Red-Blooded Risk: The Secret History of Wall Street

Transition

Sometime around 50,000 years ago, the Upper Paleolithic phase of human development began. Important features of this period are the emergence of long-distance exchange networks and specialized economic activity. Both of these things leave clear traces in the archeological record. There is some controversy over whether this was a sudden revolution or the result of accumulated gradual changes over 500,000 years. We don't have much evidence for exchange and specialization earlier, but that doesn't mean they didn't exist; it just means they were relatively rare or involved perishable goods.

It makes logical sense that this is the period in which gambling and equal-value exchange developed. They allow individuals from different social bands to make exchanges, without necessarily agreeing on all the complex rules that support involuntary and gift exchange, and without the necessity for future interactions.

The emergence of equal-value exchange seems to me to be a likely cause of the Upper Paleolithic advances. Neighboring tribes with some genetic relationship, perhaps due to having split from the same older tribe or else due to exchange of some members for genetic mixing, meet from time to time. If either tribe happens to have a surplus of something, it donates some to the other, creating a social obligation for the recipient tribe to reciprocate at some future meeting. This can explain the long-distance exchange networks. It also allows some specialization. If one tribe happens ...