So far, my book of the year is Debt: The First 5000 Years by David Graeber. There is no topic more timely than debt and this book grants you an opportunity to better understand someone who was instrumental in the formative stages of Occupy Wall Street. A fascinating read that overturns some of the myths that we take for granted.
Some excerpts:
...despite the dogged liberal assumption -- again, coming from Smith's legacy -- that the existence of states and markets are somehow opposed, the historical record implies that exactly the opposite is the case. Stateless societies tend also to be without markets. [p.50]
These are also the intellectual and political circles that shaped the thought of Emile Durkheim, the founder of the discipline of sociology that we know today, who in a way did Comte one better by arguing that all gods in all religions are always already projections of society -- so an explicit religion of society would not even be necessary. All religions, for Durkheim, are simply ways of recognizing our mutual dependence on one another, a dependence that affects us in a million ways that we are never entirely aware of. "God" and "society" are ultimately the same. [p.70]
Starting, as I say, from the principle of "from each according to their abilities, to each according to their needs" allows us to look past the question of individual or private ownership (which is often little more than formal legality anyway) and at the much more immediate and practical questions of who has access to what sorts of things and under what conditions. Whenever it is the operative principle, even if it's just two people interacting, we can say we are in the presence of a sort of communism.
Almost everyone follows this principle if they are collaborating on some common project. If someone fixing a broken water pipe says, "Hand me the wrench," his co-worker will not, generally speaking, say, "And what do I get for it?" -- even if they are working for Exxon-Mobil, Burger King, or Goldman Sachs. The reason is simple efficiency (ironically enough, considering the conventional wisdom that "communism just doesn't work"): if you really care about getting something done, the most efficient way to go about it is obviously to allocate tasks by ability and give people whatever they need to do them. One might even say that it's one of the scandals of capitalism that most capitalist firms, internally, operate communistically. [p.95]
[A good couple of paragraphs on tit-for-tat on p.105]
A wage-labor contract is, ostensibly, a free contract between equals -- but an agreement between equals in which both agree that once one of them punches the time clock, they won't be equals any more. [p.120]
We might say, then, that money introduced a democratization of desire. Insofar as everyone wanted money, everyone, high and low, was pursuing the same promiscuous substance. But even more: increasingly, they did not just want money. They needed it. This was a profound change. In the Homeric world, as in most human economies, we hear almost no discussion of those things considered necessary to human life (food, shelter, clothing) because it is simply assumed that everybody has them. A man with no possessions could, at the very least, become a retainer in some rich man's household. Even slaves had enough to eat. Here too, the prostitute was a potent symbol for what had changed, since some of the denizens of brothels were slaves, others were simply poor; the fact that their basic needs could no longer be taken for granted were precisely what made them submit to others' whims lies at the basis of the Greek obsession with the self-sufficient household. [p.190]
On the face of it, all this doesn't seem all that surprising: the moment when commercial markets developed, Greek cities quickly developed all the social problems that had been plaguing Middle Eastern cities for millennia: debt crises, debt resistance, political unrest. In reality, things are not so clear. For one thing, for the poor to be "enslaved to the rich," in the loose sense that Aristotle seems to be using, was hardly a new development. Even in Homeric society, it was assumed as a matter of course that rich men would live surrounded by dependents and retainers, drawn from the ranks of the dependent poor. The critical thing, though, about such relations of patronage is that they involved responsibilities on both sides. A noble warrior and his humble client were assumed to be fundamentally different sorts of people, but both were also expected to take account of each other's (fundamentally different) needs. Transforming patronage into debt relations -- treating, say, an advance of seed corn as a loan, let alone an interest-bearing loan -- changed all this. What's more, it did so in two completely contradictory respects. On the one hand, a loan implies no ongoing responsibilities on the part of the creditor. On the other, as I have continually emphasized, a loan does assume a certain formal, legal equality between contractor and contractee. It assumes that they are, at least in some ways on some level, fundamentally the same kind of person. This is certainly about the most ruthless and violent form of equality imaginable. But the fact it was conceived as equality before the market made such arrangements even more difficult to endure. [p.191]
One may well ask: If our political and legal ideas really are founded on the logic of slavery, then how did we ever eliminate slavery? Of course, a cynic might argue that we haven't; we've just relabeled it. The cynic would have a point: an ancient Greek would certainly have seen the distinction between a slave and an indebted wage laborer as, at best, a legalistic nicety. [p.211]
On the other hand, however suspicious of precious metals, Buddhism had always had a liberal attitude toward credit arrangements. It is one of the few of the great world religions that has never formally condemned usury. Taken in the context of the times, however, there's nothing particularly mysterious about any of this. It makes perfect sense for a religious movement that rejected violence and militarism, but that was in no way opposed to commerce. [p.235]
Since people who live in Western Europe have so long been in the habit of thinking of Islam as the very definition of "the East," it's easy to forget that, from the perspective of any other great tradition, the difference between Christianity and Islam is almost negligible. [p.271]
When it came to [Islamic] finance [in the Middle Ages], instead of interest-bearing investments, the preferred approach was partnerships, where (often) one party would supply the capital, the other carry out the enterprise. Instead of a fixed return, the investor would receive a share of the profits. Even labor arrangements were often organized on a profit-sharing basis. [p.276]
[St.] Basil grows poetic in describing the debtor's plight. It's as if time itself has become his enemy. Every day and night conspires against him, as they are the parents of interest. [p.284]
Soon the rediscovery of Aristotle, who returned in Arabic translation (and the influence of Muslim sources like Ghazali and Ibn Sina), added new arguments: that treating money as an end in itself defied its true purpose; that charging interest was unnatural, in that it treated mere metal as if it were a living thing that could breed or bear fruit. [p.290]
By the thirteenth century, the great intellectual debate was between the Franciscans and the Dominicans over "apostolic poverty" -- basically, over whether Christianity could be reconciled with property of any sort. [p.290]
The independent university -- perhaps the quintessential Medieval institution -- is another case in point [of Europe lagging the East]. Nalanda was founded in 427 AD, and there were independent institutions of higher learning all over China and the Near West (from Cairo to Constantinople) centuries before the creation of similar institutions in Oxford, Paris, and Bologna. [p.296-297]
Our image of the Middle Ages as an "age of faith" -- and hence, of blind obedience to authority -- is a legacy of the French Enlightenment. Again, it makes sense only if you think of the "Middle Ages" as something that happened primarily in Europe. Not only was the Far West an unusually violent place by world standards, the Catholic Church was extraordinarily intolerant. It's hard to find many Medieval Chinese, Indian, or Islamic parallels, for example, to the burning of "witches" or the massacre of heretics. More typical was the pattern that prevailed in certain periods of Chinese history, when it was perfectly acceptable for a scholar to dabble in Taoism in his youth, become a Confucian in middle age, then become a Buddhist on retirement. [p.297]
All this raises the question of what "capitalism" is to begin with, a question on which there is no consensus at all. The word was originally invented by socialists, who saw capitalism as that system whereby those who own capital command the labor of those who do not. Proponents, in contrast, tend to see capitalism as the freedom of the marketplace, which allows those with potentially marketable visions to pull resources together to bring those visions into being. Just about everyone agrees, however, that capitalism is a system that demands constant, endless growth. Enterprises have to grow in order to remain viable. The same is true of nations. Just as five percent per annum was widely accepted, at the dawn of capitalism, as the legitimate commercial rate of interest -- that is, the amount that any investor could normally expect her money to be growing by the principle of interesse -- so is five percent now the annual rate at which any nation's GDP really ought to grow. What was once an impersonal mechanism that compelled people to look at everything around them as a potential source of profit has come to be considered the only objective measure of the health of the human community itself. [p.346]
By the end of World War II, the specter of an imminent working-class uprising that had haunted the ruling classes of Europe and North America for the previous century had largely disappeared. This was because class war was suspended by a tacit settlement. To put it crudely: the white working class of the North Atlantic countries, the the United States to West Germany were offered a deal. If they agreed to set aside any fantasies of fundamentally changing the nature of the system, then they would be allowed to keep their unions, enjoy a wide variety a [sic] social benefits (pensions, vacations, health care...), and, perhaps most important, through generously funded and ever-expanding public education institutions, know that their children had a reasonable chance of leaving the working class entirely. One key element in all this was a tacit guarantee that increases in workers' productivity would be met by increases in wages: a guarantee that held good until the late 1970s. Largely as a result, the period saw both rapidly rising productivity and rapidly rising incomes, laying the basis for the consumer economy of today.
Economists call this the "Keynesian era" since it was a time in which John Maynard Keynes' economic theories, which already formed the basis of Roosevelt's New Deal in the United States, were adopted by industrial democracies pretty much everywhere. With them came Keyne's rather casual attitude toward money. The reader will recall that Keynes fully accepted that banks do, indeed, create money "out of thin air," and that for this reason, there was no intrinsic reason that government policy should not encourage this during economic downturns as a way of stimulating demand -- a position that had long been dear to the heart of debtors and anathema to creditors.
Keynes himself had in his day been known to make some fairly radical noises, for instance calling for the complete elimination of that class of people who lived off other people's debts -- the "the [sic.] euthanasia of the rentier," as he put it -- though all he really meant by this was their elimination through a gradual reduction of interest rates. As in so much of Keynesianism, this was much less radical than it first appeared. Actually it was thoroughly in the great tradition of political economy, hearkening back to Adam Smith's ideal of a debtless utopia but especially David Ricardo's condemnation of landlords as parasites, their very existence inimical to economic growth. Keynes was simply proceeding along the same lines, seeing rentiers as a feudal holdover inconsistent with the true spirit of capital accumulation. Far from a revolution, he saw it as the best way of avoiding one:
I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work. And with the disappearance of its rentier aspect much else in it besides will suffer a sea-change. It will be, moreover, a great advantage of the order of events which I am advocating, that the euthanasia of the rentier, of the functionless investor, will be nothing sudden...and will need no revolution. [p.373-374]
The one thing that's clear is that new ideas won't emerge without the jettisoning of much of our accustomed categories of thought -- which have become mostly sheer dead weight, if not intrinsic parts of the very apparatus of hopelessness -- and formulating new ones. This is why I spent so much of this book talking about the market, but also about the false choice between state and market that so monopolized political ideology for the last centuries that it made it difficult to argue about anything else. [p.384]
But market populism is always riddled with paradoxes, because it still does depend to some degree on the existence of that [the?] state, and above all, because it requires founding market relations, ultimately, in something other than sheer calculation: in the codes of honor, trust, and ultimately community and mutual aid, more typical of human economies. This, in turn means relegating competition to a relatively minor element. In this light, we can see that what Adam Smith ultimately did, in creating his debt-free market utopia, was to fuse elements of this unlikely legacy with that unusually militaristic conception of market behavior characteristics of the Christian West. [What is he saying here?] In doing so he was surely prescient. But like all extraordinarily influential writers, he was also just capturing something of the emerging spirit of his age. What we have seen ever since is an endless political jockeying back and forth between two sorts of populism -- state and market populism -- without anyone noticing that they were talking about the left and right flanks of exactly the same animal. [p.385]
This might come as something of a surprise, since the phrase is used so often in contemporary Western popular usage, "karmic debt" becoming something of a New Age cliche. But it seems to strike a much more intuitive chord with Euro-Americans than it ever did in India. Despite the close association of debt and sin in the Indian tradition, most early Buddhist schools avoided the concept -- largely because it implied a continuity of the self, which they saw as ephemeral and ultimately illusory. The exception were the Sammitiya... [Notes, p.433]
There are two sorts of wealthgetting, as I have said; one is part of household management, the other is retail trade: the former necessary and honorable, while that which consists in exchange is justly censured; for it is unnatural, and a mode by which men profit from one another. The most hated sort, and with the greatest reason, is usury, which makes a profit out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. And this term "interest" (tokos), which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. "Wherefore of all modes of getting wealth this is the most unnatural" Aristotle, Politics 1258b). The Nicomachean Ethics (1121b) is equally damning. For the best general analysis of the Aristotelean [sic.] tradition on usury: Langholm 1984. [The Aristotelian Analysis of Usury] [Notes, p.440]
