How did this happen? Well, remember I said that the big question in the origins of money is how a sense of obligation – an ‘I owe you one’ – turns into something that can be precisely quantified? Well, the answer seems to be: when there is a potential for violence. If you give someone a pig and they give you a few chickens back you might think they’re a cheapskate, and mock them, but you’re unlikely to come up with a mathematical formula for exactly how cheap you think they are. If someone pokes out your eye in a fight, or kills your brother, that’s when you start saying, “traditional compensation is exactly twenty-seven heifers of the finest quality and if they’re not of the finest quality, this means war!”Umm... what? First of all, as far as I can tell, he's got zero evidence. He's engaging in exactly the same kind of thought experiments that he accuses Smith et all of basing their arguments on. He makes some noises about being an anthropologist, but doesn't actually point us to the research on which this idea is based. I understand that it's an interview, but handling his assumptions this way does not give me great hope that things will be different in the book.
If however you ditch the whole myth of barter, and start with a community where people do have prior moral relations, and then ask, how do those moral relations come to be framed as ‘debts’ – that is, as something precisely quantified, impersonal, and therefore, transferrable – well, that’s an entirely different question. In that case, yes, you do have to start with the role of violence.No, you don't have to start with violence, and the paragraph above contains the reason why. It makes a lot more sense to think instead of emerging to deal with small-scale violence within the community, currency emerged to facilitate transactions with people outside the community with whom one doesn't have "prior moral relations," i.e. strangers, foreigners, etc. "I owe you one" does work pretty well within the confines of a defined, largely immobile community, and I think he's really got a point there. But it doesn't work at all for people who travel. The traveling merchant is not likely to accept "I owe you one" from someone in a village to which he may or may not return, and the villager is not likely to accept that from a traveler who may or may not come back. There needs to be some immediate exchange of value for that to work. And despite the stereotypes of people who never went more than ten miles from the place where they were born, the ancient and medieval worlds were incredibly well networked. The Romans were at least vaguely aware of China, and the Silk Road has existed for millennia. Itinerant merchants on a smaller scale were present long before that.
By the time the curtain goes up on the historical record in ancient Mesopotamia, around 3200 BC, it’s already happened. There’s an elaborate system of money of account and complex credit systems. (Money as medium of exchange or as a standardized circulating units of gold, silver, bronze or whatever, only comes much later.)vallkryn: his point is that the historical record shows that systems of credit/debt came before currency. I have no idea whether that's accurate or not but that's his claim as an 'antropologist.'
So really, rather than the standard story – first there’s barter, then money, then finally credit comes out of that – if anything its precisely the other way around. Credit and debt comes first...
“If a man is righteous and does what is just and right. . . does not oppress anyone, but restores to the debtor his pledge, commits no robbery, gives his bread to the hungry and covers the naked with a garment, does not lend at interest or take any profit, withholds his hand from injustice, executes true justice between man and man, walks in my statutes, and keeps my rules by acting faithfully—he is righteous; he shall surely live, declares the Lord God.The Protestant Reformers came up with a sort of tripartite model for thinking about debt. First, when dealing with the truly poor, one does not lend at all. One gives, and gives generously. Period. Anything less is actually viewed as a form of robbery, as a violation of the Eighth Commandment. Second, for the man who is not poor, but still needs money temporarily, one lends, but does not expect interest. In a sense, this is also a gift, as it lets the debtor have the time-value of money and does not make him any worse off. Here we see the kind of "You owe me one" thing that the author is talking about: borrowing/lending is a sort of fuzzy practice between people with prior moral relations, and the moral obligation is at least as significant as the financial one. But for the rich, or for business transactions and investments, interest is fine, as it simply represents just compensation for the risks involved in such lending. One does not help underwrite a trade mission without the promise of a return on one's investment, and all in all, trade missions and similar ventures are good things.
Systemically, all debt that charges a percentage ("usury") originates in delusion. Debt grows exponentially indefinitely, growth (income and otherwise) cannot. This leads to a widening condition where the fruits of productive "growth" devoted to interest payments increase until those fruits are entirely consumed...also btw A Critique of Pure Gold: "For a solution to this instability, Hayek himself ultimately looked not to the gold standard but to the rise of private monies that might compete with the government's own. Private issuers, he argued, would have an interest in keeping the purchasing power of their monies stable, for otherwise there would be no market for them. The central bank would then have no option but to do likewise, since private parties now had alternatives guaranteed to hold their value. Abstract and idealistic, one might say. On the other hand, maybe the Tea Party should look for monetary salvation not to the gold standard but to private monies like Bitcoin." cf. The Denial Of Money*
This problem is compounded by a private Federal Reserve that lends money into circulation at interest, and then allows the multiplication of this consumer debt-money liability through fractional reserve banking. The money in circulation today could pay only a small fraction of the total private and public debt. That fact alone is evidence of a kind of systemic fraud...
This is why debt forgiveness makes not only moral but rational, mathematical sense. Finances require balancing to be coherent. There must be some way to redress systemic imbalance. One has to be able to "zero the scales" to get an accurate weight of value and to re-establish healthy value creation... The only "real wealth" here revolves around ability to produce real and needed goods (to allow us to survive), and the ability to create something that increases one's quality of life (to promote our thriving).
Take our financial junk out of the global attic in boxes, put them out on the front lawn, and see if anyone wants to pay a few bucks for the various items, give away the leftovers to anyone interested passing on the sidewalk, and recycle, donate, or dispose of the rest. It's a moving sale, and if our economy is going to get moving, maybe we ought to have one...
[S]ubtle debt extortion creates a system of never-ending debt-slavery for a vast majority of the population. When this "manageable" slavery is aggravated by a desire to use hardship to extort ever greater assets from the overburdened at ever cheaper prices (what Naomi Klein calls "disaster capitalism"), by open and unapologetic widespread fraud, and by the unjust offloading of risk and liability to taxpayers who had nothing to do with poor decisions of private banks, then the systemic abuse is revealed in the daily lives of citizens.
Debt creates scarcity, which stimulates fear, which drives manic competition, which favors opportunism, collusion, and concentrations of power, which translates to abuse, which results in a collapse of legitimacy for the economic system. Overreach causes a breaking point, and we are getting close to it. Will the response be warfare, taxpayer revolt, political upheaval, mass default, debt forgiveness, something other, some combination?
From a resource perspective this is vital if we're to continue to maintain economic growth in a world of finite resources. However, this same innovation is also allowing us to be more productive with less employees. We have factories full of robots to build our cars and computers. Who needs a secretarial pool when you have e-mail, copy machines, and printers?---
Up through roughly the 1980s, if you had a minimal education, you could still find gainful employment that could provide a middle class income. That is less and less the case now, and it will only get worse in the future. So how do we, in a capitalist democracy, address the fact that some people will be incapable of a meaningful contribution to productive output? ...
This disparity of opportunity is one of the main reasons we have such a polarization in US politics today is because this issue has continued to go unaddressed. The tea party is not angry at government as such, but rather angry about getting screwed by the system. But their right leaning politics assumes that the target of their ire should be the government. The left, similarly angry, blames large corporations...
Of course as poverty rises, wages stagnate, and unemployment remains high for less educated workers, politicians are all too happy to demagogue, blame the other side, and make the situation even worse. So we wind up with a self-reinforcing problem where greater inequality leads to greater polarity and makes real solutions more difficult to achieve. In the end, this is unsustainable.
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posted by enn at 7:09 AM on August 28, 2011 [1 favorite]