D. Chander-Week 5-Systems of Exchange

I watched the documentary “Pig Tusks & Paper Money” and I made many key observations. In Papua New Guinea, many small villages rely heavily on “shells” as a form of currency. Henry Tokubak wants to start a bank that relies on the shell currency. To many of the residents of Papua New Guinea this is a better, more convenient form of currency because it does not depreciate as quickly and is widespread making it easy to make transactions among the residents. Tokubak says it can be used for many things such as food, goods, services, even for buying land. The economy in Papua New Guinea is very traditional, and people stick to a system that they understand and are comfortable with. He does face a lot of opposition from people saying that the current banking system will become more popular, over-taking the shell money system, but Tokubak is confident people will continue to use shell money. He stands by the claim, that people in Papua New Guinea are modest and they maintain simple lives, most of the time they eat food from the farms cultivated in the villages, and they only need money for very basic things like repairs, electricity bills, etc. I thought that this was a very interesting perspective on currency and it really opened my eyes. In the controversial  article, “Poverty at Work: Office Employment and the Crack Alternative” by Philippe Bourgois, Bourgois, explains how Latino immigrants are sometimes better off selling cocaine and other drugs on the street rather than working in menial labor, minimum wage jobs. He tells us, that factories employed many of these Puerto Rican immigrants back from the 1960s to the 1980s, but soon after they began to diminish leaving immigrants to fend for themselves. Bourgois explains that many of the drug peddlers used to have legal jobs, and once they were unemployed became destitute. He gives us the example of Primo, who used to work in a garment factory, but after losing his job begins work selling drugs. Bourgois documents that within the area known as “El Barrio” or Spanish Harlem, you can buy many different drugs at different prices, showing the competitive nature of the drug trade.The lectures highlight 5 different types of existence. The first is Hunter and Gatherer society, in which work is split equally among the different tribes/people. This is a very primitive existence. The next is Horticulturist, which is a primarily agrarian existence. These are your farmers, people harvesting crops, etc. They are capable of producing their own food and goods, and then can sell produce or goods to make a living. The next is Pastoralist existence, which is very similar to Horticulturists, but they are often more nomadic and of the herding variety. They live off their livestock and they use it to make a living, like a sheep herder might barter their livestock or sell wool. The last is the Industrialist existence, which is the most commonplace and modern, which is what we in the US use. It is a market built on production of goods, with a vast division of labor and supply and demand for commodities.  System of Exchange consists of two things: Production and Distribution. It also consists of the distribution of goods and services. The first method of distribution is redistribution. So the goods/services are provided to the person/people and it is then paid for in a different form than the original method of distribution. Another method is market exchange. In this scenario, goods and services are provided according to the rules of supply and demand. So the people decide a fair price to pay for a commodity. The last method is reciprocity. In this case, people exchange goods and services directly. Labor is known as “the rules that govern the assignment of jobs to people and for determining units of production” according to (Lecture 5.1.) There are many divisions of labor and they are commensurate with the complexity of each society.

Do you think “shell money” or another form of currency would be successful outside of an economy like Papua New Guinea?, why or why not?

Do you agree or disagree with Bourgois view on immigrants and drugs? Explain your reasoning.

3 thoughts on “D. Chander-Week 5-Systems of Exchange

  1. What didn’t work for me about the Pig Tusks and Paper Money documentary was the arguments the Papua New Guineans used for why paper money was not good and that shell money was good. For a moment forget your own opinions on the subject and just look at the arguments they used.

    – “Modern money is like chasing the wind. You have five bucks in your hand today and then a few minutes later it’s gone and then it’s gone and so you got to go and look for another five bucks.”
    – “The thing with modern money, you give it away and it goes for good. With the shell money, you give it to me and I give it back to you so it’s just to and fro most of the time.”
    – “If we can create a blood bank which is really, you store blood, what is the difference of me creating a bank for the island people and shell money for?”

    None of these arguments make sense; they all can be applied to either argue for or against shell money. If you spend your shell money, then it’s gone and you have to look for more. If you give someone paper money, they can give it right back to you, or to someone else. A blood bank and a shell bank are obviously not the same, because people don’t use blood to buy things.

    The only point I saw in the video that does make sense is that the global economy doesn’t benefit the people of Papua New Guinea, but that argument isn’t inherent to shell money. They could use any currency they like, and as long as it only really has value to them, their local economy is preserved. Shell money works for them – I’m not saying it doesn’t – because nobody else in the world wants it. It’s not a desired commodity. But this would be just as true of paper money; they could print paper notes that signify a value in shells (a 50 shell note, a 100 shell note, 250 shell note, and so on) and use that instead, and it would work exactly as well. What this system would do however would be to make it easier for them to convert their money into other world currencies (if desired) and make it vastly easier to transport their money.

    And that’s actually the funny thing about Tokubak; what he doesn’t realize – probably because he doesn’t really understand economics – is that establishing a shell bank is the first step toward abolishing shell money. If his bank succeeds, it will likely end up collecting quite a few shells. People will eventually realize that rather than going down to the bank to get shells, taking them to the store to spend, and then the store owner taking them back to the same bank to deposit them, it would be easier just to write a note and sign it saying, “take 500 shells from my bank account and put them in the store’s bank account.” This builds a checking system. After time it will become apparent that rather than writing individual checks to specific people, you can just have checks that are worth a set amount of shells and whoever physically holds the check can redeem it. This is now what paper money is; a “note” stating that the holder is entitled to some amount of an item, be it gold, silver, or shells. The only step now to transitioning entirely to paper money is to stop saying that the notes can be exchanged for shells, and say that the notes themselves now -are- the shells.

    Tokubak doesn’t realize that what he’s doing is signing the death warrant for the shell economy.

    What I do agree with Tokubak about is something he never actually says, but is a more important issue he’s struggling against, and that’s bureaucracy. I don’t think that the banking systems of PNG or the World Bank should be shutting him down, because since they don’t even recognize shell money as currency, they can’t then turn around and say that he isn’t allowed to start a bank, because his bank wouldn’t be keeping actual currency by their reckoning.

  2. This is an interesting piece you have written. I enjoy that you decided to analyze “Pig Tusks & Paper Money” rather than just analyzing the different strategies and systems of exchanges covered in this week’s lectures. To answer your question about whether or not shell money or another form of currency would be successful outside of an economy like Papua New Guinea, there is a lot that has to be thought about before answering the question entirely. I think other form of currencies such as shell money will never truly be anything more than reciprocal exchange, which truly isn’t an economic system in my mind. The reason our economic system works, is because when we pay for goods and services, the money we pay then floats through the rest of the economy. We have central banks that use strategies to control the flow of money and control inflation. Obviously, Papua New Guinea isn’t the United States of America, but for a currency to be a true currency and to establish a true economic system with central banks, the shells would have to hold some type of value. How do you establish the value? Also, I agree to an extent with Bourgois’s views on immigrants and how they are sometimes better off selling drugs illegally than holding menial, legal jobs. But when I say I agree with his views, that doesn’t make it right or ethical. Sometimes making more money in an unethical way crosses the line between legal and illegal. We aren’t just talking drug trading either, you could look at Wall Street in the same light. When does making a profit become more important than staying within the law and using practical, legal business strategies to do so? These immigrants are surely facing an uphill battle in terms of making enough money to live, but I know I would rather make less money and struggle to live than participate in something illegal.

  3. I agree that the documentary Pig Tusks & Paper Money is eye-opening because of it’s unique take on systems of exchange and currency. Using shells as a form is an alternative to paper and it is interesting to think about how money isn’t really worth anything unless it is recognized as currency within the culture, just like the shells would be in Papua New Guinea. I think this would be considered a form of industrial system because it is still using a currency rather than one of the more primitive systems. I think the shell money currency could be successful in any economy as long as everyone agreed to use it as the currency. I don’t think it really matters what the currency is as long as it is something that is agreed upon. The only issue I might see would be if it is something like that that’s a natural resource that could potentially run out.

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