Posts Tagged ‘students’

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In the beginning, there was barter. Then, and forever after, there was money

That’s the myth every student of economics learns, that money grows out of barter. The idea is that monetary exchange solves the problem of the double coincidence of wants—that a person who is interested in trading needs to find someone who wants what they have and has what they want. Money makes trade much easier, so the story goes, and thus becomes a remarkable example of both human ingenuity and economic progress.

The fact is, as Ilana E. Strauss [ht: ja] explains, the story is false. Human beings did not invent money to solve the difficulties of barter exchange. Barter turns out to be a historical myth.

various anthropologists have pointed out that this barter economy has never been witnessed as researchers have traveled to undeveloped parts of the globe. “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money,” wrote the Cambridge anthropology professor Caroline Humphrey in a 1985 paper. “All available ethnography suggests that there never has been such a thing.”

Humphrey isn’t alone. Other academics, including the French sociologist Marcel Mauss, and the Cambridge political economist Geoffrey Ingham have long espoused similar arguments.

When barter has appeared, it wasn’t as part of a purely barter economy, and money didn’t emerge from it—rather, it emerged from money. After Rome fell, for instance, Europeans used barter as a substitute for the Roman currency people had gotten used to. “In most of the cases we know about, [barter] takes place between people who are familiar with the use of money, but for one reason or another, don’t have a lot of it around,” explains David Graeber, an anthropology professor at the London School of Economics.

A good example is the kind of exchange described by Fibonacci in his Liber Abbaci. He devoted the ninth chapter to “barter of merchandise and similar things.” But it wasn’t pre-monetary barter. Instead, as Randy K. Schwartz explains,

A barter was often recorded as such in a register or account book, as if actual coins had been exchanged, when in fact no coins at all were involved.

Because coins were still scarce, the widespread custom among merchants was to set the barter price for a commodity by “marking up” the cash price by a certain percentage. The two barterers had to agree on the markup rate ahead of time, or else one would feel cheated.

In other words, this was exchange that took money as the unit of account but, because coins were scarce, it took the form of the direct exchange of goods—say, wool for cloth.

And there are many other examples in the historical and anthropological record of forms of exchange that precluded money—centralization and redistribution, gifts, potlatch, trade at the edges of and between non-monetary societies, and so on. But there was no original barter economy, which was then surpassed by the use of money.

That’s a myth that began with Adam Smith:

But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former, consequently, would be glad to dispose of; and the latter to purchase, a part of this superfluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it. But they have nothing to offer in exchange, except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner, as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry. Many different commodities, it is probable, were successively both thought of and employed for this purpose. In the rude ages of society, cattle are said to have been the common instrument of commerce; and, though they must have been a most inconvenient one, yet, in old times, we find things were frequently valued according to the number of cattle which had been given in exchange for them. The armour of Diomede, says Homer, cost only nine oxen; but that of Glaucus cost a hundred oxen. Salt is said to be the common instrument of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India colonies; hides or dressed leather in some other countries; and there is at this day a village in Scotland, where it is not uncommon, I am told, for a workman to carry nails instead of money to the baker’s shop or the ale-house.

In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce any thing being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be re-united again; a quality which no other equally durable commodities possess, and which, more than any other quality, renders them fit to be the instruments of commerce and circulation. The man who wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must have been obliged to buy salt to the value of a whole ox, or a whole sheep, at a time. He could seldom buy less than this, because what he was to give for it could seldom be divided without loss; and if he had a mind to buy more, he must, for the same reasons, have been obliged to buy double or triple the quantity, the value, to wit, of two or three oxen, or of two or three sheep. If, on the contrary, instead of sheep or oxen, he had metals to give in exchange for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for.

It’s a myth that continues to be taught to hundreds of thousands of economics students every semester.

It occupies much the same position as the Robinson Crusoe story. In both cases, it’s a myth that starts with self-interested individuals who make decisions—to trade with money or to enter into a division of labor—that, at one and the same time, benefit themselves and society as a whole.

But, of course, there are many things missing from these mythical origin stories. There’s no exploitation or instability; no debt, unequal power, or state coercion; no social relations or embeddedness of the economy within society.

Instead, what mainstream economics offers starting with Smith, and continues to offer studies today, is a story about the mythical—not real, historical—origins of capitalism.

The sooner we recognize those stories for what they are, the sooner we can get on with the business of imagining and creating alternative economic institutions.

humanities

I often tell students that, if they don’t change their major five times before they settle on one, they’re not really taking advantage of what college has to offer. They need to try out different ideas and areas and see where it takes them. It’s my attempt to push back against pressure from many sources for students to choose a major quickly and stick with it, and to focus only on how much they’ll earn after graduating based on what they study.

As it turns out, performance-based funding [ht: mfa] is going to ramp up that pressure and shut down alternatives for many college students, especially in the humanities.

When the Kentucky governor, Matt Bevin, suggested last month that students majoring in French literature should not receive state funding for their college education, he joined a growing number of elected officials who want to nudge students away from the humanities and toward more job-friendly subjects like electrical engineering.

Frustrated by soaring tuition costs, crushing student loan debt and a lack of skilled workers, particularly in science and technology, more and more states have adopted the idea of rewarding public colleges and universities for churning out students educated in fields seen as important to the economy.

Most of the push toward performance-based funding in public education is coming from Republican governors and state legislatures. But it’s also coming from inside the academy itself. One example is Anthony Carnevale, a Georgetown University professor who apparently runs the Center on Education and the Workforce. Here’s his gem of an idea:

“You can’t be a lifelong learner if you’re not a lifelong earner.”

And, yes, that is an example of sarcasm.

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Readers will remember that, in Evangelii Gaudium, the leader of the Catholic Church developed a scathing critique of trickle-down economics and of the existing economy of inequality and exclusion.

Ironically, thanks to the reporting of Paul Moses [ht: js], based on a recent report by the New America Foundation (pdf), we’ve learned that many Catholic colleges and universities are engaged in their own acts of exclusion.

at a time of escalating worry over access to higher education for the children of the least affluent Americans, the study found that five of the 10 most expensive private universities for low-income students, and 10 of the top 28, are Catholic.

Some Catholic colleges “seem to have departed from what you would assume the principles of their faith would have compelled them to do,” said Kati Haycock, president of the Education Trust, a nonprofit organization that advocates for low-income students.

“It’s disturbing that institutions give money in these very difficult times to students who don’t need it,” Haycock said, and “don’t focus their resources on those who absolutely need it the most.”

Some Catholic colleges have placed a high priority on meeting the needs of very low-income families, while others have limited resources to do so. However,

some of the Catholic colleges that charge the most have robust wealth in the form of their endowments. Saint Louis University has a $956 million endowment; the University of Dayton, $442 million; Catholic University, $264 million; Saint Joseph’s, $193 million; and Loyola of Maryland, $177 million, the National Association of College and University Business Officers reports. Among the other Catholic universities with high net prices for low-income students, Villanova University has an endowment of $419 million and Notre Dame, $6.9 billion.

According to the New American Foundation, my own university, with a $6.9 billion endowment, has an enrollment that includes just 12 percent of Pell Grant students and a net price of more than $15 thousand for low-income students.

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Apparently, this is the way to get attention of the administration on college campuses these days: threaten to cut off $1 million football revenues.

A student engaged in a week-long hunger strike wasn’t able to get the university’s president to address the problem of racism on campus. So, black football players, with the support of other players and coaches, have stopped practicing and have threatened not to play in the scheduled games.

In response to mounting racial tensions at the University of Missouri and an administration’s perceived failure to address students’ concerns, members of the school’s football team have threatened to boycott its remaining games, leaving administrators reeling and emboldening student activists who have been demanding a change in leadership.

Like all such protests, there’s a larger context. This is, of course, the state where, fifteen months ago, Michael Brown was killed by a white police officer.

“The demonstrations by these students are a reflection of where things are going nationally in terms of people being fed up with intolerance,” said the Rev. Traci Blackmon, a St. Louis minister heavily involved in the Ferguson protests. “The notion that the administration would not take a very strong no-tolerance policy toward hatred of any kind is just unconscionable. And the response to the absence of that is what you’re seeing now.”

And this is a president who was hired to run the university like a corporation.

University of Missouri curators saw Wolfe as an ideal successor to Gary Foresee, a former Sprint Nextel CEO who had become the first non-academic to run the college system. Even their praise was couched in business jargon.

“He can sell to others the vital importance of our university,” board of curators chair Warren Erdman told the Rolla Daily News. . .

“I’ve had the great fortune to work with a lot of different companies and executives,” he told the St. Louis Business Journal. “There’s a six degrees of separation and we can get access. Even if you don’t have a personal relationship, you can use your LinkedIn network and can typically find a mutual friend who can initiate an introduction.”

It quickly became clear that Wolfe was being brought in to cut costs in a state where legislators were eager to slash taxes, depriving the university of revenue. . .

One of Wolfe’s first acts was to approve a three percent tuition hike, drawing the ire of parents and students.

A few months later, Wolfe stirred anger again by shutting down the university’s highly regarded publishing house in order to save $400,000 a year. After an outcry from professors and authors across the country, however, Wolfe changed course.

The controversy was heightened by the fact that Wolfe was, at the same time, pushing for a $72 million expansion of the university’s football stadium.

Last year, the board of curators voted to extend Wolfe’s contract, praising him for his business-minded approach.

“President Wolfe has thoughtfully transformed our strategic planning process in a way that focuses our limited resources on priorities while reducing or eliminating waste and redundancies,” the board said in a statement.

This semester, however, Wolfe’s corporate cost-cutting appeared to go too far.  Just a few days before the start of the semester, the university announced it was eliminating subsidies that graduate students use to pay for health insurance.

Graduate students revolted. Thousands, including Butler, protested against the cuts. They issued demands and walked out of classes. Ultimately, the university relented and restored the subsidies.