>As <i style="mso-bidi-font-style: normal;">dentalia
</i>percolated down the coast, their scarcity rose and their exchange rate
strengthened. “<span style="mso-bidi-font-weight: bold;">In Northern Oregon or
among the Yurok</span></span><span style="font-size: 13.0pt; mso-bidi-font-family: Times; mso-bidi-font-weight: bold; mso-text-raise: 1.0pt; position: relative; top: -1.0pt;"> </span><span style="mso-bidi-font-family: Times; mso-bidi-font-weight: bold;">a slave was worth 1 string. Among the Nootka [who harvested the live <i style="mso-bidi-font-style: normal;">dentalia </i>off Vancouver Island], it took
5 fathoms to buy a slave.” (Einzig p173).</span></div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXF5kauSde0rue6mcO0tWI64BCzc0hkYt2IFCZ7f9wl9QD0NoxX_t1z55_jxSXSau-_N-ZWf_7zfvLzkJ5kO9NoS8C80n20vpFSMmjRWaNhJFb8wpyG0SVLBUMA5e4PlAROVw0/s1600/Yurok9.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXF5kauSde0rue6mcO0tWI64BCzc0hkYt2IFCZ7f9wl9QD0NoxX_t1z55_jxSXSau-_N-ZWf_7zfvLzkJ5kO9NoS8C80n20vpFSMmjRWaNhJFb8wpyG0SVLBUMA5e4PlAROVw0/s320/Yurok9.png" width="210" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt;">Primary (net) directions of </span></i><span style="font-size: 11.0pt;">dentalia<i style="mso-bidi-font-style: normal;"> shell
transfers along the two topological axes of the Yurok: south along the Pacific
coast and up the Klamath River system.<span style="mso-spacerun: yes;">
</span>The source of </i>dentalia<i style="mso-bidi-font-style: normal;"> used by
the Yurok as a fungible media for the satisfaction of obligations was far from
local; the main source was probably the Vancouver Islands in British Columbia.
(The long distance<span style="mso-spacerun: yes;"> </span>of users from the
source ensured unforgeable costliness, i.e. a reliably and securely constrained
supply curve, a pattern repeated with many other instances of shell and stone
money).</i></span></div>
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</tbody></table>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">As with the <a href="https://archive.fo/TEF3E" target="_blank">kula ring</a> of Melanesia, the net flow of specific
transfers of <i style="mso-bidi-font-style: normal;">dentalia </i>shells followed
a geographical network, in this case from a source in the distant northern
Pacific Coast to sinks further south along that coast and up the Klamath River.
</span><span style="mso-spacerun: yes;"> </span>Many of the traditional stories
of the Yurok involve <i style="mso-bidi-font-style: normal;">dentalia</i>.<span style="mso-spacerun: yes;"> </span>At least one such story follows the journey
of two characters along this network -- down the Pacific coast and up the
Klamath River -- and how they dispense of their shells. Their <i style="mso-bidi-font-style: normal;">dentalia </i>are in demand in some [hamlets]
(or the hamlets are friendly, and allow them to trade), and not in other ones
(or they are hostile). Various payments do or do not occur as our characters
take follow the main flow of dentalia up the Klamath River.<span style="mso-spacerun: yes;"> </span>(Kroeber p397)<span style="mso-bidi-font-family: Times;"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Two other
marine shells were often used as fungible money among the indigenous peoples of
western North America, even well inland, but not among coastal peoples such as
the Yurok:</span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzPgloxadB1VexktUtvp4k-dlR6bgEQT5GV1uoNibTU-gXLMWfdRJVtua27pSBIIytNF3CjbvTkCJjAriT5QmkrWppEVzjlYdBv-VrnNH85GhHpAql8JZro42QxE-MEgb71mDF/s1600/Hupa+Female+Shaman.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzPgloxadB1VexktUtvp4k-dlR6bgEQT5GV1uoNibTU-gXLMWfdRJVtua27pSBIIytNF3CjbvTkCJjAriT5QmkrWppEVzjlYdBv-VrnNH85GhHpAql8JZro42QxE-MEgb71mDF/s320/Hupa+Female+Shaman.jpg" width="229" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt;">Hupa shaman </span></i><i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt;">[<a href="http://www.edwardscurtis.com/Small%20Prints/Volume%2013/default.htm" target="_blank">Source</a>].</span></i></div>
</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: .25in; margin-right: .5in; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times; mso-bidi-font-weight: bold;">Other
shells used as currency in the Western States included <i>olivella </i>and
pieces of [the abalone shell] <i>haliotis. </i>The latter was in various
denominations according to its size... The value of pieces of the same size
varied according to the degree of their brilliance. There was a time when one
single shell bought a horse in New Mexico. (Einzig p173)<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0in; margin-right: -9.0pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; tab-stops: 369.0pt; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: Times; mso-bidi-font-weight: bold;">Haliotis </span></i><span style="mso-bidi-font-family: Times; mso-bidi-font-weight: bold;">shells “were
traded all down the West Coast from Alaska to Mexico” (Quiggin p299)<span style="mso-spacerun: yes;"> </span>But among the Yurok, the <i style="mso-bidi-font-style: normal;">haliotis</i> shell was common enough in the local environment that it
was only used whole, as a pendant with minor treasure value. <i style="mso-bidi-font-style: normal;">Olivella </i>was also locally abundant and
used liberally as an ornament, but not as substantial money or treasure. With
both fungible money and non-fungible treasure, we again see the signature
economics of collectibles at work: the unique interplay between supply and
demand, in particular the demand for scarce supply, which distinguishes a
collectible from a normal commodity. </span><br /><span style="mso-bidi-font-family: Times; mso-bidi-font-weight: bold;"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">The main kinds of Yurok obligations or deals, and the wealth
transfers that satisfied them.<span style="mso-spacerun: yes;"> </span></span></i></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 446px;">
<tbody>
<tr style="mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 110.7pt;" valign="top" width="111">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">Obligation</span></b></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 335.7pt;" valign="top" width="336">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">Type of
wealth</span></b></div>
</td>
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<tr style="mso-yfti-irow: 1;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 110.7pt;" valign="top" width="111">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Shaman fees</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 335.7pt;" valign="top" width="336">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Any kind of collectible treasure or the
occasional useful good of great value (e.g. canoe), almost always including
some <i style="mso-bidi-font-style: normal;">dentalium</i> but usually for no
more than half the value. Most common treasures used in these larger wealth
transfers were woodpecker scalps and large stone blades. </span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 2;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 110.7pt;" valign="top" width="111">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Injury compensation</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 335.7pt;" valign="top" width="336">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Similar variety and frequency of items as
for shaman fees </span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 3;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 110.7pt;" valign="top" width="111">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Bridewealth</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Recipient priority (p401): </span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo3; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Times; mso-bidi-font-family: Times; mso-fareast-font-family: Times;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: Times; mso-bidi-font-family: Times;">father of bride</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo3; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Times; mso-bidi-font-family: Times; mso-fareast-font-family: Times;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: Times; mso-bidi-font-family: Times;">brothers of bride</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo3; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Times; mso-bidi-font-family: Times; mso-fareast-font-family: Times;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: Times; mso-bidi-font-family: Times;">uncles of bride</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 335.7pt;" valign="top" width="336">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Similar variety and frequency of items as for shaman fees (Quiggin
p296) “</span><span style="mso-bidi-font-family: "Menlo Regular";">There was no
fixed price, for that depended on the rank and wealth of the individual, and
social status depended on the amount paid.” (Kroeber, 1925, pp. 21-2).</span><span style="mso-bidi-font-family: Times;"> Sometimes there were dowry
counter-payments, e.g. if the bride’s father was particularly wealthy. </span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
</td>
</tr>
<tr style="mso-yfti-irow: 4;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 110.7pt;" valign="top" width="111">
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<span style="font-family: Times; mso-bidi-font-family: Times;">Divorce (p402-3)</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12pt; text-align: left; text-indent: -0.25in;">
<span style="font-family: Times; mso-bidi-font-family: Times;"> any time at a woman’s choice, as long as her kin repays</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12pt; text-align: left; text-indent: -0.25in;">
<span style="font-family: Wingdings; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="font-family: Times; mso-bidi-font-family: Times;"> man must show just cause to convince her kin to repay</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 335.7pt;" valign="top" width="336">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Repayment depended on fertility:</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">She died early => partial repayment</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Ongoing infertility => partial repayment</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Each child she bore => smaller repayment
upon divorce, death, or subsequent infertility.</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 5; mso-yfti-lastrow: yes;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 110.7pt;" valign="top" width="111">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Exchange</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 335.7pt;" valign="top" width="336">
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Times; mso-bidi-font-family: Times;">Usually <i style="mso-bidi-font-style: normal;">dentalia
</i>could be used to purchase a wide variety of treasures, useful goods,
fishing rights, hunting rights,<span style="mso-spacerun: yes;">
</span>incorporeal rights (e.g. rights to say prayers and cast spells), etc.
at either customary or negotiated exchange rates</span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; tab-stops: 28.0pt 56.0pt 84.0pt 112.0pt 140.0pt 168.0pt 196.0pt 224.0pt 3.5in 280.0pt 308.0pt 336.0pt; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: Times;">Dentalia, </span></i><span style="mso-bidi-font-family: Times;">unlike treasure, was fungible and divisible.<span style="mso-spacerun: yes;"> </span>In consequence the values of individual
pieces of treasure, expressed as the Yurok did in terms of their customary or
most recent exchange rate into <i style="mso-bidi-font-style: normal;">dentalia,</i>
could in principle have been counted, summed, and subtracted to compute a net
settlement in satisfaction of two opposing obligations. In practice, the
indigenous Californians lacked calculating devices for accomplishing this –
they had neither any sort of abacus nor methods of algorithmic writing used in
Eurasia. Because of such difficulties in computing and thus comparing the
values of money and treasure, bilateral large payments (such as bridewealth and
dowry in a marriage, or bilateral damages incurred in a war) that included such
treasures, as they almost always did, were not net settled, but instead each
side paid in full.<span style="mso-spacerun: yes;"> </span>If two men married
each others’ sisters, each paid the full bridewealth to the other (Quiggin
p296).<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Property
with concrete utility was also sometimes used as part of large wealth
transfers, albeit far less commonly than collectibles:</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l3 level1 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="mso-bidi-font-family: Times;">Fishing
rights</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l3 level1 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="mso-bidi-font-family: Times;">Hunting
rights</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l3 level1 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="mso-bidi-font-family: Times;">Canoes
(cross-river ferries, up-and-down-river polling-and-paddling, ocean-going
paddling) </span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: 12.0pt; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l3 level1 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="mso-bidi-font-family: Times;">Slaves</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">About five
percent of the population were slaves. They “entered into this condition solely
through debt,<span style="mso-spacerun: yes;"> </span>never through violence” –
adult male prisoners of war were killed, with women and children returned upon
settlement or adopted. <span style="mso-spacerun: yes;"> </span>The debt was
almost always incurred in a dispute settlement – if the adjudged party could
not pay the amount in question, whether through <i style="mso-bidi-font-style: normal;">dentalia </i>or other treasures or property, they became the slave of the
adjudged victim.</span></div>
<div class="MsoNormal" style="background: white; margin-top: 4.35pt; tab-stops: 0in;">
<span style="color: black; mso-bidi-font-family: "Times New Roman";">Fishing sites were
(and to a great extent still are) considered privately owned and
transferable.<span style="mso-spacerun: yes;"> </span>Fishing rights could be
loaned for a portion of the harvest. Owners of the best sites were envied
“aristocrats”. (Lufkin). </span><span style="mso-bidi-font-family: Times;">“Prolific
eddies” were defined as discrete fishing spots by custom, which generally
forbade the establishment of new locations, since these would usually degrade
the fishing in current locations. A fishing spot could be individually owned,
but since it usually generated more food than a family could eat, the spot was
more often jointly owned in fractional shares by several men, who then used the
spot in rotation.<span style="mso-spacerun: yes;"> </span>The shares were
inheritable and sellable as individual property.<span style="mso-spacerun: yes;"> </span>(Kroeber p405)</span><span style="color: black; mso-bidi-font-family: "Times New Roman";"></span></div>
<div class="MsoNormal" style="background: white; margin-top: 4.35pt; tab-stops: 0in;">
<br /></div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0v3m8ErCOfPVNAq3AQUfikEo0KIKiafJIMZhigk-o8MK3Ep654v9NQziay_0j2y4CmlbUT_9JhirrT6AcgxlF7PXUMg9qTjnUqLKb3KAj71k377HeiKPID6dV1ySLw1D-GBPj/s1600/Yurok10.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="255" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0v3m8ErCOfPVNAq3AQUfikEo0KIKiafJIMZhigk-o8MK3Ep654v9NQziay_0j2y4CmlbUT_9JhirrT6AcgxlF7PXUMg9qTjnUqLKb3KAj71k377HeiKPID6dV1ySLw1D-GBPj/s320/Yurok10.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt; mso-bidi-font-family: Times;">A Yurok man fishes for salmon
with a plunge net at pame-kya’-ra-m, a “usual and accustomed” fishing site on
the Klamath River, California, before 1898.<span style="mso-spacerun: yes;">
</span>[<a href="http://americanhistory.si.edu/onthewater/exhibition/3_2.html" target="_blank">Source</a></span></i><i style="mso-bidi-font-style: normal;"><span style="font-size: 11.0pt; mso-bidi-font-family: Times;">]</span></i></div>
</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">If a piece
of land was less than a mile or so from rivers or coast (the main sources of
the Yuroks’ food) and good hunting, it was likely to be privately owned,
meaning one needed the permission of the owner to hunt on it; otherwise it was common
and permissionless. Deer and elk were the principle prey – smaller game were
scarce or otherwise not worth the trouble. <span style="mso-spacerun: yes;"> </span>Special rights pertained to taking sea lions
on the coast. The only punishable kind of trespassing was poaching, and
poachers could be shot without incurring a blood money liability. (Kroeber p406).</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">A case of
positive claim-rights to sea-lion flippers described by Hoebel illustrates a
cycle of broken-down negotiations and revenge, culminating in a property
settlement that satisfied principles and kin sufficiently to terminate the
vendetta.<span style="mso-spacerun: yes;"> </span>A certain M had a generally
acknowledged hereditary claim to have handed over to him the flippers of all
sea-lions taken on a certain 4-mile section of beach. <span style="mso-spacerun: yes;"> </span>(Apparently sea lion flippers can be made into
boots that grip slippery surfaces, <span style="mso-spacerun: yes;"> </span>fishing net floats, or glue, and at least
farther up the Pacific Coast flipper meat was widely considered to be great
delicacy: [<a href="http://alaska-native-news.com/alutiiq-word-of-the-week-may-18-2014-10842" target="_blank">Source</a>]).<span style="mso-spacerun: yes;"> </span>A certain L allegedly killed sea-lions on the
beach but kept their flippers in violation of M’s claim. A series of attack,
claim, counter-attack, etc., including murder of L by M, eventually led to a settlement
with L’s next-of-kin receiving the sea lion flipper claim rights that started
the dispute. (Hoebel p54-55)</span></div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYKFRxE6QXO8a8hUTYXMfFSAn7_R8nPrUkMc0jG8rdpQiLCPq-rh0ZBaPp2W0UoMwrQqRshZqXArHg-Kiu5vbtxo4dX2IDEwKy5FSZGq6c0rnats30LmTKUyHo9y9XsIWNF9pT/s1600/Yurok11.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="254" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYKFRxE6QXO8a8hUTYXMfFSAn7_R8nPrUkMc0jG8rdpQiLCPq-rh0ZBaPp2W0UoMwrQqRshZqXArHg-Kiu5vbtxo4dX2IDEwKy5FSZGq6c0rnats30LmTKUyHo9y9XsIWNF9pT/s320/Yurok11.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Times; font-size: 11.0pt; mso-bidi-font-family: Times;">Yurok
canoe on the Trinity River, c. 1923. [<a href="http://americanhistory.si.edu/onthewater/exhibition/3_2.html" target="_blank">Source</a>]</span></i></div>
</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Times;">Conclusion</span></b></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">The ability
to transfer wealth was crucial during many events critical to the Darwinian
fitness of evolving humans, especially death (inheritance), dispute settlement,
and marriage.<span style="mso-spacerun: yes;"> </span>With the Yurok and their
neighboring tribes, this wealth typically took the form of collectibles that
lacked concrete use – either non-fungible treasure, which came in a variety of
forms, or fungible money in the form of <i style="mso-bidi-font-style: normal;">dentalia
</i>shells and strings of same.<span style="mso-spacerun: yes;"> </span>The use
of money and treasure in some transactions (e.g. for use mitigating violence)
made it available and encouraged its use in others (e.g. trade).</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Collectibles
involved a unique interplay of supply and demand whereby demand was based in
large part on a predictable constraint in supply.<span style="mso-spacerun: yes;"> </span>A common way cultures met this constraint was
by using collectibles that originated in a very distant region and percolated
into the local region via a relatively constant stream of transfers (which
could be long-distance trade, but could also be a series of transfers
themselves as injury compensation or bridewealth). Collectibles flowed from
relatively plentiful at the origin to relatively scarce in the region they are used
as collectibles. For fungible and divisible collectibles such as <i style="mso-bidi-font-style: normal;">dentalia </i>shells, they worked best as
money where a geographical balance was struck between sufficient scarcity for
value density and sufficient abundance to allow for its divisibility and
fungibility. Such a collectible could be put to best use as money in a
“Goldilocks region” in between where it was overly scarce and where it was
overly abundant.</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: Times; mso-bidi-font-family: Times;">References</span></b></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="background: white; color: black; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><a href="http://www.yuroktribe.org/culture/" target="_blank">“Yurok Culture: History”</a></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="background: white; color: black; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Lufkin,
Alan, editor. <i>California's Salmon and Steelhead: The Struggle to
Restore an Imperiled Resource, </i><span style="mso-bidi-font-style: italic;">chapter
2.<i> </i></span>Berkeley: University of California Press,
c1991. [<a href="http://ark.cdlib.org/ark:/13030/ft209nb0qn/%20%20via%20http://publishing.cdlib.org/ucpressebooks/view?docId=ft209nb0qn;chunk.id=d0e1553;doc.view=print" target="_blank">Link</a>] </span><span style="mso-bidi-font-family: Times;"><span style="mso-spacerun: yes;"></span></span><span style="background: white; color: black; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">E. Adamson
Hoebel, <i style="mso-bidi-font-style: normal;">The Law of Primitive Man, </i>Atheneum
/ Harvard University Press 1954</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Kroeber,
A.L., <i style="mso-bidi-font-style: normal;">Handbook of the Indians of
California, </i>Chapter 2, as reprinted in R.F. Heizer and M.A. Whipple eds., <i style="mso-bidi-font-style: normal;">The California Indians: A Sourcebook, </i>University
of California Press 1971</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; tab-stops: 28.0pt 56.0pt 84.0pt 112.0pt 140.0pt 168.0pt 196.0pt 224.0pt 3.5in 280.0pt 308.0pt 336.0pt; text-autospace: none;">
<span style="mso-bidi-font-family: "Menlo Regular";">Kroeber, A. L<i style="mso-bidi-font-style: normal;">., Handbook
of the Indians of California</i> , Bureau Amer. Ethn. Bull., 1925, as cited in
Quiggins op. cit.</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; tab-stops: 28.0pt 56.0pt 84.0pt 112.0pt 140.0pt 168.0pt 196.0pt 224.0pt 3.5in 280.0pt 308.0pt 336.0pt; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: black; mso-bidi-font-family: "Menlo Regular"; mso-themecolor: text1;">Goddard,P.E., <i style="mso-bidi-font-style: normal;">Life and Culture of the Hupa</i>, The University Press, 1903. [<a href="https://ia800204.us.archive.org/29/items/cu31924104079433/cu31924104079433.pdf" target="_blank">Link</a>]</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">A. Hingston
Quiggin, <i style="mso-bidi-font-style: normal;">A Survey of Primitive Money, </i>Methuen
& Co. Ltd. 1949</span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Times;">Paul Einzig,
<i style="mso-bidi-font-style: normal;">Primtive Money, 2<sup>nd</sup> ed.,<span style="mso-spacerun: yes;"> </span></i>Pergamon Press 1966.</span></div>
<div class="MsoNormal">
<br /></div>
Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com1tag:blogger.com,1999:blog-17908317.post-57497065861883077862017-02-09T09:22:00.000-08:002017-02-09T09:36:22.392-08:00Money, blockchains, and social scalability<style>
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<h3>
<b style="mso-bidi-font-weight: normal;">Introduction </b></h3>
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<span style="font-size: small;"><span style="font-family: inherit;">Blockchains are all the rage. The
oldest and biggest blockchain of them all is <a href="http://nakamotoinstitute.org/bitcoin/" target="_blank">Bitcoin</a>,
which over its eight-year history so far starshipped in value from 10,000 bitcoins per
pizza (before there were exchanges that priced bitcoin in traditional
currencies) to over $1,000 per bitcoin. As of this writing Bitcoin has a market
capitalization of over $16 billion. Running non-stop for eight years, with
almost no financial loss on the chain itself, it is now in important ways the
most reliable and secure financial network in the world.</span> </span></div>
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<span style="font-size: small;"><br /></span></div>
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{page:WordSection1;} </style><span style="font-size: small;">The secret to Bitcoin’s success
is certainly not its computational efficiency or its scalability in the
consumption of resources. <span style="mso-spacerun: yes;"> </span>Specialized Bitcoin
hardware is designed by highly paid experts to perform only one particular
function – to repetitively solve a very specific and intentionally very
expensive kind of computational puzzle. That puzzle is called a proof-of-work,
because the sole output of the computation is just a proof that the computer
did a costly computation. Bitcoin’s puzzle-solving hardware probably consumes
in total over 500 megawatts of electricity.<span style="mso-spacerun: yes;">
</span>And that is not the only feature of Bitcoin that strikes an engineer or
businessman who is focused on minimizing resource costs as highly quixotic. Rather
than reduce its protocol messages to be as few as possible, each
Bitcoin-running computer sprays the Internet with a redundantly large number of
“inventory vector” packets to make very sure that all messages get accurately through
to as many other Bitcoin computers as possible.<span style="mso-spacerun: yes;">
</span>As a result, the Bitcoin blockchain cannot process as many transactions per second as a
traditional payment network such as PayPal or Visa. Bitcoin offends the
sensibilities of resource-conscious and performance-measure-maximizing
engineers and businessmen alike.</span></div>
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<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;">Instead, the secret to
Bitcoin’s success is that its prolific resource consumption and poor
computational scalability is buying something even more valuable: social
scalability. Social scalability is the ability of an institution –- a
relationship or shared endeavor, in which multiple people repeatedly
participate, and featuring customs, rules, or other features which constrain or
motivate participants’ behaviors -- to overcome shortcomings in human minds and
in the motivating or constraining aspects of said institution that limit who or
how many can successfully participate. <span style="mso-bidi-font-family: Helvetica;">Social
scalability is about the ways and extents to which participants can think about
and respond to institutions and fellow participants as the variety and numbers
of participants in those institutions or relationships grow. It's about
human limitations, not about technological limitations or physical resource
constraints.</span> There are separate engineering disciplines, such as
computer science, for assessing the physical limitations of a technology itself,
including the resource capacities needed for a technology to handle a greater
number of users or a greater rate of use. Those engineering scalability
disciplines are not, except by way of contrast with social scalability, the
subject of this essay.</span><br />
<span style="font-size: small;"><br /></span>
<span style="font-size: small;">Even though social scalability
is about the cognitive limitations and behavior tendencies of minds, not about
the physical resource limitations of machines, it makes eminent sense, and
indeed is often crucial, to think and talk about the social scalability of a
technology that facilitates an institution. The social scalability of an
institutional technology depends on how that technology constrains or motivates
participation in that institution, including protection of participants and the
institution itself from harmful participation or attack. <span style="mso-spacerun: yes;"> </span>One way to estimate the social scalability of
an institutional technology is by the number of people who can beneficially
participate in the institution. Another way to estimate social scalability is by
the extra benefits and harms an institution bestows or imposes on participants,
before, for cognitive or behavioral reasons, the expected costs and other harms
of participating in an institution grow faster than its benefits. <span style="mso-spacerun: yes;"> </span>The cultural and jurisdictional diversity of
people who can beneficially participate in an institution is also often
important, especially in the global Internet context. The more an institution
depends on local laws, customs, or language, the less socially scalable it is.</span></div>
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<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;">Without institutional and
technological innovations of the past, participation in shared human endeavors
would usually be limited to at most about 150 people – the famous “Dunbar number”.<span style="mso-spacerun: yes;"> </span>In the Internet era, new innovations continue
to scale our social capabilities. In this article I will discuss how
blockchains, and in particular public blockchains that implement
cryptocurrencies, increase social scalability, even at a dreadful reduction in
computational efficiency and scalability.</span></div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOvjiA_9Qm3dWn78uC8LMbIQFuC0mzTo2S-RR7Dyuf8pXttQE9Z6J9rI0eARYOiz5QxBJl6u2j6tp0B-f5pO4_c_YhlqaCPBEbNL8Ld8K8bBWNVjnmZ80VJ6wihPaEVipEzkUS/s1600/MBSS0.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="219" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOvjiA_9Qm3dWn78uC8LMbIQFuC0mzTo2S-RR7Dyuf8pXttQE9Z6J9rI0eARYOiz5QxBJl6u2j6tp0B-f5pO4_c_YhlqaCPBEbNL8Ld8K8bBWNVjnmZ80VJ6wihPaEVipEzkUS/s320/MBSS0.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<span style="font-size: small">
<i>
Cognitive capacity – here in the form of the relative size of a
species’ neocortex – set limits on how large primate groups can be. Maintaining animal or intimate human groups
requires extensive emotional communications and investments in relationships,
such as grooming in primates and gossiping, humor, story-telling, and other
conversations, songs, and play in traditional human groups. Overcoming human
cognitive limits to who or how many people can participate in an institution –
the famous “Dunbar number” of around 150 people -- requires institutional and
technological innovation. (<a href="http://whatsupnah.com/2009/02/twitter-vs-the-dunbar-number-and-the-rise-of-weak-ties/" target="_blank">Source</a>) </i></span></div>
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<span style="font-size: small;">Innovations in social
scalability involve institutional and technological improvements that move
function from mind to paper or mind to machine, lowering cognitive costs while
increasing the value of information flowing between minds, reducing vulnerability,
and/or searching for and discovering new and mutually beneficial participants.<span style="mso-spacerun: yes;"> </span><span style="color: #333333; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><a href="https://en.wikipedia.org/wiki/Alfred_North_Whitehead" target="_blank">Alfred North Whitehead</a> said, "It is a profoundly erroneous truism, repeated by all copy-books and
by eminent people when they are making speeches, that we should cultivate the
habit of thinking what we are doing. The precise opposite is the case.
Civilization advances by extending the number of important operations which we
can perform without thinking about them." Friedrich Hayek added: “We make
constant use of formulas, symbols, and rules whose meaning we do not understand
and through the use of which we avail ourselves of the assistance of knowledge
which individually we do not possess. We have developed these practices and
institutions by building upon habits and institutions which have proved
successful in their own sphere and which have in turn become the foundation of
the civilization we have built up.”<span style="mso-spacerun: yes;"> </span></span></span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="color: #333333; font-size: small; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">A wide
variety of innovations reduce our vulnerability to fellow participants, intermediaries,
and outsiders, and thereby lower our need to spend our scarce cognitive
capacities worrying about how an increasingly large number of increasingly
diverse people might behave. Another class of improvements motivates the
accurate collection and transmission of valuable information between an
increasing number and variety of participants. Yet other advances enable a
wider number or variety of mutually beneficial participants can discover each
other.<span style="mso-spacerun: yes;"> </span>All these kinds of innovations </span><span style="font-size: small;">have
over the course of human prehistory and history improved social scalability,
sometimes dramatically so, making our modern civilization with its vast global
population feasible. Modern information technology (IT), especially by making
use of the historically recent discoveries of computer science, can often
discover many more mutually beneficial matches, can improve motivations for
information quality, and can reduce the need for trust within certain kinds of
institutional transactions, with respect to an increasingly large number and
variety of people, thereby further increasing social scalability in some very important
ways.</span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;">Information flows between minds
– what I have called <a href="http://www.fon.hum.uva.nl/rob/Courses/InformationInSpeech/CDROM/Literature/LOTwinterschool2006/szabo.best.vwh.net/tradition.html" target="_blank">intersubjective protocols</a> – include spoken and written words, custom (tradition), the contents of law
(its rules, customs, and case precedents), a variety of other symbols (e.g.
“star” ratings common in online reputation systems), and market prices, among many others.</span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;">Trust minimization is reducing
the vulnerability of participants to each other’s and to outsiders’ and
intermediaries’ potential for harmful behavior. <span style="mso-spacerun: yes;"> </span>Most institutions which have undergone a
lengthy cultural evolution, such as law (which lowers vulnerability to
violence, theft, and fraud), as well as technologies of security, reduce, on
balance, and in more ways than the reverse, our vulnerabilities to, and thus
our needs to trust, our fellow humans, compared with our vulnerabilities before
these institutions and technologies evolved. In most cases an often trusted and
sufficiently trustworthy institution (such as a market) depends on its
participants trusting, usually implicitly, another sufficiently trustworthy
institution (such as contract law). These trusted institutions in turn traditionally
implement a variety of accounting, legal, security, or other controls that make
them usually and sufficiently, at least for facilitating the functionality of
their client institutions, trustworthy, by minimizing vulnerability to their own
participants (such as accountants, lawyers, regulators, and investigators). An
innovation can only partially take away some kinds of vulnerability, i.e.
reduce the need for or risk of trust in other people. There is no such thing as
a fully trustless institution or technology.<span style="mso-spacerun: yes;">
</span></span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;">The nonexistence of complete
trustlessness is true even of our strongest security technology, encryption. Although
some cryptographic protocols do guarantee certain specific data relationships with
astronomically high probability against opponents with astronomically high
computing power, they do not provide complete guarantees when accounting for
all possible behaviors of all participants. For example, encryption can
strongly protect an e-mail from direct eavesdropping by third parties, but the
sender still trusts the recipient to not forward or otherwise divulge the
contents of that email, directly or indirectly to any undesired third parties.
As another example, in our strongest consensus protocols harmful behavior by
certain fractions of participants or intermediaries well short of 100% (as
measured by their computing power, stake-holding, or individuation and
counting) can compromise the integrity of transactions or information flows
between participants and thereby on balance harm the participants. <span style="mso-spacerun: yes;"> </span>The historically recent breakthroughs of
computer science can reduce vulnerabilities, often dramatically so, but they
are far from eliminating all kinds of vulnerabilities to the harmful behavior
of any potential attacker.</span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal" style="margin-right: -27pt;">
<span style="font-size: small;">Matchmaking is facilitating the
mutual discovery of mutually beneficial participants. Matchmaking is probably
the kind of social scalability at which the Internet has most excelled. Social
networks like Usenet News, Facebook, and Twitter facilitate the mutual
discovery of like-minded or otherwise mutually entertaining or mutually
informing people (and even future spouses!). After they have allowed people
more likely to be of mutual benefit to discover each other, social networks
then facilitate relationships at various levels of personal investment, from
casual to frequent to obsessive. <a href="http://www.lifewithalacrity.com/previous/2005/10/dunbar_group_co.html" target="_blank">Christopher Allen</a> among others has done some interesting and detailed analyses about group size
and time spent mutually interacting in online games and associated social
networks.</span></div>
<div class="MsoNormal">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: small;">eBay, Uber, AirBnB, and online financial exchanges have
brought social scalability via often great improvements in commercial matchmaking:
searching for, finding, bringing together, and facilitating the negotiation of
mutually beneficial commercial or retail deals.<span style="mso-spacerun: yes;">
</span>These or related services also facilitate performances such as payment
and shipping, as well as verification that other obligations undertaken by
strangers in these deals have been performed and communication about the
quality of such performances (as with “star rating” systems, Yelp reviews, and
the like).</span></div>
<div class="MsoNormal">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: small;">Whereas the main social scalability benefit of the Internet
has been matchmaking, the predominant direct social scalability benefit of
blockchains is trust minimization. A blockchain can reduce vulnerability by locking
in the integrity of some important performances (such as the creation and
payment of money) and some important information flows, and in the future may
reduce the vulnerability of the integrity of some important matchmaking
functions.<span style="mso-spacerun: yes;"> </span>Trust in the secret and
arbitrarily mutable activities of a private computation can be replaced by
verifiable confidence in the behavior of a generally immutable public
computation. This essay will focus on such vulnerability reduction and its
benefit in facilitating a standard performance beneficial to a wide variety of
potential counterparties, namely trust-minimized money. </span></div>
<div class="MsoNormal">
<h4>
<b style="mso-bidi-font-weight: normal;">Money and Markets </b></h4>
</div>
<div class="MsoNormal">
<span style="font-size: small;">Money and markets directly benefit the participants in each
particular trade by the market matching a buyer with a mutually beneficial
seller and by a widely acceptable and standardized counter-performance (money).<span style="mso-spacerun: yes;"> </span>I use markets here in the sense Adam Smith
used the term: not as a specific place or service where buyers and sellers are
brought together (although it might sometimes involve these), but rather the
broad set of typically pairwise exchanges whereby the supply chain that makes a
product is coordinated.</span></div>
<div class="MsoNormal">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: small;">Money and markets also incentivize creation of more accurate
price signals that reduce negotiation costs and errors for participants in
other similar exchanges.<span style="mso-spacerun: yes;"> </span>The potent combination
of money and market thereby allowed a far higher number and variety of
participants to coordinate their economic activities than previous exchange
institutions, which more resembled bilateral monopolies than competitive markets.</span></div>
<div class="MsoNormal">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: small;">Markets and money involve matchmaking (bringing together
buyer and seller), trust reduction (trusting in the self-interest rather than
in the altruism of acquaintances and strangers), scalable performance (via
money, a widely acceptable and reusable medium for counter-performance), and
quality information flow (market prices).</span></div>
<div class="MsoNormal">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: small;">The greatest early thinker about money and markets was Adam
Smith.<span style="mso-spacerun: yes;"> </span>At <span style="background: white none repeat scroll 0% 0%; color: #333333; font-family: "georgia";">the dawn of the industrial revolution in
Britain, Smith observed in <i>The Wealth of Nations</i> how making even the most humble of products depended,
directly and indirectly, on the work of large numbers of a wide variety of
people:</span></span></div>
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<blockquote class="tr_bq">
<span style="font-size: small;"><i style="mso-bidi-font-style: normal;"><span style="background: white none repeat scroll 0% 0%; color: #333333; font-family: "calibri";">Observe
the accommodation of the most common artificer or day-laborer in a civilized
and thriving country, and you will perceive that the number of people of whose
industry a part, though but a small part, has been employed in procuring him
this accommodation, exceeds all computation. The woolen coat, for example,
which covers the day laborer, as coarse and rough as it may appear, is the
produce of the joint labor of a great multitude of workmen. The shepherd, the
sorter of the wool, the wool-comber or carder, the dyer, the scribbler, the
spinner, the weaver, the fuller, the dresser, with many others, must all join
their different arts in order to complete even this homely production. How many
merchants and carriers, besides, must have been employed in transporting the
materials from some of those workmen to others who often live in a very distant
part of the country! How much commerce and navigation in particular, how many
shipbuilders, sailors, sail makers, rope makers, must have been employed in
order to bring together the different drugs made use of by the dyer, which
often come from the remotest corners of the world! What a variety of labor,
too, is necessary in order to produce the tools of the meanest of those
workmen! To say nothing of such complicated machines as the ship of the sailor,
the mill of the fuller, or even the loom of the weaver, let us consider only
what a variety of labor is requisite in order to form that very simple machine,
the shears with which the shepherd clips the wool. The miner, the builder of
the furnace for smelting the ore, the feller of the timber, the burner of the
charcoal to be made use of in the smelting-house, the brick maker, the brick layer,
the workmen who attend the furnace, the millwright, the forger, the smith, must
all of them join their different arts in order to produce them. Were we to
examine, in the same manner, all the different parts of his dress and household
furniture, the coarse linen shirt which he wears nest his skin, the shoes which
cover his feet, the bed which he lies on, and all the different parts which
compose it, the kitchen grate at which be prepares his victuals, the coals
which he makes use of for that purpose, dug from the bowels of the earth, and
brought to him perhaps by a long sea and a long land carriage, all the other
utensils of his kitchen, all the furniture of his table, the knives and forks,
the earthen or pewter plates upon which he serves up and divides his victuals,
the different hands employed in preparing his bread and his beer, the glass
window which lets in the heat and the light, and keeps out the wind and the
rain, with all the knowledge and art requisite for preparing that beautiful and
happy invention, without which these northern parts of the world could scarce
have afforded a very comfortable habitation, together with the tools of all the
different workmen employed in producing those different conveniences; if we
examine, I say, all these things, and <span style="mso-bidi-font-style: italic;">consider what a variety of labor is employed about each of them, we
shall be sensible that without the assistance and co-operation of many
thousands, the very meanest person in a civilized country could not be provided</span>,
even according to what we may falsely imagine the easy and simple manner in
which he is commonly accommodated.</span></i></span> </blockquote>
<div class="MsoNormal">
<span style="font-size: small;">And this was before the many successive waves of industrial
revolution and globalization between 1776 and now that refined, elaborated, and
extended the division of labor many times more. Rather than trusting in the unlikely
altruism of so many strangers, markets and money create many pairings of mutual
benefit and thus motivate this large network of mutually oblivious people to
act in our interests:</span><br />
<blockquote class="tr_bq">
<span style="font-size: small;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "calibri"; mso-ascii-theme-font: major-latin; mso-hansi-theme-font: major-latin;"> In civilized society man stands at all times
in need of the cooperation and assistance of great multitudes, while his whole
life is scarce sufficient to gain the friendship of a few persons…[In contrast
to other animals, man has an almost constant occasion for the help of his
brethren, and it is vain for him to expect it from their benevolence only.<span style="mso-spacerun: yes;"> </span>[Exchange is the] manner in which we obtain
from another the far greater part of those good offices which we stand in need
of. It is not from the benevolence of the butcher, the brewer, or the baker,
that we expect our dinner, but from their regard for their own interest. </span></i></span></blockquote>
</div>
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<br />
<div class="MsoNormal">
<span style="font-size: small;">Smith goes on to describe how division of labor, and thus
labor productivity, depends on the extent of the network of pairwise exchanges:
“As it is the power of exchanging that gives occasion to the division of labor,
so the extent of this division must always be limited by the extent of that
power, or, in other words, by the extent of the market”.<span style="mso-spacerun: yes;"> </span>As the exchange network around a country and
around the globe grows, involving a greater number and variety of producers, so
grows the division of labor and thereby labor productivity.</span></div>
<div class="MsoNormal">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: small; mso-bidi-font-family: Helvetica;">Money
facilitates social scalability by increasing the opportunities for this
exchange. By lowering coincidence problems (coincidence-of-wants in exchange
and coincidence-of-want-and-event in unilateral transfers), via a widely
acceptable and reusable form of wealth storage and transfer, money greatly
lowered transaction costs, making possible more exchanges of a greater variety
of goods and services involving exchanges and other wealth transfer
relationships with a much larger number and much wider variety of people.</span></div>
<div class="MsoNormal">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: small;">A wide variety of media, from oral language itself, <a href="http://nakamotoinstitute.org/the-playdough-protocols/" target="_blank">clay</a>,
paper, telegraph, radio, and computer networks, have served to communicate
offers, acceptances, and the resulting deals and prices, as well as performance
monitoring and other business communications. <span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">One of the most
knowledgeable observations of the price network produced by markets and money can
be found in Friedrich Hayek’s essay, <a href="http://www.econlib.org/library/Essays/hykKnw1.html" target="_blank">“The Use of Knowledge in Society”</a>:</span><i style="mso-bidi-font-style: normal;"><span style="font-family: "calibri"; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-theme-font: major-latin;"> </span></i></span><br />
<blockquote class="tr_bq">
<span style="font-size: small;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "calibri"; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-theme-font: major-latin;"> I<span style="color: #333333;">n a system in which the knowledge of the relevant facts
is dispersed among many people, prices can act to coordinate the separate
actions of different people…in any society in which many people collaborate,
this planning, whoever does it, will in some measure have to be based on
knowledge which, in the first instance, is not given to the planner but to
somebody else, which somehow will have to be conveyed to the planner. The
various ways in which the knowledge on which people base their plans is
communicated to them is the crucial problem for any theory explaining the
economic process, and the problem of what is the best way of utilizing
knowledge initially dispersed among all the people is at least one of the main
problems of economic policy—or of designing an efficient economic system…</span></span></i><i style="mso-bidi-font-style: normal;"><span style="color: #333333; font-family: "calibri"; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-hansi-theme-font: major-latin;">The mere fact that there is one price for any commodity—or
rather that local prices are connected in a manner determined by the cost of
transport, etc.—brings about the solution which (it is just conceptually
possible) might have been arrived at by one single mind possessing all the
information which is in fact dispersed among all the people involved in the
process…</span></i><i style="mso-bidi-font-style: normal;"><span style="color: #333333; font-family: "calibri"; mso-ascii-theme-font: major-latin; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-theme-font: major-latin;">The marvel is that in a case like that of a scarcity of one raw
material, without an order being issued, without more than perhaps a handful of
people knowing the cause, tens of thousands of people whose identity could not
be ascertained by months of investigation, are made to use the material or its
products more sparingly; <span style="mso-bidi-font-style: italic;">i.e., </span>they
move in the right direction….The price system is just one of those formations
which man has learned to use (though he is still very far from having learned
to make the best use of it) after he had stumbled upon it without understanding
it. Through it not only a division of labor but also a coordinated utilization
of resources based on an equally divided knowledge has become possible…a
solution is produced by the interactions of people each of whom possesses only
partial knowledge.</span></i></span></blockquote>
<div class="MsoNormal">
<h4>
<b style="mso-bidi-font-weight: normal;">The Social Scalability of Network Security </b></h4>
</div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="font-size: small;">Where long ago we used clay, and more recently paper, today
programs and protocols running on our computers and data networks implement
most of our commercial dealings. While this has greatly improved matchmaking
and information flow, it has come at the cost of an increase in vulnerability
to harmful behavior. </span></span></div>
<div class="MsoNormal">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times"; font-size: small; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">As networks grow, more people with
fewer mutually understood habits of and constraints on behavior are added.<span style="mso-spacerun: yes;"> </span>Security via root-trusting access control,
designed for small and chummy offices like Bell Labs where co-workers were well
known and income and expenditures well controlled by paper procedures rather
than performed on these office computers, breaks down as an efficient and
effective security mechanism as organizations become larger, as organizational
boundaries are crossed, and as more valuable and concentrated resources such as
money are put on or activated via the computers. The more strangers one
receives emails from, the more likely one is likely to get a phishing attack or
a malware-laced attachment.<span style="mso-spacerun: yes;"> </span>Traditional
computer security is not very socially scalable. </span><span style="font-size: small;">As I describe in <a href="https://unenumerated.blogspot.com/2014/12/the-dawn-of-trustworthy-computing.html" target="_blank">The Dawn of Trustworthy Computing</a>:
</span></div>
<blockquote class="tr_bq">
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</style><span style="font-size: small;"><i style="mso-bidi-font-style: normal;"><span style="background: white none repeat scroll 0% 0%; color: #333333; font-family: "calibri";">When we currently use a smart phone or a laptop
on a cell network or the Internet, the other end of these interactions
typically run on other solo computers, such as web servers. Practically all of
these machines have architectures that were designed to be controlled by a
single person or a hierarchy of people who know and trust each other. From the
point of view of a remote web or app user, these architectures are based on
full trust in an unknown "root" administrator, who can control
everything that happens on the server: they can read, alter, delete, or block
any data on that computer at will. Even data sent encrypted over a
network is eventually unencrypted and ends up on a computer controlled in this
total way. With current web services we are fully trusting, in other words we
are fully vulnerable to, the computer, or more specifically the people who have
access to that computer, both insiders and hackers, to faithfully execute our
orders, secure our payments, and so on. If somebody on the other end wants to
ignore or falsify what you've instructed the web server to do, no strong
security is stopping them, only fallible and expensive human institutions,
which often stop at national borders.</span></i></span></div>
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<span style="font-family: "times"; font-size: small; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Many server computers are not valuable enough for insiders
or outsiders to attack. But an increasing number of others contain valuable
concentrations of resources, motivating attack. Centralized root-trusting
security scales poorly. As the resources controlled by computers become more
valuable and more concentrated, traditional root-trusting security becomes more
like the “call the cop” security we are used to in the physical world.<span style="mso-spacerun: yes;"> </span>Fortunately, with blockchains we can do much
better for many of our most important computations.</span></div>
<div class="MsoNormal">
<h4>
<b style="mso-bidi-font-weight: normal;">Blockchains and
Cryptocurrencies</b></h4>
</div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="font-size: small;">Scalable markets and prices require scalable money. Scalable
money requires scalable security, so that a greater number and variety of
people can use the currency without losing its integrity against forgery,
inflation, and theft.</span></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="font-size: small;">An individual or group communicating under the name “Satoshi
Nakamoto” brought Bitcoin to the Internet in 2009. <span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Satoshi’s breakthrough
with money was to provide social scalability via trust minimization: reducing vulnerability
to counterparties and third parties alike. By substituting computationally
expensive but automated security for computationally cheap but institutionally
expensive traditional security, Satoshi gained a nice increase in social
scalability. A set of partially trusted intermediaries replaces a single and fully
trusted intermediary.</span></span></span></div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwzUzCKcIkNQk0u2ZUs8kMA8f-oTge-UwP6r0CWeEA-liborz36ySbbFU1EtBTSgEggne3cAdO0_uvWTrjPAk4ktxx_viknrcoYz8L1QR6fPPCyKi5gYEaO5YAeh-j_rw32n4c/s1600/MBSS1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="238" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwzUzCKcIkNQk0u2ZUs8kMA8f-oTge-UwP6r0CWeEA-liborz36ySbbFU1EtBTSgEggne3cAdO0_uvWTrjPAk4ktxx_viknrcoYz8L1QR6fPPCyKi5gYEaO5YAeh-j_rw32n4c/s320/MBSS1.png" width="320" /></a></td></tr>
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<span style="font-size: small">
<i>
Financial
controls on computational steroids: a blockchain as an army of robots, each checking
up on each other’s work.</i></span></div>
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<span style="font-size: small; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">When we can secure the most important
functionality of a financial network by computer science rather than by the traditional
accountants, regulators, investigators, police, and lawyers, we go from a
system that is manual, local, and of inconsistent security to one that is
automated, global, and much more secure. Cryptocurrencies, when implemented
properly on public blockchains, can substitute an army of computers for a large
number of traditional banking bureaucrats. <span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;">“</i></span></span><span style="font-family: inherit;"><span style="background: white none repeat scroll 0% 0%; color: #333333; font-size: small;">These
block chain computers will allow us to put the most crucial parts of our online
protocols on a far more reliable and secure footing, and make possible
fiduciary interactions that we previously dared not do on a global network.” (<a href="https://unenumerated.blogspot.com/2014/12/the-dawn-of-trustworthy-computing.html" target="_blank">Source</a>)</span><span style="font-size: small; mso-bidi-font-family: Helvetica;"> </span></span><br />
<br />
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">The
characteristics most distinctively valuable in blockchain technology in
general, and Bitcoin in particular — for example</span></span></div>
<span style="font-family: inherit;"><span style="font-size: small;"></span></span>
<ul style="font-size: small;">
<li>independence from existing institutions for its basic operations</li>
</br>
<li>ability to operate seamlessly across borders</li>
</ul>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">come from the
high levels of security and reliability a blockchain can maintain without human
intervention. Without that high security it’s just a gratuitously wasteful
distributed database technology still tied to the local bureaucracies it would
have to depend upon for its integrity.</span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgg_LzMUkNq6WafqQ9UuevyRgC6h6Z0OSLbR0qqiGl00Ir8mvw1otv8qPVrGCzhhcdMPXRA20OlWq7mrAwblDS7DRwU9IYQfOICJ6MfyOAzB1_BX748Qn9pzQ42t7yQiKNKgeq7/s1600/MBSS2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="295" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgg_LzMUkNq6WafqQ9UuevyRgC6h6Z0OSLbR0qqiGl00Ir8mvw1otv8qPVrGCzhhcdMPXRA20OlWq7mrAwblDS7DRwU9IYQfOICJ6MfyOAzB1_BX748Qn9pzQ42t7yQiKNKgeq7/s320/MBSS2.png" width="320" /></a></td></tr>
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<div class="MsoNormal" style="text-align: justify;">
<span style="font-size: small">
<i>
Since the mid-20<sup>th</sup>
century computing has increased in efficiency by many orders of magnitude, but
humans are using the same brains. This has created plenty of possibility for
overcoming human limitations, and institutions based solely on human minds,
with computational capabilities, including in security, doing what they do
best, with human minds doing what they still do best. As a result, humans have
no more raw mental ability to scale up our institutions than we ever have. But
there is plenty of potential for improving social scalability by replacing some
human functions with computational ones. (An important note – this argument
depends on the slope, not the absolute position, of the human ability line. The absolute position shown above is
arbitrary and depends on what human “computation” we are measuring).</i></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Helvetica;">
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<br />
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">A new
centralized financial entity, a trusted third party without a “human
blockchain” of the kind employed by traditional finance, is at high risk of
becoming the next Mt. Gox; it is not going to become a trustworthy financial
intermediary without that bureaucracy.</span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><br /></span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">Computers and networks are cheap.<span style="mso-spacerun: yes;"> </span>Scaling computational resources requires
cheap additional resources. Scaling human traditional institutions in a
reliable and secure manner requires increasing amounts accountants, lawyers,
regulators, and police, along with the increase in bureaucracy, risk, and
stress that such institutions entail. Lawyers are costly. Regulation is to the
moon. Computer science secures money far better than accountants, police, and
lawyers.</span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">In computer
science there are fundamental security versus performance tradeoffs. Bitcoin's automated
integrity comes at high costs in its performance and resource usage. Nobody has
discovered any way to greatly increase the computational scalability of the
Bitcoin blockchain, for example its transaction throughput, and demonstrated
that this improvement does not compromise Bitcoin’s security.</span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-size: small;"><span style="font-family: inherit;"><span style="mso-bidi-font-family: Helvetica;">It is probable that no such big but integrity-preserving performance improvement is
possible for the Bitcoin blockchain; this may be one of these unavoidable
tradeoffs. Compared to existing financial IT, Satoshi made radical
tradeoffs in favor of security and against performance. The seemingly wasteful
process of mining is the most obvious of these tradeoffs, but Bitcoin also
makes others. Among them is that it requires high redundancy in its
messaging. Mathematically provable integrity would require full broadcast
between all nodes. Bitcoin can’t achieve that but to even get anywhere
close to a good approximation of it requires a very high level of redundancy.
So a 1 MB block consumes far more resources than a 1 MB web page, because
it has to be transmitted, processed, and stored with high redundancy for
Bitcoin to achieve its automated integrity.</span></span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">These
necessary tradeoffs, sacrificing performance in order to achieve the security
necessary for independent, seamlessly global, and automated integrity, mean
that the Bitcoin blockchain itself cannot possibly come anywhere near Visa
transaction-per-second numbers and maintain the automated integrity that
creates its distinctive advantages versus these traditional financial systems.
Instead, a less trust-minimized peripheral payment network (possibly <a href="https://lightning.network/lightning-network-paper.pdf" target="_blank">Lightning</a> )
will be needed to bear a larger number of lower-value bitcoin-denominated
transactions than Bitcoin blockchain is capable of, using the Bitcoin
blockchain to periodically settle with one high-value transaction batches of peripheral network transactions.</span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-size: small;"><span style="font-family: inherit;"><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Bitcoin supports a lower rate
transactions than Visa or PayPal, but due to its stronger automated security
these can be much more important transactions. </span><span style="mso-bidi-font-family: Helvetica;">Anybody
with a decent Internet connection and a smart phone who can pay $0.20-$2
transaction fees – substantially lower than current remitance fees -- can
access Bitcoin any where on the globe.<span style="mso-spacerun: yes;">
</span>Lower value transactions with lower fees will need to be implemented on
peripheral bitcoin networks.</span></span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal">
<span style="font-size: small;"><span style="font-family: inherit;"><span style="mso-bidi-font-family: Helvetica;">When it comes
to small-b bitcoin, the currency, there is nothing impossible about paying
retail with bitcoin the way you’d pay with a fiat currency —
bitcoin-denominated credit and debt cards, for example, with all the <a href="https://en.wikipedia.org/wiki/Chargeback" target="_blank">chargeback</a> and transactions-per-second
capabilities of a credit or debit card. And there are also clever ways to do
peripheral bitcoin retail payments in which small value payments happen
off-chain and are only periodically bulk-settled on the Capital-B Bitcoin
blockchain. That blockchain is going to evolve into a high-value settlement
layer as bitcoin use grows, and we will see peripheral networks being used for
small-b bitcoin retail transactions.</span></span></span></div>
<div class="MsoNormal">
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal">
<span style="font-size: small;"><span style="font-family: inherit;"><span style="mso-bidi-font-family: Helvetica;">When I designed <a href="https://web.archive.org/web/20070616052640/http://unenumerated.blogspot.com/2005/12/bit-gold.html" target="_blank">bit gold</a> I already knew consensus did not scale to large transaction throughputs securely,
so I designed it with a two-tier architecture: (1) bit gold itself, the
settlement layer, and (2) <a href="http://www.hit.bme.hu/~buttyan/courses/BMEVIHIM219/2009/Chaum.BlindSigForPayment.1982.PDF" target="_blank">Chaumian digital cash</a>,
a peripheral payment network which would provide retail payments with high
transactions-per-second performance and privacy (through Chaumian blinding),
but would like Visa be a trusted third party and thus require a “human
blockchain” of accountants, etc. to operate with integrity. The
peripheral payment network can involve only small value transactions, thereby requiring
much less of a human army to avoid the fate of Mt. Gox.</span></span></span></div>
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgZm-7BlpX9846EZNMo5FyZS4BX-Zr47ISBfjPwxiayMCbUV1kMWM4_UuVOWcLkm1hcmSBAsyLB2sBCSFhUPKfnBGbjYm7n2-TNvGjk20vLAS9Ma-Awz1aDRwmEZBLFnRvfbiM/s1600/MBSS3.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgZm-7BlpX9846EZNMo5FyZS4BX-Zr47ISBfjPwxiayMCbUV1kMWM4_UuVOWcLkm1hcmSBAsyLB2sBCSFhUPKfnBGbjYm7n2-TNvGjk20vLAS9Ma-Awz1aDRwmEZBLFnRvfbiM/s320/MBSS3.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<span style="font-size: small">
<i>
Ralph Merkle: pioneer
of public-key cryptography and inventor of hierarchical hash-tree structures
(Merkle trees).</i></span></div>
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<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">Money requires
social scalability in its design, via security. For example it should be very
hard for any participant or intermediary to forge money (to dilute the supply
curve leading to undue or unexpected inflation). <span style="mso-spacerun: yes;"> </span>Gold can have value anywhere in the world and
is immune from hyperinflation because its value doesn’t depend on a central
authority. Bitcoin excels at both these factors and runs online, enabling
somebody in Albania to use Bitcoin to pay somebody in Zimbabwe with minimal
trust in or and no payment of quasi-monopoly profits to intermediaries, and
with minimum vulnerability to third parties.</span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">There are all
sorts of definitions of “blockchain” out there, almost all of them just
implicitly broad hand-waving amid the mountains of marketing hype. I suggest a
clear definition that can be communicated to lay people. It is a
blockchain if it has blocks and it has chains. The “chains” should be <a href="https://en.wikipedia.org/wiki/Merkle_tree" target="_blank">Merkle trees</a> or other cryptographic structures with a similar integrity functionality of
<a href="http://archive.is/T9Y8P#selection-103.0-103.30#Post-unforgeable%20auditing%20logs" target="_blank">post-unforgeable</a><span style="mso-spacerun: yes;"> </span>integrity. Also the transactions and any other data whose integrity is
protected by a blockchain should be replicated in a way objectively tolerant to
worst-case malicious problems and actors to as high a degree as possible
(typically the system can behave as previously specified up to a fraction of
1/3 to 1/2 of the servers maliciously trying to subvert it to behave differently).</span></span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtHlRzZB2L_GfB8FcRvR5ZSwDH4kaqA1xUonfwTZQHMtHCGwJ4ihKZrJoRGGpDQa1dG5yOkPkK34XJdlxftIl9OVb22YT4Q-FChc76T4omaUSdzoHyla2uYAn8sqTDhOKPV0TX/s1600/MBSS4.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="220" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtHlRzZB2L_GfB8FcRvR5ZSwDH4kaqA1xUonfwTZQHMtHCGwJ4ihKZrJoRGGpDQa1dG5yOkPkK34XJdlxftIl9OVb22YT4Q-FChc76T4omaUSdzoHyla2uYAn8sqTDhOKPV0TX/s400/MBSS4.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<span style="font-size: small">
<i>
Bitcoin’s socially
scalable security, based on computer science rather than on police and lawyers,
allows, for example, customers in Africa to pay suppliers in China seamlessly
across borders. A private blockchain cannot accomplish this
feat nearly as easily, since it would require an identification scheme,
certificate authority, and PKI shared between these various jurisdictions. (<a href="https://twitter.com/pesa_africa/status/812618598443319297" target="_blank">Source</a>)</i></span></span></div>
<br />
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">Because
of this fraction, and because of the (hopefully very rare) need to update
software in a manner that renders prior blocks invalid – an even riskier
situation called a hard fork -- blockchains also need a human governance layer
that is vulnerable to fork politics. The most successful blockchain, Bitcoin,
has maintained its immutable integrity via decentralized decision-making among
experts in the technology combined with a strong dogma of immutability, under
which only the most important and rare bug fixes and design improvements, that
cannot be made any other way, justify a hard fork. Under this philosophy of
governance accounting or legal decisions (such as altering an account balance
or undoing a transaction) never justify a hard fork, but should be accomplished
by traditional governance outside of (or on top of) the system (e.g. via a
court injunction forcing a Bitcoin user to send a new transaction that
effectively undoes the old one, or confiscating the particular keys and thus
the particular holdings of a particular user).</span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">To say that
data is post-unforgeable or immutable means that it can’t be undetectably alteredafter being committed to the blockchain. Contrary to some hype this
doesn’t guarantee anything about a datum’s provenance, or its truth or falsity,
before it was committed to the blockchain. That requires additional protocols,
often including expensive traditional controls. Blockchains don’t guarantee
truth; they just preserve truth and lies from later alteration, allowing one to
later securely analyze them, and thus be more confident in uncovering the lies.
Typical computers are computational etch-a-sketch, while blockchains are
computational amber. Important data should be committed to blockchain amber as
early as possible, ideally directly from and cryptographically signed by the device
in which it was generated, to maximize the blockchain’s benefit in securing its
integrity.</span></span></div>
<div class="MsoNormal" style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="text-align: left;">
<span style="mso-bidi-font-family: Helvetica;"><br /></span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
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<tr><td class="tr-caption" style="text-align: center;"><style>
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<span style="font-size: small">
<i>
A Merkle
tree of four transactions (tx0 through tx3). Combined with a proper
replication and chains of transaction blocks protected by proof-of-work, Merkle trees can make data such as transactions post-unforgeable by consensus. In Bitcoin, a Merkle
root hash securely summarizes and is used to verify the unaltered state of all
the transactions in a block.</i></span></div>
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<br />
<div class="MsoNormal" style="text-align: left;">
<span style="font-size: small; mso-bidi-font-family: Helvetica;">My own 1998 <a href="http://nakamotoinstitute.org/secure-property-titles/" target="_blank">“secure property title”</a> architecture
had Merkle trees and replication of data tolerant against an objective fraction
of arbitrarily faulty software or malicious actors, but not blocks. It
demonstrated my theory that you could protect the integrity of globally shared
data and transactions, and use that ability to design a cryptocurrency (bit
gold). It did not have the more efficient and computationally scalable blocks-and-ledger system that Bitcoin does. Also like today’s private blockchains, secure property
titles assumed and required securely distinguishable and countable nodes.</span><br />
<br />
<span style="font-size: small; mso-bidi-font-family: Helvetica;">Given the
objective 51% hashrate attack limit to some important security goals of public
blockchains like Bitcoin and Ethereum, we actually do care about the
distinguishable identity of the most powerful miners to answer the question
“can somebody convince and coordinate the 51%?</span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">Blockchain
security is objectively limited and blockchain governance is heavily influenced
by the potential for a 51% attack.<span style="mso-spacerun: yes;"> </span>An
attack of course does not have to be called an “attack” by the attackers;
instead they might call it “enlightened governance” or “democracy in
action”.<span style="mso-spacerun: yes;"> </span>Indeed some kinds of software
updates needed to fix bugs or otherwise improve the protocol require a soft fork.
Some other kinds of software updates require hard forks, which in Bitcoin pose
an even greater security and continuity risks than soft forks. Blockchains,
although reducing trust far more than any other network protocols, are still
far from trustless. Miners are partially trusted fiduciaries, and those who are
not expert developers or computer scientists who have invested a great deal of
time in learning the design principles and codebase of a blockchain must place a
great deal of faith in the expert developer community, much as non-specialists
who want to understand the results of a specialized science do of the
corresponding scientists. During a hard fork exchanges can also be very
influential by deciding which fork to support with their order books and trade
symbol continuity.</span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">Public
blockchains thus mostly but not entirely dodge the identity-is-hard bullet and
take care of its remaining problem of identifying the most powerful miners at a
higher “wet”/“social” level, where it is probably more appropriate, rather than
trying to securely map such an inherently wet (brain-based) concept onto the
protocol, as PKI (<a href="https://en.wikipedia.org/wiki/Public_key_infrastructure" target="_blank">public key infrastructure</a>) rather awkwardly tries
to do.</span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">So I think
some of the “private blockchains” qualify as bona fide blockchains; others
should go under the broader rubric of “distributed ledger” or “shared database”
or similar. They are all very different from and not nearly as socially
scalable as public and permissionless blockchains like Bitcoin and Ethereum.</span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">All of the
following are very similar in requiring an securely identified (distinguishable
and countable) group of servers rather than the arbitrary anonymous membership
of miners in public blockchains. In other words, they require some other,
usually far less socially scalable, solution to the <a href="http://changingminds.org/techniques/propaganda/sockpuppeting.htm" target="_blank">Sybil (sockpuppet</a>) attack problem:</span></span></div>
<div>
<ul style="font-size: small;">
<li><a href="https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/" target="_blank">Private blockchains</a></li>
</br>
<li>The “federated” model of <a href="https://www.blockstream.com/sidechains.pdf" target="_blank">sidechains</a> (Alas, nobody has figured out how to do sidechains with any
lesser degree of required trust, despite previous hopes or claims). Sidechains
can also be private chains, and it’s a nice fit because their architectures and
external dependencies (e.g. on a PKI) are similar.</li>
</br>
<li><a href="https://coincenter.org/entry/what-is-multi-sig-and-what-can-it-do" target="_blank">Multisig</a>-based
schemes, even when done with blockchain-based smart contracts</span></li>
</br>
<li>Threshold-based “oracle” architectures for moving off-blockchain data onto blockchains</li>
</ul>
</div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small;">T</span><span style="font-size: small; mso-bidi-font-family: Helvetica;">he dominant,
but usually not very socially scalable, way to identify a group of servers is
with a PKI based on trusted <a href="https://en.wikipedia.org/wiki/Certificate_authority" target="_blank">certificate authorities</a> (CAs).
To avoid the problem that <a href="http://nakamotoinstitute.org/trusted-third-parties/" target="_blank">merely trusted third parties are security holes</a>, reliable CAs themselves must be expensive, labor-intensive
bureaucracies that often do extensive background checks themselves or rely on
others (e.g. Dun and Bradstreet for businesses) to do so. (I once led a
team that designed and built such a CA). CAs also act as a gatekeeper,
rendering these permissioned systems. CAs can become singular points of
political control and failure. "Public blockchains are automated,
secure, and global, but identity is labor-intensive, insecure, and local.” </span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-size: small;"><br /></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">PKI-enabled
private blockchains are a nice for banks and some other large enterprises
because they already have mature in-house PKIs that cover the employees,
partners, and private servers needed to approve important transactions.
Bank PKIs are relatively reliable. We also have semi-reliable CAs for web
servers, but not generally speaking for web clients, even though people have
been working on the problem of client certificates since the invention of the
web: for example advertisers would love to have a more secure alternative to
phone numbers and cookies for tracking customer identities. Yet it hasn’t
happened. </span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">PKI can work
well for some important things and people but it is not nearly so nice or so
easy for lesser entities. Its social scalability is limited by the traditional
wet identity bureaucracy on which it depends.</span></span></div>
<div class="MsoNormal" style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="text-align: left;">
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi91hozV3wT8hJ-vnoE5K4FWpoknlL21NY_UoesIWDLQskp1XINFbON1kldAGHYrBAeAtJZJ7r8IEmXxR17bQUv4WNwDbMdNg9BgFV6j8jYOyrAtW3c2-hnXabZGQiaPy5AeV7x/s1600/MBSS6.png" style="margin-left: auto; margin-right: auto;"><img border="0" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi91hozV3wT8hJ-vnoE5K4FWpoknlL21NY_UoesIWDLQskp1XINFbON1kldAGHYrBAeAtJZJ7r8IEmXxR17bQUv4WNwDbMdNg9BgFV6j8jYOyrAtW3c2-hnXabZGQiaPy5AeV7x/s320/MBSS6.png" width="320" /></a></td></tr>
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<span style="font-size: small">
<i>Some significant thefts in the broader bitcoin ecosystem. Whereas the Bitcoin blockchain
itself is probably the most secure financial network in existence (and indeed must remain far more secure than traditional payment networks in order to maintain its low governance costs and seamless cross-border capability), its
peripheral services based on older centralized web servers are very insecure. (Source: author)</i></span></div>
<div class="MsoNormal" style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;">We need more
socially scalable ways to securely count nodes, or to put it another way to
with as much robustness against corruption as possible, assess contributions to
securing the integrity of a blockchain. That is what proof-of-work and broadcast-replication
are about: greatly sacrificing computational scalability in order to improve
social scalability. That is Satoshi’s brilliant tradeoff. It
is brilliant because humans are far more expensive than computers and that gap
widens further each year. And it is brilliant because it allows one to
seamlessly and securely work across human trust boundaries (e.g. national
borders), in contrast to “call-the-cop” architectures like PayPal and Visa that
continually depend on expensive, error-prone, and sometimes corruptible
bureaucracies to function with a reasonable amount of integrity.</span></span><br />
<h4>
<b style="mso-bidi-font-weight: normal;">Conclusion </b></h4>
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;"></span></span>
</div> <!-- add manually to close next div above -->
<div class="MsoNormal">
<span style="font-family: inherit;"><span style="font-size: small; mso-bidi-font-family: Helvetica;"><span style="font-family: inherit;">The rise of the Internet as seen the rise of a variety of
online institutions, among them social networks, “long-tail” retail (e.g.
Amazon), and a variety of services that allow small and dispersed buyers and
sellers to find and do business with each other (eBay, Uber, AirBnB, etc.) These are just the initial attempts to take
advantage of our new abilities. Due to
the massive improvements in information technology over recent decades, the
number and variety of people who can successfully participate in an online
institution is far less often restricted by the objective limits of computers
and networks than it is by limitations of mind and institution that have usually
have not yet been sufficiently redesigned or further evolved to take advantage
of those technological improvements.</span></span></span><br />
<br />
<span style="font-family: inherit;"><span style="font-size: small;">These initial Internet efforts have been very centralized. Blockchain technology, which implements data integrity via computer science rather than via “call the cops”, has so far made possible trust-minimized money -- cryptocurrencies – and will let us make progress in other financial areas as well as other areas where transactions can be based primarily on data available online.</span></span><br />
<br />
<span style="font-family: inherit;"><span style="font-size: small;">This is not to say that adapting our institutions to our new capabilities will be easy, or indeed in particular cases anything short of difficult and improbable. Utopian schemes are very popular in the blockchain community, but they are not viable options. Reverse-engineering our highly evolved traditional institutions, and even reviving in new form some old ones, will usually work better than designing from scratch, than grand planning and game theory. One important strategy for doing so was demonstrated by Satoshi – sacrifice computational efficiency and scalability -- consume more cheap computational resources -- in order to reduce and better leverage the great expense in human resources needed to maintain the relationships between strangers involved modern institutions such as markets, large firms, and governments.
</span>
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</div>
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Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com14tag:blogger.com,1999:blog-17908317.post-31879549825736546282016-12-18T14:54:00.001-08:002016-12-18T14:54:47.772-08:00Weigh and deliver: compensation and the evolution of law and money
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<span style="font-family: inherit;"><span style="font-size: 12.5pt;">Long
before the invention of coins, the earliest written legal codes take for
granted the existence of commodity money that served both as a medium for
paying fines and compensation and as a unit of account and standard of value
assessing such penalties. The rules throughout the Sumerian <a href="https://en.wikipedia.org/wiki/Code_of_Ur-Nammu" target="_blank">“Code” of Ur-Nammu</a> [1],</span><span style="font-size: 12.5pt;"> </span><span style="font-size: 12pt;">c.
2100–2050 BC. (about 1400 years before the invention of coinage),</span><span style="font-size: 12.5pt;"> show us that standard weights of silver were
being used as a unit of account and the actual medium of payment: the code
specifically requires defendants adjudged guilty to “weigh and deliver” the
specified weight of silver. Over half of the extant rules specify fine or
damage payments in silver. The single rule specifying a silver payment that
allows an alternative medium to be used calls it out as such: it specifies “he
shall bring [a slave woman], if he has no slave woman, he shall instead weigh
and deliver 10 shekels of silver; if he has no silver, he shall give him
whatever of value he has.” (Law 24). </span></span><br />
<br />
<span style="font-family: inherit;"><span style="font-size: 12.5pt;"><i style="mso-bidi-font-style: normal;"><span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiy18DM-hswIlwjMdjyAgB4kF2Vy0i5qluSROx1008kGRBsjlww7uxWNg_gntlQjcKWzHRstnIlIY2HDlVxU4ZxjHTX4zZrlbON8v66X9dzj1rj7mdkqmsAMr-vCuK472rPkEfz/s1600/LawAndMoney1.png" style="margin-left: auto; margin-right: auto;"><img border="0" height="203" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiy18DM-hswIlwjMdjyAgB4kF2Vy0i5qluSROx1008kGRBsjlww7uxWNg_gntlQjcKWzHRstnIlIY2HDlVxU4ZxjHTX4zZrlbON8v66X9dzj1rj7mdkqmsAMr-vCuK472rPkEfz/s400/LawAndMoney1.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<i style="mso-bidi-font-style: normal;"><span style="color: black; font-family: Cambria; font-size: 12.0pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-font-kerning: 12.0pt; mso-themecolor: text1;">“In Mesopotamia, the
adoption of a silver standard that equated measures of barley with a set amount
of silver is illustrated by a rare example of a spiral coil of silver, lengths
of which were snipped off to pay debts.” Given a standard cross-section, equal
lengths of wire gave equal weights of metal. Coils could be audited by snipping
them at random points inspecting the cut section. <a href="http://oi.uchicago.edu/museum-exhibits/special-exhibits/commerce-and-coins-ancient-near-east" target="_blank">[Link]</a></span></i></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
</td></tr>
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</span></i></span></span><br />
<span style="font-family: inherit;"><span style="font-size: 12.5pt;">A medium for paying fines and damages
implies that the recipient (for example the king for a fine, or the victim for
compensation) could use that medium in further useful payments – likely for
inheritance, tax, religious tithe, tribute, and exchange, among other
transactions. (These transactions, and how money emerges from them, will be
discussed in future posts). Indeed, the frequency with which a an intermediate
good is used as a medium for paying legal penalties may serve as a useful proxy
for how much value that good adds (i.e. how much in transaction costs its
saves) to other transactions (including but not limited to legal penalties)
involved in the circulation of that good</span>.</span><br />
<br />
<span style="font-family: inherit;"> </span>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Penalty</span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Frequency</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 1;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Weigh
and deliver weight of silver</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">19</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 2;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Death</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">4</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 3;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Defining
state of slavery </span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">2</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 4;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Return
of same or similar (measure and deliver volume of grain for injury involving
grain)</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">2</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 5;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Variable
damages</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">2</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 6;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Misc.</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">2</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 7; mso-yfti-lastrow: yes;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Unknown
or no compensation</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">6</span></div>
</td>
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<br />
<div class="MsoNormal">
<span style="font-family: inherit;">
<i style="mso-bidi-font-style: normal;"><span style="font-size: 12.5pt;">Frequency of penalties in the “Code” of
Ur-Namma [1]</span></i></span><style>
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<div class="MsoNormal">
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<h3>
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--</style><b style="mso-bidi-font-weight: normal;"><span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">An Indo-European example: the Old
Hittite laws</span></b></h3>
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<tr style="mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Penalty</span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Frequency</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 1;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Weight
of silver</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">71</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 2;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Number
of slaves</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">10</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 3;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Enslavement</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">4</span></div>
</td>
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<tr style="mso-yfti-irow: 4;">
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<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Death</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">11</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 5;">
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<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Volume
of barley</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">6</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 6;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Return
objects in same or similar form as item(s) found or stolen</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">40</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 7;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Storable
food (sheep, bread, and beer)</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">3</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 8;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Sheep</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">7</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 9;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Land</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">4</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 10;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Estate
division (land, slaves, livestock)</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">5</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 11;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Variable
damages</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">10</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 12;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Misc.</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">7</span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 13; mso-yfti-lastrow: yes;">
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Unknown
or no compensation</span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">18</span></div>
</td>
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<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span style="font-size: 12.5pt;">Frequency of penalties in the Old
Hittite Laws (c. 1650-1500 BC: still over 800 years before the invention of
coinage) [2]</span></i></span></div>
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<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">The ubiquity and deep age of compensation culture </span></b><span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">[3]</span></div>
<div class="MsoNormal">
<br /></div>
<span style="font-family: Arial,Helvetica,sans-serif;">
</span><div class="MsoNormal">
<span style="font-family: inherit;"><span style="font-size: 12.5pt;">Institutions of
blood money and compensation via standard forms of wealth for other injuries have
been observed and recorded by missionaries, traders, and ethnologists in every
branch of humans, including all major divisions of humans that left Africa as
well as many who stayed. It is possible that this ubiquitous geographical scope
reflects a shared cultural influence that is more recent than our shared
ancestry in Africa (c. 70,000 BC) but prior to Columbus and Magellan. More
likely, it reflects a common cultural and genetic heritage dating back to at
least 70,000 BC before the exit of the ancestors of today’s Austronesian and
Eurasian peoples from Africa. This is also suggested by the deep age and
continuity of the shell bead tradition detailed <a href="http://unenumerated.blogspot.com/2016/07/artifacts-of-wealth-patterns-in_15.html" target="_blank">here</a>.
Shell beads were the predominant form of compensation money in cultures that
migrated out of the African and Eurasian core before the dawn of livestock
agriculture and metallurgy, to such diverse places as Melanesia and the
Americas. These patterns will be laid out in detail, from descriptions derived from traveler, missionary, and ethnographic literature, in future post(s).</span></span></div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjx75SG21VLajRT2o59NynUqynYSo8leSTbddHz06ylzaCqXkwgD4N2iPaEvLhbIOn9G_DM_BcSDz0KKSKf2kztOYIV5X5XmlM-oXXQqHZT_wP17kVbgc1VymJ0z5UdinS0suPa/s1600/LawAndMoney2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjx75SG21VLajRT2o59NynUqynYSo8leSTbddHz06ylzaCqXkwgD4N2iPaEvLhbIOn9G_DM_BcSDz0KKSKf2kztOYIV5X5XmlM-oXXQqHZT_wP17kVbgc1VymJ0z5UdinS0suPa/s320/LawAndMoney2.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<br /></div>
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<i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">‘Shell-money
"Bakhia", Solomon Islands, used as "blood money"’ [<a href="http://numisarchives.blogspot.com/search/label/Blood%20money" target="_blank">Link</a>]</span></i><span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"></span></div>
</td></tr>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Customary prices</span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;">Prior to the rise of efficient competitive markets, prices for goods
were often specified by custom or law rather than negotiated. This served to
conserve transaction costs in a high transaction cost culture where exchange
relationships <span style="mso-spacerun: yes;"> </span>resembled bilateral monopolies
more closely than they resembled spot markets.<span style="mso-spacerun: yes;">
</span>Bargaining costs were high, and indeed bargaining failure often resulted
in violence and destruction rather than merely in no deal. This made focal
points of negotiation, such as customary prices and customary compensation
amounts for specific injuries, a quite valuable and ubiquitous part of most
Neolithic and earlier cultures.<span style="mso-spacerun: yes;"> </span>When
specified by law, these rules setting prices were often intermingled with laws
specifying legal penalties and used the same set of units: in the Mesopotamian
and Anatolian law codes prior to coinage, most commonly weights of silver and
volumes of barley.</span></div>
<span style="font-family: inherit;">
</span><div class="MsoNormal">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr style="mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
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<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Price
unit</span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.05in;" valign="top" width="148">
<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Frequency</span></div>
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<div class="MsoNormal">
<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Weight
of silver</span></div>
</td>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">68</span></div>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Volume
of barley</span></div>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">6</span></div>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Number
of sheep</span></div>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">7</span></div>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Labor
or military service appurtenant to land</span></div>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">11</span></div>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Other</span></div>
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<span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">1</span></div>
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<br /></div>
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<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span style="font-size: 12.5pt;">Frequency of legally specified prices
and rents in the Old Hittite Laws [2]</span></i></span></div>
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<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
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<span style="font-family: inherit;">One can also think blood-money-type fixed damages (compensation) and
fines as customary prices for injuries. As with customary prices for goods,
customary prices for injuries conserved on the transaction costs of bilateral
monopoly negotiations, in this case negotiations to settle legal disputes. Today
this is solved, to the extent it is, by each side predicting what damages or
punishments they expect a court to assess, and negotiating accordingly.</span></div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNZmZVEcUMVnJLuGQ2HHEhy5TQQHFWa8HzkWoFKpsgcjHWobUTP9FSQ5u-23KvsknolvbXx-_VzUF4aE2psKLrZ2Xi1veMxY_r-BSnyTnf1zkr-xx6-0J8DJDC_21F83wt4c6-/s1600/LawAndMoney3.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="239" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNZmZVEcUMVnJLuGQ2HHEhy5TQQHFWa8HzkWoFKpsgcjHWobUTP9FSQ5u-23KvsknolvbXx-_VzUF4aE2psKLrZ2Xi1veMxY_r-BSnyTnf1zkr-xx6-0J8DJDC_21F83wt4c6-/s320/LawAndMoney3.png" width="320" /></a></td></tr>
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<br /></div>
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<i style="mso-bidi-font-style: normal;"><span style="color: black; font-family: Cambria; font-size: 12.0pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-font-kerning: 12.0pt; mso-themecolor: text1;">Copper spirals and gold discs, 4th millenium BC, Austria. Spiral armbands were among the earliest items worked from native copper,
in what are now Serbia and Hungary, c. 5000-4500 BC. [<a href="http://www.digplanet.com/wiki/Stollhof_Hoard" target="_blank">Link</a>]</span></i></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: Helvetica; mso-bidi-font-family: Helvetica;">Estimating
deterrence and fairness: eye-for-eye vs. measured punishments</span></b></div>
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-</style><span style="font-family: inherit;">As kings and chiefs gained power, fines paid to them for criminal
acts replaced compensation to victims. In some cases a separate set of laws
(for example <a href="https://en.wikipedia.org/wiki/Tort" target="_blank">tort</a> laws) arose alongside the criminal law, or was
evolved from the previous compensation culture, maintaining some compensation
for victims. Subsequently law usually evolved away from monetary compensation and towards punishments for deterrence.<span style="mso-spacerun: yes;"> </span>A chief
concern of criminal law became estimation of deterrence value. The king had
incentives to perform punishments both as a public good and a public show. To
allow themselves and their public to assess the deterrence value of punishments,
there were two major strategies:</span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<span style="font-family: inherit;">
</span><div class="MsoListParagraphCxSpFirst" style="mso-layout-grid-align: none; mso-list: l0 level1 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: inherit;"><span style="mso-list: Ignore;">·<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-synthesis: weight style; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>“Eye for an eye”-type laws, which focus on comparing the punishment
to the crime’s injury (often similar to the injury to maximize perceived
fairness, but sometimes also more severe than the injury for extra deterrence
value). In some of the non-silver compensation rules in the Mesopotamian and
Hittite law codes described above, barley, slaves, or other goods are
substituted for silver because in order to correspond to an injury involving
barley, slaves, etc.: like for like.</span></div>
<span style="font-family: inherit;">
</span><div class="MsoListParagraphCxSpMiddle" style="mso-layout-grid-align: none; mso-list: l0 level1 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: inherit;"><span style="mso-list: Ignore;">·<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-synthesis: weight style; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>Measured punishments, which, like monetary compensation for injury,
allow the severity of different crimes to be compared and ranked, for example</span></div>
<span style="font-family: inherit;">
</span><div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level2 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: inherit;"><span style="mso-list: Ignore;">o<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-synthesis: weight style; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span>Whipping (number
of lashes)</span></div>
<span style="font-family: inherit;">
</span><div class="MsoListParagraphCxSpLast" style="margin-left: 1.0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level2 lfo1; mso-pagination: none; text-autospace: none; text-indent: -.25in;">
<span style="font-family: inherit;"><span style="mso-list: Ignore;">o<span style="font-feature-settings: normal; font-kerning: auto; font-language-override: normal; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-synthesis: weight style; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span>Prison sentences
(length of time), our dominant modern form of criminal punishment</span></div>
<span style="font-family: inherit;">
</span><div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<span style="font-family: inherit;">
</span><div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;">As suggested above (and for reasons to be explicated in future
posts), compensation according to a standard amount of a standard wealth good
(pre-coinage money), the outcome of coercive negotiations between clans, was
very likely the dominant form of measured punishment during the vast majority
of the time and in the vast majority of cultures from the dawn of our species
to today.</span></div>
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<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijPwNEyGSH4R0N9bAtej5UwpoHmLeTFzAUI44sf-1JX8tqirIU1i0oU-AiWyMNvcCw0LfvT0srYszzmwarxEA7BjnSXjscmssKy3ITeW-1b7iyIroO3pR4ZiIWoHySLsYlvi4r/s1600/LawAndMoney4.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="319" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijPwNEyGSH4R0N9bAtej5UwpoHmLeTFzAUI44sf-1JX8tqirIU1i0oU-AiWyMNvcCw0LfvT0srYszzmwarxEA7BjnSXjscmssKy3ITeW-1b7iyIroO3pR4ZiIWoHySLsYlvi4r/s320/LawAndMoney4.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">
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<i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">In
Northern Europe, blood money and other compensation for injury was known as
“wergeld”. If the guilty party didn't have the money on hand, they needed a money-lender.</span></i><b style="mso-bidi-font-weight: normal;"><span style="font-family: Helvetica; font-size: 12.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"></span></b></div>
</td><td class="tr-caption" style="text-align: center;"> </td><td class="tr-caption" style="text-align: center;"> </td><td class="tr-caption" style="text-align: center;"> </td><td class="tr-caption" style="text-align: center;"> </td></tr>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: Helvetica; mso-bidi-font-family: Helvetica;">Markets and the rise of variable damages</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: inherit;">There was very little change between the Old Hittite Laws of (c.
1600 BC) and the New Hittite Laws (c. 1200 BC).<span style="mso-spacerun: yes;">
</span>But between then and the Roman Twelve Tables (c. 400BC) there was a
radical shift away from fixed fees and towards variable damages, assessed by
judge or jury. This evolution was coincident with the rise of coinage, probably
due to the shift of trade in a wide variety of goods away from bilateral and
hierarchical relationships and towards competitive marketplaces. Market deals were
facilitated by being able to transfer metal in branded form (coins) instead of
the cutting and weighing of coils or hack-silver or the laborious counting of
shells (or error-prone approximations by length) which had dominated exchange
up to that time. The lowering of negotiation costs by marketplaces, coins, and
other developments substantially decreased the use of customary prices in favor
of prices negotiated in a market.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To be continued!</div>
Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com2tag:blogger.com,1999:blog-17908317.post-80420258714275289832016-07-31T00:04:00.004-07:002016-07-31T07:21:59.165-07:00Artifacts of wealth: patterns in the evolution of collectibles and money<h3>
Introduction</h3>
<div class="MsoNormal">
This is the first of at least two posts on the evolution of
collectibles and money.<span style="mso-spacerun: yes;"> </span>The goal is to
explore the evolutionary and economic functions of the “ornamental” or
“ceremonial” objects that are so common in the archaeological record. In this
article, we will look broadly and visually at the patterns of evolution of
artifacts, in terms of their material and visual characteristics, of the most common kinds of collectibles -- those
objects that look to our modern eyes like jewelry.</div>
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAYkX7ypp5IPZKQnlyjcSxLWconpiZSca9TNZ29HdMva-aq7WC4N0y3PEtpf3KPFcYqXTrlkJG1PRkfbWctjCgdzqYNjTlNCpI3Xko2Zgw977HhB9cCzVJUQW2lR0_Ec96A9hN/s1600/Collectibles1.png" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="298" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAYkX7ypp5IPZKQnlyjcSxLWconpiZSca9TNZ29HdMva-aq7WC4N0y3PEtpf3KPFcYqXTrlkJG1PRkfbWctjCgdzqYNjTlNCpI3Xko2Zgw977HhB9cCzVJUQW2lR0_Ec96A9hN/s400/Collectibles1.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"> <style><!--
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<br />
<div style="margin: 0in 0in 0.0001pt;">
<span style="font-size: x-small;"><i><span style="color: black; font-family: "cambria";">‘Tomb Nr 7 from Yao Shan showing Jade implements
and their position on or near the body. This display in the Museum gives a good
overview of the multiple Jade pieces and shapes following the deceased Liangzhu
Noble into to afterworld.' (Neolithic China, 3000 BC to 2000 BCE)</span></i></span></div>
<br />
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This blog post will lay out a profound puzzle: the
ubiquity and importance of artifacts, often called “ornamental”, “decorative”, “ceremonial”,
or “ritual”, the evolutionary function of which the anthropological and
archaeological literature has never successfully explained. We will study the
common instances, and the kinds of artifacts of most general importance across
human cultures and timespans, and the connections between them, rather than
thrilling to the rare and freakish artistry beloved of collectors, museums, and
ethnographers.</div>
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWbHcrE-p5Oxeo_rWrveIG-O_Yy9nkP2ttHnI1iBk57o6z18E_eQC-q7NrikcI0s5VTCPAXTAAO0Xan3VHgtSQNr_xGYOTQ2y66OzmcpNtP5wIN95cZvxRdbkFcLX_KB_zZszt/s1600/Collectibles2.png" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWbHcrE-p5Oxeo_rWrveIG-O_Yy9nkP2ttHnI1iBk57o6z18E_eQC-q7NrikcI0s5VTCPAXTAAO0Xan3VHgtSQNr_xGYOTQ2y66OzmcpNtP5wIN95cZvxRdbkFcLX_KB_zZszt/s400/Collectibles2.png" width="205" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<span style="font-size: x-small;"><i>Sungir (in the Russian plain, c. 200 km east of
Moscow): burial with mammoth ivory bracelets and thousands of mammoth ivory
beads, 25000-17000 BC. This is long
before the Neolithic (early agriculture era; the people represented in these
burials were mammoth hunters. <a href="http://archaeology.about.com/od/sterms/g/sungir.htm">http://archaeology.about.com/od/sterms/g/sungir.htm</a>. Randall White estimates that an individual
bead took one to two hours of work, and as a result that the grave goods in
such a burial represented nearly 10,000 hours of labor. [7] “</i><i>Each of the three intact individuals
was lavishly decorated with thousands of painstakingly prepared ivory beads
arranged in dozens of strands... The man was adorned with 2,936 beads…” <a href="http://www.donsmaps.com/sungaea.html">http://www.donsmaps.com/sungaea.html</a></i></span></div>
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<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
To describe my solution to these puzzles, in future posts
I will elucidate updated versions of the theories laid out
on <a href="http://nakamotoinstitute.org/shelling-out/" target="_blank">the evolutionary functions of these objects[1].</a><span style="mso-spacerun: yes;"></span><span style="mso-bidi-font-family: Helvetica;"> These theories are not
about how people in these cultures perceived or thought about their axes and
shells and their uses, much less about the interpretations and explanations
given in the accounts of travelers and missionaries, and in the ethnographic
literature. These varied widely, both in how the natives themselves interpreted
their thoughts and actions and how the various observers who recorded these thoughts
and actions further interpreted them. Understanding the thoughts and feelings
of people in such an alien culture is usually extremely difficult at best. Trying
to get in the heads of people from long-extinct cultures is a futile exercise. Our
account will rather be about the evolutionary function of these objects and
their uses, which was typically unconscious, but which we can infer from
archaeological facts, objective aspects of ethnographic observations, and
general evolutionary and economic principles appropriately adapted.<span style="mso-spacerun: yes;"> </span>We talk in short in terms of <i style="mso-bidi-font-style: normal;">ultimate </i>rather than <i style="mso-bidi-font-style: normal;">proximate </i>explanations <a href="http://www.zoo.ox.ac.uk/group/west/pdf/Scott-Phillips_etal_11.pdf" target="_blank">[14]</a>: what were
the consequences in terms of Darwinian fitness for the non-concrete uses of
collectibles?</span></div>
<h3 class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Helvetica;"><b>Artifacts as Wealth </b></span></h3>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "helvetica"; mso-bidi-font-family: Helvetica;"></span></b><span style="mso-bidi-font-family: Helvetica;">There were a
wide variety of objects that at one time or another could have served as to a
greater or lesser extent as stores and displays of wealth, and to a greater or
lesser extent media for the satisfaction of obligations and units of account.
(I will describe what I mean by “media of obligation satisfaction” in future
posts; for now it is sufficient to say that it is a generalization of the
economic idea of “medium of exchange” to include a wide variety of non-exchange
transactions that transfer wealth). </span>
</div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Helvetica;">The
manufacture and use of shell beads is more than 100,000 years old, and possibly
dates to the earliest millennia of <i style="mso-bidi-font-style: normal;">homo
sapiens. <b style="mso-bidi-font-weight: normal;"><span style="mso-spacerun: yes;"> </span></b></i>The use of “ritual” blades and points
may be even older, predating our species. The general pattern of artifacts in
general and collectibles in particular in terms of their abilities to store,
display, or transfer wealth can be diagrammed as follows:</span></div>
<div class="MsoNormal">
<span style="mso-no-proof: yes;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNgQWyZmf-lnOok1nNwZiyAo8EDsgAbRTjWw7d2ao_CKkfgSSeTno-e_LN5qgtFpR02PtZ9jYed6mOBXqNqBwOUrGyAOtgCv6d2RG0kSiD786SahyphenhyphenaExeT8FZXxdZOZtKB_ZjO/s1600/Collectibles3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNgQWyZmf-lnOok1nNwZiyAo8EDsgAbRTjWw7d2ao_CKkfgSSeTno-e_LN5qgtFpR02PtZ9jYed6mOBXqNqBwOUrGyAOtgCv6d2RG0kSiD786SahyphenhyphenaExeT8FZXxdZOZtKB_ZjO/s640/Collectibles3.png" width="640" /></a></div>
<div class="MsoNormal">
At the extreme upper left-hand corner is modern money – used
purely as a medium of exchange and obligation satisfaction, and with high
velocity, typically several transactions per month.<span style="mso-spacerun: yes;"> </span>The predominant such media in a culture also
usually becomes its of account. At the opposite (southeast) extreme are pure
stores of value – seldom if ever alienated, they usually change ownership only
at death.<span style="mso-spacerun: yes;"> </span>At the northeast extreme are
pure collectibles – a low-velocity (a few to a few dozen transfers per human
lifetime) medium of obligation satisfaction and exchange, but also a store and
display of wealth.<span style="mso-spacerun: yes;"> </span>At the southwest
extremely are immediate consumables, such as food obtained from foraging in
cultures that do not preserve or store their food.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
“Media for the satisfaction of obligations” is a
generalization of the idea from modern monetary theory that money serves as a media of
exchange.<span style="mso-spacerun: yes;"> The kinds of obligations that might be satisfied over the course of human evolution are far broader and deeper than just exchange, which was probably far from the most important kind of wealth transfer during the Paleolithic. </span>“Unit of account” is any
measure or count that people in a society used as a general (across multiples
goods and services) <a href="http://szabo.best.vwh.net/measuringvalue.html" target="_blank">proxy measure of value</a>.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As for display of wealth, according to the theory of this
series this was the main function of ornamentation, and is derivative from the
function of these objects as stores of wealth. In a future post we will discuss
more about what is meant by this terminology.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The correlations between media for the satisfaction of obligations
and units of account, and between stores and displays of wealth, largely holds
true for Paleolithic and Neolithic times when functions were condensed that are
now quite distinct . In more recent times there has been a strong divergence
between stores of wealth and displays of wealth (e.g. stocks and bonds vs.
jewelry).
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Most of the durable artifacts that archaeologists dig up
from the Paleolithic through Bronze Ages, including the early civilizations of
Mesopotamia, lived a mixed life – they were concretely useful objects <b>and</b>
low-velocity media of fitness-benefiting transactions <b>and</b> stores and
displays of wealth, to varying degrees, but seldom if ever used as just any one
of these. They <i style="mso-bidi-font-style: normal;">condensed</i> multiple
functions that we now consider separate and often unrelated, as discussed
further below.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is important to keep in mind two very large selection
biases at work in archaeology.<span style="mso-spacerun: yes;"> </span>The first
is that apart from some exceptional environments (e.g. peat bogs) that preserve
organic material, only durable objects survive to be dug up by the
archaeologist.<span style="mso-spacerun: yes;"> </span>This means that an
artifact is more likely to be a collectible than the typical artifact in the
culture (which quite preponderantly would have been organic materials for
concrete use that have not survived). The second selection bias is that nearly
all collectors and museums, and most archaeologists, are heavily biased towards
collecting objects that more resemble unique artworks than they are interested
in collecting or studying repetitive and boring objects.<span style="mso-spacerun: yes;"> </span>Overcoming this bias can result in
substantial breakthroughs in understanding a culture. For example <a href="https://szabo.best.vwh.net/seals.html" target="_blank">Denise Schmidt-Besserant</a> discovered the origins of writing in Mesopotamia by focusing on repetitive and unartful clay
tokens that had been ignored by collectors and ther archaeologists.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In addition to the two general selection effects above,
another selection effect particularly impacts metals.<span style="mso-spacerun: yes;"> </span>That is that metals, especially precious
metals but even baser metals such as copper and bronze, were recycled very
efficiently. Metallic artifacts we find in archaeological digs are likely to be
particularly unrepresentative of the metallic artifacts most commonly used in a
society.<span style="mso-spacerun: yes;"> </span>For money in particular, unless
they were unique artworks of particular attraction to collectors, an earlier form of
metallic money has with very high probability been recycled into a later form
of metallic money, or into some other metal object, the result being that the
earlier forms are highly underrepresented in the archaeological record.</div>
<div class="MsoNormal">
<br /></div>
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<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgfRbSXEiGnLnYbJ0-xj4gAd-wMRfYwoF-kWjfW7xJWsoJttYidVS7Ih1FQ0D_Sv8YzLldnIql7CLE6fpOldOsjxJs9W2M8K7iFauBW3Hczg3Pb5LqdzkKzo7hVkW5f02LXlsp/s1600/Collectibles4.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="245" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgfRbSXEiGnLnYbJ0-xj4gAd-wMRfYwoF-kWjfW7xJWsoJttYidVS7Ih1FQ0D_Sv8YzLldnIql7CLE6fpOldOsjxJs9W2M8K7iFauBW3Hczg3Pb5LqdzkKzo7hVkW5f02LXlsp/s400/Collectibles4.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<span style="font-size: x-small;"><i><span style="font-family: "cambria";">From the Gutenberg 42-line Bible</span></i> <a href="https://www.wdl.org/en/item/4102/view/1/100/" target="_blank">[source].</a></span>
<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Some Basic Patterns
of Collectibles</b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Three of the most important patterns of collectibles that
have been discovered in this research are <i style="mso-bidi-font-style: normal;">condensation,
authority resemblance, </i>and <i style="mso-bidi-font-style: normal;">unforgeable
costliness. </i>In the former two cases these patterns are broadly applicable
to artifacts in general. Taking these in turn:</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<i style="mso-bidi-font-style: normal;">1. Condensation -- </i>generally
speaking,<i style="mso-bidi-font-style: normal;"> </i>the farther back we go in
time, the lesser the degree of specialization (division of labor) and thus
differentiation of technology exists. Furthermore, the weight and bulk of
artifacts per family was much lower in Neolithic society, with its much higher
transport costs, than today. In Paleolithic forager societies, which were
typically mobile, belongings had to be carried on the person, resulting in a
still radically lower weight or volume of goods controlled by a person or clan.
This results as we go back in time in <i style="mso-bidi-font-style: normal;">condensation:</i>
a given object tends to serve a greater variety of functions: it <i style="mso-bidi-font-style: normal;">condenses </i>the functions we consider or
take for granted today as separate and often unrelated functions.</div>
<span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"> </span> <br />
<div class="MsoNormal">
<span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Obtaining fitness benefits by the
widest variety of available means within a society with a radically smaller
division of labor and differentiation of technology. Thus institutions usually
condensed the functions of religion with business, business with politics and
war, law with lore, tort law with criminal law, ceremony with accounting, and
gang warfare with a substantial body of customary rules. Objects could condense
the functions of jewelry with coinage, and concrete utility with media of
obligation satisfaction and store of value</span><span style="font-family: "helvetica"; font-size: 12.5pt;">.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
From our point of view functions in earlier periods are
increasingly condensed, and in Neolithic times were very highly condensed, and
in Paleolithic times were radically condensed: a typical object tended to serve
many more purposes in the early Paleolithic than in the late Paleolithic, less
still in the Neolithic, and less still after the dawn of state-like
agricultural societies. Contrariwise the general trend of economic development
over millennia, and between stages of the Paleolithic and Neolithic, is <i style="mso-bidi-font-style: normal;">differentiation.<b style="mso-bidi-font-weight: normal;"><span style="mso-spacerun: yes;"> </span></b></i>Missionaries,
travellers, and ethnographic observers, as well as their readers, often
committed the <i style="mso-bidi-font-style: normal;">fallacy of exclusion<b style="mso-bidi-font-weight: normal;"> – </b></i>concluding that because an
object was used for one thing, that it was not used for another thing in what
we consider to be a separate sphere of activity.</div>
<div class="MsoNormal">
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ-bIhA0ocwtaV3H4Nb9VZkrr-DnhRg120yIXeZs9ozi-gO2ZAG3T3BEkz_cuh9OXEVt1GtJgFSKNpVtGiQ2f90JfB8_hLE3TnW_MgLKoopuZayOjGakCMLDutgn3AswgIY6Lg/s1600/Collectibles5.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="247" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ-bIhA0ocwtaV3H4Nb9VZkrr-DnhRg120yIXeZs9ozi-gO2ZAG3T3BEkz_cuh9OXEVt1GtJgFSKNpVtGiQ2f90JfB8_hLE3TnW_MgLKoopuZayOjGakCMLDutgn3AswgIY6Lg/s400/Collectibles5.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Detail from the </span></i><span style="font-family: "cambria";">Giant Bible of Mainz</span><i><span style="font-family: "cambria";">, handwritten in the traditional way around the same time as Gutenberg produced the
first printed Bible. </span></i><a href="http://www.hrc.utexas.edu/exhibitions/permanent/gutenbergbible/history/" target="_blank"><span style="font-family: "cambria";">[source]</span></a></span>
</div>
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<i style="mso-bidi-font-style: normal;">2. Authority resemblance</i>
– Initial forms of innovative artifacts, of a kind the value of which was based
at least in part on their authority, often borrowed authority from what they
were replacing by physical resemblance. Mimicry of or semblance to pre-existing
authoritative forms in a new medium was and is a very common feature of
innovations: examples range from Gutenberg’s printing press mimicking scribal
script to the private overnight parcel service Federal Express alluding
by name and color scheme to the United States Postal Service.<span style="mso-spacerun: yes;"> The ritualistic airstrips, offices, military drills, etc. of </span><a href="https://en.wikipedia.org/wiki/Cargo_cult#Causes.2C_beliefs.2C_and_practices" target="_blank"><u>cargo cults</u></a> were an extreme example of
authority resemblance, and it predominates in the design of<span style="mso-spacerun: yes;"> </span><a href="https://en.wikipedia.org/wiki/Flag_of_the_United_States#First_flag" target="_blank">national</a> flags and many other symbols (such
as commercial brands) that invoke reputation or authority. Where not tabooed or
banned as counterfeiting or trademark violation, authority resemblance was and
is a common feature of innovative collectibles, their form invoking a traditional authoratative form while pioneering a new media.<span style="mso-spacerun: yes;"></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The histories of art and architecture in religion, politics,
finance, and business are replete with examples of authority resemblance.<span style="mso-spacerun: yes;"> </span>The designs of many of the very
earliest coins, which differ greatly from the standard and presumably optimal form they soon converged on and have retained ever since, highlights what existing objects they were inspired by and suggests a similarity in intended role and function between the novel object and the old object whose form it has taken on. We will see in this and future posts that the earliest coins borrowed their form from shells, beads, and the
metal blades of tools.</div>
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<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS0QLhr-pNrUEuk1CIJKD48uXxnnOtXBn3d_ix8_wvfAndDNb0iCgWLy48e9b0WgQXZVh4yLIZUYkvImSH8kLqRBwmo9CBnlK0hPvGXyqMESztgKWykwb1dAByIYU3Gyb8S0Qs/s1600/Collectibles7.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="134" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS0QLhr-pNrUEuk1CIJKD48uXxnnOtXBn3d_ix8_wvfAndDNb0iCgWLy48e9b0WgQXZVh4yLIZUYkvImSH8kLqRBwmo9CBnlK0hPvGXyqMESztgKWykwb1dAByIYU3Gyb8S0Qs/s320/Collectibles7.png" width="320" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i>Detail of necklace from a burial at Sungir, Russia, 28,000 BP.
Interlocking and interchangeable beads. Each mammoth ivory bead may have required
one to two hours of labor to manufacture. [9]</i></span><style>
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3. <i style="mso-bidi-font-style: normal;">Unforgeable
costliness – </i>a wide variety of objects, which we call <i style="mso-bidi-font-style: normal;">collectibles, </i>have as a necessary component and a secure costliness
– either in search costs of collection, in manufacturing costs, or both – that
serves to constraint its supply curve.<span style="mso-spacerun: yes;">
</span>This is true for collectibles as media of obligation satisfaction as
well as collectibles as stores and displays of wealth.<span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJzUIU6vVLa8i_PVA0ThjnzeDEzQswUNKn02qBP4jCTPK0H9mnDYaXdnTLMCKWCfCEaqqWXAdJOOajx1YfW_zRAcCT4F8y0z7pGBKClZZflPWBYmKEE83i498QQ5lj3Qycqvef/s1600/Collectibles8.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="182" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJzUIU6vVLa8i_PVA0ThjnzeDEzQswUNKn02qBP4jCTPK0H9mnDYaXdnTLMCKWCfCEaqqWXAdJOOajx1YfW_zRAcCT4F8y0z7pGBKClZZflPWBYmKEE83i498QQ5lj3Qycqvef/s320/Collectibles8.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Efficient symbolic communication – Mesolithic
cave painting -- abundant surface and easily made pigments. Much information. </span></i><a href="http://www.mmdtkw.org/EGtkw0142RockArt4.jpg" target="_blank"><span style="font-family: "cambria";">[Source]</span></a></span>
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Many of the artifacts called here collectibles, especially
Paleolithic and Neolithic beads, have been assumed by archaeologists to be
primarily “ornamental” and serve a “symbolic” function, i.e. are said to have
been “information technology”[6]. If an artifact were purely symbolic (e.g. a
<a href="https://szabo.best.vwh.net/seals.html" target="_blank">clay tablet</a> impressed with accounting
records) we would expect symbol efficiency to be high given the available
materials (e.g. clay) and technologies (e.g. symbols for words). But with
collectibles, people went out of their way to choose costly goods and undertake
costly methods of manufacture – collectibles such as beads typically had an
extremely poor symbol efficiency compared to the available alternatives. They must have had functions that were much more than symbolic, leading to competing
requirements that we must elucidate.</div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLhb3NQK6QMLt_wYTY15GSnpHbypIVE1vno4VR8G9JZpUNfN51M0PWyBdQQiNTd1Ha8LVGS9ddxTudimX5Ng3lCzVJ-kj5WzxT1KvTHgBxvk8_idVURngCjGzPwJsxFVElXiHJ/s1600/Collectibles9.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="250" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLhb3NQK6QMLt_wYTY15GSnpHbypIVE1vno4VR8G9JZpUNfN51M0PWyBdQQiNTd1Ha8LVGS9ddxTudimX5Ng3lCzVJ-kj5WzxT1KvTHgBxvk8_idVURngCjGzPwJsxFVElXiHJ/s400/Collectibles9.png" width="400" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Efficient symbolic communication – already
existing and otherwise useful flint painted with symbols (c. 5000 BC)</span></i><span style="font-family: "cambria";"> <a href="http://www.mmdtkw.org/EGtkw0146DecimalFlintPetrie.jpg" target="_blank">[Source]</a></span></span>
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As we will see below, beads of shell, bone, and similar
objects were made, strung, and worn for tens of millennia in the vast majority
of Upper Paleolithic and Neolithic cultures.<span style="mso-spacerun: yes;">
</span>Gratuitous use of costly beads over tens of millennia would have been
weeded out by Darwinian genetic selection. Beads, used as actually observed either
in Epipaleolithic or Neolithic burials or as observed in the few recently
observed such cultures, are not, in contrast to spoken human language and every other information-rich symbolic system, used in any way remotely approaching the
efficient coding scheme that would have emerged from natural selection if pure
symbolism were their main evolutionary function.<span style="mso-spacerun: yes;"> </span>Beads that are arranged in a pleasing regular
pattern, as they typically are, carry very little information – they are
extremely inefficient in terms of information per unit of weight or volume and
especially per cost of collection and manufacture. Since forager bands were
typically mobile they had even more compelling evolutionary pressure to improve
the symbol efficiency of their media, by evolving choices and designs for the most
efficient available such media, if such recorded communication was an
evolutionary important (and evolutionarily accessible) problem. Instead, vocal
communications were far more useful for mobile forager bands and underwent the
radical and unique evolution of human spoken language, while remains of recorded
symbolic communications are sparse and rare.</div>
<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqcEF7CCYfh9TQ-owgyemGLGF9edOwWpr5raqi00v0cnBIyQTQEmLXyc6onrVTjwoOwUTOTeFBW3ztWdt6Xnkzvs4Z6pL_LejJbDcZJ9XRErM9gvGNPkwz28MtCkwQzGeV58kJ/s1600/Collectibles10.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="288" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqcEF7CCYfh9TQ-owgyemGLGF9edOwWpr5raqi00v0cnBIyQTQEmLXyc6onrVTjwoOwUTOTeFBW3ztWdt6Xnkzvs4Z6pL_LejJbDcZJ9XRErM9gvGNPkwz28MtCkwQzGeV58kJ/s400/Collectibles10.png" width="400" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i>Efficient communication –
painted pebbles (Norwegian Mesolithic, c. 11,000 BP)</i></span></div>
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Not only were beads of multiple varieties almost always
strung together in regular patterns that did not take advantage of the coding
capabilities of the multiple varieties, but the most common bead pattern was
repeating the same kind of bead over and over again, which carries no
information whatsoever in the arrangement of the beads. The digital nature of
shell beads makes this a tempting theory in our society so saturated by
computer screens and codes, but it is wrong. </div>
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<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDtovdL6s1nWRfoRe-OzPSnlebaCNRNNx3n40N3g-vJYoVdhclV6YdxwaCEHaI_s5O3SI8o9cHex23J7UvX81k-n6lbbcLZMdm2EeJoJUxSjOwCtZyZ9-11Nt-bzIgntPW_wSi/s1600/Collectibles11.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="232" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDtovdL6s1nWRfoRe-OzPSnlebaCNRNNx3n40N3g-vJYoVdhclV6YdxwaCEHaI_s5O3SI8o9cHex23J7UvX81k-n6lbbcLZMdm2EeJoJUxSjOwCtZyZ9-11Nt-bzIgntPW_wSi/s400/Collectibles11.png" width="400" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i>Cost-effective
communication – pictures, pictograms and counting symbols in abundant clay
(Transylvania, 5500-5300 BC)</i></span></div>
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What would have efficient symbolic coding of bead patterns
look like if contrary to the observed facts it had evolved? If there are, for
example, 16 different roles (what we would call “offices”) in a clan (elder,
shaman, etc.), and there is evolutionary benefit (e.g. in minimizing disputes) to
representing title to those positions in permanent form, one does not need a
long string of beads.<span style="mso-spacerun: yes;"> </span>A clan only needs
16 different objects, each representing a different office.<span style="mso-spacerun: yes;"> </span>If the clan has only 2 different kinds of
objects available, they still only 4 of them (2^4 = 16 bits of information).<span style="mso-spacerun: yes;"> </span>There are a wide variety of coding schemes in
between that would be this efficient or nearly so.<span style="mso-spacerun: yes;"> </span>But no such efficient scheme, or any scheme
anywhere nearly as efficient as such a scheme, using beads has ever been
observed in widespread use in a Paleolithic or Neolithic culture: neither in
contemporarily observed instances of such cultures nor in the archaeological
record.</div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8vpp8awCaeIgPz7cO_rIkqbYkKT-NVCwFSrBN8sT-3KQ4V3lhaitAIWxjNfyn-5I_PMRmSX84aCjW206WO-dvqh-YZG7hGW-iPpZT_payaVLCmFMjswcAVui6njgTmquUJarr/s1600/Collectibles12.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8vpp8awCaeIgPz7cO_rIkqbYkKT-NVCwFSrBN8sT-3KQ4V3lhaitAIWxjNfyn-5I_PMRmSX84aCjW206WO-dvqh-YZG7hGW-iPpZT_payaVLCmFMjswcAVui6njgTmquUJarr/s640/Collectibles12.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Wasteful as symbolic communication – regular
pattern (little information) and made of costly beads, as well as taking much
additional labor to assemble from the beads.
Wampum, Museum of Ontario Archaeology.</span></i><a href="http://archaeologymuseum.ca/wampum/" target="_blank"><span style="font-family: "cambria";"> [Source]</span></a></span>
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If Paleolithic and Neolithic beads had been as extremely
cheap as mass-manufactured beads are today, and transportation and storage
costs had been those of today, the extremely poor symbolic efficiency of how
beads were used might be taken to not have mattered so much.<span style="mso-spacerun: yes;"> </span>But beads were very costly to make and in a
mobile forager society were costly to bring with. An example of how beads were
far too costly for purely symbolic communications is provided by the cost
analysis done on beads found in the Sungir Burials of the 29,000-15,000 BP
epoch. Randall White estimates that an individual bead took one to two hours of
work, and as a result that the grave goods in such a burial represented nearly
10,000 hours of labor. [7]</div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheSRcmI4xNaDJlNwhJclsWCrKrFAsKWSpwmovJTXdMJQYnVvlew_UD6K_C6l_-ysNLO6QhUhMPcVNMPi3Ld9wQayCwYEYjQd48vGsVOF59tbvDZA-Qw_VfnqbF3dVL3aYCzi_n/s1600/Collectibles13.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheSRcmI4xNaDJlNwhJclsWCrKrFAsKWSpwmovJTXdMJQYnVvlew_UD6K_C6l_-ysNLO6QhUhMPcVNMPi3Ld9wQayCwYEYjQd48vGsVOF59tbvDZA-Qw_VfnqbF3dVL3aYCzi_n/s1600/Collectibles13.png" /></a></td></tr>
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<span style="font-size: x-small;"><i>QR codes are a great way for computers to read a label printed by another computer and affixed to a movable object, but a terrible technique for human-to-human
communications, especially if as with shell beads each “pixel” had cost an hour
or more of human labor to make. </i></span></div>
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<br /></div>
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So while beads could have been and sometimes were used for
symbolic purposes, this could not have been their primary evolutionary function
– symbolic aspects of their use would have been very secondary. A similar
analysis applies to most other kinds of collectibles, such as “ceremonial”
blades and points (most commonly axes). Unforgeable costliness – the secure
supply curve of these objects relative to the much more common objects in the
environment that were not used as collectibles – strongly suggests that these
collectibles had some function very important to Darwinian fitness related to
wealth. What that function was has been explored in [1] which I hope to
elaborate on in future post(s).</div>
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiStAVbSi1JBxvY8dXFrvtq0b5-rD5SB2exxnDunQ0abAfUyDtMOcqp_Cp9P-l74sHoLxhUYaeQvfdz-Q6HisQf_bxSyLODFVjflwTUCAXhnjnLPQJ8CuMuhIccv7LDEyKbP9Xa/s1600/Collectibles14.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="116" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiStAVbSi1JBxvY8dXFrvtq0b5-rD5SB2exxnDunQ0abAfUyDtMOcqp_Cp9P-l74sHoLxhUYaeQvfdz-Q6HisQf_bxSyLODFVjflwTUCAXhnjnLPQJ8CuMuhIccv7LDEyKbP9Xa/s640/Collectibles14.png" width="640" /></a></td></tr>
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<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Regular pattern of costly beads. Wampum, British
Museum.<a href="http://www.britishmuseum.org/research/collection_online/collection_object_details/collection_image_gallery.aspx?partid=1&assetid=1345555001&objectid=529560" target="_blank"> </a></span></i><a href="http://www.britishmuseum.org/research/collection_online/collection_object_details/collection_image_gallery.aspx?partid=1&assetid=1345555001&objectid=529560" target="_blank"><span style="font-family: "cambria";">[Source]</span></a></span>
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In some broad sense of the term any display of wealth is “symbolic”,
especially when its design invokes the reputation or authority of prior
displays of wealth. Thus the commonality of authority resemblance in the design
of paper money, coins, and jewelry, repeated tropes such as gold foil and
expensive ultramarine blue pigments in medieval and Renaissance European art,
etc. But it is the ability of the medium to serve as a secure store and display
of wealth that is doing the heavy lifting here, not its ability to efficiently
convey information.</div>
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<br /></div>
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When costliness becomes insecure, and authority resemblance
comes to predominate over genuine scarcity, we can get counterfeiting crises
that disrupt the culture relying on the old form of collectible.<span style="mso-spacerun: yes;"> </span>The first craftsmen to pound copper and gold
flat and apply it to surfaces could make far more surface look lavish than was
possible with solid copper or gold. Such a counterfeiting crisis would have
produced a kind of inflation broader than monetary inflation: a change in
expectations about wealth securely displayed as well as wealth securely stored
in an object. To the extent imitation cowrie shells (see below) could be made
out of materials much cheaper than the genuine cowrie (e.g. stone) it could
produce such inflation. <a href="https://en.wikipedia.org/wiki/Trade_beads" target="_blank">Trade beads</a> were colonial examples: mass-produced
beads that were supernormal models of shell beads shiny from wear, usurping
their authority, while being cheaply mass produced, undermining the previously
unforgeable costliness of beads.</div>
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<br /></div>
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<b><span style="font-family: "times"; font-size: 13.5pt;">Attributes
of Collectibles </span></b></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "times"; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">What attributes are we looking for in
media of obligation satisfaction, units of account, and in stores and displays
of wealth? <a href="https://szabo.best.vwh.net/shell.html" target="_blank">"Shelling Out: The Origins of Money"</a> argued, and future posts will argue, that</span><span style="font-family: "times"; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"> </span>
</div>
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<br /></div>
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<span style="font-family: "times"; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">[C]ollectibles
provided a fundamental improvement to the workings of reciprocal altruism,
allowing humans to cooperate in ways unavailable to other species. For them,
reciprocal altruism is severely limited by unreliable memory. Some other
species have large brains, build their own homes, or make and use tools. No
other species has produced such an improvement to the workings of reciprocal
altruism. </span></div>
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<br /></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: "times"; mso-bidi-font-family: "Times New Roman";">[Economist Karl]
Menger called this first money an "intermediate commodity" -- what
this paper calls collectibles. An artifact useful for other things, such as
cutting, could also be used as a collectible. However, once institutions
involving wealth transfer became valuable, collectibles would be manufactured
just for their collectible properties. What are these properties? For a
particular commodity to be chosen as a valuable collectible, it would have had,
relative to products less valuable as collectibles, at least the following
desirable qualities: </span></div>
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<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 82.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 45.8pt 91.6pt 137.4pt 183.2pt 229.0pt 274.8pt 320.6pt 366.4pt 412.2pt 458.0pt 503.8pt 549.6pt 595.4pt 641.2pt 687.0pt 732.8pt; text-indent: -.5in;">
<span style="font-family: "courier"; mso-bidi-font-family: Courier; mso-fareast-font-family: Courier;"><span style="mso-list: Ignore;">(1)<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "courier"; mso-bidi-font-family: Courier;">More secure from accidental loss and theft.<span style="mso-spacerun: yes;"> </span>For most of history this meant it could be
carried on the person and easy to hide.<span style="mso-spacerun: yes;">
</span></span></div>
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<span style="font-family: "courier"; mso-bidi-font-family: Courier;"><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 82.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 45.8pt 91.6pt 137.4pt 183.2pt 229.0pt 274.8pt 320.6pt 366.4pt 412.2pt 458.0pt 503.8pt 549.6pt 595.4pt 641.2pt 687.0pt 732.8pt; text-indent: -.5in;">
<span style="font-family: "courier"; mso-bidi-font-family: Courier; mso-fareast-font-family: Courier;"><span style="mso-list: Ignore;">(2)<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "courier"; mso-bidi-font-family: Courier;">Harder to forge its value.<span style="mso-spacerun: yes;"> </span>An
important subset of these are products that are unforgeably costly, and therefore
considered valuable…</span></div>
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<br /></div>
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<span style="font-family: "courier"; mso-bidi-font-family: Courier; mso-fareast-font-family: Courier;"><span style="mso-list: Ignore;">(3)<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "courier"; mso-bidi-font-family: Courier;">This value was more accurately approximated by simple observations or
measurements. These observations would have had more reliable integrity yet
have been less expensive. </span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: "times"; mso-bidi-font-family: "Times New Roman";">Humans
across the world are strongly motivated to collect items that better satisfy
these properties. Some of this motivation probably includes genetically evolved
instincts. Such objects are collected for the sheer pleasure of collecting them
(not for any particularly good explicit and proximate reasons), and such
pleasure is nearly universal across human cultures. One of the immediate
proximate motivations is decoration. According to Dr. Mary C. Stiner, an
archaeologist at the University of Arizona, "Ornamentation is universal
among all modern human foragers." [W02] For an evolutionary psychologist,
such a behavior that has a good ultimate explanation, in terms of natural
selection, but has no proximate rationale other than pleasure, is a prime
candidate to be a genetically evolved pleasure that motivates the behavior.
Such is, if the reasoning in this essay is correct, the human instinct to
collect rare items, art, and especially jewelry. </span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaSd3dFIoVJ_utpk82_bmKu4kRMO2ORQw1yZPz03M4pUqBrJgnXBshPz1sc_L1k4d1NiORpH1wn8EaMy5wRGoft3jrwocNqAal2vr2RoFEE4tYhkgGDKyhg-3I5olP1HR4m2K3/s1600/Collectibles15.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaSd3dFIoVJ_utpk82_bmKu4kRMO2ORQw1yZPz03M4pUqBrJgnXBshPz1sc_L1k4d1NiORpH1wn8EaMy5wRGoft3jrwocNqAal2vr2RoFEE4tYhkgGDKyhg-3I5olP1HR4m2K3/s1600/Collectibles15.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="color: black; font-family: "cambria";">“Miniature Bi disc”,
jade, from the late Neolithic to Bronze Ages, c. 3000-2000 BCE, diameter
1.25" to 2” </span></i><a href="http://www.trocadero.com/stores/schneiblefineart/items/1082001/item1082001.html" target="_blank"><span style="color: black; font-family: "cambria";">[Source]</span></a></span>
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<br />
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: "times"; mso-bidi-font-family: "Times New Roman";">The
kind of mobile art made by Paleolithic humans, (small figurines and the
like) also matches these characteristics well. Indeed, Paleolithic peoples made
very few objects that were not either utilitarian, or shared characteristics
(1)-(3). There are many puzzling instances of useless or at least unused flints
with <i>homo sapiens</i>…Cunliffe [C94] discusses a European Mesolithic era
find of hundreds of flints, carefully crafted, but which micrograph analysis
reveals were never used for cutting. </span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: "times"; mso-bidi-font-family: "Times New Roman";">Flints
were quite likely the first collectibles, preceding special-purpose
collectibles like jewelry. Indeed, the first flint collectibles would have been
made for their cutting utility. Their added value as a medium of wealth
transfer was a fortuitous side effect that enabled the institutions described
in this article to blossom. These institutions, in turn, would have motivated
the manufacture of special-purpose collectibles, at first flints that need have
no actual use as cutting tools, then the wide variety of other kinds of
collectibles that were developed by <i>homo sapiens</i>. </span><span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div style="margin-left: .5in;">
<span style="font-size: 12.0pt;">It is no coincidence
that the attributes of collectibles are shared with precious metals, coins, and
the reserve commodities that have backed most non-fiat currencies. Money proper
implemented these properties a purer form than the collectibles used during
almost all of human prehistory. </span></div>
<div class="MsoNormal">
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMeLedYsUYMc9JrWcLJJUyh-XQ1Nc7dzawv66adnS8FYp2R6LBy_ZEukB31AxNViNs3nCvYtLLjl3gU2eWQ7Bb3avTpPuO9rElFYeiqzLNEAkT9y11qTtmdWkURoNtp-T1zIIC/s1600/Collectibles16.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMeLedYsUYMc9JrWcLJJUyh-XQ1Nc7dzawv66adnS8FYp2R6LBy_ZEukB31AxNViNs3nCvYtLLjl3gU2eWQ7Bb3avTpPuO9rElFYeiqzLNEAkT9y11qTtmdWkURoNtp-T1zIIC/s320/Collectibles16.png" width="240" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="color: black; font-family: "cambria";">Grave goods from Longshan or Liangzhu cultures (China,
3000 to 2000 BCE)</span></i></span><span style="mso-bidi-font-style: normal;"><span style="color: black; font-family: "cambria"; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-font-kerning: 12.0pt; mso-themecolor: text1;"><span style="font-size: x-small;"> <a href="http://www.chinadaily.com.cn/culture/art/2014-08/13/content_18296380_3.htm" target="_blank">[Source]</a></span></span></span></div>
<div style="text-align: center;">
</div>
<div class="MsoNormal">
Due to endemic violence, high transaction costs, and the
extremely low division of labor compared to later economies, there was nothing
resembling modern efficient spot markets in Paleolithic or most Neolithic
societies.<span style="mso-spacerun: yes;"> </span>As a result, classical
accounts of the origins of money like those of Smith, Menger, et. al. cannot be used as a
theory or guide to the actual historical origins of money without extremely
heavy modification.<span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNwX3GJQzD60kL_3Z4diwHb8r5NeNJErdxvqtlm2BvRPSbqcuWYxF5xJ9oG-4oWF8eobcLA83FDiyehhRn65LtUpw-HHSGtAeYWYlhPoG-y1dmsOQhP0ZlTJVssV-pJAQqdEtf/s1600/Collectibles17.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNwX3GJQzD60kL_3Z4diwHb8r5NeNJErdxvqtlm2BvRPSbqcuWYxF5xJ9oG-4oWF8eobcLA83FDiyehhRn65LtUpw-HHSGtAeYWYlhPoG-y1dmsOQhP0ZlTJVssV-pJAQqdEtf/s320/Collectibles17.png" width="260" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Rare and lovingly worked shell collectibles
being displayed for transfer at a bride price ceremony in Papua New Guinea (20<sup>th</sup>
century)</span></i><i> </i><a href="http://numisarchives.blogspot.com/search/label/Blood%20money" target="_blank">[Source]</a></span>
</div>
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<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">The Snail Standard </b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Collectibles, even pure collectibles, have an extremely
ancient heritage that must have put them under prolonged evolutionary selection:
cultural (memetic[2]) selection most obviously, but as we shall see, possibly
also genetic selection for a hankering to collect certain kinds of objects for
display and accumulation, not just for food. An evolutionarily gratuitous
practice of such substantial cost would have soon died out, but collectibles
with the traits listed above have been a nearly ubiquitous and important part
of human cultures for many tens of millennia and in all parts of the planet to
which humans have spread.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The Upper Paleolithic period, as the tail end of the most
recent Ice Age, featured climates mostly cooler than today and sea levels that
were many tens of meters lower than they are today.<span style="mso-spacerun: yes;"> </span>The vast majority of seaside communities of
that epoch now lie submerged under fathoms of ocean and are usually
prohibitively costly for archaeologists to try to find.</div>
<div class="MsoNormal">
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQ-CP6mTwAoI5OCwR2O7CwXFyBbd8J1Qg5qoiwC4gAamDfc2ehMRQA3bzn_L3P5xCfh0sDdJ2uHebn_90kc5zr4-FL8DOpHgrOXcsby7bCf66S39NkO-JhCk2uD5kfAX3R4fGx/s1600/Collectibles18.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="168" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQ-CP6mTwAoI5OCwR2O7CwXFyBbd8J1Qg5qoiwC4gAamDfc2ehMRQA3bzn_L3P5xCfh0sDdJ2uHebn_90kc5zr4-FL8DOpHgrOXcsby7bCf66S39NkO-JhCk2uD5kfAX3R4fGx/s640/Collectibles18.png" width="640" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i>Consistent form: </i>Nassarius gibbosulus<i> shells beads in varied stages of use-wear,
from </i></span><i style="mso-bidi-font-style: normal;"><span style="font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><span style="font-size: x-small;">Üçağızli
Cave I in Turkey. Shell beads generally
get shinier with wear. [6]</span></span></i></div>
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One exception to this submersion is the set of <span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Üçağızli
caves along the thin stretch of Turkish coast that sits in front of Syria. The
approach to the coast there is quite steep. As a result, even though the caves
are still above sea level today, and were thus 60-80 meters above sea level in
the Upper Paleolithic, they lie a short (but steep) walk of probably around 1
kilometer from that era’s shoreline.</span></div>
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<br /></div>
<div class="MsoNormal">
The inhabitants of these caves lived in a climate that was
more like that of today’s Baltic Sea region than of today’s Mediterranean.<span style="mso-spacerun: yes;"> </span>They feasted both on land animals such as
deer and on marine resources, a mix that trended from land resources to a mix
of land and marine resources over the period recorded in the archaeological
layers. These people walked the shore not just in search of food, but also in
search of a very specific set of uncommon yet authoritative objects – shells of
the sea snail <i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: Times;">Nassarius gibbosulus. </span></i><span style="mso-bidi-font-family: Times;">Once
collected they were selected for size and intactness, and laboriously
perforated.<span style="mso-spacerun: yes;"> </span>They were then strung onto cords,
presumably as necklaces, bracelets, or belts, or sewn onto clothes, as beads
would appear in later Paleolithic burials.<span style="mso-spacerun: yes;">
</span>Extensive cord-wear exists on most of the beads.</span></div>
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<tr align="center"><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjV6MPUI_3Q5gH09OEMTr4ZTERrSZrPNr29koPcZASGChfn5MDggrz60VASJTj4w0cjB8qkqKDH0JefkN8-wtuCv7KAkB08LK1KZ6F8b9tW7t3CCAaABTuzBqXkap3egTX18Y-r/s1600/Collectibles19.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="314" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjV6MPUI_3Q5gH09OEMTr4ZTERrSZrPNr29koPcZASGChfn5MDggrz60VASJTj4w0cjB8qkqKDH0JefkN8-wtuCv7KAkB08LK1KZ6F8b9tW7t3CCAaABTuzBqXkap3egTX18Y-r/s320/Collectibles19.png" width="320" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "times";">Consistent
size distributions </span></i><i>of </i><i>Üçağızli</i><i><span style="font-family: "times";"> Cave I beads by culture period from 41,000
BP (start of Initial Upper Paleolithic) to 29,000 BP (end of Epipaleolithic) [6]</span></i></span></div>
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<br />
Upper Paleolithic shell bead manufacturers were very
selective of which size and shape of shells they chose to turn into beads: the
resulting beads had “great consistency…of size and shape” compared to the
natural biotic distribution of the shells.<span style="mso-spacerun: yes;">
</span>Most variation in shell species, shape, and size was eliminated during manufacture.
They were as similar in size, shape, and weight as it was possible for a
collectable set of natural objects in that environment to be. According to
Stiner et. al.:</div>
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<br /></div>
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Something about the basket-shaped forms in particular
– their resemblance to something else or just their geometry – held the
interests of people over very long stretches of time. It is difficult to argue
that continuity in species and forms across such vast stretches of time and
space reflects cultural affinity or continuity, particularly in the case of
beautiful <i style="mso-bidi-font-style: normal;">natural </i>objects. While
preferred shell forms stayed much the same, other aspects of culture varied a
great deal.[6]</div>
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<br /></div>
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</div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglOcDMllu3Z28zKYCtASgRtX8lv6z6mmRq5ZwjQv72HMXCaJUNAkJa8xfjVhnW7NF43s2ebqBLTigbkPuUXuKi6-K4TI9ZUeoDqim0LgbsXCwMFDDykmgRQx9t5Bv8Kclv5sPM/s1600/Collectibles20.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglOcDMllu3Z28zKYCtASgRtX8lv6z6mmRq5ZwjQv72HMXCaJUNAkJa8xfjVhnW7NF43s2ebqBLTigbkPuUXuKi6-K4TI9ZUeoDqim0LgbsXCwMFDDykmgRQx9t5Bv8Kclv5sPM/s400/Collectibles20.png" width="300" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "times";">Severe conservatism
of shells selected for use as beads at </span><span style="font-family: "cambria";">Üçağızli
</span><span style="font-family: "times";">from
c. 41,000 BP (layer I) to 29,000 BP (layer EPI) – time goes from bottom to top.
Relative frequencies of Columbella, Nassarius, Dentalium, Gibbula, and other
taxa used as shell beads. There was during
this long period a very strong preference for the “basket-shaped” shells of the
most typical size of Columbella and Nassarius over the many other and more
common shapes and sizes of shells across the Mediterranean. [6]</span></i></span>
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Besides a consistent form, the beads were also manufactured
in a supply that was very stable across the more than ten millennia recorded in
the <span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Üçağızli caves. The diet changed – at the beginning of this
timespan consisting almost entirely of land resources, at the end in a mix of
land and marine resources -- but the shell bead supply remained remarkably
steady.</span></div>
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<br /></div>
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Consider that objects constituting an efficient medium for
the satisfaction of obligations among forager peoples would satisfy two main
criteria:<br />
<blockquote class="tr_bq">
<span style="font-family: inherit;">1. They must be common and consistent enough to
find or make a sufficient number of fungible instances to allow divisibility,
and</span><br />
<br />
<span style="font-family: inherit;">2. They must be rare enough or costly enough to make
to constitute substantial wealth with low bulk and weight, and must fit snugly
enough together when strung and worn, that they do not overburden the mobile
forgers who carry them around when changing campsites (as they often did).</span></blockquote>
</div>
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These hard-to-find shells of <i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: Times;">Nassarius</span></i> and <i style="mso-bidi-font-style: normal;">Columbella </i>were the objects in the Mediterranean
forager environments that best satisfied these criteria.<span style="mso-spacerun: yes;"> </span>Incorporating as they did unforgeable
costliness, they would have also made splendid stores and displays of
wealth.<span style="mso-spacerun: yes;"> </span>In any of these roles, they were
a pure collectible. The snail shell standard was far from arbitrary.</div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-Ca3vo-9kgm6HBJJs_U_D3mdyBLcdC26v76pHvkOtRu_40CDCVzJy3uHFqF2dpP4z5TGZcny9KtKV2bcSkjCpAzQEcX6qqBa3d9MMVgYM7ObGlHA-e6t6TfhUi4Q0eRd1c1H2/s1600/Collectibles21.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="178" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-Ca3vo-9kgm6HBJJs_U_D3mdyBLcdC26v76pHvkOtRu_40CDCVzJy3uHFqF2dpP4z5TGZcny9KtKV2bcSkjCpAzQEcX6qqBa3d9MMVgYM7ObGlHA-e6t6TfhUi4Q0eRd1c1H2/s400/Collectibles21.png" width="400" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i>Consistent supply: abundance of beads (“ornaments”)
vs. vertebrates (typically edible land animals) and edible shellfish (“shellfish”)
found in the successive </i><i>Üçağızli layers 41,000-29,000 BP.[6]</i></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The use of <i style="mso-bidi-font-style: normal;">N.
gibbosulus</i> shells as beads goes back much further in time than the 41,000
BP starting point of this study of <span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Üçağızli</span>. The earliest evidence
of this shell standard is dated from between 100,000 and 135,000 BP at Skuhl in
Israel, and similarly old beads were found in Algeria.<span style="mso-spacerun: yes;"> </span>The institution prevailed for many tens of
thousands of years across most of the length of the Mediterranean[11]. It was
not until the Epipaleolithic that there was even the slightest trace of
Schumpeterian “creative destruction” in this institution.</div>
<br />
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<b style="mso-bidi-font-weight: normal;"> <table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOtdMY2hMRzyOv5psUa1_xOaEdFt9bz2_GX4MHY76tpCwKD2ErE34f4wQr0t7Xis_1eU9AJEp5o7n7jBRcBOyWMacbgmr2W-em5adscHXfye-Ffn_7J5i23KApL-dLaPbVZvDY/s1600/Collectibles22.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOtdMY2hMRzyOv5psUa1_xOaEdFt9bz2_GX4MHY76tpCwKD2ErE34f4wQr0t7Xis_1eU9AJEp5o7n7jBRcBOyWMacbgmr2W-em5adscHXfye-Ffn_7J5i23KApL-dLaPbVZvDY/s320/Collectibles22.png" width="320" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "cambria";">“Money Cowry; Length 2.6 cm; Palou Tello, Batu
Islands, Indonesia.”</span></i><span style="font-family: "cambria";"> <a href="https://en.wiktionary.org/wiki/%E8%B2%9D" target="_blank">[Source]</a></span></span>
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<b style="mso-bidi-font-weight: normal;">Cowries</b></div>
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<span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Cowry shells are among the most widely
distributed objects found in Eurasian Neolithic archaeology[8]. Peng and Zhu [2]
use the archaeological record to trace an early Bronze Age “Cowrie Road” roughly
following the arc of the later Silk Road across the mid-Eurasian steppes from
the Red Sea (where the species used probably lived) to what is now modern
China. <span style="mso-spacerun: yes;"> </span>The lack of thick forests or
fixed agriculture made the region relatively easy for merchants and other
travellers to traverse. </span></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPLNXqi2DQf-by1d-4ZbLrTRiILrnzK_jerJiRsPRXH2W7VXqrgaEPhjnYC3XedMX6ZikFYvFB2dH8obc2VRWAL4NqxysJ-SLBLC-EoitUFisyAeUAJAi0qMnzemXCjIGOuKmq/s1600/Collectibles23.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="456" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPLNXqi2DQf-by1d-4ZbLrTRiILrnzK_jerJiRsPRXH2W7VXqrgaEPhjnYC3XedMX6ZikFYvFB2dH8obc2VRWAL4NqxysJ-SLBLC-EoitUFisyAeUAJAi0qMnzemXCjIGOuKmq/s640/Collectibles23.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i>Finds of cowries originating from the Red Sea (off the map
to the left), during the middle and late Shang Dynasty, c. 1400-1040 BC. This general West-to-East movement would be
repeated in much later times by a largely ship-borne movement of silver. [2]</i></span></div>
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<span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">These cowries have also been found in
many Neolithic excavations within a few hundred kilometers of the Red Sea,
including pre-dynastic Egypt and Jericho as far back as the second Neolithic
stage (7000-6000BC). Cowries are also found in the steppe Djeitun culture (7000-6000
BC). Cowrie shells did not however reach everywhere, and were far from the only
shells used in the Eurasian Neolithic.<span style="mso-spacerun: yes;">
</span>In southeastern China during the late Neolithic and early Bronze Age,
cowries were not used, but instead four species of mollusk from China’s own
coast[2]. In the Mediterranean Neolithic <i style="mso-bidi-font-style: normal;">Spondylus
</i>shells were often used [3], but there was also a significant presence of
cowrie in Mesopotamia and the eastern Mediterranean. </span><br />
<br />
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjscpBBxgQpQoz_P30ykBcshKHWtwZBBAIsaB3oHjA0Qn1GPeSxZrX9N5bKZH6qDMbf18b2TbMGrtwE1TxIwVWwve-8GuYVm716IubNemGk_nGKb1Xm8XgZQD8gxOvh77bel6GZ/s1600/Collectibles24.png" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="284" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjscpBBxgQpQoz_P30ykBcshKHWtwZBBAIsaB3oHjA0Qn1GPeSxZrX9N5bKZH6qDMbf18b2TbMGrtwE1TxIwVWwve-8GuYVm716IubNemGk_nGKb1Xm8XgZQD8gxOvh77bel6GZ/s400/Collectibles24.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "cambria"; font-size: 10.0pt;"><span style="font-size: x-small;">Authority resemblance: bronze cowries (</span></span><span style="font-size: x-small;"><span style="font-family: "cambria";">Shang dynasty (</span><span style="color: #1c1c1c; font-family: "ms 明朝";">商代</span><span style="color: #1c1c1c; font-family: "cambria";">) 1600-1046 BC)</span><span style="color: #1c1c1c; font-family: "helvetica";"> </span></span></i><span style="font-size: x-small;"><a href="https://zh.wikipedia.org/wiki/%E9%93%9C%E8%B4%9D" target="_blank"><span style="color: #1c1c1c; font-family: "helvetica";">[Source]</span></a></span><span style="font-family: "cambria"; font-size: 10.0pt;"> </span>
</td></tr>
</tbody></table>
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZIJKZz_VlsumylKc44q3Lux-2qBJYNBq-EdEKOHiHrGO37qMaQUFM-ETTfubVGKwe3SPI0D-TKv2eWn0a09rv1gsWMHwQ-4Xj39zc-asZ6v68gmMyTYm8HMNqSqyjHFL7IdNS/s1600/Collectibles25.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="296" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZIJKZz_VlsumylKc44q3Lux-2qBJYNBq-EdEKOHiHrGO37qMaQUFM-ETTfubVGKwe3SPI0D-TKv2eWn0a09rv1gsWMHwQ-4Xj39zc-asZ6v68gmMyTYm8HMNqSqyjHFL7IdNS/s400/Collectibles25.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: x-small;"><i><span style="font-family: "cambria";">"Ant-nose” coins (</span><span class="searchmatch"><span style="font-family: "cambria";">Eastern</span></span><span style="font-family: "cambria";"> <span class="searchmatch">Zhou</span> 770 to 221
BC) </span></i><a href="https://zh.wikipedia.org/wiki/%E9%93%9C%E8%B4%9D" target="_blank"><span style="color: #1c1c1c; font-family: "helvetica";">[Source]</span></a></span></td></tr>
</tbody></table>
<br />
Cowries are also recorded in historical times as being used
as money, for example in parts of China. The cowrie shell symbol <span style="font-family: "lantinghei tc heavy"; mso-bidi-font-family: "Lantinghei TC Heavy"; mso-fareast-font-family: "Times New Roman";">貝</span> is used as a component to
write several <a href="http://elaineou.com/2016/06/28/china-and-%E9%8C%A2/" target="_blank">Chinese words</a> [5] associated with the transfer of value, including<br />
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<span style="font-family: "lantinghei tc heavy"; mso-bidi-font-family: "Lantinghei TC Heavy"; mso-fareast-font-family: "Times New Roman";">則</span> (rule,
law, regulation) – a cowrie and a knife – possibly referring to the two main
kinds of legal remedies (money and punishment), which I hope to explore in
depth in future posts</div>
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<br /></div>
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<span style="font-family: "lantinghei tc heavy"; mso-bidi-font-family: "Lantinghei TC Heavy"; mso-fareast-font-family: "Times New Roman";">買 </span>(buy,
purchase) – a net over a cowrie (cowrie in a pouch?)</div>
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<br /></div>
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<a href="https://en.wiktionary.org/wiki/%E8%B2%9D" target="_blank">Exchange rates</a> between cowries and coins existed in at least
India, Bengal, and Siam.</div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSujbWl0cbhPmWB_bE24mTV46QVg0NfR3eA4CKOuvM6lcsutUbjQLkumwLrPhhmTrNP2o03OT9jQqPdyOs41VnCfA3mYzVeUPa1j6XmdHR3R4Suo3mOHrvSxEVSfTDb_pri63m/s1600/Collectibles26.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="165" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSujbWl0cbhPmWB_bE24mTV46QVg0NfR3eA4CKOuvM6lcsutUbjQLkumwLrPhhmTrNP2o03OT9jQqPdyOs41VnCfA3mYzVeUPa1j6XmdHR3R4Suo3mOHrvSxEVSfTDb_pri63m/s320/Collectibles26.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Obverse and reverse of a Ban Liang coin from the
Western Han Dynasty (206 BC – 204 AD)</span><span style="font-family: "cambria";">.
Like beads, they were strung on strings.
These “strings of cash” were the most common form of payment in China
until colonial times.</span></i><i> </i><a href="https://en.wikipedia.org/wiki/Ancient_Chinese_coinage#Ban_Liang_coins" target="_blank">[Source]</a></span>
</div>
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Authority resemblance, the mimicry of pre-existing
authoritative forms in a new medium, is as described above a very common
feature of innovation.<span style="mso-spacerun: yes;"> </span>The earliest electrum coins invented near the Turkish coast appear, like the
Chinese bronze cowries and “ ant-nose” coins (so named by a much later
numismatist), to purposefully resemble pre-existing shell collectibles[13].<span style="mso-spacerun: yes;"> </span>This suggests that the earliest coins were
intended to be authoritative for uses similar to what cowries in China and electrum
beads in Anatolia, respectively, were already being used for. </div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEith-i_PeRnceyzQAl6gxSBAQa0wzAI6n6Sq1h7zLcs5qjmG9QSKekTuFsaBlwG3G79px2EojWt1AL42VWHen8HE-6hcARxW1J93OsrTMGZrufPR6haMF_219tKPFRMhIMwMjlz/s1600/Collectibles27.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="121" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEith-i_PeRnceyzQAl6gxSBAQa0wzAI6n6Sq1h7zLcs5qjmG9QSKekTuFsaBlwG3G79px2EojWt1AL42VWHen8HE-6hcARxW1J93OsrTMGZrufPR6haMF_219tKPFRMhIMwMjlz/s640/Collectibles27.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Electrum beads in the form of cowrie shells,
from a burial in Middle Kingdom Egypt. Yet another likely case of authority
resemblance.</span></i><span style="font-family: "cambria";"> <a href="http://www.penn.museum/documents/publications/expedition/PDFs/56-1/hidden-treasures.pdf" target="_blank">[Source]</a></span></span>
</div>
<br />
<span style="font-family: "cambria"; font-size: 12.0pt;">Shininess and other aesthetically desired
characteristics could have served as <i style="mso-bidi-font-style: normal;"><a href="http://szabo.best.vwh.net/measuringvalue.html" target="_blank">proxy measures</a><span style="mso-spacerun: yes;"> </span></i>of scarcity during the long periods of the shell standards in the Upper Paleolithic, and these continue to be attractive attributes of jewelry to this day. </span><br />
<span style="font-family: "cambria"; font-size: 12.0pt;"></span><br />
<span style="font-family: "cambria"; font-size: 12.0pt;"></span>
<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDRtYWJiltVAtaqkL5gqyJNlq3QCoPFFJug2BChw6C_AI3YSBQS1EKwACjCSdeiFdmDB2T-WhaRJHtafGcXCIXKozEVOz2TScuEc9wH-BFS_IVIdtnrijY_Cq8Yki0P0W3VvHs/s1600/Collectibles28.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDRtYWJiltVAtaqkL5gqyJNlq3QCoPFFJug2BChw6C_AI3YSBQS1EKwACjCSdeiFdmDB2T-WhaRJHtafGcXCIXKozEVOz2TScuEc9wH-BFS_IVIdtnrijY_Cq8Yki0P0W3VvHs/s320/Collectibles28.png" width="198" /></a></td></tr>
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<span style="font-size: x-small;"><i>Electrum and gold beads, Nubia, c. 1700-1550 BC</i></span><br />
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<b style="mso-bidi-font-weight: normal;">Conclusion</b></div>
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<br /></div>
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It was once argued that the eye could not have evolved, for
what use is half an eye, much less a quarter of an eye and so forth?<span style="mso-spacerun: yes;"> </span>Richard Dawkins called this “argument from
lack of imagination.”<span style="mso-spacerun: yes;"> </span>It is hard to
imagine objects much less functional than those we are familiar with as being
useful at all. But even one light-sensing cell can be useful in telling the
difference between night and day, which in some environments can be strongly
correlated with the availability of food or protection from predators. Starting
from that most rudimentary (yet useful in itself) of functions, there are a
wide variety of useful steps to the sophisticated eyes of animals today. [4]
Similarly with the artifacts of archaeology, sometimes objects far less
functional than the ones we take for granted could have been evolutionarily
crucial to humans dating back at least to the Middle Paleolithic. </div>
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<br /></div>
<span style="font-family: "cambria"; font-size: 12.0pt;"> </span>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpxUGu6ZunZFQdU5WlxnrlroeAccJgNLgQJ18wTZ9NHKgo-meZmtah9pdRJek_hEa-VG1pRxMAVPvdHeWnSkEY70P_RDP9fyM6NMqZG6quiYYqmq6egYxcGSw5jitObZnC2bQA/s1600/Collectibles29.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpxUGu6ZunZFQdU5WlxnrlroeAccJgNLgQJ18wTZ9NHKgo-meZmtah9pdRJek_hEa-VG1pRxMAVPvdHeWnSkEY70P_RDP9fyM6NMqZG6quiYYqmq6egYxcGSw5jitObZnC2bQA/s200/Collectibles29.png" width="187" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Electrum bead, Mesopotamia c. 1000 BC. </span></i><a href="https://the-maac.com/shop/antique-jewelry/early-mesopotamian-faience-electrum-necklace/" target="_blank">[Source]</a></span>
<br />
<br />
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{page:Word</style>A wide variety of artifacts have served to store, display,
and transfer wealth in a wide variety of ways, ranging from unique artworks and
heirlooms as we now understand them, to money as we now understand it
(typically official government currencies, the modern legal definition of
money), to a wide variety of forms and uses in between, most of which we no
longer know about or have a difficult time understanding.<span style="mso-spacerun: yes;"> </span>Where artifacts are present in burials, they
are most commonly these artifacts of wealth – these collectibles -- rather than
concretely useful tools. They are also common in the remainder of the
archaeological record dating back many tens of millennia, strongly suggesting
an important evolutionary function.<span style="mso-spacerun: yes;"> </span>During
Upper Paleolithic times shell beads were manufactured in standard forms with a tradition so rigid that these forms existed largely unchanged for many thousands of years.</div>
<br />
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<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgUQzBv-RhsUqZhJwj6SjHJ7HiyJMoC_i6g0HJPy7qxxbjSysbmi9jmFMzVtjviztobnnnu2ZRWCnJtvs9BNr4Iho7Bso45f3OXfEJzE1A8Xrl-Lp71f9cHuNWw2Qgm3dWFJ0FP/s1600/Collectibles30.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="276" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgUQzBv-RhsUqZhJwj6SjHJ7HiyJMoC_i6g0HJPy7qxxbjSysbmi9jmFMzVtjviztobnnnu2ZRWCnJtvs9BNr4Iho7Bso45f3OXfEJzE1A8Xrl-Lp71f9cHuNWw2Qgm3dWFJ0FP/s320/Collectibles30.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><style>
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<span style="font-size: x-small;"><i>Electrum bead necklace, Lydia (in what is now Turkey),
c. 550-450 BC</i></span><br />
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<br />
Stocks and bonds, futures and derivatives, the kind of money
we are familiar with (coins, paper money, digital money, etc.), high art, and
most other artifacts of wealth as we understand them did not exist in
Paleolithic times, and even in Neolithic times, when some artifacts more
closely approached these ideals, they were still far less developed and
specialized than today.<span style="mso-spacerun: yes;"> </span>We are not
talking about the highly evolved forms of collectibles, quite the opposite – we
are talking about the most rudimentary of function, which nevertheless is quite
a bit better than nothing (which is what other animals have when it comes to
collectibles).<span style="mso-spacerun: yes;"> </span>I described what such
function is <a href="https://szabo.best.vwh.net/shell.html" target="_blank">here</a> and will be elaborating these theories and demonstrating them further in future
publications.<br />
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<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhiqD_cnuzai2ihVLvb0k8REQymOS392663ql2n9Yr8rEFYaIk8cO6dr2rGdVLYSu_zW49xfkfqt_h7GFoutqVuNRFNhfW7oYZO_F4cDHM0P3awOh6kD1gTy0945Eqhj6hyx6FW/s1600/Collectibles31.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhiqD_cnuzai2ihVLvb0k8REQymOS392663ql2n9Yr8rEFYaIk8cO6dr2rGdVLYSu_zW49xfkfqt_h7GFoutqVuNRFNhfW7oYZO_F4cDHM0P3awOh6kD1gTy0945Eqhj6hyx6FW/s320/Collectibles31.png" width="235" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "cambria"; font-size: 10.0pt;"><span style="font-size: x-small;">Early electrum coins of the “Ionian-A” or
Ephesian type, in what is now Turkey, c. 625-575 BC. </span></span></i><span style="font-size: x-small;"><a href="http://www.glebecoins.net/electrum/Early_Electrum/Basic_Electrum_Types/basic_electrum_types.html" target="_blank"><span style="font-family: "cambria";">[Source]</span></a></span></td></tr>
</tbody></table>
<br />
<br />
<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJBeDH5rdMkBTO4aj6VTeCmBNKxn0jZVHvyfjhbBDDk3qS0VREUS7KzJslHqC1TSaQqrlqTMo6uCRXA4tI1YwJRbG0AUybOIEsWUOPnGN8edE8GeClcsBHzAWiVql9q3qastrx/s1600/Collectibles32.png" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJBeDH5rdMkBTO4aj6VTeCmBNKxn0jZVHvyfjhbBDDk3qS0VREUS7KzJslHqC1TSaQqrlqTMo6uCRXA4tI1YwJRbG0AUybOIEsWUOPnGN8edE8GeClcsBHzAWiVql9q3qastrx/s320/Collectibles32.png" width="264" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "cambria"; font-size: 10.0pt;"><span style="font-size: x-small;">Early electrum coins of the “Ionian-A” or
Ephesian type, in what is now Turkey, c. 625-575 BC. </span></span></i><span style="font-size: x-small;"><a href="http://www.glebecoins.net/electrum/Early_Electrum/Basic_Electrum_Types/basic_electrum_types.html" target="_blank"><span style="font-family: "cambria";">[Source]</span></a></span></td></tr>
</tbody></table>
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Of the wide variety of artifacts that had no concrete use,
but which archaeologists tend to dub “ornamental” or “ceremonial”, most types
were idiosyncratic to particular cultures. But two types were widely spread in
time and space: beads of shell or bone were ubiquitous in Paleolithic and
Neolithic cultures, while “ornamental” blades and points were widely popular in
the Neolithic and possibly much further back in time.</div>
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In both cases where coins were invented – along the coast of
Turkey and in parts of China – many early coins resembled shell beads in
probable cases of authority resemblance. Prior to the invention of coinage many
metal beads had also been shaped in forms resembling shell beads. Before the
widespread use of coinage, the artifacts we now see as jewelry likely also
often condensed a function similar to early coinage. </div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfNvCPdwhoOLhzmFUcPiQj8FGsiVw_SGRdO0sPdhlcLxG8N2fyyPI3eoZiEbOP_wUapQFwe06ODqIhalVAAk22up5tCsFcnIRQvhNyOd0C8xUQJ8PFp4GxQhrnuFR4metyF1OQ/s1600/Collectibles33.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="292" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfNvCPdwhoOLhzmFUcPiQj8FGsiVw_SGRdO0sPdhlcLxG8N2fyyPI3eoZiEbOP_wUapQFwe06ODqIhalVAAk22up5tCsFcnIRQvhNyOd0C8xUQJ8PFp4GxQhrnuFR4metyF1OQ/s320/Collectibles33.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: x-small;"><i><span style="font-family: "cambria";">Early electrum coins of the “Ionian-B” or
Milesian type. in what is now Turkey, c. 625-575 BC </span></i><a href="http://www.glebecoins.net/electrum/Early_Electrum/Basic_Electrum_Types/basic_electrum_types.html" target="_blank"><span style="font-family: "cambria";">[Source]</span></a></span></td></tr>
</tbody></table>
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<span style="mso-bidi-font-family: Helvetica;"><br /></span></div>
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<span style="mso-bidi-font-family: Helvetica;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghHln_5tE5TTGqFxqy_b3SuHxP2aa4yg0i7LcvVeVUIUMzpwJuq3tlbARj6lAUA7EN08Dnzw_SIn_xlxDoNZjXdVJt2VOvjSvR61Takehm3STwgAi8VStkV1LvIJ34Ri6fYEAr/s1600/Collectibles34.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghHln_5tE5TTGqFxqy_b3SuHxP2aa4yg0i7LcvVeVUIUMzpwJuq3tlbARj6lAUA7EN08Dnzw_SIn_xlxDoNZjXdVJt2VOvjSvR61Takehm3STwgAi8VStkV1LvIJ34Ri6fYEAr/s320/Collectibles34.png" width="220" /></a></td></tr>
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<div style="text-align: center;">
<span style="font-size: x-small;"><i><span style="font-family: "cambria";">Early electrum coins of the “Ionian-B” or
Milesian type. in what is now Turkey, c. 625-575 BC </span></i><a href="http://www.glebecoins.net/electrum/Early_Electrum/Basic_Electrum_Types/basic_electrum_types.html" target="_blank"><span style="font-family: "cambria";">[Source]</span></a></span>
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Beads of shell and bone dominate the artifacts that look to
us like ornaments in the archaeological record from its invention in the early
years of <i style="mso-bidi-font-style: normal;">homo sapiens</i> to late
Neolithic times, and were still very influential when coins were invented. Contrary
to a currently popular archaeological theory, the main use of these shell beads
was not as “information technology” or the visual convenience of symbolic
information via different combinations of shell beads. Other materials
available in forager environments and other techniques foragers could use were
much better suited to cost-efficient symbolic communications. Instead what
coins and jewelry, at least as far back as the very conservative shell bead
traditions of the Upper Paleolithic, have in common, in sharp contrast to
cost-efficient symbolic systems, is unforgeable costliness, which securely
constrained the supply curve of these goods.<span style="mso-spacerun: yes;">
</span>This economic security feature strongly suggests functions related to
wealth and the fitness benefits of wealth. What these functions more
specifically were, in terms of genetic evolution and certain models from
economics applied to that evolutionary framework, will be the subject of
subsequent post(s) in this series.</div>
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<b style="mso-bidi-font-weight: normal;">Acknowledgements</b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
My thanks to Colin Hardwick and Elaine Ou, among others, for
their help with research and/or editing.</div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;">References</b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="mso-bidi-font-family: Helvetica;">[1] Szabo,
Nick (2002) “Shelling Out: The Origins of Money”, <a href="https://szabo.best.vwh.net/shell.html">https://szabo.best.vwh.net/shell.html</a></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
[2] Ke Peng and Yanshi Zhu, “New Research on the Origin of
Cowries in Ancient China”, in <i style="mso-bidi-font-style: normal;">Sino-Platonic
Papers #68 (May 1995)<b style="mso-bidi-font-weight: normal;"> </b></i>– on the “Cowrie
Road” from the Red Sea across the Eurasian Steppes.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
[3] Barry Cunliffe, <i style="mso-bidi-font-style: normal;">The
Oxford Illustrated History of Prehistoric Europe, </i>p144</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
[4] Richard Dawkins, <i style="mso-bidi-font-style: normal;">The
Blind Watchmaker</i></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
[5] Elaine Ou, <span style="color: black; mso-themecolor: text1;">“</span><span style="color: black; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-themecolor: text1;">China and </span><span style="color: black; font-family: "lantinghei tc heavy"; mso-bidi-font-family: "Lantinghei TC Heavy"; mso-fareast-font-family: "Times New Roman"; mso-themecolor: text1;">錢</span><span style="color: black; mso-themecolor: text1;">“,<b style="mso-bidi-font-weight: normal;">
</b></span><a href="http://elaineou.com/2016/06/28/china-and-%E9%8C%A2/">http://elaineou.com/2016/06/28/china-and-%E9%8C%A2/</a></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
[6] Mary C. Stiner, Steven L. Kuhn, Erksin G<span style="font-variant: small-caps; mso-ascii-font-family: Cambria; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Cambria;">ü</span>lec, “Early Upper Paleolithic shell beads at <span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Üçağızli</span>
Cave I (Turkey): Technology and the socioeconomic context of ornament life-histories,”
<i style="mso-bidi-font-style: normal;">Journal of Human Evolution 64 (2013)
380-398</i></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
[7] <span style="font-family: "times"; font-size: 12.5pt;">Randall White, “Technological and social dimensions of “Aurignacian age” body
ornaments across Europe.” In <i style="mso-bidi-font-style: normal;">Before
Lascaux: The Complex Record of the Early Upper Paleolithic</i>, H. Knecht, A.
Pike-Tay, and R. White (eds.) pp. 277–299. Boca Raton: CRC Press (1993)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "times"; font-size: 12.5pt;">[8] </span><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><a href="http://www.tibetarchaeology.com/may-2014/">http://www.tibetarchaeology.com/may-2014/</a></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">[9] Randall White, "From
Materials To Meaning", Institute For Ice Age Studies</span></div>
<div class="MsoNormal">
<br /></div>
<span style="font-family: "cambria"; font-size: 12.0pt;">[10] </span><span style="font-family: "cambria"; font-size: 12.0pt;">John Wilford, "Debate is
Fueled on When Humans Became Human", New York Times, February 26th, 2002
<a href="http://nakamotoinstitute.org/shelling-out/#refW02"><span style="mso-bidi-font-family: "Lucida Grande";">↩</span></a></span><br />
<span style="font-family: "cambria"; font-size: 12.0pt;"><span style="mso-bidi-font-family: "Lucida Grande";"> </span> </span><br />
<span style="font-family: "cambria"; font-size: 12.0pt;">[11] </span><cite><span style="font-family: "times"; font-size: 12.0pt; font-style: normal;">Vanhaereny, M.; d'Errico, F.; Stringer, C.;
James, S. L.; Todd, J. A.; Mienis, H. K. (2006). "Middle Paleolithic Shell
Beads in Israel and Algeria". Science <b>312</b> (5781): 1785–1788.</span></cite><br />
<br />
<cite><span style="font-family: "times"; font-size: 12.0pt; font-style: normal;">[12] Richard
Dawkins, </span></cite><cite><span style="font-family: "times"; font-size: 12.0pt;">The Selfish Gene</span></cite><br />
<br />
<cite><span style="font-family: "times"; font-size: 12.0pt; font-style: normal;">[13] Peng
Xinwei, </span></cite><cite><span style="font-family: "times"; font-size: 12.0pt;">A Monetary History of China</span></cite><cite><span style="font-family: "times"; font-size: 12.0pt; font-style: normal;"> (Edward H. Kaplan, tr.) Edition
1.0 (1994)</span></cite><br />
<br />
<div class="MsoNormal">
<span style="mso-bidi-font-family: Helvetica;">[14] </span><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Thomas
C. Scott-Phillips, Thomas E. Dickins, and Stuart A. West, </span><span style="mso-bidi-font-family: Helvetica;"><span style="mso-spacerun: yes;"> </span>“</span><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Evolutionary
Theory and the Ultimate–Proximate Distinction in the Human Behavioral Sciences”
<a href="http://www.zoo.ox.ac.uk/group/west/pdf/Scott-Phillips_etal_11.pdf" target="_blank">[Online]</a></span></div>
<div class="MsoNormal">
<span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"></span><span style="mso-bidi-font-family: Helvetica;"><br /></span><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"></span></div>
Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com10tag:blogger.com,1999:blog-17908317.post-60145786623411037512016-03-07T22:56:00.002-08:002016-03-07T23:01:59.489-08:00The trouble with booksThe Chinese invented printing, but their writing system required a large number of typefaces, which made for very high up-front capital costs to print even a single short book. Centuries after the slow dawn of Chinese printing Gutenberg in Germany,
taking advantage of a concise phonetic alphabet, requiring only a small
number of typefaces, invented a printing method that required much less up-front capital than Chinese printers. The Internet has even more radically lowered up-front capital costs to publish than did the Gutenberg revolution.<br />
<br />
Chinese printed works were vast but rare. European books were smaller but still too long. Internet works are the actual length a reader needs, they are (or soon will be) available practically everywhere, and often readers can interact frequently with the author.<br />
<br />
Most readers don't want to spend most of their time reading verbose works by single author, when a greater variety of more relevant and thoughtfully concise works are available from a much larger pool of thinkers. Prior to the Internet they had much less choice: books were just the way educated people learned and taught. (And many people still believe that reading and writing books is the <i>sine quo non</i> of being educated, just as many Europeans in 1500 still lauded the superiority of scribal methods and scholastic thought).<br />
<br />
Magazines and newspapers involve smaller form factors, but they still draw from a very small pool of authors. These authors can only write in detail about a wider variety of subjects by pretending to know things that they don't: they take human institutions far more complicated than a single human can possibly comprehend and boil them down to a series of hypersimplified theories, what in less authoritative contexts we'd call ideologies or conspiracy theories.<br />
<br />
Instead of being forced to read a vast number of words each from a small number and variety of authors, already widely read by many other people (making your reading of them often quite intellectually redundant), on the Internet you can read much less per-author text (and thus, potentially at least, far more thought out per word) from a much greater number and variety of authors.<br />
<br />
The Internet also can be more interactive with more select groups than the old face-to-face + snail-mail + books regime— providing much more opportunity for Socratic dialog, glossing, and other intellectual processes that were too often neglected after Gutenberg. And while the Internet can produce far higher amounts of garbage, mixing up thoughtlessly popular haystacks with thoughtfully rare needles, search engines and links often make wading through these vasty spaces much easier. The Internet allows you to meet people who share your specialized interests and dialog with them, making possible specific interactions that rarely happened in the old regime. However, without actually reading the content, i.e. while initially searching for it, it is hard to distinguish thoughtless (even though textual) content from the thoughtful content -- a big reason why at least for the moment book-literacy retains its aura of intellectual superiority over Internet literacy: scholarly publishers with their monetary incentives often take the time to select the most thoughtful works for our consideration. Nevertheless, they lack the knowledge needed to select the most relevant works to match the wide variety of interests and knowledge of their readers, or to judge well among works outside their specialties.<br />
<br />
Much as more efficient and speedier <a href="http://unenumerated.blogspot.com/2014/10/transportation-divergence-and.html" target="_blank">transportation networks</a> enabled labor and natural resources to be brought together in a much greater variety of ways, so does the Internet by providing more direct and speedy connections between minds enable a far greater <a href="http://www.econlib.org/library/Essays/hykKnw1.html" target="_blank">division of knowledge</a> than was possible with in the face-to-face+snail-mail+books regime. However, in contrast to the economy of things, that division of knowledge is largely (so far, at least, and still mostly for the foreseeable future) unmonetized: the information economy is a vastly different beast than the economy of things.<br />
<br />
That said, there is a good book(!) that covers much of this (along with of course a bunch of introductory material redundant for most readers, as well as the typical trivial or thoughtless text added to pad it out to books size): <a href="http://smarterthanyouthink.net/" target="_blank">Smarter Than You Think</a> by Clive Thompson.<br />
<br />
tl;dr if you thought this blog post was too long, why would you ever pick up a book? Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com14tag:blogger.com,1999:blog-17908317.post-71915333024675163272016-02-16T01:16:00.000-08:002016-02-16T17:10:28.561-08:00Two Malthusian scares<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFOerIF1jjWUGXkZoooqlN1mTtb_PHUOxJ010QF7NPrdL_2_w1dytJYus7UzJ-TSX0-sIDE3mOdOrABuFOvGtJaJlcCpJK320HTcLHJVbsUa5qS1Y2XqvFhlagKWpCyGXEeomq/s1600/CarterSweater1978.png" style="margin-left: auto; margin-right: auto;"><img border="0" height="217" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFOerIF1jjWUGXkZoooqlN1mTtb_PHUOxJ010QF7NPrdL_2_w1dytJYus7UzJ-TSX0-sIDE3mOdOrABuFOvGtJaJlcCpJK320HTcLHJVbsUa5qS1Y2XqvFhlagKWpCyGXEeomq/s320/CarterSweater1978.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
<i>Carter lectures the U.S. </i><br />
<i>on energy, 1978</i></td></tr>
</tbody></table>
In 1798. the Reverend Thomas Malthus wrote his influential <a href="https://en.wikipedia.org/wiki/An_Essay_on_the_Principle_of_Population" target="_blank">essay on population</a>, arguing that population grows exponentially while the supply of food, energy, and other commodities only grows linearly. As a result, the vast majority of humankind is doomed to be mired in poverty unless some even grimmer reapers than starvation (war, disease, etc.) are brought to bear, or births are moderated. In 1978 U.S. president Jimmy Carter, reflecting a popular intellectual Malthusian sentiment of the time, sat by his fireplace in a comfy sweater and instructed Americans to turn down the thermostat lest we run out of oil. (Here's a <a href="http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-energy/%20%E2%80%A6" target="_blank">similar speech</a> he gave a year earlier).<br />
<br />
Malthus' description of a general pattern of human history (and indeed of the history of all living things, an observation that inspired Charles Darwin) was by and large accurate. But since the time of Malthus, writing during the early industrial revolution, developed
and even most developing economies have managed to <a href="http://unenumerated.blogspot.ca/2011/06/trotting-ahead-of-malthus.html" target="_blank">trot</a> or even race
ahead of Malthus: per capita income has increased tremendously far beyond the near-starvation limits set by Malthusian theory. Industrial productivity has pulled vastly increased amounts of commodities from the earth, using them to produce an unprecedented abundance of goods. Meanwhile population growth has radically declined until today many developing economies have below-replacement birthrates. Nevertheless, Malthus' observations and reasoning periodically stage an intellectual and popular comeback: industrial civilization can only cheat Malthus so long, thought leaders warn us; if we do not mend our unsustainable ways, and convert from gluttony to stringent conservation, Malthus' grim formula will soon return to wreak an awful revenge.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZm48-672_qiV3tjfh6WLy7g5JQPLVDMwV3OGjZSq52X8N3SB9b1d3CX1ec1lu02rEUYhd5zXOMdW6zeMeP47PedmqHc9ur7zAvnki9Y8cLlruoGY_UgEJBCZSrJF9d0JDGqn3/s1600/ElementalAbundance_BacteriaVsSeaWater.JPG" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="311" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZm48-672_qiV3tjfh6WLy7g5JQPLVDMwV3OGjZSq52X8N3SB9b1d3CX1ec1lu02rEUYhd5zXOMdW6zeMeP47PedmqHc9ur7zAvnki9Y8cLlruoGY_UgEJBCZSrJF9d0JDGqn3/s320/ElementalAbundance_BacteriaVsSeaWater.JPG" width="320" /></a></div>
<br />
What <a href="http://unenumerated.blogspot.com/2010/10/elements-evolution-and-nitrogen-crisis.html" target="_blank">chemical inputs does life depend on most</a>? Hydrogen and oxygen from water is plentiful. Plants obtain copious carbon by breathing in carbon dioxide (and animals from eating the carbohydrates, fats, and proteins in the plants or other animals).
Nitrogen-fixing bacteria (and legume plants that are symbiotic with them)
obtain plenty of single-N nitrogen by splitting the plentiful but
strongly bonded N2 in our atmosphere. Artificial means of nitrogen fixing depend primarily on natural gas or oil prices. Metals are plentiful in soil. The
only significant remaining scarce ingredients for crops are potassium (K) and
phosphorous (P) -- and of these on land phosphorous, which must be
available in the form of phosphate, is the most needed and most lacking of all. No technology can substitute anything else for phosphate: it has to be phosphate in order to form DNA, the essential cell energy molecule ATP, and crucial parts of our bones and teeth. Phosphate is thus the most geopolitically important agricultural input and exhibit A in Malthusian warnings about limited resources and unsustainable practices. This also makes phosphorous a favorite target of stockpilers and speculators during a Malthusian scare.<br />
<br />
The most important commodity for mining, manufacturing, and especially transportation, for almost all the 20th century and through the present time, is petroleum oil. Internal combustion and other engines powered by fuels refined from petroleum have since the early decades of the 20th century increasingly dominated he transport of goods and people on air, sea, and land. For much of the late 19th and 20th centuries heating was a major use
of oil; in that use it is being eclipsed by its cousin carbon fuel,
natural gas. Oil is also the world's most important feedstock for the
production of plastics, synthetic fibers, and a wide variety of other
chemicals. While oil makes up a much larger price value of trade than phosphates, oil in the long run is potentially far more vulnerable to substitution innovation. And as we shall see, it also has been at least somewhat more amenable to technological improvements in supply.<br />
<br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9lY2fgkk2D2PmPB97FIBfmyW-6k_giQlTf7aDRNB_YxyNYLUvc_z2TWRnwN3LB4R-GWdRiaNNDi6II1GUD1fC-YKm21nZfkAFfSdzaU1NwI_nnb7F2TKyqI3S_Lfx_CQPik88/s1600/LimitsToGrowth.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9lY2fgkk2D2PmPB97FIBfmyW-6k_giQlTf7aDRNB_YxyNYLUvc_z2TWRnwN3LB4R-GWdRiaNNDi6II1GUD1fC-YKm21nZfkAFfSdzaU1NwI_nnb7F2TKyqI3S_Lfx_CQPik88/s320/LimitsToGrowth.png" width="192" /></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJGKSB7NqhqWQzLMgAn1seyqwyMm93-KCeVrHSrQue8DVJxx4gcOsiXHTC54OleIgjoO7VsjoK_51VgdCW6l7OHmF3jiVgYOXhjiVMjHsSVht-HyZ5gewlooz0ChMPR3P87-JS/s1600/ErlichPopulationBomb.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a>Between the mid-1800s, by which time the industrial revolution had transformed much of Europe, and the end of the Bretton Woods era, sentiments about the unsustainability of industrial civilization were usually on the intellectual fringe. But since the late 1960s, cries of doom and sophisticated warnings that we must redesign our economy, our technology, and civilization itself to "sustainable" lifestyles have become mainstream. Malthusian allegations that we face diminishing, or soon-to-be diminishing, supplies of raw materials such as oil, natural gas, metal ores and fertilizers, have become "common knowledge." <br />
<br />
This component of green ideology has been fueled by two Malthusian scares: two substantial periods, the first between about 1968-1980, the second c. 2004-14, during which nominal commodity prices (i.e. the prices you see posted) increased dramatically, and "real" (adjusted for some measure of inflation, such as the consumer price index) commodity prices increased substantially. These price rises led to prophecies of a coming great diminution in our abilities to feed, cloth, and transport ourselves, much less to enjoy all the other abundant goods we have become accustomed to in the developed world as a result of the industrial revolutions that have occurred during and since the time of Malthus. We faced a miserable future unless we changed our ways. Unless we stopped having babies and stringently conserved and recycle our resources (the general green movement), or invest in solar power and electric cars (the Silicon Valley green movement), our future was deemed to be doom. This remains a predominant ideology in Western culture today.<br />
<br />
A big part of those scares and of the green movement has been environmental limits -- that we are damaging our environments, our planet, the one and only planet we can ever hope to naturally inhabit in the foreseeable future, far too much -- adding too much sulfur dioxide, ozone, or carbon dioxide to the atmosphere, too many fertilizers to our waterways, etc. This essay does not address those concerns, which provide a far stronger argument for the sustainability movement than the topic of this essay -- the supply of commodities, especially of raw minerals from the earth such as oil, metal ores, and fertilizers, and the theories that have become popular since the late 1960s that historical rates of industrial growth cannot be sustained in the face of expected future diminution of those supplies. Indeed, if you are already scared by our ability to pollute our planet, after you finish reading this essay you should be even more scared. Our planet places no material limits on our ability to consume and pollute it. If we are to have such limits we must put them in place, politically, ourselves. (As for me, I'm scared both by the prospects for greater pollution <i>and</i> by the fact that political solutions and hoped-for advances in technology, not natural limits, will be the only ways to address the threats of pollution. The greatest source of domestic disputes is fighting over the thermostat; I expect this trend will carry over to international climate disputes of the future...)<br />
<br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVYbgJ2kcCbZv4KEOlTXacaSkeRYDsTeY5DJnC4KY2UKByfPKG2tqBnsC7FX0PPwxpUTVFivM1TT3H4_LYaM4d4_KIsN9fJI6xDZ2UPdZTQDiDbRm6PX42C1hotPLiIQXEUrk5/s1600/Newsweek1973RunningOutOfEverything.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVYbgJ2kcCbZv4KEOlTXacaSkeRYDsTeY5DJnC4KY2UKByfPKG2tqBnsC7FX0PPwxpUTVFivM1TT3H4_LYaM4d4_KIsN9fJI6xDZ2UPdZTQDiDbRm6PX42C1hotPLiIQXEUrk5/s320/Newsweek1973RunningOutOfEverything.png" width="221" /></a>For many of us in the developed world, a future of higher prices for energy and other commodities does not seem like such big a deal as it once did: we already have more physical goods than we know what to do with, and <a href="http://www.theminimalists.com/minimalism/" target="_blank">cutting back</a> to achieve more peace of mind now seems to take and be worth more effort than accumulation. While the better-off fractions of the developed world have by and large reached a level of satisfaction in their consumption of the abundance of goods made possible by the industrial revolutions, the poorer fractions and the developing world have not. <br />
<br />
Nevertheless, during the Malthusian scares commodities did seem to grow much more expensive and scarcer -- and not just a few commodities but commodities in general. Indeed, the prices of a broad range of industrial commodities went substantially higher, often much faster than the general inflation rate -- a sure sign, according to traditional industrial economics, that industrial supply was being outstripped by consumer demand -- that we were getting approaching, often rapidly, Malthusian limits rather than moving further away from them as has been the general trend since Malthus. During most of the years of the first and second scares raw material and food prices skyrocketed, practically across the board. Why was this happening, if not the predictions of Malthusians starting to come true? Let's take a look at the scares, and the economic histories surrounding them, to find out. <br />
<br />
<b>Prelude to the First Malthusian Scare</b><br />
<br />
From ancient civilization to the late 1960s, civilization's money was generally defined by, and either consisted of or was convertible to, standard weights of precious metals. Even thousands of years before the invention of coinage, most fines in the <a href="https://en.wikipedia.org/wiki/Code_of_Ur-Nammu" target="_blank">earliest recorded code of laws</a> were defined and paid in weights of silver. While the role of precious metals in monetary affairs declined throughout the 20th century, with many episodes of fiat currencies untied to precious metals inflating and <a href="http://www.comparegoldandsilverprices.com/news/economics-101/modern-hyperinflation-56-cases-around-the-world/" target="_blank">hyperinflating</a>, under the post-World War II Bretton Woods system United States and its allies up to 1968 had a <a href="https://en.wikipedia.org/wiki/London_Gold_Pool" target="_blank">gold window</a> whereby authorized high rollers (among them most other governments) could still cash in their dollars for gold at a promised official rate. Under Bretton Woods most other free world currencies were pegged to the dollar. So you could cash in your local currency for dollars, and (if you were an authorized high roller) your dollars for gold, all at committed official prices.<br />
<br />
But Bretton Woods, depending on a single country to ultimately back the entire free world's money, was not financially sustainable. It established the U.S. dollar as the free-world standard after World War II, when the the U.S. made half the world's industrial goods and held over half of its financial reserves. But the economies damaged by World War II quickly recovered, and agricultural and industrial revolutions spread to the developing world where economic growth greatly quickened. While the U.S. economy in its own terms was thriving, the relative U.S. role in the world economy declined as those of the rest of the world quickly rose from the ashes. By the mid-1960s the U.S. held only 16% of the world's financial reserves, and even less than that of its gold reserves. Even though it promised to exchange dollars for gold on demand, the U.S. Federal Reserve issued more notes, and its banks more broadly issued more dollar credit, than could possibly be securely backed by its diminishing gold reserves.<br />
<br />
Meanwhile, most academic and government economists scoffed at the gold standard as a "barbarous relic" and held that world monetary conditions would be improved if the U.S. stopped pretending that the dollar was pegged to gold. By 1968 the U.S. was no longer willing to honor its commitment to deliver an ounce of gold for $35. The U.S., which since the time of Franklin Roosevelt had banned the domestic private gold trade, now tried with futility to halt overseas private trade by refusing to deal in gold with governments that allowed private gold trade. (In reality, this was less a serious attempt to stifle overseas private gold trade than an attempt to close down the gold window in a face-saving way). The U.S. government forced the London Gold Pool, the gold window mechanism operating between the major free world central banks, to declare a "bank holiday", i.e. shut down its operations. But of course this didn't stop non-Americans from trading in gold; quite the opposite: it signaled that the U.S. dollar, and all the currencies pegged to the U.S. dollar, had radically changed in form, and might no longer be as reliable as a store of value. The free-market price of gold soon rose well above $35 official rate. The U.S. was by 1971 forced to officially float the dollar (it had already been floating de facto for up to three years), officially making the U.S. dollar a purely fiat currency. The pegged currencies followed suit, and Bretton Woods was dead.<br />
<br />
All this monetary obscurity matters for our Malthusian scares not just because all the aforesaid commodity prices from then until now are quoted in major fiat currencies, most usually in dollars, and these signals prices send about industrial supply and demand can only be as reliable as the currencies those prices are denominated in. Such a consideration could, with good statistics based on good records, be reasonably dealt with by computing the "real", inflation-adjusted prices of commodities. But commodity prices proceeded to skyrocket even in general-inflation-adjusted terms The dawn of the pure fiat, floating currency regime caused far deeper forces to come into play.<br />
<br />
For in reality, post-gold-standard prices for industrial commodities are not driven purely, or often even mostly, by industrial demand being met by appropriate changes in material supply. Instead, both supply and demand curves have been warped by a new role for the major industrial commodities -- they are no longer purely commodities; the are in part also money. In particular, they have since the late 1960s been increasingly used as a liquid store of value, easily tradeable for media of exchange (e.g. dollars), as an alternative to and hedge for the new regime of floating rate currencies.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9CcFQz1fcZuu3F52SPPWpoAjt9xDJGdvouVQUjy0w8C75IniNfB6pExCKIH_XUB0W3NCiOqbxIexQyw_1_9WXo_cPDhx5t3aH4VE5fUmIea21bo54pFG_27lAwIWbOmNVtjXx/s1600/OilPriceChanges1947_2016.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9CcFQz1fcZuu3F52SPPWpoAjt9xDJGdvouVQUjy0w8C75IniNfB6pExCKIH_XUB0W3NCiOqbxIexQyw_1_9WXo_cPDhx5t3aH4VE5fUmIea21bo54pFG_27lAwIWbOmNVtjXx/s400/OilPriceChanges1947_2016.png" width="400" /></a></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHzSWQ5rvwCz_egPxGkx4zCUoOtngyBe-__GRmVIACiQpsAmn45ElTVyzOQca0Mf3Z_hy87WEJJyVHo93_3-SztFI0rhxD5qymCcExxiCUIaQzdjUMUbxMnrbFFohwhJXx-bF3/s1600/PhosphateVolatilityPrePostBrettonWoods.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="287" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHzSWQ5rvwCz_egPxGkx4zCUoOtngyBe-__GRmVIACiQpsAmn45ElTVyzOQca0Mf3Z_hy87WEJJyVHo93_3-SztFI0rhxD5qymCcExxiCUIaQzdjUMUbxMnrbFFohwhJXx-bF3/s400/PhosphateVolatilityPrePostBrettonWoods.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i> Noise in the signal: radical increase in volatility of two of the most </i><br />
<i>important geopolitical minerals, crude oil and phosphate, between the </i><br />
<i>Bretton Woods (1947-70) and floating rate (1970-present) eras.</i></td></tr>
</tbody></table>
<br />
What does it mean to say a commodity is part money? For this we need to turn to economist <a href="http://is.muni.cz/el/1456/podzim2009/MPE_MOEK/um/8972262/menger1892.pdf" target="_blank">Carl Menger's theory</a> of the origins of money. <a href="https://en.wikipedia.org/wiki/Carl_Menger" target="_blank">Menger</a>'s theory is less an accurate account of how money did historically originate among humans (which happened <a href="http://nakamotoinstitute.org/shelling-out/" target="_blank">long before</a> the dawn of the efficient commodity markets postulated by Menger), as a good theory and reasonably accurate set of predictions about how a free barter market economy does behave whenever it does arise. According to Menger, in a world of market-based barter, a very high cost (which economists would now call a transaction cost) comes from having to keep track of on the order of N^2 prices for the N goods, and the lack of coincidence of mutual wants between the holders of any two particular such commodities.<br />
<br />
For this reason market participants start spontaneously treating some goods as <i>intermediate commodities. </i>Intermediate commodities are held, not to consume them, but to store value until the next opportunity for exchange comes along. The intermediate commodity's price increases substantially from what it was when it was just demanded for its consumption: it obtains a price premium for its use as a store of value immune from the changing values of currency or currency-denominated assets the holder of the intermediate commodity would have otherwise held. This price premium waxes and wanes with the weighted changes in inflation expectations of the world's main traded currencies.<br />
<br />
Many commodities might be used this way: and every commodity that is used in this way becomes, in part, money. It is no longer just an good whose supply is driven by purely by the costs of production (since producers may choose to withhold production rather than sell for a currency whose inflation expectations have just increased, or may choose to increase production beyond the needs of immediate demand when inflation expectations have decreased), or whose demand is driven purely by desires or needs for its consumption (since some of the demand -- the vast majority of the demand in the case of gold and silver -- is now for its use as a store of value). It is an intermediate commodity, <a href="http://unenumerated.blogspot.com.br/2008/03/monetary-value-of-liquid-commodities.html" target="_blank">partial money</a>.<br />
<br />
When the primary use of the commodity money is as a medium of exchange, for example the cigarettes used as money in some wartime prisons, strong network effects usually exist to cause the market to converge on one or a few standards -- historically, usually gold and silver. These <a href="http://blogs.ft.com/maverecon/2009/11/gold-a-six-thousand-year-old-bubble/" target="_blank">undergo </a>a <a href="http://unqualified-reservations.blogspot.com/2009/12/gold-and-central-banks-game-theory.html" target="_blank">"bubble that does not pop"</a>. But the other intermediate commodities, the commodities don't make it all the way to being dominant and nearly pure money, are bubbles that can and do pop.<br />
<br />
When the primary use of commodity money is, however, a store of value, a store of value that can be readily exchanged when needed for the actual medium of exchange, there is almost no network effect. Any commodity that can be stored and so traded can be used as store of value that will render the owner immune from the perceived or actual risks of holding a floating currency. This storage could occur in the form of a paper or digital future, or as the actual commodity in the warehouse, or even as a readily extractable mineral such as oil still in the ground.<br />
<br />
Since the end of Bretton Woods, the major industrial commodities, and especially the major geopolitical commodities such as oil and phosphates, have become Mengerian. They are no longer purely industrial commodities. They are also stores of value, places to put wealth in between obtaining money and spending it, that provide an alternative for those who wish to diversify away from, for various reasons, holding currency or assets such as bonds and derivatives that are defined by or correlated to the health of currencies. In the face of increasing inflation expectations, stockpiling of commodities also decreases the risk that further economic growth that nations may be expecting or planning for in their economies could only come at the costs of even purchasing the needed inputs at even higher prices in the future (e.g. China in the 2000s). Stockpiling of commodities is also a general strategy whenever international trust erode and leaders start thinking of potential risks that trade will be slowed or embargoed.<br />
<br />
There are other securities that can store and even grow value -- stocks, bonds, real estate. In many ways all these are better stores of value than commodities. However for a major financial and political power, they have drawbacks. First, they are trust-based -- you are trusting somebody (often a foreigner) to pay the coupons or dividends. In the case of real estate, it depends on the vagaries of local economic activity and politics. Commodities, especially commodities a government can physically control, are far more trust-minimized. The U.S. can sanction Russia by freezing the assets of its national held in paper or digital form in the U.S., but it cannot take the oil from Russia's wells or stop it from drilling, pumping, and selling it to e.g. Europe. Finally, commodities in most of their forms, especially as futures, are readily exchanged for pure money such as dollars. Since the theme of this paper is Malthusian resources, we shall focus
on the waxing and waning of the intermediateness of commodities, and in
particular the geolitical commodities oil and phosphate rock.<br />
<br />
Thus industrial commodities, and especially minerals important to geopolitics like crude oil and phosphate, serve at least three major purposes in the post Bretton Woods world beyond just industrial or agricultural consumption:<br />
<br />
(a) a hedge against increases in expected inflation in floating rate currencies, or greater uncertainties about same,<br />
<br />
(b) for governments, protection against coercive economic sanctions by foreign governments, and<br />
<br />
(c) for militarily strong countries, a form of wealth relatively immune from foreign attack in time of war<br />
<br />
We will see all these factors at play during the first and second Malthusian scares.<br />
<br />
<br />
<b>The First Malthusian Scare</b><br />
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS6_0tFnmloUqJrhS0byfXoJpqkkDBbpEtmLeYDDjkL0OX1GkbEbMQ1i9zVU3COk-9LlxVsHN-zUO_RtFmMZZ-ACDwmGd7bfSqOaI6CuGlEkMjguVUl69F_A0uJOAFet9KscsX/s1600/OilGold1970s_Hammes.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="204" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS6_0tFnmloUqJrhS0byfXoJpqkkDBbpEtmLeYDDjkL0OX1GkbEbMQ1i9zVU3COk-9LlxVsHN-zUO_RtFmMZZ-ACDwmGd7bfSqOaI6CuGlEkMjguVUl69F_A0uJOAFet9KscsX/s320/OilGold1970s_Hammes.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
<i>Oil "chasing the tail of gold" </i><br />
<i>during the 1970s. (<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=388283" target="_blank">Source</a>)</i><br />
<br /></td></tr>
</tbody></table>
As described above, the Bretton Woods era ended between 1968 and 1971, leading to the purely floating rate regime that has prevailed from 1971 to today. Free trade in gold, which had been banned under Franklin Roosevelt, was returned to the U.S.<br />
<br />
Shortly thereafter, in 1973-4, an event that many economists have deemed an "exogenous shock", and even a main cause of the dramatic oil price rises of the 1970s, occurred on the world stage: the Arab oil embargo of Britain and the U.S. in response to their intervention on behalf of Israel in the 1973 Yom Kippur War. Around the same time OPEC more than doubled the dollar prices it charged for its oil. It is common but highly inaccurate to call OPEC a "monopoly cartel" at that time -- it accounted for only about 3% of U.S. oil consumption in 1967 and still only 6.7% at the end of 1973. It had increased its pricing power from negligible to slight; it could hardly have more than doubled the price of oil on its own had not other oil-producing companies and countries been of similar mind.<br />
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDiirr9oAq21HOC_S1X4JGP2kgZs0ieMzNcwFysudrwuEf0dS-J-BViTXXn6w2h7VwtdElDwEFmhNIBbmCx5rBgDuidpQz6m0RXq0f7N5l5CjhtGVvuu2AWsfT3bLAbJfZKXDv/s1600/OilPricesSuezVsArabOilCrisis.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="201" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDiirr9oAq21HOC_S1X4JGP2kgZs0ieMzNcwFysudrwuEf0dS-J-BViTXXn6w2h7VwtdElDwEFmhNIBbmCx5rBgDuidpQz6m0RXq0f7N5l5CjhtGVvuu2AWsfT3bLAbJfZKXDv/s320/OilPricesSuezVsArabOilCrisis.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
<i>One dog didn't bark: oil prices around the times of the </i><br />
<i>Suez crisis (1956-7), in which Europe lost control of over </i><br />
<i>half its oil supply, and the Arab Crisis (73-74), involving a </i><br />
<i>temporary embargo that was easy to get around </i><br />
<i>by trading through cutout countries.</i></td></tr>
</tbody></table>
By sharp contrast, the Suez Crisis of 1956-7, which produced a much more dramatic and longer-lasting impact on the world's oil supply chains -- Europe suddenly lost military control over more than half of the oil it consumed to a recently independent and hostile Egypt, never to gain it back -- was followed by a far smaller and more ephemeral percentage increase in oil prices.<br />
<br />
Due to the increased inflation expectations, oil producers conserved on pumping, despite rising prices and oil consumers stockpiled despite the rising prices of funding those purchases. The reverse would happen throughout the decreases in inflation expectations and resulting long decline in commodity prices during most of the 1980s and 1990s. Oil producers kept pumping beyond the needs of the industrial market to hasten the drawdown of their depreciating reservoirs.<br />
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijO9HTLkystGZYaOPYjlNGhnCVModJP3u9tz9zehNxdxkK2eGVTYMVPOU4mBXrDcoizHhfDBwSr28mLGsDGJg6sQhfBv6dBtDcWWCHUeCQZAJ2_EG2juyNVBAo_Ne_WiqNDpuA/s1600/Inflation1970s.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="190" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijO9HTLkystGZYaOPYjlNGhnCVModJP3u9tz9zehNxdxkK2eGVTYMVPOU4mBXrDcoizHhfDBwSr28mLGsDGJg6sQhfBv6dBtDcWWCHUeCQZAJ2_EG2juyNVBAo_Ne_WiqNDpuA/s320/Inflation1970s.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
<i>What the voter saw: U.S. consumer </i><br />
<i>price index 1973-81.</i></td></tr>
</tbody></table>
But during the first Malthusian scare, U.S. and European entities began stockpiling oil and other strategic commodities. For example U.S. oil imports from the Middle East, which had been only about 3% of consumption in 1967 when relations were friendly, had increased to 6.7% by 1973 even though relations had become hostile. and nominal prices of that oil had risen. Meanwhile U.S. oil producers were pumping less oil, choosing to keep relatively more of it in the ground rather than sell it for cheapening dollars.<br />
<br />
<br />
<br />
<b>The Second Malthusian Scare </b><br />
<br />
<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; tab-stops: .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in; text-autospace: none;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0lwd9wi4upyF9OOAwyi0VtpzHWaYqD4V9LLSutIOdjvrth5JYW1b_6ws3PTQSIRakzdP_oj74WYadxLcCmcBz5i0WyVGJI1Iq7fx1VSHazv6EhHDcWTG7k4rAgbmiBcI_B7Qc/s1600/WorldFertilizerPricesSoar2007.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="232" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0lwd9wi4upyF9OOAwyi0VtpzHWaYqD4V9LLSutIOdjvrth5JYW1b_6ws3PTQSIRakzdP_oj74WYadxLcCmcBz5i0WyVGJI1Iq7fx1VSHazv6EhHDcWTG7k4rAgbmiBcI_B7Qc/s320/WorldFertilizerPricesSoar2007.png" width="320" /></a><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">As in the 1970s, the
commodity rise during the second Malthusian scare of roughly 2004-14 was often sharp and concurrently effected the vast majority of commodities. After substantial advances in both real estate and commodity
prices the previous several years, during 2007 central banks cut rates and
raise money supplies to fight collapsing real estate prices. These efforts
fueled sharp increases in <a href="http://unenumerated.blogspot.com/2008/07/inflation-expectations-gold-and-oil.html" target="_blank">inflation expectations</a>. Nominal and CPI-adjusted prices
of fossil fuels, precious metals, industrial metals, lumber, fibers,
fertilizers, grains, oilseeds, dairy, and livestock all skyrocketed during
2007, hitting </span><span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">record highs in nominal prices. <span style="mso-spacerun: yes;"> </span>The market’s <a href="http://unenumerated.blogspot.com/2008/06/commodity-hysteria-overview.html" target="_blank">endless search </a>for stores of
value independent of the vagaries of fiat currencies had switched from real estate on which easy loans were defaulting to
commodities that could be held more securely. This time the most (in)famous stockpiler was China, planning for the rapid economic growth it expected in the decades ahead.</span><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzkxGttNGcT_okFeECgJquAuzLngvOX42S2zKo4d4Oel19CWftn0SF6IMcc_s3Y6zOK5fMjXHIh0wmDIReeB_Oxor19SFMQ_1EwVYctCYUwHvsYugq_Y9NUYjMX49Bwz0azfsi/s1600/FertilizerPrices1960_2009_Nominal.png" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="217" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzkxGttNGcT_okFeECgJquAuzLngvOX42S2zKo4d4Oel19CWftn0SF6IMcc_s3Y6zOK5fMjXHIh0wmDIReeB_Oxor19SFMQ_1EwVYctCYUwHvsYugq_Y9NUYjMX49Bwz0azfsi/s320/FertilizerPrices1960_2009_Nominal.png" width="320" /></a></div>
<span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Also as in the 1970s, the individual components
of this broad-range trend were attributed to a stupendous variety of
idiosyncratic causes -- the co-occurrence of which all driving prices in the
same direction at the same time was astronomically improbable. The only reasonable attribution would be to related common causes – which, given that there
had been no sudden worldwide industrial boom, had to have been monetary causes.</span><br />
<br />
<span style="mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Warnings about peak oil, peak phosphorous, etc. issued from all the major media outlets and science journals. In Silicon Valley, a boom in "green technology" startups and investments ensued -- resulting later in mostly bankrupt companies. </span></div>
<br />
As I <a href="http://unenumerated.blogspot.com/2008/04/hoarding-and-speculation-of-commodities.html" target="_blank">wrote</a> at the time:<br />
<blockquote class="tr_bq">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgr9HontwTk5l04Y5GPiwAsAIN7x7eXjU7BY09N6AoTr2D11qVxD8gJHnaETwfvZK3Wed5yzBvYDg2diPa_wu1GypVVn_71xTZYqfJblhfPrIv1e0hfIDR9KofEA9c7QdgCnEpQ/s1600/PhosphateFoodPrices1990_2013.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="172" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgr9HontwTk5l04Y5GPiwAsAIN7x7eXjU7BY09N6AoTr2D11qVxD8gJHnaETwfvZK3Wed5yzBvYDg2diPa_wu1GypVVn_71xTZYqfJblhfPrIv1e0hfIDR9KofEA9c7QdgCnEpQ/s320/PhosphateFoodPrices1990_2013.png" width="320" /></a>It is a gross violation of Occam's Razor to attribute the recent very
broad-based run-up in dollar commodity prices primarily to the plethora
of disparate causes to which they have been attributed: "peak oil", the
war in Iraq, ethanol subsidies displacing food, and so on. Rises in
industrial demand, increases in the costs of transporting commodities
due to high oil prices, and so on explain only a small fraction of the
rise in other commodity prices, and do not explain at all why precious
metal prices have increased alongside those of other commodities.
Occam's Razor points us, as it did to wise investors and economists in
the 1970s, to the one kind of commodity all these other commodities have
in common: the currencies they are priced in...</blockquote>
<blockquote class="tr_bq">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUzhtvxmHWJ6PmGsJooyrDe5WkVfzU-i6yPc-nguC8JswLCK57gQe2rfMfHUvcE8AeZ0jnlKFkheskgpnbUlStZ0tg7iqOFEM1WNQQWEAOSq3Xlvn63f9DyfpqlObAniUR83Oc/s1600/SecondMalthusianScare_OilPhosphorousCrudePrices.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="232" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUzhtvxmHWJ6PmGsJooyrDe5WkVfzU-i6yPc-nguC8JswLCK57gQe2rfMfHUvcE8AeZ0jnlKFkheskgpnbUlStZ0tg7iqOFEM1WNQQWEAOSq3Xlvn63f9DyfpqlObAniUR83Oc/s320/SecondMalthusianScare_OilPhosphorousCrudePrices.png" width="320" /></a>...demand for the oft-dreaded but ill-understood "hoarding" and
"speculation", that is storing extra commodities (often off-the-books,
or at least not in the officially measured warehouses) and the purchase
of extra commodity futures and other commodity derivatives to hedge
transactions based on government currencies, will remain strong as long
as the Federal Reserve continues to inflate the dollar supply, and as
long as many developing countries continue to link their currencies to
this dollar. Commodity prices in dollars will level off, and then move
back down close to historical trends based largely on just industrial
consumption, if or when the Fed stops increasing the supply of dollars
faster than the demand for dollars. </blockquote>
As it transpired, neither the Malthusian worries nor, as of this writing, the inflation expectations proved justified. The run-up in oil helped fund the fracking revolution, a technology which defied peak oil theory:<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjI9kIej-iB13C02CnzFtuFMVGhW-FLGxBunY9LeLXACDs4W_8PD8B94A0_zBtZ1Jk06UdfibhwG5amJwggLLUY_yIpvKbQnNdmwNPOfsVZTIDT7FJ85LxrEW8BPNUcE_2GAdHL/s1600/HubbertPeakOil_PermanentOilCrisis.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="185" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjI9kIej-iB13C02CnzFtuFMVGhW-FLGxBunY9LeLXACDs4W_8PD8B94A0_zBtZ1Jk06UdfibhwG5amJwggLLUY_yIpvKbQnNdmwNPOfsVZTIDT7FJ85LxrEW8BPNUcE_2GAdHL/s320/HubbertPeakOil_PermanentOilCrisis.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
<i>Theory: peak oil diagram after Hubbert. Alleged to </i><br />
<i>apply at all scales not just to individual wells.</i></td></tr>
</tbody></table>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQ2XUHGEpaxmopRISZJ6XUyvHswazgGTw1XscXsyxxbR-Oim3ttXaSC4NtrrdIEb0COCGtEXNv8tw1gnLkcHgolqOW778KssalrTHhT3qbGDtSVPzuo7n5s8XmCFHzkNq1tq7t/s1600/USOilProduction1920_2015.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQ2XUHGEpaxmopRISZJ6XUyvHswazgGTw1XscXsyxxbR-Oim3ttXaSC4NtrrdIEb0COCGtEXNv8tw1gnLkcHgolqOW778KssalrTHhT3qbGDtSVPzuo7n5s8XmCFHzkNq1tq7t/s320/USOilProduction1920_2015.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
<i>Reality: not as simple as theory</i></td></tr>
</tbody></table>
<br />
Oil thus demonstrated itself as a poorer monetary substitute than gold: being a much more novel commodity than gold, its production is subject to substantially more likelihood of technological invention and geological discovery. <i> </i> <br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhiWnIhjcXbV2HaqJvk6p_ZrYDLoy4_SnnUSpcE1Xsjur-ZvWbWU5SQn7WKeP2Ls9LUCTDzNfNwHUXrRl7YUaUBKZVXnuXEfubfY8d6Lp5YhlvBi3nHJ7MLA9PuhVUlsoc-YnBo/s1600/GoldOilRatio1865_2015.jpg_large.jpeg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhiWnIhjcXbV2HaqJvk6p_ZrYDLoy4_SnnUSpcE1Xsjur-ZvWbWU5SQn7WKeP2Ls9LUCTDzNfNwHUXrRl7YUaUBKZVXnuXEfubfY8d6Lp5YhlvBi3nHJ7MLA9PuhVUlsoc-YnBo/s320/GoldOilRatio1865_2015.jpg_large.jpeg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
<i>Fracking in one diagram</i></td></tr>
</tbody></table>
<br />
This possibility, which had not been sufficiently priced into oil before fracking, makes oil supply less reliably scarce than that of gold, rendering it less useful as a store of value, reducing the monetary premium of the oil price over oil as it would be priced if it were just an industrial commodity. Secondly, of course, is the direct effect of fracking on the supply curve in lowering oil prices. The effects of the fracking revolution are amplified because more than just the Econ-101 supply curve shift is reducing oil prices due to fracking: oil's monetary premium is being eroded at the same time. Oil had been a monetary bubble which is now bursting.<br />
<br />
If you are Saudi Arabia or Iraq sitting on large reservoirs of easily extracted oi, your alternative to treating oil as a store of value, if you still don't trust the Western powers, is to pump even more and trade the proceeds for gold (and also pay off some foolishly acquired debts) -- which is what we now see happening. Thus, paradoxically (to those who analyze oil as no more than an industrial commodity) oil producing countries pump <i>more</i> oil despite much lower oil prices. They are selling oil from their "oil warehouse" below the sands of the Middle East in exchange for gold, which due to the fracking revolution has reasserted its superiority as a trust-minimized currency over oil. If "money is the bubble that doesn't pop", partial money, i.e. Mengerian intermediate commodities, create bubbles that sometimes do pop, as the desirability of various commodities for their monetary properties, especially their value as a store of value relatively immune from political interdiction, waxes and wanes.<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLrwQfO0iHuV_2xYauJDHVJwAE-B7N9zXQuGmQiBJDa9jbYAA-XonUgBJ7N_Yhs5llbJowhc7e0hFxobiVGg77i9NxNkBqxr9wVwGXfCcJsTEoBa6Yfwpv9vxcnImPhuKe5Y3j/s1600/RealCRBCommodityIndex.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="186" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLrwQfO0iHuV_2xYauJDHVJwAE-B7N9zXQuGmQiBJDa9jbYAA-XonUgBJ7N_Yhs5llbJowhc7e0hFxobiVGg77i9NxNkBqxr9wVwGXfCcJsTEoBa6Yfwpv9vxcnImPhuKe5Y3j/s320/RealCRBCommodityIndex.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
<i>As much good news as bad: the two Malthusian scares </i><br />
<i>sandwich an era when inflation-commodity prices fell by about the same </i><br />
<i>amount that they rose during the two scares combined. (And they have </i><br />
<i>fallen further since 2010). The explanation of "tight money" vs. "easy </i><br />
<i>money" is pertinent but oversimplified, as one would expect an </i><br />
<i>attempt to explain a theory in chart labels to be...</i></td></tr>
</tbody></table>
<br />
<b>Conclusion</b><br />
<br />
During the Bretton Woods era the U.S. dollar, pegged to gold at $35 an ounce, served the entire free world as a common and reliable standard of value. The transition from Bretton Woods to floating rates left the world with no common and reliable standard of value by which to guarantee future real returns on contracts or investments. As a result the most commonly traded commodities, and especially geopolitical commodities such as oil and phosphates, became Mengerian intermediate commodities, with a price premium as a store of value that waxed and waned with the weighted expected inflation among the world's various floating currencies. As a result, the prices of these commodities are much more volatile since 1970 than they were during the Bretton Woods era. Epochs of increasing inflation expectations have led to rapid, broad-based commodity price rises, where the market gives out false signals of scarcity, leading to Malthusian anxieties and panics that we face a future of diminishing natural resources. This in turn has fueled a major and sustainable growth in green ideology since the 1960s.<br />
<br />
It's no longer debatable that commodity supplies in general pose few limits to long-term industrial growth, nor, except in the special case of phosphates, any significant limits that cannot eventually be innovated past by substituting newer more abundant materials for scarcer older ones. To obtain all the commodities we have consumed in history has involved barely scratching he surface of one planet. Scratching out somewhat more each upcoming decade and century into the foreseeable future is, in terms of that supply, by and large sustainable. A far more debatable proposition is to how much environmental impacts will or should limit industrial growth -- for example, what is or should be our ability to continue pumping more carbon dioxide into the atmosphere? That is a debate this paper shall leave for another day.<br />
<br />
<br />Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com24tag:blogger.com,1999:blog-17908317.post-2022967303139444742015-10-08T13:40:00.000-07:002015-10-08T13:41:35.973-07:00Estimating and minimizing consumer worryThe process of selling in general, and web commerce in particular, is often described or charted as a funnel. Prospective customers are poured in at one end, and a fewer number of paying customers come out at the other. The other prospects spill out through other holes or over the side of the funnel and don't bring you any revenue. The fraction of customers left, converted from prospects to customers, is called the conversion rate. As prospects proceed from initial interest to final sale, from initial entry page to clicking the final "I Agree" button, more and more of them become discouraged by various worries which beset the consumer. They drop out. The remaining prospects, those who have not dropped off, have been converted into customers or into an audience for your advertisers.<br />
<br />
There are a variety of factors that cause drop-off, which vary from business to business. A common cause is forms. Simplifying forms often greatly increases conversion rates. For example, in one <a href="http://contentverve.com/lead-form-optimization-case-study/" target="_blank">study</a> cutting the number of lines on a form in half increase conversions by a third. As one web designer <a href="http://www.searchenginejournal.com/7-things-you-can-do-when-your-conversion-funnel-sucks/31150/" target="_blank">put it</a>: "[i]s every field you're asking the visitor to submit absolutely necessary? Can you trim the fat and make the process simpler?"<br />
<br />
Besides the sheer tediousness and time consumed in filling out forms,
rational consumers also worry about the potentials for privacy violation
and identity theft from the information most e-commerce sites currently
require them to divulge: physical and e-mail addresses, phone numbers
used for cross-site behavioral tracking, insecure credit card numbers,
and more. <br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi71G9pl5dDh2_EsKbZ2BNyDA4zc7zqsKQLl7lYIw_A0zFht9c_YYr6r2_vWd2iAr19nmj5XMWMctS3JntDs1JAMKreJ-wQsCNs5vbqMGPBR0Zw9PHbMkiSQXikRTKtgjB-uOr6/s1600/RF_Wallet2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi71G9pl5dDh2_EsKbZ2BNyDA4zc7zqsKQLl7lYIw_A0zFht9c_YYr6r2_vWd2iAr19nmj5XMWMctS3JntDs1JAMKreJ-wQsCNs5vbqMGPBR0Zw9PHbMkiSQXikRTKtgjB-uOr6/s1600/RF_Wallet2.jpg" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>The tinfoil-wallet crowd is now mainstream</i></td></tr>
</tbody></table>
<br />
Instances of regret that one has filled out a form, only to have one's<a href="https://twitter.com/anjiecast/status/607038893393772545" target="_blank"> trust violated </a>-- or <a href="https://twitter.com/csoghoian/status/607057306430242816" target="_blank">pride</a> among the sophisticated that they refused to fill out such a form -- are on the rise.<br />
<br />
The worst worry culprit is usually the step you most want your customers to complete -- paying you. "[T]he credit card form likely has the highest abandonment rate of any other part of the sign-up process." [<a href="http://petovera.com/17-examples-of-the-best-online-sales-funnels/" target="_blank">Source</a>].<br />
<br />
If you don't require payments, you are probably funding your service through advertisements. Those also cause worries. Ads typically distract and delay from the content users are after, provide a low quality of entertainment or information, and are too often offensive. And sophisticated users are worried about the tracking that tends to go with ads. Ad blocking <a href="http://www.economist.com/news/business/21653644-internet-users-are-increasingly-blocking-ads-including-their-mobiles-block-shock?fsrc=scn/tw/te/pe/ed/blockshock" target="_blank">grew</a> nearly tenfold between 2009 and 2014. <br />
<br />
Replacing ads and identity-based payments with payments that don't require identity, such as bitcoin, can greatly reduce these worries, lowering the barriers and hesitations that currently prevent consumers from paying for your service.<br />
<br />
But there remains a big worry that no payment system can reduce. Consumers worry about whether they are getting their money's worth -- the <a href="http://szabo.best.vwh.net/micropayments.html" target="_blank">mental transaction cost </a>problem (see also<a href="http://nakamotoinstitute.org/static/docs/micropayments-and-mental-transaction-costs.pdf" target="_blank"> this paper</a>). If e-commerce were as worry-free as some of it could be, your customers would neither have to fill out forms, nor be bothered by ads, nor have to worry about repeated charges for content or services of variable value. They would be able to just insert a few digital coins into your online vending machine and then not have to worry about losing your service for another year. Eliminate forms <i>and</i> eliminate repeated payments -- both are key to worry-minimized e-commerce.<br />
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Many bitcoin startups are making the grave mistake of replacing one set of worries with another. The ability of cryptocurrency systems to facilitate small payments tempts many companies to nickel-and-dime their customers with pay-per-click micropayments and other such excruciating schemes. Don't follow the many lemmings who have already jumped off that cliff. Stick to long-term subscriptions for content (or other services of variable value) and pay-per-unit for fungible units of consistent value (as in phone minutes). That way customers aren't saddled with having to constantly re-evaluate the amount and worthiness of recurring charges. The costs to your customers of having to finance a years' worth of low-cost subscription to a reputable brand is almost always far less than the mental transaction costs of recurring charges for content or services of variable value. The ideal worry-free commerce is to "stick the coin into the machine" once, and then never have to pay again for an entire year. A vending machine for subscriptions. Reduce your customers' worries across the board: eliminate forms <i>and</i> eliminate recurring charges.<br />
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Ideal worry-minimization can only be closely approached in some purely online forms of commerce, such as video streaming, remote storage, privacy services, and the like. The more physical and offline contract performances are -- a common example being physical delivery -- the more location, various kinds of identity (legal, social network, etc.) may need to come into play, adding, often greatly and necessarily, to the worry overhead, the mental transaction costs, of your relationship with your consumers.<br />
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I have previously called this worry-minimized commerce by a narrower label, "form-minimized commerce." The complexity of the forms you make your users fill is indicative of the worries you are causing them, and thus the barriers you are putting up between your prospects and their decisions to purchase your services.<br />
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When you are a consumer, the tediousness of the forms you are filling
out is not only a direct cost of your time, and your ability to enjoy
that time, it is on top of that a decent proxy measure of the odds of
your identity being stolen and of your privacy otherwise being violated.
The fewer forms you fill out, the more the tediousness, worries, and
risks in your life caused by interacting with the world's institutions
will drop in proportion.<br />
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While such a proxy measure does not account in particular for the wide variety of information that can be disclosed, nor that some kinds of information (social security numbers) are more risky to divulge than others (throw-away email addresses), nor for the wide variety of risks in identity theft and privacy violation that are consequent, nevertheless consumers necessarily must bring to bear such sweeping rules-of-thumb in order to satisfactorily navigate the bizarre complexities of the digital world. And when your users are using, whether consciously or implicitly, such estimates, you the service provider and the product designer must use them too.<br />
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Add to the forms your customers must fill out the repeated charges you make your customers make, and we get a rough proxy measure of the worry that you are causing your consumers:<br />
<blockquote class="tr_bq">
Index of worry = number of lines of forms + number of repeated charges for content or services of variable value</blockquote>
If you are funded through ads rather than consumer payments, you can substitute for the repeated charges the proportion of screen space covered by your ads, or any other reasonable estimate of the delay and distraction the ads on your pages cause.<br />
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The index of worry allows you to estimate and minimize the worries you are causing your users, and as a result to minimize the drop-off in your sales funnel and maximize the number of users coming back for more -- and willing to view your ads or pay for the privilege.<br />
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Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com10tag:blogger.com,1999:blog-17908317.post-62165067283829082502015-07-03T19:53:00.001-07:002015-07-04T09:48:34.724-07:00The Greek financial mess; and some ways Bitcoin might help<div class="separator" style="clear: both; text-align: center;">
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Many years of government debt buildup in Greece has ultimately resulted, in the last few days, in a political and financial maelstrom. The political maelstrom includes demonstrations in the run up to a referendum on obscure debt-restructuring provisions to be held this Sunday (July 5th). This article focuses on financial problems and some potential practical steps that can be taken to mitigate them. The imposition of capital controls is a disaster for a modern trade-driven economy, a catastrophe which however digital technology, and in particular the digital currency bitcoin (which given the Greek environment usually must involve direct use of the Bitcoin blockchain), has the potential to mitigate. This article will explore some of the severe practical problems that capital controls are causing Greek individuals and businesses, and suggest some potential bitcoin solutions, many of which could also be applied to other countries with some similar financial problems and controls such as Argentina and Venezuela. These aren't solutions that can be applied in time to help with the current 6 days of capital controls, but could substantially help some Greeks and some aspects of the Greek economy if some version of these controls is continued for months or years.<br />
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At root the Greek financial problem is that the Greek government has spent more, compared to the GDP generated by its economy, than the vast majority of other governments. It has borrowed copious sums to do so, falling ever deeper into debt. Here is its payment schedule:<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRs9AYt8Ngt7iToOFp-aZFS96pd5b6yT3tLFNsHoH36WV4lgfB24kpB4eQb-FKVXyR_TtvbREuErrFNqnBE7GSgzePZ0B1id9GQosu6d7GgdefrYME34p7glCeu67t-Pb5flyB/s1600/GreekCrisisDebtSchedule.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRs9AYt8Ngt7iToOFp-aZFS96pd5b6yT3tLFNsHoH36WV4lgfB24kpB4eQb-FKVXyR_TtvbREuErrFNqnBE7GSgzePZ0B1id9GQosu6d7GgdefrYME34p7glCeu67t-Pb5flyB/s640/GreekCrisisDebtSchedule.jpg" width="352" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>And you thought your student loan debt was bad</i></td></tr>
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The only place the Greek government has left to go for money to fund its ongoing expenditures and pay these debts is Greek banks. Fearing capital controls and "haircuts" (government confiscation of certain fractions of bank deposits), many Greeks in recent months have, quite rationally, started withdrawing money out of their banks and sending it overseas. More trusting Greeks kept their savings in their banks, with the result that, with the imposition of capital controls last Monday, they have been locked out of their savings, and plans for "haircuts" of 30% or more have been reported (If somebody lopped off 30% of your head, you’d have more than a haircut).<br />
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When capital controls were first rumored and then announced on Sunday, vast lines formed at ATMs as Greeks rushed to rescue what little of their life savings that they could:<br />
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<tr><td class="tr-caption" style="text-align: center;"><i>ATM line, Thessaloniki</i></td></tr>
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<tr><td class="tr-caption" style="text-align: center;"><i>ATM line, Larissa City</i></td><td class="tr-caption" style="text-align: center;"><br /></td><td class="tr-caption" style="text-align: center;"><br /></td><td class="tr-caption" style="text-align: center;"><br /></td><td class="tr-caption" style="text-align: center;"><br /></td></tr>
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On Tuesday, the Greek government defaulted on its scheduled debt payment to the International Monetary Fund (IMF).<br />
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Under capital controls, ATM withdrawals from Greek bank accounts are now limited to 60 euros a day. Debit cards can still be used for payments within the country, but the money simply gets transferred from one frozen bank account to another. As a result many businesses no longer accept debit cards, and many more are demanding a substantial premium price (in at least one business, double) for debit cards (transferred bank balances) versus hard cash. There is a growing shortage of such cash; as a result some stores are paying their suppliers in private "scrip", which can be used by the supplier's workers to purchase goods from the issuing store. (more on this below).<br />
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Use of credit and debit cards to pay out of the country is banned and effectively blocked, resulting in a near-complete freeze-out of Greeks from Internet commerce. This restriction, along with the controls resulting in Greeks being excluded from the pan-European money settlement system, means that Greek businesses can't pay for imports. Many shipments into the country have been halted as a result. (The government plan is to create a whitelist of politically approved cases in which such payments for imports will be unblocked).<br />
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A crucial feature of store-issued scrip is that it literally circulates through a complete closed cycle: store --> supplier --> workers --> store. Such specific cycles are a pattern that is commonly found when currencies are primitive or newly emerging, and every Bitcoin marketer and evangelist should be familiar with them. <br />
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<tr><td class="tr-caption" style="text-align: center;"><i>The <a href="http://szabo.best.vwh.net/kula.html" target="_blank">kula ring</a>, two specific cycles (counter-circulating cycles of shell money) allowing exchange of seasonal goods in the precolonial South Pacific</i></td></tr>
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It doesn’t help much to sell bitcoin to isolated individuals: as a mere store of value its volatility is much greater than most existing currencies; as an investment it only makes sense as a tiny high-risk fraction of one's portfolio. Bitcoin does have some political-affinity and status value in developed countries; by contrast in many developing countries and in countries under financial crisis such as Greece, there are urgent needs bitcoin potentially can address. In terms of these needs Bitcoin is mainly useful as a way to send money across borders for investment in more stable assets overseas, and to substitute for cash or other substitute currencies in a money-starved environment.<br />
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To have value as a medium of exchange, bitcoin must be taken up by a community of people who already frequently trade with each other, and who have a strong need to use it in these trades. It is especially important to market to the links in the cycle
that have the strongest negotiating leverage with the others (in the case of Greek the Greek store scrip cycle, the store
and its larger suppliers). The link in the cycle with the greatest incentives to switch to bitcoin here are likely the store's suppliers, because they don’t fully trust the store, nor the
underlying currency, euro or post-euro, that is the “O” in an IOU, but
are participating in the scrip because, sans bitcoin, they have no other
choice.<br />
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In bitcoin specific cycles create other cost savings. Almost everywhere they economize on the increasingly high KYC/AML (know your customer/anti-money-laundering) costs of going through a fiat-bitcoin exchange. What's more, in a capital controls environment like Greece specific cycles avoid the capital controls that would be imposed on a Greek-based fiat-bitcoin exchange, and avoid the need nearly all Greek customers using out-of-country exchanges would have to futilely try to tap into their frozen bank accounts in order to purchase bitcoin. Bitcoin will not, contrary to some feverish news reporting, help Greeks get money out of their frozen bank accounts.<br />
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But bitcoin does have great potential to help in less obvious ways: for one thing, as a superior (not vulnerable to trust in an issuing store, and in any currency underlying an IOU) substitute for the emerging store scrips. For another, it could help greatly with the severe cross-border commerce issues that are emerging. Exporters, including freelancers working over the Internet, can bring bitcoin into the country, thereby avoiding earning wages that get deposited to frozen bank accounts (per Greek lore, be wary of a cave with many tracks coming in but few coming out). Importers can pay for goods with bitcoin while other electronic payment channels (European money settlements, Paypal, and credit & debit cards when paying foreign businesses, etc.) remain frozen. Again specific cycles must be set up: isolated marketing to just exporters or importers will be far less effective than organizing existing supply chains that involve both.<br />
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There are likely many other, mostly highly non-obvious, niches in which bitcoin, and other cryptocurrencies, and smart contract platforms could play a quite valuable role in capital-controlled and other financially handicapped countries.<br />
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Bitcoin is not easy to learn, either conceptually or in setting up businesses and individuals with the software (and preferably also the secure hardware) to accept it. This is especially the case in a capital controls climate where the traditional bitcoin exchanges and retail payment companies, with their consumer-friendly front ends, as they normally operate in developed countries, likely can't effectively operate. To take advantage of bitcoin many Greeks will have to use the Bitcoin blockchain directly. So it's too late for bitcoin to help much with the current 6 days of bank closure, but once the learning curves have been surmounted, the participants in specific cycles educated, bitcoin has great potential to address likely many ongoing problems with capital control, in Greece as long as they continue in various forms, and in many other parts of the world where such financial restrictions designed for a pre-digital era have been imposed.<br />
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[Update: various minor edits: the first version was rather rough, sorry :-)] Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com23tag:blogger.com,1999:blog-17908317.post-64776237002171946292015-05-25T21:36:00.003-07:002015-05-25T21:40:36.294-07:00Small-game fallaciesA small-game fallacy occurs when game theorists, economists, or others trying to apply game-theoretic or microeconomic techniques to real-world problems, posit a simple, and thus cognizable, interaction, under a very limited and precise set of rules, whereas real-world analogous situations take place within longer-term and vastly more complicated games with many more players: "the games of life". Interactions between small games and large games infect most works of game theory, and much of microeconomics, often rendering such analyses useless or worse than useless as a guide for how the "players" will behave in real circumstances. These fallacies tend to be particularly egregious when "economic imperialists" try to apply the techniques of economics to domains beyond the traditional efficient-markets domain of economics, attempting to bring economic theory to bear to describe law, politics, security protocols, or a wide variety of other institutions that behave very differently from efficient markets. However as we shall see, small-game fallacies can sometimes arise even in the analysis of some very market-like institutions, such as "prediction markets."<br />
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Most studies in experimental economics suffer from small-game/large-game effects. Unless these experiments are very securely anonymized, in a way the players actually trust, and in a way the players have learned to adapt to, overriding their moral instincts -- an extremely rare circumstance, despite many efforts to achieve this -- large-game effects quickly creep in, rendering the results often very misleading, sometimes practically the opposite of the actual behavior of people in analogous real-life situations. A common example: it may be narrowly rational and in accord with theory to "cheat", "betray", or otherwise play a narrowly selfish game, but if the players may be interacting with each other after the experimenters' game is over, the perceived or actual reputational effects in the larger "games of life", ongoing between the players in subsequent weeks or years, may easily exceed the meager rewards doled out by the experimenters to act selfishly in the small game. Even if the players can somehow be convinced that they will remain complete strangers to each other indefinitely into the future, our moral instincts generally evolved to play larger "games of life", not one-off games, nor anonymous games, nor games with pseudonyms of strictly limited duration, with the result that behaving according to theory must be learned: our default behavior is very different. (This explains, why, for example, economics students typically play in a more narrowly self-interested way, i.e. more according to the simple theories of economics, than other kinds of students).<br />
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Small-game/large-game effects are not limited to reputational incentives to play nicer: moral instincts and motivations learned in larger games also include tribal unity against perceived opponents, revenge, implied or actual threats of future coercion, and other effects causing much behavior to be worse than selfish, and these too can spill over between the larger and smaller games (when, for example, teams from rival schools or nations are pitted against each other in economic experiments). Moral instincts, though quite real, should not be construed as necessarily or even usually being actually morally superior to various kinds of learned morals, whether learned in economics class or in the schools of religion or philosophy.<br />
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Small-game/large-game problems can also occur in auditing, when audits look at a particular system and fail to take into account interactions that can occur outside their system of financial controls, rendering the net interactions very different from what simply auditing the particular system would suggest. A common fraud is for trades to be made outside the scope of the audit, "off the books", rendering the books themselves very misleading as to the overall net state of affairs.<br />
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Similarly, small-game/large-game problems often arise when software or security architects focus on an economics methodology, focusing on the interactions occurring within the defined architecture and failing to properly take into account (often because it is prohibitively difficult to do so) the wide variety of possible acts occurring outside the system and the resulting changes, often radical, to incentives within the system. For example, the incentive compatibility of certain interactions within an architecture can quickly disappear or reverse when opposite trades can be made outside the system (such as hedging or even more-than-offsetting a position that by itself would otherwise create a very different incentive within the system), or when larger political or otherwise coercive motivations and threats occur outside the analyzed incentive system, changing the incentives of players acting within the system in unpredictable ways. Security protocols always consist of at least two layers: a "dry layer" that can be analyzed by the objective mathematics of computer science, and a "wet layer" that consists of the often unpredictable net large-game motivations of the protocols' users. These should not be confused, nor should the false precision of mathematical economic theories be confused with the objective accuracy of computer science theories, which are based on the mathematics of computer architecture and algorithms and hold regardless of users' incentives and motivations.<br />
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A related error is the pure-information fallacy: treating an economic institution purely as an information system, accounting only for market-proximate incentives to contribute information via trading decisions, while neglecting how that market necessarily also changes players' incentives to act outside of that market. For example, a currently popular view of proposition bets, the "prediction markets" view, often treats prop bets or idea futures as purely information-distribution mechanisms, with the only incentives supposed as the benign incentive to profit by adding useful information to the market. This fails to take into account the incentives such markets create to act differently <i>outside</i> the market. A "prediction market" is always also one that changes incentives outside that market: a prediction market automatically creates parallel incentives to bring about the predicted event. For example a prediction market on a certain person's death is also an assassination market. Which is why a pre-Gulf-War-II DARPA-sponsored experimental "prediction market" included a prop bet on Saddam Hussein's death, but excluded such trading on any other, more politically correct world leaders. A sufficiently large market predicting an individual's death is also, necessarily, an assassination market, and similarly other "prediction" markets are also <i>act </i>markets, changing incentives to act outside that market to bring about the predicted events.Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com15tag:blogger.com,1999:blog-17908317.post-43196562701648144572014-12-11T10:16:00.001-08:002014-12-11T11:28:26.977-08:00The dawn of trustworthy computingWhen we currently use a smart phone or a laptop on a cell network or the Internet, the other end of these interactions typically run on other solo computers, such as web servers. Practically all of these machines have architectures that were designed to be controlled by a single person or a hierarchy of people who know and trust each other. From the point of view of a remote web or app user, these architectures are based on full trust in an unknown "root" administrator, who can control everything that happens on the server: they can read, alter, delete, or block any data on that computer at will. Even data sent encrypted over a network is eventually unencrypted and ends up on a computer controlled in this total way. With current web services we are fully trusting, in other words we are fully vulnerable to, the computer, or more specifically the people who have access to that computer, both insiders and hackers, to faithfully execute our orders, secure our payments, and so on. If somebody on the other end wants to ignore or falsify what you've instructed the web server to do, no strong security is stopping them, only fallible and expensive human institutions which often stop at national borders. <br />
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The high vulnerability we have to web servers stands in sharp contrast to traditional commercial protocols, such as ticket-selling at a movie theater, that distribute a transaction so that no employee can steal money or resources undetected. There is no "root administrator" at a movie theater who can pocket your cash undetected. Because, unlike a web server, these traditional protocols, called financial controls, can securely handle cash, you didn't have to fill out a form to see a movie, shop for groceries, or conduct most other kinds of every-day commerce. You just plunked down some coin and took your stuff or your seat. Imperfect and slow as these processes often are (or were), these analog or paper-based institutions often provided security, financial control, and/or verifiability of fiduciary transactions in many ways far superior to what is possible on web servers, at much less hassle and privacy loss to customers. On the Internet, instead of securely and reliably handing over cash and getting our goods or services, or at least a ticket, we have to fill out forms and make ourselves vulnerable to identity theft in order to participate in e-commerce, and it often is very difficult to prohibitive to conduct many kinds of commerce, even purely online kinds, across borders and other trust boundaries. Today's computers are not very trustworthy, but they are so astronomically faster than humans at so many important tasks that we use them heavily anyway. We reap the tremendous benefits of computers and public networks at large costs of identity fraud and other increasingly disastrous attacks.<br />
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Recently developed and developing technology, often called "the block chain", is starting to change this. A block chain computer is a virtual computer, a computer in the cloud, shared across many traditional computers and protected by cryptography and consensus technology. A Turing-complete block chain with large state gives us this shared computer. Earlier efforts included state-machine replication (see list of papers linked below). QuixCoin is a recent and Ethereum is a current project that has implemented such a scheme. These block chain computers will allow us to put the most crucial parts of our online protocols on a far more reliable and secure footing, and make possible fiduciary interactions that we previously dared not do on a global network <br />
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Much as pocket calculators pioneered an early era of limited personal computing before the dawn of the general-purpose personal computer, Bitcoin has pioneered the field of trustworthy computing with a partial block chain computer. Bitcoin has implemented a currency in which someone in Zimbabwe can pay somebody in Albania without any dependence on local institutions, and can do a number of other interesting trust-minimized operations, including multiple signature authority. But the limits of Bitcoin's language and its tiny memory mean it can't be used for most other fiduciary applications, the most obvious example being risk pools that share collateral across a pool of financial instruments.<br />
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A block-chain computer, in sharp contrast to a web server, is shared across many such traditional computers controlled by dozens to thousands of people. By its very design each computer checks each other's work, and thus a block chain computer reliably and securely executes our instructions up to the security limits of block chain technology, which is known formally as anonymous and probabilistic Byzantine consensus (sometimes also called Nakamoto consensus). The most famous security limit is the much-discussed "51% attack". We won't discuss this limit the underlying technology further here, other than saying that the oft-used word "trustless" is exaggerated shorthand for the more accurate mouthful "trust-minimized", which I will use here. "Trust" used in this context means the need to trust remote strangers, and thus be vulnerable to them. <br />
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Trust-minimized code means you can trust the code without trusting the owners of any particular remote computer. A smart phone user in Albania can use the block chain to interact with a computer controlled by somebody in Zimbabwe, and they don't have to know or trust each other in any way, nor do they need to depend on the institutions of either's countries, for the underlying block chain computer to run its code securely and reliably. Regardless of where any of the computers or their owners are, the block chain computer they share will execute as reliably and securely as consensus technology allows, up to the aforementioned limits. This is an extremely high level of reliability, and a very high level of security, compared to web server technology. <br />
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Instead of the cashier and ticket-ripper of the movie theater, the block chain consists of thousands of computers that can process digital tickets, money, and many other fiduciary objects in digital form. Think of thousands of robots wearing green eye shades, all checking each other's accounting. Individually the robots (or their owners) are not very trustworthy, but collectively, coordinated by mathematics, they produce results of high reliability and security.<br />
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Often block chain proponents talk about the "decentralized" block chain versus the "centralized" web or centralized institutions. It's actually the protocol (Nakamoto consensus, which is highly distributed) combined with strong cryptography, rather than just decentralization <i>per se</i>, that is the source of the far higher reliability and and much lower vulnerability of block chains. The cryptography provides an unforgeable chain of evidence for all transactions and other data uploaded to the block chain. Many other decentralized or peer-to-peer (P2P) technologies do not provide anything close to the security and reliability provided by a block chain protected by full Byzantine or Nakamoto consensus and cryptographic hash chains, but deceptively style themselves as block chains or cryptocurrency.<br />
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A big drawback is that our online and distributed block chain computer is much slower and more costly than a web server: by one very rough estimate, about 10,000 times slower and more costly, or about the same as it cost to run a program on a normal computer in 1985. For this reason, we only run on the block chain that portion of an application that needs to be the most reliable and secure: what I call fiduciary code. Since the costs of human ("wet") problems caused by the unreliability and insecurity of web servers running fiduciary code are often far higher than the extra hardware needed to run block chain code, when web server reliability and security falls short, as it often does for fiduciary computations such as payments and financial contracts, it will often make more sense to run that code on the block chain than to run it less reliably and securely on a web server. Even better, the block chain makes possible new fiduciary-intensive applications, such as posting raw money itself to the Internet, securely and reliably accessible anywhere on the globe - apps that we would never dare do with a web server.<br />
<br />
What kinds of fiduciary code can we run? We are still thinking up new applications and the categories will be in flux, but a very productive approach is to think of fiduciary applications by analogy to traditional legal code that governs traditional fiduciary institutions. Fiduciary code will often execute some of the functions traditionally thought of as the role of commercial law or security, but with software that securely and reliably spans the global regardless of traditional jurisdiction. Thus:<br />
<br />
* Property titles (registered assets), where the on-chain registry is either the legally official registry for off-chain assets or controls on-chain ones, thus providing reliable and secure custody of them. One can think of a cryptocurrency such as Bitcoin as property titles (or at least custody enforced by the block chain consensus protocol) to bits recognized as being a fixed portion of a currency, or as controlling unforgeably costly bits, or both. Block chains could also control hardware which controls the function of and access to physical property.<br />
<br />
* Smart contracts: here users (typically two of them) agree via user interface to execute block chain code, which may include transfer of money and other chain-titled assets at various times or under various conditions, transfer and verification of other kinds of information, and other combinations of wet or traditional (off-chain) and dry (on-chain) performance. A block chain can hold cryptocurrency as collateral (like an escrow) which incentivizes off-chain performance that can be verified on-chain, by the parties or by third parties. A full block chain computer can pool on-chain assets into a single chain-controlled risk pool spread among many similar financial contracts, reducing the amount of collateral that needs to be stored on-chain while minimizing the need for off-chain collateral calls. The block chain can also make the search, negotiation, and verification phases of contracting more reliable and secure. With on-chain smart contracts we will be able to buy and sell many online services and financial instruments by button and slider instead of by laboriously filling out forms that disclose our private information.<br />
<br />
* On-chain treasuries, trusts, and similar, where money lives on the block chain and is controlled by multiple signature ("multisig") authority. Putting a treasury with signature authority on a block chain computer is low-hanging fruit, but is often tied to more speculative efforts under the label "distributed autonomous organization (DAO)", which may include voting shares and other mechanisms to control the treasury like a corporation or other kind of of organization.<br />
<br />
I hope to discuss these block chain applications, especially smart contracts, in future posts. While there is much futurism in many block chain discussions, including many trying to solve problems that aren't actually solved by the block chain, I will generally stick to low-hanging fruit that could be usefully implemented on Quixcoin, Ethereum, or similar technology in the near future, often interfacing to still necessary parts of traditional protocols and institutions rather than trying to reinvent and replace them in whole.<br />
<br />
<h3>
References </h3>
<a href="http://bitstein.org/blog/nick-szabo-the-computer-science-of-crypto-currency/">Here</a> is a list of basic computer science papers describing the technology of block chains (including cryptocurrencies).<br />
<br />
<a href="http://unenumerated.blogspot.com/2006/11/wet-code-and-dry.html">Wet vs. dry code</a>Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com26tag:blogger.com,1999:blog-17908317.post-65150387812714002932014-10-16T14:00:00.002-07:002014-10-16T14:57:06.651-07:00Transportation, divergence, and the industrial revolutionAfter about 1000 AD northwestern Europe started a gradual switch from using oxen to using horses for farm traction and transportation. This trend culminated in an <a href="http://unenumerated.blogspot.com/2011/06/trotting-ahead-of-malthus.html" target="_blank">eighteenth-century explosion</a> in roads carrying horse-drawn carriages and wagons, as well as in canals, and works greatly extending the navigability of rivers, both carrying horse-drawn barges. This reflected a great rise in the use of cultivated fodder, a hallmark of the novel agricultural system that was evolving in northwestern Europe from the start of the second millennium: <a href="http://unenumerated.blogspot.com/2011/05/lactase-persistence-and-quasi.html" target="_blank">stationary pastoralism</a>. During the same period, and especially in the seventeenth through nineteenth centuries, most of civilized East Asia, and in particular Chinese civilization along its coast, navigable rivers, and canals, faced increasing Malthusian pressures and evolved in the opposite direction: from oxen towards far more costly and limited human porters. Through the early middle ages China had been far ahead, in terms of division of labor and technology, of the roving bandits of northern Europe, but after the latter region's transition to stationary pastoralism that gap closed and Europe surged ahead, a <a href="http://unenumerated.blogspot.com/2013/11/european-asian-divergence-predates.html" target="_blank">growth divergence</a> that culminated in the industrial revolution. In the eighteenth century Europe, and thus in the early industrial revolution, muscle power was the engine of land transportation, and hay was its gasoline. <br />
<br />
<a href="http://en.wikipedia.org/wiki/Metcalfe%27s_law" target="_blank">Metcalfe's Law</a> states that a value of a network is proportional to the square of the number of its nodes. In an area where good soils, mines, and forests are randomly distributed, the number of nodes valuable to an industrial economy is proportional to the area encompassed. The number of such nodes that can be economically accessed is an inverse square of the cost per mile of
transportation. Combine this with Metcalfe's Law and we reach a
dramatic but solid mathematical conclusion: the potential value of a land transportation network is the inverse fourth power of the cost of that transportation. A reduction in transportation costs in a trade network by a factor of two increases the potential value of that network by a factor of sixteen. While a power of exactly 4.0 will usually be too high, due to redundancies, this does show how the cost of transportation can have a radical nonlinear impact on the value of the trade networks it enables. This formalizes Adam Smith's observations: the division of labor (and thus value of an economy) increases with the extent of the market, and the extent of the market is heavily influenced by transportation costs (as he extensively discussed in his <i>Wealth of Nations</i>).<br />
<br />
The early industrial revolution was highly dependent on bringing together bulk goods such as coal and iron ore. Land transportation of such materials more than a dozen miles in most parts of the world was prohibitively costly, and they were only rarely located a shorter distance from navigable water (the costs per mile of water transport were generally orders of magnitude cheaper than the costs per mile of of land transport). As a result, the early industrial revolution, and the potential for a region to be the first to industrialize, was very sensitive to small changes in land transportation costs.<br />
<br />
Furthermore, land and sea-borne transportation were far more complements than substitutes. Cheaper land transportation was a "force multiplier" for water transportation. Decreasing the costs of getting to port from field or mine by a factor of two increased the number of fields and mines accessible by a factor of four, and increased the number of possible ways to divide labor, and thus the value, by an even greater factor via Metcalfe's law. This in turn incentived greater investment in sea-borne transport. It's thus not surprising that, even before the industrial revolution, the leaders in global trade and colonization were European countries that could access the Atlantic.<br />
<br />
By the dawn of the industrial revolution in northwest Europe the effects of horse haulage had already been dramatic: drop by a factor of two in the costs, and increase in speed by about the same factor, of transporting goods by land, the corresponding increase in commercial crop area and in area that could be economically lumbered and coal and metals that could be mined. Multiply that factor of four by much more when we factor in (1) innovations in wheels, tires, shock absorption, and road building that followed on the heels, as is were, of the great increase in horse haulage, and (2) the great increase in mileage and inland penetration of navigable rivers and canals, especially in the 18th century, the barges again hauled by horses. And as Metcalfe's Law suggests, the number of combinations, and thus the value, increased by a far greater factor still. Not only did northwestern European ports have access to far more land, but there were far more ports far more "inland" along rivers and canals, thanks again chiefly to the draft horses and the nutrient-rich cultivated fodder that fed them.<br />
<br />
To enable the industrial revolution, mines and nutrient-dense fodder had to be colocated within efficient bulk transport distance of each other — which in the case of horses hauling coal or wood by rural road, was typically less than twenty miles, and for oxen and human porters far less still — to produce the low-cost bulk transportation networks needed to make industrial revolution scale use of most commercial crops and mines. Efficient bulk transportation is needed _all the way_ between the iron mine, the coal mine, and the smelter. Because the cost per mile of water transport was so much smaller than the costs of land transport, this “last few miles to the mine” problem usually played a dominant role in transportation economics, somewhat analogous to the “last mile” problem in modern cable networks. That’s why stationary pastoralism with its efficient markets for nutrient-dense (because cultivated) fodder was such a huge win — it allowed horses to be housed at the mines, canals, roads, and factories where they worked, which no place in the world outside Europe could during that era do. Nutrient-dense fodder created a virtuous recursion, enabling itself to be harvested (via horse-drawn mows and rakes) and transported to mine, factory, and stable at increasingly lower costs.<br />
<br />
Industrialization came in many phases. Very roughly speaking, the first phase, in the latter half of the eighteenth century, involved the culmination and optimization of the use of horses, by northwestern Europe, and especially England, greatly expanding its horse wagon and carriage roads and horse-drawn barge canal networks. Horses brought coke or charcoal and iron ore to the smelters. Horse-powered capstans performed some arduous farm tasks such as threshing. Along with primitive Newcomen steam engines they pumped coal mines. Horse gins also powered most of the early versions of innovative textile machinery (they switched to more power-efficient water mills when they later scaled up). That classic carnival ride, the merry-go-round, was inspired by these perpetually circling horses.<br />
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Again roughly speaking, the second phase of industrial growth, after about 1830, was more scientific and far easier to copy than northwestern Europe's unique biology: steam engines came to replace horse gins and water mills for running industrial machinery, and the steam-powered railroad radically lowered transportation costs between major mines, factories, and urban centers. When non-European countries industrialized, such as Japan after the 1870s, they did it in a "leap-frog" style: they skipped over the long-evolved improvement in draft animals and went straight to mature steam engines and, soon thereafter, electrical motors. Much as countries installing phone networks for the first time over the last few decades have leap-frogged over the land line era, going straight to cell phones. Starting early in the 20th century industrializing countries could replace all the remaining important functions of the horse with internal combustion engines. England, which made the longest and most thorough use of the horse, and thereby had the transportation economies allowing it to pioneer the industrial revolution, had a less pressing need to use the internal combustion engine and thus lagged enough in that technology so that second-generation industrializers like Japan, Germany, and the United States became leaders in internal combustion engine products.<br />
<br />
Given the scientific nature of the second phase of the industrial revolution, which could be discovered by any culture full of <a href="http://szabo.best.vwh.net/bookconsciousness.html" target="_blank">literate craftsmen</a>, this second phase was more technologically inevitable and didn't ultimately depend on northwestern Europe's unique biology. At the same time, during the long evolution that culminate in the industrial revolution, and during its first phase, land transportation the world over was muscle powered and the unique system of stationary pastoralism, by breeding draft horses that ran on cultivated, nutrient-dense fodder, substantially lowered transportation costs. This allowed the value of northwestern Europe's bulk transportation networks to radically increase and made it very nearly as inevitable that that region would be the pioneers of the industrial revolution.<br />
<br />
Hat tips and references: Edward Wright and Raymond Crotty among many other authors have explored some of these issues.<br />
<div id="stcpDiv" style="left: -1988px; position: absolute; top: -1999px;">
Raymond Crotty</div>
<div id="stcpDiv" style="left: -1988px; position: absolute; top: -1999px;">
Raymond Crottyamong many other authors have explored some of the issues.</div>
Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com10tag:blogger.com,1999:blog-17908317.post-14095901252988191622014-07-02T20:26:00.001-07:002014-07-02T20:26:47.255-07:00Tweetinghttps://twitter.com/NickSzabo4Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com1tag:blogger.com,1999:blog-17908317.post-31566154380186603012013-11-18T19:17:00.000-08:002013-11-18T19:21:20.479-08:00European-Asian divergence predates the industrial revolution<b style="-webkit-text-stroke-width: 0px; background-color: #fafafa; background-position: initial initial; background-repeat: initial initial; border: 0px; color: black; font-family: Arial, Verdana, Arial, Helvetica, sans-serif; font-size: 14px; font-style: normal; font-variant: normal; letter-spacing: normal; line-height: 21.265625px; margin: 0px; orphans: auto; padding: 0px; text-align: start; text-indent: 0px; text-transform: none; vertical-align: baseline; white-space: normal; widows: auto; word-spacing: 0px;"></b>Stephen Broadberry describes new <a href="http://www.voxeu.org/article/accounting-great-divergence" target="_blank">estimates</a> of per capita GDP which say that the economic divergence between Western Europe and other civilized parts of the world predates the industrial revolution. (H/T <a href="http://marginalrevolution.com/marginalrevolution/2013/11/assorted-links-974.html" target="_blank">Marginal Revolution</a>). This is more consistent with my own theories (linked below) than the idea that the Great Divergence magically appears from nowhere around the year 1800. Nevertheless I feel compelled to point out shortcomings in these kinds of estimates, on any side of such debates.<br />
<br />
There are the usual correctable, but sadly seldom corrected, problems with datasets comparing European economies over historical periods, for example using "Holland", and leaving out, presumably not only the rest of the modern Netherlands, but the entire area of the exceptional Low Country late medieval industry and wealth (Flanders, Brabant, Hainault, etc.), most of which migrated (along with most of the skilled craftsmen and merchants) to the Netherlands during the 16th century wars there. The southern Low Countries, until those wars, were the leading centers of European textile manufacture and probably also had the most labor-productive agriculture.<br />
<br />
Worse are these and all other attempts to compared historical European "wealth" or "income" to those of non-European cultures before the era of cheap global precious metals flows (initiated by <a href="http://unenumerated.blogspot.com/2012/10/dead-reckoning-and-exploration-explosion.html" target="_blank">the exploration explosion</a>) allows comparison of prices. How do you compare the “wealth” or “income” of rice-eating and cotton-wearing Chinese farmer to a milk-drinking, oat-eating, and wool-clad Scottish peasant? It it is neither very useful nor very reliable to try to reduce such cultural and even genetic differences to mere numerical estimates.<br />
<br />
So it's no surprise to see such conjectural and subjective estimates subject to major revisions, and I'm sure we'll see many more such revisions, in both directions, in the future. That said, many of the economically important innovations in northwestern Europe long predate not only the industrial revolution, but also the Black Death (Broadberry's new date for the start of the Great Divergence), including the following biological bundle:<br />
<br />
(1) heavy dairying<br />
<br />
(2) Co-evolution of human lactase persistence and cow milk proteins<br />
<br />
(2) <a href="https://en.wikipedia.org/wiki/Hajnal_line" target="_blank">delayed marriage</a><br />
<br />
(3) hay<br />
<br />
(4) greater use of draft animals<br />
<br />
<br />
<a href="http://upload.wikimedia.org/wikipedia/commons/0/0d/ShireDraftHorse.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="213" src="http://upload.wikimedia.org/wikipedia/commons/0/0d/ShireDraftHorse.jpg" width="320" /></a>These innovations all long predate the <a href="http://unenumerated.blogspot.com/2011/06/agricultural-consequences-of-black.html" target="_blank">Black Death</a>, except that thereafter this biological divergence, especially in the <a href="http://unenumerated.blogspot.com/2011/06/trotting-ahead-of-malthus.html" target="_blank">use of draft animals, accelerated</a>. After a brief interruption the <a href="http://unenumerated.blogspot.com/2011/05/lactase-persistence-and-quasi.html" target="_blank">lactase persistent core</a> resumed its thousand-year conversion of draft power from humans and oxen to horses, including super-horses bred to benefit from good fodder crops -- the <a href="http://en.wikipedia.org/wiki/Shire_horse" target="_blank">Shire Horse</a>, <a href="http://en.wikipedia.org/wiki/Percheron" target="_blank">Percheron,</a> <a href="http://.wikipedia.org/wiki/Belgian_horse" target="_blank">Belgian</a>, etc., and of course the famous <a href="http://en.wikipedia.org/wiki/Clydesdale_(horse)" target="_blank">Clydesdale</a> of the beer ads. Draft horses figured prominently in the great expansion of the English coal mines from the 14th to 18th centuries. They both pumped the mines and transported the coal to navigable water. Due to lack of horsepower for pumping and transport, the Chinese use of coal, though already well established by the 13th century visit of Marco Polo, where both mine and consumer were within short human-porter distance to navigable water, failed to grow beyond that limit until the coming of the railroad. Similarly draft horses, alongside the more famous water-mills, played a key role in the early (pre-steam) exponential growth of the English textile industry, the economically dominant feature of the early industrial revolution.<br />
<br />
Greater use of draft animals led to higher labor productivity and larger markets for agricultural output, and thus to greater agricultural specialization. Higher labor productivity implies higher per capita income, even if it can’t be measured. For civilizations outside Western Europe by contrast, much less use was made of draft animals with the result that these effects were confined to within a dozen or less miles of navigable water.<br />
<br />
Contrariwise, northern Europe has always been at a severe ecological disadvantage to warmer climates when it comes to growing rice, cotton, sugar, and most other economically important crops. However these seem not to have had an anti-Malthusian effect in increasing labor productivity -- the increased efficiency of rice in converting solar power to consumable calories, for example, simply led to a greater population rather than a sustained increase in per capita income.Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com6tag:blogger.com,1999:blog-17908317.post-18666385871081438132013-08-04T18:50:00.000-07:002013-08-04T19:19:29.871-07:00Political relationshipsIn most political theories and ideologies, there is a preposterous oversimplification about what kinds of political relationships are desirable, common, or even possible. Given the <a href="http://unenumerated.blogspot.com/2006/02/irreducible-complexity-of-society.html" target="_blank">irreduceable complexity of society</a>, any summary of real-world political relationships is by necessity going to be greatly oversimplified, but most such movements neglect even very broad and common kinds of political relationships. So herein, based on my extensive study of the legal relationships between political players that have existed in a very wide variety of polities, is a classification scheme:<br />
<br />
Let's define a "polity" as any entity with some coercive powers. Polities can range in scale from the United Nations to the jail cell at the back of your local shopping mall. By studying polities over many years, and borrowing from previous work on law and political science, I have identified three basic kinds of legal relationships between polities. The basic legal structure, or constitution, of a polity can also be characterized by how much and in what ways it is composed of each kind of relationship. The three basic kinds of political relationships are:<br />
<br />
(1) Delegation: This includes any kind of delegation from a principal to an agent. The principal authorizes the agent to act for him, e.g. by making a contract or treaty with a third party to which the principal will be bound. A principal can be a boss, a contractee, or voter; the corresponding agents being employee, contractor, or representative. We can characterize principal/agent relationships by <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1156482" target="_blank">representation distance</a>, with each extreme common:<br />
<br />
(A) at a very short representation distance is the master/servant (in modern parlance, employer/employee) relationship. The master gives orders to the servant who is delegated to carry them out and closely supervised. A military dictatorship, for example the Roman Empire, is or was dominated by commander-subordinate relationships. In such a system, to paraphrase the legal code compiled for the Emperor Justinian, the emperor's will is law. <br />
<br />
(B) at the other extreme, an extremely long representation distance, is the relationship between millions of voters and the representatives they vote for in most modern governments. Voters do not give orders, but rather are treated as having delegated most their coercive powers to their representatives. Representatives in modern governments usually further delegate political and legal power to unelected bureaucracies themselves dominated by type A (boss/employee) relationships.<br />
<br />
(2) Subsidiarity: for example the relationship in the United States between counties and states, or between the states and the federal government. Often these combine supremacy clauses (when in conflict the law of the encompassing jurisdiction trumps that of its subsidiaries) with typically enumerated powers (the subject matters of the encompassing power is typically limited relative to that of the subsidiary). We can characterize subsidiarity relationships by how much and what kinds of coercive power can be exercised by the encompassing jurisdiction.<br />
<br />
In medieval England, the subject matter of the encompassing jurisdiction was very small, the Crown essentially having jurisdiction only regarding procedural laws for interactions between subsidiarity jurisdictions (which like the encompassing Crown were held as property by individuals or corporations), as well as some war-making powers. Substantive law was almost entirely in the hands of the encompassed jurisdictions, including the specialized merchant courts as peers enforced an international standard of business law, the <i>lex mercatoria</i>.<br />
<br />
By contrast in the modern U.S., the substantive legal jurisdiction of the encompassing power has become vast in scope. Nevertheless one can still find many examples of fine-grained subsidiarity, down to "stand your ground" laws, citizen's arrest, and those shopping mall jail cells.<br />
<br />
In property law (which once was also procedural law and essential to defining political relationships), the landlord/tenant relationship is a subsidiarity relationship. The landlord is generally not the master of the tenant, and cannot issue the tenant arbitrary commands, but rather their relationship is governed on both sides by the constraints imposed by the tenancy.<br />
<br />
(3) Peer-to-peer: these include any agreements made between polities where neither is a subsidiary of the other, or a standard law arrived at in parallel, either through parallel development of precedent (as in the <i><a href="http://szabo.best.vwh.net/lex.html" target="_blank">lex mercatoria</a></i> and many other bodies of law) or codification of a standard law (e.g. the Uniform Commercial Code, which is not federal or national law, but a standard set of laws separately enacted by 50 separate jurisdictions, the states of the United States, as peers). Peer-to-peer relationships most commonly involve maintaining distinct sets of laws adapted to local conditions along with agreements or mutually evolved practices for resolving conflicts of laws. Conflict-of-laws law itself was primarily developed through parallel development of judicial precedent, through courts respecting each other in order to maintain their reputations for enforcing the rule of law. On a larger scale wars and treaties between nations are peer-to-peer relationships. In medieval Italy, a wide variety city-states that were often at war with each other nevertheless also developed through this process most of the body of modern conflict-of-laws law.<br />
<br />
Since political theory developed in universities out of the study of Roman imperial law, it has been dominated by imputing to polities only one of the above kinds of relationships -- namely master/servant or commander/subordinate relationships, or at best delegation in general. This is especially apparent in the quixotic search for a "locus of sovereignty", a search that typically amounts to conspiracy theory in search of a hidden commander-of-all when in fact far more sophisticated combinations of the above kinds of relationships are at play.<br />
<br />
For further reading:<br />
<a href="http://en.wikipedia.org/wiki/Conflict_of_laws" target="_blank">Conflict-of-laws law</a><br />
<a href="http://unenumerated.blogspot.com/2010/02/basics-procedural-vs-substantive-law.html" target="_blank">Substantive vs. procedural law</a><br />
<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=936314" target="_blank">Jurisdiction as property</a> (subsidiarity and peer-to-peer relationships via property law)<br />
<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1156482" target="_blank">Representation distance</a><br />
<a href="http://unenumerated.blogspot.com/2006/09/semaynes-case-liberty-of-house.html" target="_blank">Liberty of house</a> (common law origins of stand-your-ground laws)Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com3tag:blogger.com,1999:blog-17908317.post-48880609706954253832013-07-20T13:12:00.000-07:002013-08-04T19:23:53.677-07:00A very underrated inventionPerhaps the most underrated invention in history is the humble hourglass. Invented in Europe during the late 13th or early 14th century, the sand glass complemented a nearly simultaneous invention, the mechanical clock. The mechanical clock with its bell was a centralized way of broadcasting the hours day and night; the sand glass was a portable way of measuring shorter periods of time. These clocks were made using very different and independent techniques, but their complementarity function led to their emergence at the same time and place in history, late medieval Europe.<br />
<br />
The sandglass was more portable than a water clock. Since its rate of flow is independent of the depth of the upper reservoir, it was also more accurate. And, important in northern Europe, it didn't freeze in winter.<br />
<blockquote>
An advancing technology in 13th century western Europe very different from mechanics was glass-blowing. The origin of the sandglass is quite obscure, but its accuracy relies on a precise ratio between the neck width and the grain diameter. It thus required extensive trial and error for glass-blowers to arrive at hour glasses for sand, ground marble, eggshell, and other sized grains, and techniques for mass producing these precisely sized works of glass, besides a ready of market of users, which Europe turned out to be.
<br />
<br />
<a href="http://szabo.best.vwh.net/SandglassOld.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="http://szabo.best.vwh.net/SandglassOld.jpg" width="140" /></a>There are no demonstrated cases of sandglasses before the 14th century. Manufacture <span id="goog_861003392"></span><span id="goog_861003393"></span>and use of the sand-glass was widespread in western Europe by the middle of the 14th century. In 1339 Ambrosio Lorenzetti painted a fresco in Siena, one of the commercial cities of northern Italy, which shows a sandglass as an allegory for temperance (self-control). Mariners in the Mediterranean were likely using sandglasses to measure time and velocity by 1313. By 1394 French housewives were using recipes to make, along with food, glue, ink, and so on, marble grains for an hour-glass:
<br />
<blockquote>
"Take the grease which comes from the sawdust of marble when those great tombs of black marble be sawn, then boil it well in wine like a piece of meat and skim it, and then set it out to dry in the sun; and boil, skim and dry nine times; and thus it will be good." </blockquote>
Such a recipe presumably creates grains of a size in a precise ratio to a standard hour-glass neck size, thus producing an accurate time.
<br />
<br />
The sandglass, not the mechanical clock, became between the 13th and 16th centuries the main European timekeeper in activities as diverse as public meetings, sermons, and academic lectures. It was also the main navigational and scientific clock during that period. [<a href="http://szabo.best.vwh.net/synch.html" target="_blank">*</a>]</blockquote>
From the point of view of later engineers, the mechanical clock was the more important invention -- they were on the cutting edge of technology from the time of their invention until the industrial revolution. However,<br />
<blockquote class="tr_bq">
For contemporaries....the sandglass was equally or more important. Until the widespread use of small table-top mechanical clocks, the sandglass was the primary means of fair timekeeping. The sand glass was visible to all in a room, and it could only be dramatically and obviously “reset”, it couldn’t be fudged like a mechanical clock. [<a href="http://szabo.best.vwh.net/synch.html" target="_blank">*</a>]</blockquote>
As I detail <a href="http://unenumerated.blogspot.com/2012/10/dead-reckoning-and-exploration-explosion.html" target="_blank">here</a>, the sand glass also played an essential role in the technique of dead reckoning for ocean navigation, also developed in late medieval Europe. A strict regimen of turning the glasses was kept non-stop throughout a voyage:<br />
<blockquote class="tr_bq">
During the voyage of Ferdinand Magellan around the globe, his vessels kept 18 hourglasses per ship. It was the job of a ship's page to turn the hourglasses and thus provide the times for the ship's log. Noon was the reference time for navigation, which did not depend on the glass, as the sun would be at its zenith.[8] More than one hourglass was sometimes fixed in a frame, each with a different running time, for example 1 hour, 45 minutes, 30 minutes, and 15 minutes. [<a href="http://en.wikipedia.org/wiki/Hourglass" target="_blank">*</a>]</blockquote>
Arab and Chinese navigators lacked this crucial piece, and thus by the time of the exploration explosion had not developed navigation techniques that could rival those of Western Europe.<br />
<br />Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.comtag:blogger.com,1999:blog-17908317.post-68881288758584871722012-10-28T18:23:00.001-07:002012-10-29T13:45:22.626-07:00Dead reckoning, maps, and errorsIn my last post I introduced <a href="http://unenumerated.blogspot.com/2012/10/dead-reckoning-and-exploration-explosion.html" target="_blank">dead reckoning as used during the exploration explosion.</a> In this post I will describe the errors these explorers (Dias, Columbus, da Gama, etc.) typically encountered in dead reckoning (DR) when sailing on the oceans, and why dead reckoning could be usefully accurate despite the fact that trying to map those dead reckoning directions onto a normal map would be very inaccurate.<br />
<br />
To get a taste of the issue, first consider the following abstract navigation problem -- hiking in foggy hills:<br />
<ol>
<li>There are only two useful landmarks, 1F (the origin or "first fix") and 2F (the destination or "second fix").</li>
<li>It’s very foggy, so you have no way to use the hills as recognizable features. But the dead reckoning directions are of sufficient accuracy to get you within sight of landmark 2F. (For simplicity assume 100% accuracy).</li>
<li>You don’t know and can’t measure hill slope angles. Indeed there are only two things the hikers can measure: (a) magnetic compass direction, and (b) distance actually walked. Observe that this is <i>not</i> distance as the crow flies, nor is it distance projected onto the horizontal plane. If a hill happens to be a pyramid, and you happen to be walking straight up it (and thus walking up the hypotenuse of a triangle), the distance measured is the length of the hypotenuse, not the length of the horizontal leg of that triangle. </li>
<li>The first person who discovered 2F, starting from 1F, recorded dead reckoning directions to there and back as a sequence of tuples { direction, speed, time }.</li>
</ol>
We can draw a useful head-to-tail diagram of these directions on a piece of paper. But we can’t use these directions to figure out the distance as the crow flies between 1F and 2F, because we don’t know the slopes of the hills traversed. And for the purposes of our loose analogy to long-distance ocean navigation, our hikes are short and could be in all steep terrain or all flat, so that over the course of our hike the slopes don’t converge on a knowable average. <br />
<br />
<span style="font-size: small;">Since we have insufficient information to determine "crow flight" distances, we don’t have enough information to accurately draw our dead reckoning itinerary on maps as we know them (i.e. Ptolemaic maps). Yet such faithfully recorded directions are sufficient to get any hiker (who can also exactly measure bearings and distances) from 1F to 2F and back.<br />
<br />
Most maps as we know them – Ptolemaic maps -- are projections from a sphere to a Euclidean plane based on lines of latitude and longitude where lines of longitude converge at the celestial poles. Latitude is determined by measuring the altitude of a celestial object, and latitude is also ultimately defined by what navigators call the celestial sphere (although by "Ptolemaic map" I will refer to any map that shows actual earth surface distances proportionately on the map, i.e. "to scale"). There are also non-Ptolemaic maps, for example subway maps, which show the topological relationships between entities but not proportional distances. This chart of the kind <a href="http://unenumerated.blogspot.com/2006/10/how-to-succeed-or-fail-on-frontier.html" target="_blank">Zheng He</a> may have used, or was drawn using information from those or similar voyages, was of such a topological nature (the west coast of India is along the top and the east coast of Africa is along the bottom):</span><br />
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<img border="0" height="456" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhd1eaM56BL6ZZtL8ooltVppONNgGlyhK7xA6hcjWmM9ypGbVgja3W9DLvG4oJk7vja0gNjk5QF7fCv0SDhJbKtMorWWu73jYImkCIGLyftMHDjqwAjhQk3TLWwYSaT4DordJ5c/s640/Zhenghe-sailing-chart-800px.gif" width="640" /></div>
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<span style="font-size: small;">A set of dead reckoning directions can be diagrammed. But although it contains more information than a subway map, it doesn’t contain enough information to plot on a Ptolemaic map. Thus like a subway map this dead reckoning "space" cannot be accurately projected, or "mapped" in mathematical terminology, onto a normal (Ptolemaic) map without further information. </span><br />
<span style="font-size: small;"></span><br />
<span style="font-size: small;">A subway map is in no way "to scale": the distances on are not proportional to any measured values. By contrast a dead reckoning map can be drawn "to scale" in its own distinct Euclidan plane. But not only cannot this dead reckoning space without further information be accurately projected (i.e. projected with proportions intact or "to scale") onto a Ptolemaic map, but two different dead reckoning itineraries drawn on a Euclidean plane will also generally be in error relative to each other, as I will describe below. And now to the central point I want to get across in this article: these two kinds of errors -- from trying to Ptolemaically map a dead reckoning itinerary on the one hand and between two dead reckoning itineraries on the other hand -- are <em>very different. </em>They are quite distinct in kind and usually produce errors of very different magnitudes.</span><br />
<span style="font-size: small;"><br />
<span style="font-size: small;">The unknown values ignored in a dead reckoning itinerary, analogous to the hill slopes in the scenario above, can be any spatially variable but temporally constant distances, directions, or vectors that are unknown to the navigators writing and following the directions. The three most important spatially variable but temporally constant sets of vectors generally unknown to or ignored by dead reckoners on ocean and sea voyages from the 13<sup>th</sup> century through the era of the exploration explosion were were magnetic variation (shown below as green arrows), current (red arrows), and curvature of the earth (ignored in this post, but the same argument applies). Since these temporally constant but spatially variable factors (analogous to the slopes of our foggy hills) were unknown or ignored, they had no way to map such pure dead reckoning directions onto a Ptolemaic map. The information they rigorously measured and recorded for the purposes of dead reckoning was insufficient for that purpose. Yet that information was sufficient to enable navigators to retrace their steps (to get back on course if blown off course) or follow a previously recorded dead reckoning itinerary (or a nearby course, as I'll show below) </span></span>with usefully small error.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPMju3dHq4OK4cabMCddf8uePEP39KDS_PiFZbAyLj_FVVTot1f666nd4kiZXkDGIM-Wcmgcy8NZ7AYoLRU0U8Lcg_pX6aqJ_-H9xSXwvyX7NhNHka3SfVVUizcFBXXz2oqMfG/s1600/DeadReckoningCurrentMagneticVariation.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPMju3dHq4OK4cabMCddf8uePEP39KDS_PiFZbAyLj_FVVTot1f666nd4kiZXkDGIM-Wcmgcy8NZ7AYoLRU0U8Lcg_pX6aqJ_-H9xSXwvyX7NhNHka3SfVVUizcFBXXz2oqMfG/s1600/DeadReckoningCurrentMagneticVariation.jpg" /></a></div>
<em>Temporally constant but spatially variable vectors shown on a <span style="font-family: inherit;">diagram. Only</span> the dead reckoning (DR) vectors are shown added head-to-tail, since these are all the dead reckoning navigator in the exploration explosion era usually measured. The vectors shown here are magnetic variation (green) and current (red). Since these vectors were unknown, dead reckoning directions could not be accurately plotted on a Ptolemaic map. Curvature of the earth, not shown here, is also temporally constant and can thus also be ignored for the purposes of dead reckoning.</em>
<br />
<br />
However some kinds of dead reckoning errors were due to unknowns variables that changed over time. These produced small but cumulative errors in dead reckoning even for the purposes of specifying repeatable directions. Errors in measuring bearing, speed, and time were of this nature. Externally, different winds required different tacking angles, creating "leeway", where the boat moves not straight forward but at an angle. If the directions don’t account for this, or account for it imperfectly, there will necessarily be a cumulative error. It was thus important to "fix" on landmarks or soundings. The more accuracy needed (such as when approaching shorelines, much more hazardous than open-ocean sailing), the more often fixes had to be taken. I hope to say more about fixes and temporally variable errors in future posts. This post is about dead reckoning between two fixes and errors that vary spatially but can be reasonably treated as constant in time.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNjqkxQ5tYsMPE7DQF1bwEZNM67a2otPVAZhUBp7to1OS9Z8IA4t7Q6lt1Dsrf3Frhf-1MHAL2c8TziRGUhD0icjZQrLrDCPHCyxMxQegiMr_3XAuA1T_9xrtPvz7mwkhkA6DB/s1600/DeadReckoningWithFix.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="129" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNjqkxQ5tYsMPE7DQF1bwEZNM67a2otPVAZhUBp7to1OS9Z8IA4t7Q6lt1Dsrf3Frhf-1MHAL2c8TziRGUhD0icjZQrLrDCPHCyxMxQegiMr_3XAuA1T_9xrtPvz7mwkhkA6DB/s320/DeadReckoningWithFix.jpg" width="320" /></a></div>
<em>A dead reckoning diagram made on a chart, with "fixes" or adjustments (dashed line)s to a landmark or sounding (yellow "X") diagrammed on the chart. The start and end of points of the voyage are also landmarks, so there is also a fix for the final landmark. Note that the chart still does not have to be Ptolemaic for this purpose -- the fixes need not be shown with proportionally correct distances to each other. Indeed the Zheng He era chart above is roughly in this form, with only one crude dead reckoning vector between each fix: it labels each arc with a crude time or distance estimate along with a (much more accurate) bearing estimate, but like a subway map it doesn't care about showing distances as proportional. </em><br />
<br />
When sailing over continental shelves, European mariners (and sometimes Chinese mariners) of that era took "soundings" that measured depth and sampled the bottom soil, creating a unique signature of { depth, soil type} that functioned like landmarks but on open ocean. Soundings could be taken when sailing over the relatively shallow areas of continental shelves. As you can <a href="http://upload.wikimedia.org/wikipedia/commons/9/93/Elevation.jpg" target="_blank">see</a>, most parts of the oceans are too deep for this, but most shorelines are fronted by at least a few miles of soundable shelf, and sometimes hundreds of miles. Soundings were very useful for navigating in clouds, fog, and at night far enough away from the shore to avoid the hazards of very shallow water, yet close enough for the water to be shallow enough to sound. Pilots that used soundings thus had a set of "landmarks" for fixing their dead reckoning directions that allowed them to avoid hazardous navigation too close to land.<br />
<br />
Notice that these kinds of fixes <em>still</em> do not give Ptolemaic coordinates -- they simply map or "fix" a particular point in our dead reckoning "space" to a particular point on the earth's surface of unknown Ptolemaic (celestial) coordinates, and indeed of unknown distances <em>relative to other fixes.</em><br />
<br />
(Side note -- explorers between Cao and Magellan usually could not get a celestial "fix" on a rolling deck of sufficient accuracy to be useful, i.e. more accurate than their dead reckoning -- and even in the case of Magellan this was only useful because there was nothing better, dead reckoning errors having accumulated to very high levels by the time they were in the mid-Pacific. So like them we will have to ignore this way, both more ancient and more modern, but generally unused during the exploration explosion, of correcting DR errors at sea).<br />
<br />
It's all fine and good for dead reckoning to provide, as shown above, repeatable directions to a destination, despite being Ptolemaically unmappable, when the same itinerary is exactly repeated. But the best itinerary over the oceans depends on the wind. These winds vary, and the early explorers of new oceans searched for the best courses and seasons in order to catch the best winds. So the early explorers usually did not exactly repeat dead reckonings recorded on prior voyages. They usually took courses a few hundred miles away from the prior voyages' itinerary in order to catch more favorable winds. So the question arises: if the navigator adjusts his course by a few hundred miles, roughly what amount of resulting error should the navigator generally expect.<br />
<br />
(BTW, it us important to note that dead reckoning directions, while they did not have to account for currents, magnetic variation, and the curvature of the earth, for the reasons given in this article, <em>did </em>have to account for variations in winds and the related leeway from tacking, since these reasons do not apply to vectors with substantial temporal variability. So we assume, as the navigators themselves probably did in some fashion, that the velocity vectors in our dead reckoning itineraries aren't strictly those measured, but are those measurements adjusted for variations in wind).<br />
<br />
To reiterate the most important point: this is a <em>different question </em>than the question of what the error is when plotted on a normal map. Historians trying to recreate these voyages, in order to figure out where their landfalls were, or plot them on maps, or to estimate what navigational acccuracy of European navigators achieved in that era, usually haven't understood this crucial distinction. Indeed, because currents and magnetic variation don't in most places in the open ocean change in extreme or sudden ways, the resulting errors in dead reckoning navigation tended to be much smaller than the errors when plotting the dead reckoning directions on a Ptolemaic map. If you can scrutinize some more complicated diagrams I can demonstrate this by example here. First consider two dead reckoning itineraries, unadjusted for current and magnetic variation and thus plotted non-Ptolemaically:<br />
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<img border="0" height="190" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1cGOnT4c5QGkWTfyUnvhyphenhyphen_rQjoCV93xP3PVgYnGYltrtjq30_O7GP49E3BYNMs12LOSKp_p3-WXlb0sUFWz2aDkMhfWBZmfQo5Zp_2d20XKM6_r9qCaffwSsSqlKIS5MZj2Kr/s320/DeadReckoningTwoItineraries.png" width="320" /></div>
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<br />
<i>Black = DR velocity in given time period<br />
<br />
Red = average current velocity in given time period<br />
<br />
Green = average magnetic variation in given time period<br />
<br />
A, B = Two different DR itineraries as recorded (i.e. not adjusted for unknown magnetic variation and current). B has different first and third leg plus different currents on last two legs (only DR measurements added head-to-tail) – navigator would not actually plot these on a chart of geographic location, or at least would not consider such plotting accurate.<br />
<br />
1F, 2F = first fix, next fix (same in each case, but their geographical location doesn’t need to be known)</i></div>
<br />
For simplicity I am treating magnetic variation as uniform and spatially varying only the current, but the same argument I make here applies even more strongly to magnetic variation (and even more strongly to curvature of the earth, which can be treated as another set of vectors). The second fix (2F) has a question mark in front of it to indicate that the second itinerary (B) won't actually arrive at the same spot as A arrives at -- due to the different currents it encounters, it will arrive at a different spot. We assume, as was usually the case out of sight of shore, that our early explorer doesn't know the current. But the explorer did want to know, as historians want to know: roughly how large can such errors in typical oceans be expected to be? To demonstrate the mathematics of this, I've created a Ptolemaic map of the itineraries (dashed lines) by adding in the currents and magnetic variations head-to-tail. I've also superimposed the original non-Ptolemaic diagram (just the dead reckoning vectors added up) to show the much larger error that occurs when trying to project that onto a Ptolemaic map.
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUgUxnztgJhjWIJTpgUKa95zI-bZEd4QheYSk6nq1Lh8mwFAUMM7lPJovAjdkV4121IrM-dn8qd62wv2B8giC_wEE0xFvAUSJO3vUlL0oO2E6cSTzdqGFQLIoja2uM_KXDWHhp/s1600/DeadReckoningOnPtolemaicMap.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="236" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUgUxnztgJhjWIJTpgUKa95zI-bZEd4QheYSk6nq1Lh8mwFAUMM7lPJovAjdkV4121IrM-dn8qd62wv2B8giC_wEE0xFvAUSJO3vUlL0oO2E6cSTzdqGFQLIoja2uM_KXDWHhp/s400/DeadReckoningOnPtolemaicMap.png" width="400" /></a></div>
<i>
A‘, B’ = A and B adjusted to show difference in geographic location (all vectors added head-to-tail). The navigator in Columbus’ day could not usally compute these, since he typically did not know the current and magnetic variation values. <br />
<br />
NA, NB = net effect of spatially variable but temporally constant current on geographic (i.e. Ptolemaic or celestial) location. Error if unadjusted itineraries Ptolemaically mapped. Separate red arrow diagram shows the same net effect of the two separate sets of currents.<br />
<br />
Dashed blue line next to 2F = actual navigator’s error of two DR itineraries against each other when neither set of itineraries adjusts for current or magnetic variation. The next fix lies somewhere on this line, assuming no other errors.
</i><br />
<br />
(BTW if you can copy and paste arrows it's easy to make your own examples).
<br />
<br />
As you can see, the errors (solid blue lines labeled NA and NB) from trying to superimpose the non-Ptolemaic dead reckoning itineraries (solid lines) on the Ptolemaic map are much larger than the actual error (dashed blue line labeled 2F) that occurs from following itinerary A instead of B or vice versa (shown on dashed lines when adjusted for current. The magnetic variation is held constant, but the same argument applies to that, and to the curvature of the earth.
<br />
<br />
Note that the error in locating our second fix 2F is simply the same as the difference between the two separately added sets of current vectors:
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3H9-py1WbH9j3Gui0nIhvC1f37dMIH-i5v49mzSw8-I3wIzASM_p1OVZzhQ1p76h39HFlUI9G9WgKA3Dws3TjYc8IDBn9_9dBiMNZ6WiRivKjoe1Ac7Qf8cmzNIagJTjtmLmL/s1600/DeadReckoningCurrentVectorsAndError.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3H9-py1WbH9j3Gui0nIhvC1f37dMIH-i5v49mzSw8-I3wIzASM_p1OVZzhQ1p76h39HFlUI9G9WgKA3Dws3TjYc8IDBn9_9dBiMNZ6WiRivKjoe1Ac7Qf8cmzNIagJTjtmLmL/s1600/DeadReckoningCurrentVectorsAndError.png" /></a></div>
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It would be instructive to create a computer simulation of this which plugs in actual values (which we now know in excrutiating detail) for current, magnetic variation, and curvature of the earth.Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com4tag:blogger.com,1999:blog-17908317.post-6749407490776832342012-10-18T02:18:00.001-07:002012-10-18T03:08:46.216-07:00Dead reckoning and the exploration explosion<span style="font-family: inherit;">Navigation is the art or science of combining information
and reducing error to <i style="mso-bidi-font-style: normal;">keep oneself on, or return oneself
to, a route</i> that will get you where you want to go. Note what I did <em>not</em> say
here. Navigation is <em>not necessarily </em>the art or science of <em>locating where
you are.</em> While answering
the latter question – i.e. locating oneself in a Euclidean space, or a space
reasonably projectable onto a Euclidean space – can usefully solve the
navigation problem, figuring out such a location often requires different, and often
more, information than you need to answer the questions of how to stay on or
return to your desired route. And indeed this is what dead reckoning does – it gets
you where you want to go with different information than what you would need to
draw or find yourself on a normal map. I hope to explain more about this important incompatibility between the pilots’ and cosmographers’ systems during most of the age of exploration in a future post, but for now I will give an overview of the
historical development of dead reckoning.</span><br />
<br />
Between Italy of the late 13<sup><span style="font-size: x-small;">th</span></sup> century and the advent of GPS, dead reckoning formed the basis of most modern navigation. Dead reckoning was in particular the primary method of navigation used during the exploration explosion of the late 15<sup><span style="font-size: x-small;">th</span></sup> and early 16<sup><span style="font-size: x-small;">th</span></sup> centuries – the startlingly unprecedented voyages across unknown oceans of Dias, da Gama, Columbus, Magellan, and so on.<br />
<br />
<span style="font-family: inherit;">Dead reckoning is based on a sequence of vectors. Each vector consists of two essential pieces
of information: direction and distance. Distance is typically calculated from time and speed, so each vector
typically consists of the tuple {direction, time, speed}. With only speed and
time, we have only a scalar distance value – it could be in any direction. With time but not speed, or speed but not
time, we don’t have enough information to determine the distance covered.</span><br />
<br />
<span style="font-family: inherit;">From the start of a voyage to the last docking at the home
port, dead reckoning was a strict regimen that never stopped: day and night, in
calm and in storm, its measurement, recording, and diagramming protocols were
rigorously followed.</span><br />
<br />
<span style="font-family: inherit;">Measuring or estimating the speed of a ship was a craft
mystery the nature of which is still debated today, so I’ll skip over that and
focus on the two more straightforward innovations in measurement, both of which
occurred in or reached Italy and were first combined there in the 13<sup><span style="font-size: x-small;">th</span></sup>
century: in measuring direction and in measuring time.</span><br />
<br />
<span style="font-family: inherit;">For measuring time mariners used the <em>sand glass,</em> invented in Western Europe during that
same century. I have discussed this
invention</span> <a href="http://szabo.best.vwh.net/synch.html"><span style="font-family: inherit;">here</span></a><span style="font-family: inherit;">. A strict regimen of turning the glasses was
kept non-stop throughout a voyage.</span><br />
<br />
<span style="font-family: inherit;">For measuring direction, the ships of the exploration
explosion typically had at least two <em>magnetic
compasses</em>, usually built into the ship to maintain a fixed orientation with
the ship. Typically one compass was used
by the helmsman, in charge of steering the ship, and the other by the pilot, in
charge of ordering both the sail rigging and the general direction for the
helmsman to keep.</span><br />
<br />
<span style="font-family: inherit;">The magnetic compass was probably first invented in China, used
first for <em>feng shui</em> and then for navigation by the early 12<sup><span style="font-size: x-small;">th</span></sup>
century. Somehow, without any recorded intermediaries, it appears in the writings
of authors in the region of the English Channel in the late 12<sup><span style="font-size: x-small;">th</span></sup>
century where it was quite likely being used for navigation in that often cloudy region. Its first use in Italy was associated with the then-thriving port city
of Amalfi. As both Amalfi and the
English Channel were at the time controlled by the Normans, this suggests to me
either a Norman innovation, or arrival via Norse trade connections to the
Orient via Russia combined with now unknown Chinese trade routes. This is conjectural. Neither the Norse sagas
nor writings about the Normans during earlier periods mention a magnetic
compass, nor do Arab sources mention it until the late 13<sup><span style="font-size: x-small;">th</span></sup> century
in the Mediterranean. In any case, it is
the Italians who made the magnetic compass part of a rigorous system of dead
reckoning.</span><br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGtF3mD7CP-tm2jgzve3aLv0Uwdmb54H-AiCg5c4n03zPs-sNdRWwvBFULPRBCZff2zimeNz8umlsV_9IOXYh252LC9LFlHw378g8K5G5CLRhywOKzAkvO5jcD8YbKATXwzNTA/s1600/CompassMentions12thAndEarly13thCenturies_NormanHoldings1130.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGtF3mD7CP-tm2jgzve3aLv0Uwdmb54H-AiCg5c4n03zPs-sNdRWwvBFULPRBCZff2zimeNz8umlsV_9IOXYh252LC9LFlHw378g8K5G5CLRhywOKzAkvO5jcD8YbKATXwzNTA/s1600/CompassMentions12thAndEarly13thCenturies_NormanHoldings1130.jpg" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><div align="left">
<em><span style="font-size: small;">Green dots indicate, in the case of northern Europe, the location of authors who mention use of the magnetic compass for navigation in the late 12th and 13th centuries, and for Italy, the traditional Italian association of the invention of the compass with Amalfi in the 13th century. Red indicates areas controlled by the Normans.</span></em></div>
</td></tr>
</tbody></table>
<br />
<br />
<span style="font-family: inherit;">A dead reckoning itinerary can be specified as a sequence of
tuples { direction, speed, time }. It
can be drawn as a diagram of vectors laid down head-to-tail. However, as mentioned above, this diagram by
itself, for nontrivial sea and ocean voyages, contains insufficient information
to map the arrows accurately onto a Ptolemaic map (i.e. maps as we commonly
understand them, based on celestial latitudes and longitudes), yet sufficient at least in theory to guide a pilot following such directions to their destination.</span><br />
<br />
<div class="separator" style="clear: both; margin: 0in 0in 10pt; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWBIo7XxuQdxV5M1kTi2w_a4lk7_wPR1-tqviwKisQJ7KGwFdmSGzRwNv3yxTlFnTeN1zvqhCL5A_7bLFpR07v6oi-9iGLTH9JLxo8NI4PlpzLC3-890ndYRwZMpvExvV2JyYa/s1600/DeadReckoningBasic.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="108" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWBIo7XxuQdxV5M1kTi2w_a4lk7_wPR1-tqviwKisQJ7KGwFdmSGzRwNv3yxTlFnTeN1zvqhCL5A_7bLFpR07v6oi-9iGLTH9JLxo8NI4PlpzLC3-890ndYRwZMpvExvV2JyYa/s320/DeadReckoningBasic.png" width="320" /></a></div>
<span style="font-family: inherit;">For recording speed and direction for each sand glass time
interval (e.g. half hour), pilots used some variation of the <em>traverse board</em>, in
which these values were specified by the locations of pegs in the board.</span><br />
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkj4PDeiffWCTvET1PW9CYcP4si_gZlkzXPhFwRu4cWNUBPIwnGvyEuKFyNrFDM3rhrU4rHKjk0Oj2RgMM306KSv9fWaTF4sR3qNrMzXl8LPVE_PDqc5Bt4F34KPME3koPZBxV/s1600/Traverse_Board.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkj4PDeiffWCTvET1PW9CYcP4si_gZlkzXPhFwRu4cWNUBPIwnGvyEuKFyNrFDM3rhrU4rHKjk0Oj2RgMM306KSv9fWaTF4sR3qNrMzXl8LPVE_PDqc5Bt4F34KPME3koPZBxV/s1600/Traverse_Board.jpg" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><div align="left">
<span style="font-size: small;">
</span><span style="font-size: small;"><em><span style="font-family: inherit;">Traverse
board. Pins on the upper (circular) portion
indicate compass heading and (via distance from the center) for each half hour. Pins on the lower (rectangular) portion
indicate estimated speed during each hour. The board thus allows an a pilot on
a wet deck unsuitable for a paper log to record an equivalent of a sequence of
tuples { direction, speed, time } over four hours, after which time this
information is transferred to the ship’s written log(normally kept indoors), the progress is
plotted as a head-to-tail diagram on a chart (also kept indoors), and the
traverse board is reset. Note that the direction
is read directly off the magnetic compass: thus north (the fleur-de-lis) is magnetic north, not geographic (celestial)
north.</span></em></span></div>
</td></tr>
</tbody></table>
<o:p><span style="font-family: inherit;">In a future post I hope to discuss more about dead reckoning
directions and explain how the errors that can accumulate in such directions over
long distances were corrected. I will
also explain why neither the directions nor even the corrections could be
accurately drawn on a normal (Ptolemaic or celestial coordinate) map, and yet
such dead reckoning directions are sufficient at least in theory for the pilot
to guide his ship from the starting port to the intended destination port. In practice, pilots "fixed" errors in their dead reckoning using landmarks and sounding, which I will also describe. And I hope to describe how this resulted in
two incompatible systems of “navigation” (broadly speaking) during exploration explosion -- the pilot’s dead reckoning methods versus the cosmographers’ maps and globes
based on latitude and longitude. </span></o:p><br />
<o:p></o:p><br />
<o:p></o:p><span style="font-family: inherit;">I also hope to someday figure out just why the exploration
explosion occurred when it did. The
advent of rigorous dead reckoning -- combining the compass, the sand glass, and decent estimates of speed with
rigorous log-keeping -- did not occur in Asia (where the Chinese, lacking the
sand glass at least, made a less systematic use of the compass), nor with the
Arabs (who seldom used either sand glass or compass), which along with naval superiority explains why the exploration
explosion occurred from western Europe. The
puzzle of why the explosion started specifically in the 1480s, and not sooner
or later, however, remains a mystery to be solved.</span>Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com2tag:blogger.com,1999:blog-17908317.post-55859688150207698772012-08-15T00:35:00.000-07:002012-08-15T00:35:15.902-07:00Authority and ad hominemArgument from authority ("I'm the expert") goes hand-in-hand with the <i>ad hominem</i> ("you're not"). Each may be rebutted by the other, and the average quality as evidence of arguments from authority are about the same as the average quality as evidence of <i>ad hominem</i>. By necessity, these two kinds of evidence are the dominant forms of evidence that lead each of us as individuals to believe what we believe, since little important of what you believe comes from your own direct observation. Authority's <a href="http://unenumerated.blogspot.com/2012/08/proxy-measures-sunk-costs-and.html">investment costs</a> are one good proxy measure for evaluating the value of such evidence. But contrast <a href="http://unenumerated.blogspot.com/2006/09/law-of-dominant-paradigm.html">the law of the dominant paradigm</a>. Perhaps the latter is superior for judging claims about the objective world, whereas investment costs are superior for judging the <a href="http://szabo.best.vwh.net/tradition.html">intersubjective</a>.Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com2tag:blogger.com,1999:blog-17908317.post-71665158049001523332012-08-07T23:58:00.000-07:002012-08-07T23:58:00.400-07:00Proxy measures, sunk costs, and Chesterton's fenceG.K. Chesterton ponders a fence:<br />
<blockquote class="tr_bq">
In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."<br />
<br />
This paradox rests on the most elementary common sense. The gate or fence did not grow there. It was not set up by somnambulists who built it in their sleep. It is highly improbable that it was put there by escaped lunatics who were for some reason loose in the street. Some person had some reason for thinking it would be a good thing for somebody. And until we know what the reason was, we really cannot judge whether the reason was reasonable. It is extremely probable that we have overlooked some whole aspect of the question, if something set up by human beings like ourselves seems to be entirely meaningless and mysterious. There are reformers who get over this difficulty by assuming that all their fathers were fools; but if that be so, we can only say that folly appears to be a hereditary disease. But the truth is that nobody has any business to destroy a social institution until he has really seen it as an historical institution. If he knows how it arose, and what purposes it was supposed to serve, he may really be able to say that they were bad purposes, that they have since become bad purposes, or that they are purposes which are no longer served. But if he simply stares at the thing as a senseless monstrosity that has somehow sprung up in his path, it is he and not the traditionalist who is suffering from an illusion.<br />
<br /></blockquote>
Contrast the sunk cost fallacy, according to one account:
<blockquote class="tr_bq">
When one makes a hopeless investment, one sometimes reasons: I can’t stop now, otherwise what I’ve invested so far will be lost. This is true, of course, but irrelevant to whether one should continue to invest in the project. Everything one has invested is lost regardless. If there is no hope for success in the future from the investment, then the fact that one has already lost a bundle should lead one to the conclusion that the rational thing to do is to withdraw from the project.</blockquote>
The sunk cost fallacy, according to another account:<br />
<blockquote class="tr_bq">
Picture this: It's the evening of the Lady Gaga concert/Yankees game/yoga bootcamp. You bought the tickets months ago, saving up and looking forward to it. But tonight, it's blizzarding and you've had the worst week and are exhausted. Nothing would make you happier than a hot chocolate and pajamas, not even 16-inch pink hair/watching Jeter/nailing the dhanurasana.</blockquote>
<blockquote class="tr_bq">
But you should go, anyway, right? Because otherwise you'd be "wasting your money"?<br />
<br />
Think again. Economically speaking, you shouldn't go.</blockquote>
Has Chesterton committed the sunk cost fallacy? Consider the concept of proxy measures:<br />
<blockquote class="tr_bq">
The process of determining the value of a product from observations is necessarily incomplete and costly. For example, a shopper can see that an apple is shiny red. This has some correlation to its tastiness (the quality a typical shopper actually wants from an apple), but it's hardly perfect. The apple's appearance is not a complete indicator -- an apple sometimes has a rotten spot down inside even if the surface is perfectly shiny and red. We call an indirect measure of value -- for example the shininess, redness, or weight of the apple -- a proxy measure. In fact, all measures of value, besides prices in an ideal market, are proxy measures -- real value is subjective and largely tacit.</blockquote>
<blockquote class="tr_bq">
Cost can usually be measured far more objectively than value. As a result, the most common proxy measures are various kinds of costs. Examples include:</blockquote>
<blockquote class="tr_bq">
(a) paying for employment in terms of time worked, rather than by quantity produced (piece rates) or other possible measures. Time measures sacrifice, i.e. the cost of opportunities foregone by the employee</blockquote>
<blockquote class="tr_bq">
(b) most numbers recorded and reported by accountants for assets are costs rather than market prices expected to be recovered by the sale of assets. </blockquote>
<blockquote class="tr_bq">
(c) non-fiat money and collectibles obtain their value primarily from their scarcity, i.e. their cost of replacement.</blockquote>
Proxy measures are important because we usually can't measure value directly, much less forecast future value with high confidence. And often we know little of the evidence and preferences that went into an investment decision. You may have forgotten or (if the original decision maker was somebody else) never learned the reason. In which case, the original decision-maker may have had more knowledge than you do -- especially if that decision-maker was somebody else, but sometimes even if that decision-maker was you. In which case it can make a great deal of sense to use the sunk cost as a proxy measure of value.<br />
<br />
In the first account of sunk cost, there seems to be no uncertainty: by definition we know that our investment is "hopeless." In such a case, valuing our sunk costs is clearly erroneous. But the second, real-world example, is far less clear: "you've had the worst week and are exhausted.." Does this mean you won't enjoy the concert, as you originally envisioned? Or does it mean that in your exhaustion you've forgotten why you wanted to go to the concert? If it's more likely to mean the latter, then my generalization of Chesterton's fence, using the idea of proxy measures, suggests that you should use your sunk costs as a proxy measure of value, and weigh that value against the costs of the blizzard and the benefits of hot chocolate and pajamas, to decide whether you still will be made happier by going to the concert. <br />
<br />
If your evidence may be substantially incomplete you shouldn't just ignore sunk costs -- they contain valuable information about decisions you or others made in the past, perhaps after much greater thought or access to evidence than that of which you are currently capable. Even more generally, you should be loss averse -- you should tend to prefer avoiding losses over acquiring seemingly equivalent gains, and you should be divestiture averse (i.e. exhibit endowment effects) -- you should tend to prefer what you already have to what you might trade it for -- in both cases to the extent your ability to measure the value of the two items is incomplete. Since usually in the real world, and to an even greater degree in our ancestors' evolutionary environments, our ability to measure value is and was woefully incomplete, it should come as no surprise that people often value sunk costs, are loss averse, and exhibit endowment effects -- and indeed under such circumstances of incomplete value measurement it hardly constitutes "fallacy" or "bias" to do so.<br />
<br />
In short, Chesterton's fence and proxy measures suggest that taking into account sunk costs, or more generally being averse to loss or divestiture, rather than always being a fallacy or irrational bias, may often lead to better decisions: indeed if it is done in just those cases where substantial evidence or shared preferences that motivated the original investment decision have been forgotten or have not been communicated, or otherwise where the quality of evidence that led to that decision may outweigh the quality of evidence that is motivating one to change one's mind.. We generally have far more information about our past than about our future. Decisions that have already been made, by ourselves and others, are an informative part of that past, especially when their original motivations have been forgotten.<br />
<br />
<em>References:</em><br />
<br />
<a href="http://www.cse.dmu.ac.uk/~mward/gkc/books/The_Thing.txt">Chesterton's Fence</a><br />
<br />
Sunk Cost Fallacy <a href="http://www.skepdic.com/sunkcost.html"> (1)</a>, <a href="http://www.huffingtonpost.com/maria-lin/financial-advice-sunk-cost-fallacy_b_1128482.html">(2)</a> <br />
<br />
<a href="https://en.wikipedia.org/wiki/Endowment_effect">Endowment Effects/Divestiture Aversion:</a> <br />
<br />
<a href="https://en.wikipedia.org/wiki/Loss_aversion">Loss Aversion:</a> <br />
<br />
<a href="http://unenumerated.blogspot.com/2011/06/of-wages-and-money-cost-as-proxy.html">Cost as a Proxy Measure of Value</a><br />
<br />
<span style="background-color: silver;"></span><br />
<br /><br />
<br />
<br />Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com8tag:blogger.com,1999:blog-17908317.post-73593439729031098752012-07-25T23:33:00.001-07:002012-07-25T23:35:52.689-07:00Three philosophical essaysFrom <a href="http://szabo.best.vwh.net/kolmogorov.html">Algorithmic Information Theory: </a><br /><br />Charles Bennett has discovered an objective measurement for sophistication. An example of sophistication is the structure of an airplane. We couldn't just throw parts together into a vat, shake them up, and hope thereby to assemble a flying airplane. A flying structure is vastly improbable; it is far outnumbered by the wide variety of non-flying structures. The same would be true if we tried to design a flying plane by throwing a bunch of part templates down on a table and making a blueprint out of the resulting overlays. <br /><br />On the other hand, an object can be considered superficial when it is not very difficult to recreate another object to perform its function. For example, a garbage pit can be created by a wide variety of random sequences of truckfulls of garbage; it doesn't matter much in which order the trucks come. <br /><br />More examples of sophistication are provided by the highly evolved structures of living things, such as wings, eyes, brains, and so on. These could not have been thrown together by chance; they must be the result of an adaptive algorithm such as Darwin's algorithm of variation and selection. If we lost the genetic code for vertebrate eyes in a mass extinction, it would take nature a vast number of animal lifetimes to re-evolve them. A sophisticated structure has a high replacement cost. <br /><br />Bennett calls the computational replacement cost of an object its logical depth. Loosely speaking, depth is the necessary number of steps in the causal path linking an object with its plausible origin. Formally, it is the time required by the universal Turing machine to compute an object from its compressed original description.<br /><br /><br />From <a href="http://szabo.best.vwh.net/tradition.html">Objective versus Intersubjective Truth</a>:<br /><br />Post-Hayek and algorithmic information theory, we recognize that information-bearing codes can be computed (and in particular, ideas evolved from the interaction of people with each other over many lifetimes), which are <br /><br />(a) not feasibly rederivable from first principles,<br /><br />(b) not feasibly and accurately refutable (given the existence of the code to be refuted)<br /><br />(c) not even feasibly and accurately justifiable (given the existence of the code to justify)<br /><br />("Feasibility" is a measure of cost, especially the costs of computation and empircal experiment. "Not feasibly" means "cost not within the order of magnitude of being economically efficient": for example, not solvable within a single human lifetime. Usually the constraints are empirical rather than merely computational). <br /><br />(a) and (b) are ubiqitous among highly evolved systems of interactions among richly encoded entities (whether that information is genetic or memetic). (c) is rarer, since many of these interpersonal games are likely no more diffult than NP-complete: solutions cannot be feasibly derived from scratch, but known solutions can be verified in feasible time. However, there are many problems, especially empirical problems requiring a "medical trial" over one or more full lifetimes, that don't even meet (c): it's infeasible to create a scientifically repeatable experiment. For the same reason a scientific experiment cannot refute _any_ tradition dealing with interpersonal problems (b), because it may not have run over enough lifetimes, and we don't know which computational or empirical class the interpersonal problem solved by the tradition falls into. One can scientifically refute traditional claims of a non-interpersonal nature, e.g. "God created the world in 4004 B.C.", but one cannot accurately refute metaphorical interpretations or imperative statements which apply to interpersonal relationships. <br /><br />As Dawkins has observed, death is vastly more probable than life. Cultural parts randomly thrown together, or thrown together by some computationally shallow line of reasoning, most likely result in a big mess rather than well functioning relationships between people. The cultural beliefs which give rise to civilization are, like the genes which specify an organism, a highly improbable structure, surrounded in "meme space" primarily by structures which are far more dysfunctional. Most small deviations, and practically all "radical" deviations, result in the equivalent of death for the organism: a mass breakdown of civilization which can include genocide, mass poverty, starvation, plagues, and, perhaps most commonly and importantly, highly unsatisying, painful, or self-destructive individual life choices. <br /><br /><br />From <a href="http://szabo.best.vwh.net/hermeneutics.html">Hermeneutics: An Introduction to the Interpretation of Tradition: </a><br /><br />Hermeneutics derives from the Greek <em>hermeneutika</em>, "message analysis", or "things for interpreting": the interpretation of tradition, the messages we receive from the past... Natural law theorists are trying to do a Heideggerean deconstruction when they try to find the original meaning and intent of the documents deemed to express natural law, such as codifications of English common law, the U.S. Bill of Rights, etc. For example, the question "would the Founding Fathers have intended the 1st Amendment to cover cyberspace?" is a paradigmatic hermeneutical question...[Hans-Georg] Gadamer saw the value of his teacher [Martin] Heidegger's dynamic analysis, and put it in the service of studying living traditions, that is to say traditions with useful applications, such as the <a href="http://szabo.best.vwh.net/hermeneutics.html#law">law </a>. Gadamer discussed the classical as a broad normative concept denoting that which is the basis of a liberal eduction. He discussed his historical process of <em>Behwahrung</em>, cumulative preservation, that, through constantly improving itself, allows something true to come into being. In the terms of <a href="http://szabo.best.vwh.net/hermeneutics.html#evo">evolutionary hermeneutics</a>, it is used and propagated because of its useful <a href="http://szabo.best.vwh.net/hermeneutics.html#app">application, </a>and its useful application constitutes its truth. Gadamer also discusses value in terms of the duration of a work's power to speak directly. <br /><br /><br /><br /><br />Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com2tag:blogger.com,1999:blog-17908317.post-13841124370849952402012-07-23T02:26:00.002-07:002012-07-23T02:51:03.197-07:00Pascal's scams (ii)Besides the robot apocalypse, there are many other, and often more important, examples of <a href="http://unenumerated.blogspot.com/2012/07/pascals-scams.html">Pascal scams.</a> The following may be or may have been such poorly evidenced but widely feared or hoped-for extreme consequences (these days the fears seem to predominate):<br />
<ol>
<li>That we are currently headed for another financial industry disaster even worse than 2008 (overwrought expectations often take the form of "much like the surprise we most recently experienced, only even more extreme").</li><br />
<li>That global warming has caused or will cause disaster X (droughts, floods, hurricanes, tornadoes, ...)</li><br />
<li>A whole witch's brew of "much like what just happened" fears were the many terrorist disaster fears that sprouted like the plague in the years after 9/11: suitcase nukes, the "ticking-time bomb" excuse for legalizing torture, envelopes filled with mysterious white powders, and on and on.<br /></li><br />
<li>On the positive daydream side, Eric Drexler's "molecular nanotechnology" predictions of the 1980s: self-replicating robots, assemblers that could make almost anything, etc. -- a whole new industrial revolution that would make everything cheap. (Instead, it was outsourcing and a high-tech version of t-shirt printing that made many things cheap, and "nanotechnology" became just a cool buzzword to use when talking about chemistry).</li><br />
<li>A big hope of some naive young engineers during the previous high oil price era of the late 1970s: solar power satellites made from lunar materials, with O'Neill space colonies to house the workers. Indeed, a whole slew of astronaut voyages and industries in space were supposed to follow after the spectacular (and spectacularly expensive) Apollo moon landings -- a "much like recently experienced, only more so" daydream.</li><br />
<li>The "Internet commerce will replace bricks-and-mortar and make all the money those companies were making" ideas that drove the Internet bubble in the late 1990s. Indeed, most or all of the bubbles and depressions in financial markets may be caused by optimistic and pessimistic Pascal fads respectively.</li><br />
</ol>
History is replete with many, many more such manias and scares, whether among small groups of otherwise smart people, or among the vast majority of a society. Sometimes poorly evidenced consequences do happen to occur, just in way(s) very different from expected -- for example Columbus, following the advice of well respected authorities like <a href="http://unenumerated.blogspot.com/2012/07/exploration-explosion.html">Strabo and Toscanelli</a> and heading west for India -- ending up instead in America. And sometimes a <a href="http://articles.latimes.com/1988-07-25/local/me-4586_1_lucky-penny">lucky penny</a> prophecy of a wonderful or terrible but very unlikely event comes true -- although hardly any of us ever seem to learn about these sage predictions until after the event. Then they only make us believe enough in prophecy that we fall for the next scam.Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com11tag:blogger.com,1999:blog-17908317.post-44102964579451549842012-07-14T00:16:00.000-07:002012-07-14T00:16:29.316-07:00Pascal's scamsBeware of what I call Pascal's scams: movements or belief systems that ask you to hope for or worry about very improbable outcomes that could have very large positive or negative consequences. (The name comes of course from the infinite-reward Wager proposed by Pascal: these days the large-but-finite versions are far more pernicious). Naive expected value reasoning implies that they are worth the effort: if the odds are 1 in 1,000 that I could win $1 billion, and I am risk and time neutral, then I should expend up to nearly $1 million dollars worth of effort to gain this boon. The problems with these beliefs tend to be at least threefold, all stemming from the general uncertainty, i.e. the poor information or lack of information, from which we abstracted the low probability estimate in the first place: because in the messy real world the low probability estimate is almost always due to low or poor evidence rather than being a lottery with well-defined odds:<br />
<br />
(1) there is usually no feasible way to distinguish between the very improbable (say, 1 in 1,000) and the extremely improbable (e.g., one in a billion). Poor evidence leads to what<a href="http://lpr.oxfordjournals.org/content/5/2/159.full?keytype=ref&ijkey=ny8A8TF7Lp8kezF"> James Franklin</a> calls "low-weight probabilities", which lack robustness to new evidence. When the evidence is poor, and thus robustness of probabilities is lacking, then it is likely that "a small amount of further evidence would substantially change the probability. " This new evidence is as likely to decrease the probability by a factor of X as increase it by a factor of X, and the poorer the original evidence, the greater X is. (Indeed, given the nature of human imagination and bias, it is more likely to decrease it, for reasons described below).<br />
<br />
(2) the uncertainties about the diversity and magnitudes of possible consequences, not just their probabilities, are also likely to be extremely high. Indeed, due to the overall poor information, it's easy to overlook negative consequences and recognize only positive ones, or vice-versa. The very acts you take to make it into utopia or avoid dystopia could easily send you to dystopia or make the dystopia worse.<br />
<br />
(3) The "unknown unknown" nature of the most uncertainty leads to unfalsifiablity: proponents of the proposition can't propose a clear experiment that would greatly lower the probability or magnitude of consequences of their proposition: or at least, such an experiment would be far too expensive to actually be run, or cannot be conducted until after the time which the believers have already decided that the long-odds bet is rational. So not only is there poor information in a Pascal scam, but in the more pernicious beliefs there is little ability to improve the information.<br />
<br />
The biggest problem with these schemes is that, the closer to infinitesimal probability, and thus usually to infinitesimal quality or quantity of evidence, one gets, the closer to infinity the possible extreme-consequence schemes one can dream up, Once some enterprising memetic innovator dreams up a Pascal's scam, the probabilities or consequences of these possible futures can be greatly exaggerated yet still seem plausible. "Yes, but <em>what if</em>?" the carrier of such a mind-virus incessantly demands. Furthermore, since more than a few disasters are indeed low probability events (e.g. 9/11), the plausibility and importance of dealing with such risks seems to grow in importance after they occur -- the occurrence of one improbable disaster leads to paranoia about a large number of others, and similarly for fortuitous windfalls and hopes. Humanity can dream up a near-infinity of Pascal's scams, or spend a near-infinity of time fruitlessly worrying about them or hoping for them. There are however far better ways to spend one's time -- for example in thinking about what has actually happened in the real world, rather than the vast number of things that might happen in the future but quite probably won't, or will likely cause consequences very differently than you expect. <br />
<br />
So how should we approach low probability hypotheses with potential high value (negative or positive) outcomes? Franklin et. al. <a href="http://web.maths.unsw.edu.au/~jim/advocacydivdist.pdf">suggest</a> that "[t]he strongly quantitative style of education in statistics, valuable as it is, can lead to a neglect of the more qualitative, logical, legal and causal perspectives needed to understand data intelligently. That is especially so in extreme risk analysis, where there is a lack of large data sets to ground solidly quantitative conclusions, and correspondingly a need to supplement the data with outside information and with argument on individual data points."<br />
<br />
On the above quoted points I agree with Franklin, and add a more blunt suggestion: stop throwing around long odds and dreaming of big consequences as if you are onto something profound. If you can't gather the information needed to reduce the uncertainties, and if you can't suggest experiments to make the hope or worry falsifiable, stop nightmaring or daydreaming already. Also, shut up and stop trying to convince the rest of us to join you in wasting our time hoping or worrying about these fantasies. Try spending more time learning about what has actually happened in the real world. That study, too, has its uncertainties, but they are up to infinitely smaller.<br />
<br />Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com40tag:blogger.com,1999:blog-17908317.post-65527434751380286632012-07-01T22:47:00.001-07:002012-07-01T22:47:25.001-07:00More short takesPerhaps I should take up Twitter, but I already have this blog, and even my short takes tend to go a bit over 140 characters. So here goes: <br />
<br />
* The most important professions in the modern world may be the most reviled: advertiser, salesperson, lawyer, and financial trader. What these professions have in common is extending useful social interactions far beyond the tribe-sized groups we were evolved to inhabit (most often characterized by the Dunbar number). This commonly involves activities that fly in the face of our tribal moral instincts.<br />
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* On a related note, much mistaken thinking about society could be eliminated by the most straightforward application of the pigeonhole principle: you can't fit more pigeons into your pigeon coop than you have holes to put them in. Even if you were telepathic, you could not learn all of what is going on in everybody's head because there is no room to fit all that information in yours. If I could completely scan 1,000 brains and had some machine to copy the contents of those into mine, I could only learn at most about a thousandth of the information stored in those brains, and then only at the cost of forgetting all else I had known. That's a theoretical optimum; any such real-world transfer process, such as reading and writing an e-mail or a book, or tutoring, or using or influencing a market price, will pick up only a small fraction of even the theoretically acquirable knowledge or preferences in the mind(s) at the other end of said process, or if you prefer of the information stored by those brain(s). Of course, one can argue that some kinds of knowledge -- like the kinds you and I know? -- are vastly more important than others, but such a claim is usually more snobbery than fact. Furthermore, a society with more such computational and mental diversity is more productive, because specialized algorithms, mental processes, and skills are generally far more productive than generalized ones. As Friedrich Hayek pointed out, our mutual inability to understand a very high fraction of what others know has profound implications for our economic and political institutions. <br />
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* A big problem in the last few years has been the poor recording of transfers of ownership of mortgages (i.e. of the debt not the house). The issue of recording transfers of contractual rights is very interesting. I have a proposal for this, <a href="http://szabo.best.vwh.net/securetitle.html">secure property titles</a>. This should work just as well for mortgage securities and other kinds of transferable contractual rights as it does for the real estate itself or other kinds of property. Anytime you transfer rights to a contract it should be registered in such a secure and reliable public database in order to avoid the risk of not being able to prove ownership in court. <br />
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* Not only should you disagree with others, but you should disagree with yourself. Totalitarian thought asks us to consider, much less accept, only one hypothesis at a time. By contrast quantum thought, as I call it -- although it already has a traditional name less recognizable to the modern ear, scholastic thought -- demands that we simultaneoulsy consider often mutually contradictory possibilities. Thinking about and presenting only one side's arguments gives one's thought and prose a false patina of consistency: a fallacy of thought and communications similar to <a href="https://en.wikipedia.org/wiki/False_precision">false precision</a>, but much more common and imporant. Like false precision, it can be a mental mistake or a misleading rhetorical habit. In quantum reality, by contrast, I can be both for and against a proposition because I am entertaining at least two significantly possible but inconsistent hypotheses, or because I favor some parts of a set of ideas and not others. If you are unable or unwilling to think in such a quantum or scholastic manner, it is much less likely that your thoughts are worthy of others' consideration. <br />Nick Szabohttp://www.blogger.com/profile/16820399856274245684noreply@blogger.com11