Nick Szabo's Shelling Out - Did He Sell Out by Having Zero Empathy for the Human Exchange of Immutable Truth?

Introduction

Nick Szabo’s influential article, Shelling Out: The Origins of Money, provides a compelling examination of the historical development of money, tracing its roots from primitive barter systems to modern monetary economies. Szabo argues that money evolved as a solution to the limitations of barter, developing through trade in durable and desirable items such as shells, beads, and metals. However, despite its depth, the article conspicuously overlooks a crucial factor: the role of Immutable Truth and the pure human empathy that governed early exchanges of value. In his focus on Austrian economic theory, Szabo misses the moral and human underpinnings that define early barter economies.

This post will critically assess Szabo’s work, analysing where his reliance on contemporary economic models falters, particularly in failing to account for the empathy-based exchanges that defined early human societies. We will argue that Szabo’s omission of empathy leads to a distorted view of economic history, and we will explore the damaging effects of this exclusion, particularly with regard to the ethics of interest and wealth distribution.

The Barter System and the Origins of Money: Szabo’s Overview

Szabo begins his article by describing the challenges inherent in barter systems. He rightly points out that barter economies suffered from a lack of coincidence of wants, meaning that two parties rarely had goods of equal value that the other wanted at the same time. However, Szabo treats barter in purely practical terms, as an inefficient mechanism for facilitating trade. He fails to recognise that early barter was more than a primitive form of economic exchange; it was rooted in human empathy—the understanding and mutual recognition of need. Barter was an inherently social act that fostered trust, cooperation, and community cohesion.

In early societies, the exchange of goods was not driven by a cold calculation of value, but by the recognition of the other person’s needs and a desire for fairness. As explored in Maslow’s Hierarchy of Needs, barter exchanges were often about fulfilling both basic physiological needs (such as food and water) and emotional needs, including love, belonging, and esteem. This is a point Szabo entirely neglects. He frames the development of money as an inevitable progression towards a more efficient system but ignores the empathy that underpinned those early exchanges, and the Immutable Truth that individuals relied on one another for survival, bound by social and moral obligations rather than mere transactional necessity.

The Role of Durable Goods in the Evolution of Money

Szabo’s article goes on to explain how the use of durable goods like shells, beads, and metals arose as a medium of exchange. These items had intrinsic value due to their durability, divisibility, and difficulty to counterfeit. However, Szabo’s focus on these material qualities overlooks the fact that empathy played a critical role in the selection and acceptance of these goods as currency.

The shift from barter to durable goods was not simply a pragmatic solution to the shortcomings of barter; it was also a reflection of trust in the community. The use of certain durable items was bound by Immutable Truth—the inherent trust that the goods being exchanged had real value based on shared understanding and collective needs. For example, in some cultures, shells were valued not for their rarity alone but because they were deeply integrated into social and spiritual practices, carrying meaning that transcended simple utility. Szabo fails to address the human, empathetic component of why these durable goods came to be accepted as money in the first place.

The Origin of Commodity Money and Austrian Economic Theory

Szabo’s narrative, influenced by Austrian economic theory, frames the evolution of money as a series of innovations aimed at solving the inefficiencies of barter. Austrian economics, which favours individualism, the free market, and minimal government intervention, often ignores the moral dimensions of economic systems. Szabo’s adoption of this viewpoint leads him to dismiss the social and empathetic aspects of money, focusing instead on material goods and market dynamics.

What Szabo neglects is the recognition that Immutable Truth and human empathy were cornerstones of early trade. Austrian economic theory assumes that individuals are rational, self-interested agents, driven primarily by profit. But the earliest forms of barter and trade were not solely based on self-interest. They were communal, and rooted in the understanding that one’s survival and well-being were tied to the well-being of others in the community. By ignoring this reality, Szabo presents a distorted view of economic history, one that reduces human interaction to a series of impersonal exchanges.

How Szabo Misses the Role of Empathy in Economic Exchange

Szabo’s failure to address the role of empathy in early economic exchange is a critical oversight. Empathy is not simply a social nicety; it was the glue that held early societies together, ensuring fair exchanges, mutual aid, and the fulfilment of collective needs. In small communities where everyone knew each other, the Immutable Truth was that the survival of one person often depended on the cooperation and support of others. Trust and empathy were critical to sustaining economic relationships.

In his discussion of money as a solution to the limitations of barter, Szabo overlooks the fact that introducing money as a medium of exchange removed much of the empathy that had been intrinsic to barter. As money became more widely used, transactions became more anonymous and less personal. The introduction of money allowed individuals to trade without knowing or caring about the other person’s needs. This marked a fundamental shift in the nature of economic exchange, one that Szabo fails to adequately address.

Interest on Money: Empathy Drained Like a Vampire Sucking Blood

Perhaps the most significant failure in Szabo’s analysis is his lack of engagement with the concept of interest on money. The idea of charging interest on loans directly undermines the empathetic foundations of early economic systems. Charging interest allows individuals to profit from the needs and vulnerabilities of others, draining empathy from the economic system like a vampire sucking blood from its victims. Instead of facilitating fair exchanges, interest-based lending exploits imbalances in power and wealth, creating cycles of debt that disproportionately affect the most vulnerable.

Szabo’s silence on this issue is indicative of the broader shortcomings of Austrian economic theory, which often fails to consider the ethical dimensions of wealth accumulation and distribution. In early societies, empathy was the guiding principle behind economic exchanges, ensuring that both parties benefited and that the community remained cohesive. Interest, by contrast, concentrates wealth in the hands of a few, eroding trust and empathy within the community.

Supply and Demand: Missing the Role of Empathy

Szabo’s analysis of supply and demand also lacks an understanding of the role that human empathy plays in balancing these forces. In early barter economies, the supply of goods was often limited, and demand fluctuated based on need rather than profit motive. Empathy helped balance supply and demand, ensuring that resources were distributed according to need. In a drought, for example, those with access to water would share it with those who had food, and vice versa. This mutual understanding of need created a more equitable system of resource distribution than the market-driven forces that Szabo describes.

By focusing on material goods and market dynamics, Szabo overlooks the ways in which human empathy regulated supply and demand in early societies. The introduction of money disrupted these empathetic exchanges, creating opportunities for individuals to accumulate wealth without regard for the needs of others. This shift undermined the Immutable Truth that had governed barter economies: that all individuals are interdependent, and that fairness and empathy are essential for social cohesion.

Conclusion: Did Nick Szabo Sell Out by Ignoring Human Empathy?

Nick Szabo’s Shelling Out offers an insightful analysis of the origins of money, but it falls short in its failure to address the critical role of Immutable Truth and human empathy in early economic systems. By framing the evolution of money through the lens of Austrian economic theory, Szabo overlooks the moral and social dimensions that underpinned early barter economies.

His article misses the mark by ignoring the fact that early economic exchanges were driven by empathy and mutual understanding, rather than self-interest and profit motive.

In failing to engage with these concepts, Szabo also misses the opportunity to critique the ethics of interest and wealth accumulation, which drain empathy from the economic system like a vampire draining blood. Ultimately, by ignoring the role of empathy in economic exchange, Szabo presents a distorted and incomplete view of the origins of money, one that fails to recognise the human connections that once governed trade.

Sources:

• Szabo, Nick. Shelling Out: The Origins of Money, 2002.
• Graeber, David. Debt: The First 5,000 Years, Melville House, 2011.
• Ferguson, Niall. The Ascent of Money: A Financial History of the World, Penguin Press, 2008.
• Abraham Maslow, A Theory of Human Motivation, Psychological Review, 1943.

By Joe Bloggs

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