Archive for the ‘economics’ Category

Since reading David Graeber’s Debt last fall, I’ve become interested in the relationship between Marxist economic theory and the heterodox theory of money Graeber supports in his work.  Graeber holds to a chartalist position, which argues that money is not, as the classic account in Carl Menger goes, simply the most salable commodity, but rather a symbol that has value because the state requires us to pay taxes in it.  Though this theory of money dates back to Aristotle, today it has been developed into the body of theory known as ‘Modern Monetary Theory.’

MMT’s focus on the role of the state in making money gives it a very different emphasis from Marx’s analysis in the first three chapters ofCapital.  There, Marx argues for something quite similar to Menger, drawing an account of the way that a society based on commodity production has need for one commodity to serve as a universal equivalent.  In other words, monetary theory appears to make for strange bedfellows.  On one side, we have the neo-classicals, the Austrians, and Marx.  On the other, the left-leaning post-Keynesians.  What to make of all this?

Personally, I’m pulled by the arguments of MMT.  As  I began researching what Marxists had to say on the subject, I was relieved to find a number of them arguing that value theory does not require commodity money, and that Marx himself in the later volumes of Capital appears to recognize this.  Others, however, argue that capitalism does require a commodity basis for money.  David McNally’s recent work, probably the most sophisticated Marxist appraisal of the current crisis we have, lends support to both positions, in a way.  On the one hand, his argument for a neoliberal boom clearly implies that capitalism can go through substantial periods of accumulation without a commodity based currency.  On the other hand, he argues that the waves of financialization that accompanied this boom, and lit the fuse for the bust, were themselves a product off capital’s need for a different kind of universal equivalent, since money itself was no longer playing that role.

Really, I have no idea where I stand in all of this, having nowhere near the requisite knowledge to judge the debate.  But I thought while I’m reading up on the question, I may as well post a bibliography to make it easier for other folks interested in doing the same.  Here it is.

Foley, Duncan K. “On Marx’s Theory of Money: The Theory of Money and the Theory of Value” Social Concept 1.1 (1983).

Lapavitsas, Costas. “Money as ‘Universal Equivalent’ and its Origins in Commodity Exchange” (unpublished) (2003).

Lapavitsas, Costas.  “The Emergence of Money in Commodity Exchange, or Money as the Monopolist of the Ability to Buy” (unpublished) (2002).

Lavoie, Don. “Some Strengths in Marx’s Disequilibrium Theory of Money” Cambridge Journal of Economics 7.1 (1983).

Marx, Karl. Capital: A Critique of Political Economy, Chs. 1-3.

Moseley, Fred. “The ‘Monetary Expression of Labor’ in the Case of Non-Commodity Money” (unpublished) (2004).

Moseley, Fred (ed). Marx’s Theory of Money: Modern Appraisals.  (New York: Palgrave Macmillan, 2005).

Nelson, Anitra.  “Marx’s Theory of the Money Commodity”  History of Economics Review 40 (2004).

Weeks, John.  “The Theory and Empirical Credibility of Commodity Money”  Science & Society 76.1 (2012).

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I’ve always liked the way the hard left has described ideological differences as ‘deviations.’  There’s something almost sexy about it, either from the near-homonymy with ‘deviant’ or the way the language seems to slide easily into a Freudian diagnosis.  Alas, as a Marxist of at least what I like to imagine as near-Jesuitical orthodoxy, I have been something of a late bloomer in developing my deviations.  Recently, however, I’ve been doing some experimenting, and I think I’ve found one at last, in an intellectual infatuation with the anarchist anthropologist David Graeber.  What follows may simply be the result of over-excitement, but I wanted to get some initial thoughts down before diving into his big new book.

I’ve known about Graeber for some time, first encountering him in this piece at Lenin’s Tomb.  Recently, his book on debt has been getting a lot of press, and I noticed his spat with (really, thorough demolition of) Austrian economists posted at Naked Capitalism.  From there, I’ve been watching a number of pieces of his on youtube, and just yesterday I went to his event at the Brooklyn Book Festival, where the impeccably yuppy crowd tittered predictably upon his introduction as ‘an anarchist.’

Graeber’s presentation there was something of a precis of his new book Debt: The First Five Thousand Years.  Graeber argues that debt has played a whole variety of complex roles in human societies, and that our current understanding of debt as an inviolable, calculable obligation, while not exactly new, is at least somewhat peculiar.  In fact, debt structured human sociality in a multitude of ways long before the rise of money, and thus before the rule of any sort of quantifiable principle.

You can get a sense of the antiquity of debt, and its importance, in its presence in early religious discourse.  Graeber notes that in many ancient religions, the word for sin or guilt was the same as that for debt.  The Lord’s Prayer originally went ‘forgive us our debts, as we forgive our debtors.’  This is because debt played a crucial role in structuring human relations, which in many pre-capitalist societies formed a complex and subtle web of mutual obligations.  Indeed, in some societies, one habitually paid either slightly less or slightly more than own owed – to pay your debt exactly was to signal to your creditor that  you desired no further relationship with her.

This structure of debt changed with the rise of money, which is at the center of the debate at Naked Capitalism.  Graeber argues that, contra Adam Smith and basically every other economist, money did not arise out of a previously existing barter economy.  Such a thing never existed.  Instead, money first arose as a means of exchange between people coming into contact at the edges of societies, such as long distance traders who only came into contact intermittently.  As Graeber argues, such socially incidental practices could hardly serve as the basis for the emergence of a full-blown money economy.  Instead, precise quantifiability seems linked up with the threat of violence.  If someone commits violence against someone else, the penalties tend to be enumerated precisely, introducing practices of quantification previously absent.  Additionally, money seems to come from the practices off non-state bureaucracies, such as temples, in accounting for the needs of their workers – in other words, it comes from practices that are the opposite of the kind of barter system predicted by economists of various stripes.  For Graeber, these two institutions – the law regulating violence, and non-state bureaucracies, are the key to understanding the emergence of money.

However, money economies were not a done deal once they emerged.  Graeber argues that history has seen an oscillation between what he calls a ‘virtual credit economy’ of the type described earlier and a money economy.  Most recently, the key turn came in the early modern era.  At this time, non-monetized credit was the animating force behind about 95% of all transactions.  As a new round of imperial wars got under way, however, the state turned to money to pay its soldiers, and money became a more important feature of social relations.  Correspondingly, the law concerning debts became more precise and punitive, and suddenly debt became a weapon everyone could use against everyone else.  Graeber calls this ‘the Hobbesian moment,’ and argues that the resulting chaos helps explain the ambivalence early political economists felt towards debt.

Moving forward a bit, Graeber argues that neoliberalism represents in some ways a new social role for debt.  While the Keynesian social contract of the postwar years had tied rising productivity to rising wages, and the social struggles of  that era largely concerned the extension of this contract to excluded groups, under neoliberalism workers were promised not raises but credit.  Debt thus replaced the social wage as a force for social pacification.  Of course, as the last few years have amply illustrated, this arrangement contained within it the seeds for even greater social chaos than that of the postwar years.

Though Graeber is deliberately non-prescriptive in much of his argument, he does argue for a certain broad political orientation towards debt.  All debt is, he says, are promises we make each other, and if democracy means anything at all, it surely means the ability to continually renegotiate those promises.  After all, we’ve seen that certain people and institutions are quite easily able to renegotiate their debts if they suddenly find them onerous.  If AIG can write off its loans, why can’t I?

As a point of critique, this seems to me unassailable.  But I think it falls somewhat short of being able to provide a strategic orientation.  For while Graeber emphasizes that most of us live our daily lives in ways that are closer to the virtual credit economy than to neoliberal man (he likes to joke that if you took Milton Friedman out to a nice dinner, he’d probably feel obliged to do something nice for you, even though his economic theory says he should just take the lobster and run), it remains true nonetheless that there are powerful social groups in our society who will do everything in their power to stop us from achieving our Jubilee.  If we are to have any hope of actually clearing our books, we have to have a serious accounting of the strengths and weaknesses of these groups or institutions, as well as our own.

There’s another point at which a semi-orthodox Marxist such as myself could find something to question in Graeber’s argument, and that’s his emphasis on state and non-state bureaucracies in the rise of money.  It seems to me that this argument could be presented in an extremely anti-Marxist fashion, emphasizing the causal primacy of institutions and processes not related to social relations of production, and vindicating a sort of Weberian explanatory pluralism.  Though I haven’t read Debt yet, I doubt very much Graeber takes this path, though I would not be surprised to see others use his work in such a way.  I want to suggest, though, that Graeber’s emphasis on these points does not necessarily contradict Marxist hypotheses about the causal primacy of social relations of production.  After all, as Ellen Meiksins Wood, amongst others, has argued, it is only under capitalism that ‘the state’ and ‘the economy’ become separate realms of social life (paging Dr. Lukacs).  In pre-capitalist modes of production, the state and non-state bureaucracies are intimately connected to the process of production, even if they are not organizing the labor process itself (though sometimes they are).  Thus, the centrality of these institutions is not necessarily a refutation of historical materialism.

I realize this is a somewhat hamfisted attempted to deal with an argument I don’t even know that anyone is making.  But people always say silly things about their crushes.  I’m looking forward to getting to know him better.

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‘Greed is Good -Wall Street bonuses are getting a bad rap, but they’re an important and useful part of the financial services industry. Taking them away could hamper the economic comeback.’ (Wall Street Journal)

‘Greed is Good…for Burma – In snatching up the country’s wealth for themselves, the ruling junta’s rapacious generals may actually be opening the door for democracy. And, ironically, China may be the reformers’ greatest ally.’ (Foreign Policy)

‘Wall Street’s “Greed Is Good” Is A Lot Less Nasty Than You Think.’ (Business Insider)


“Wisconsin public unions are greedy free riders”

‘Governor Christie Shreds ‘Greedy’ Teachers’

‘Greedy Teachers Union Must be Opposed’

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Rand Paul gets groovy

There’s been lots of talk since the election describing the new Republicans as pushing a particularly cruel or uncaring version of capitalism.  Besides ignoring the increasing important of affect in the performance of conservative masculinity, this line of thought completely misunderstands the vision of capitalism espoused by Tea Party and co.  It’s not capitalism red in tooth and claw they favor, but hippie capitalism:

BLITZER: What if they just raised taxes on the richest, those making more than 250,000 dollars a year?

PAUL: Well, the thing is, we’re all interconnected. There are no rich. There are no middle class. There are no poor. We all are interconnected in the economy.

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The Ecclesiarchy

Throughout the whole tawdry spectacle of controversy over the so-called ‘Ground Zero mosque,’ it has been interesting to follow the responses of American liberals.  Some have cravenly attempted to track the mythical beast known as ‘public opinion,’ hoping to capture it and save their own sorry hides.  Others have acquitted themselves well, taking a principled stand against racism.  Despite the welcome display of backbone on this issue on the part of many liberals, I’ve nonetheless experienced a certain dissatisfaction upon reading their arguments.  This feeling is especially acute regarding their treatment of the assertion that Ground Zero is ‘hallowed ground.’

People can certainly be forgiven for meeting this charge with stifled giggles.  After all, as one much-reposted blog entry has shown us, the former World Trade Center site is surrounded by strip clubs, betting parlors, and all imaginable varieties of tourist terror kitsch.  Furthermore, the repeated solemn intonations of the phrase by various talking heads have so emptied it of semantic content that one is left with the impression that it means little besides ‘no muslims allowed.’  Thus, many have concluded, this site is not hallowed ground, but rather one more piece of Manhattan where people will do anything to make a buck.  While such a response is tempting, however, it is insufficient.  For it is precisely the veneration of accumulation, embodied in the various supposedly profane establishments listed above, that makes Ground Zero a sacred space in the American imagination.

To understand why this is so, we must look, with Walter Benjamin, upon capitalism as a religion.  Benjamin made this argument in a short unpublished fragment from 1921.  A response to Max Weber’s famous treatment of Protestantism and capitalism, Benjamin’s fragment sought to demonstrate not merely that capitalism was strengthened by religious culture at key points in its development, but that it was itself a religious phenomenon.  Thanks to Michael Lowy’s erudite exegesis of the fragment in Historical Materialism last year, those of us without a complete edition of Benjamin’s unpublished writings can see this fascinating argument for the first time.

Capital's avatar

Benjamin’s characterization of capitalism as a religion relies on three main points.  The first is that capitalism is a peculiarly cultic phenomenon, one in which ‘nothing has meaning that is not immediately related to the cult’.   The cultic activities – ‘capital investment, speculation, financial operations, stock-exchange manipulations, the selling and buying of commodities’ – are the only ones invested with meaning, as all else is rendered valueless (p. 62).  The idol of the cult is money, the only object worthy of worship.  As Lowy notes, this description of capitalism is not Marx’s, focusing as it does on mercantile activity, and not the aspects of capitalism (the commodification of labor power) that Marx thought were decisive.  Nonetheless, the practices Benjamin focuses on are those which are crucial to capital’s self-presentation — its church clothes, if you like.

The second religious aspect of capitalism is its conception of time.  Benjamin’s phrase, borrowed from Weber, is “sans trêve et sans merci” (without rest or mercy) (p. 63).  Capital’s time is homogenous, rationalized.  It marches steadily forward without interruption, without pause.  For Weber, this dynamic had its roots in the Puritan suppression of holidays, when time spent for one’s self was time stolen from God.  For Benjamin, the accent is different, as the cultic allegiance capital demands, the ceaseless worship of its idols, transform every day into a sacred one, homogenizing our experience of time into a never-ending cultic ceremony.

The final religious aspect of capitalism is its production of despair.  Capital recognizes nothing beyond itself.  It forecloses on all futures except its own.  This destruction of futurity can be seen as the essence of despair, since any hope is contingent upon the possibility of a future.  Every capitalist must expand or be crushed by the competition, so that collectively the class ensures that none of its members may have any respite from this dynamic.  As Lowy puts it: “According to the religion of Capital, the only salvation consists in the intensification of the system, in capitalist expansion, in the accumulation of more and more commodities; but this ‘remedy’ results only in the aggravation of despair” (p. 68).  According to the rules of the game, the pursuit of salvation only assures damnation.

All of these cultic aspects of capitalism were on exhibit in the original World Trade Center.  Conceived in the 1940s as a means to revitalize lower Manhattan, the WTC was to act as a locus for international trade at the same time that it would be an engine of urban renewal by improving the value of the real estate surrounding it.  The cultic devotion to the realization of profit here reshaped the urban form, restructuring the city environment in ways more conducive to capital.  Architecturally, this same dynamic shaped the design of the buildings themselves.  The WTC’s distinctive design, in which the steel support beams were placed on the building’s exterior, was intended to allowed maximum flexibility for the tenants of the various floors.  The  project’s planners envisaged every sort of commercial activity within the wide open spaces of the towers’ interior, from office space to trading floors hundreds of feet above the city.  Every aspect of the project was to be devoted to the cultic practices of capitalism.

The homogenization of time was also important in the project’s conception.  The WTC was to be a command center of global capital, a place from which the expansion of markets and the battering down of trade barriers could be planned and executed.  Its purpose, in other words, was to facilitate the imposition of capitalist time upon those areas of the world still outside of it.  The WTC’s form also lent itself to the project of homogenizing time.  The skyscraper, after all, is a particular attempt to control time through a spatial configuration.  By gathering so many of capital’s prelates into one place, the planners of the WTC hoped to minimize the temporal disruptions caused by difficulties in communication.  Through the manipulation of space, time could be smoothed into that frictionless medium demanded by capitalist theology.

Crucial as the homogenization of time and the domination of cultic activity were to the WTC’s design, the production of despair was by far the most important ideological element of the project.  Minoru Yamasaki, the head architect, conceived of his design as a tribute to American democracy.  Yamasaki hoped that his buildings would be a ‘a living and active monument to world peace,’ linking the globe through trade.  Though couched in a language of liberal hope, Yamasaki’s dreams for his project reveal a profoundly desperate vision of the future.  The WTC was to be a monument to a particular kind of world peace – that established under American global supremacy.  Launched during the Cold War, the project’s goal of uniting the world through trade was a particularly American vision of global cooperation.  As capitalism works through eliminating possible futures, ensuring that its future will be the only one, so the WTC was a symbol of the United States’ bid to ensure that the world’s future would be identical with its own.

With so much cultic energy embodied in the WTC, it is unsurprising to find that the project’s design expressed certain themes in common with sacred architecture.  Portentously enough, Yamasaki chose Islamic architecture as the tradition from which he would draw.  Capitalism’s relentless reduction of everything to ductile raw materials here worked its magic on symbolic motifs of pre-modernity, transforming the sacred architecture of Islam into adornments of the church’s of capital.  This pattern was most obvious on the exterior of the towers, where transition from wide column spacing to “dense structural mesh” created implied pointed arches, one of Islamic architecture’s most recognizable motifs.  The central plaza of the WTC was patterned after the Qa’ba in Mecca, the most holy site in Islam.  All of this was quite conscious on Yamasaki’s part, as he described his project as “a mecca, a great relief from the narrow streets and sidewalks of the surrounding Wall Street area.”  Just as  other religions absorb the holidays and deities of their predecessors, capital absorbed the sacred architecture of Islam into its own hallowed ground.

Capital's Qa'ba

September 11th, as they like to say, changed everything.  But the designation of the WTC site as a sacred space of capitalism would remain untouched.  Before the wreckage had even been cleared, plans for rebuilding were already under way.  The eventual design that was settled upon, ‘Freedom Tower,’ was to be a monument to America’s determination to rebuild.  It would be, as its designer Daniel Libeskind declared, “a global symptom of optimism.”

As Oscar Wilde told us long ago, however, “The basis of optimism is sheer terror.”  In this case, truer words have never been spoken.  Freedom Tower is a bathetic expression of American supremacy.  At 1776 feet tall, its structure is meant to remind us of our hallowed past and sacred mission.  Yet patriotic numerology cannot expunge from consciousness a certain awareness of the structure’s origins in terror.  As dominating as the tower purports to be, it cannot conceal the paranoia built into its structure.  As the New York Times’ architectural critic has put it, the structure’s ’20-story, windowless fortified concrete base decorated in prismatic glass panels [is] a grotesque attempt to disguise its underlying paranoia.’  Of course, the project’s devotion to the cultic pursuits of capitalism also remains.  The current owners of the lease have hawked rental space in the tower with all the fervor of a revivalist preacher, assuring the tenants that their pursuit of profit is a noble service to their country.

So, next time someone tries to convince you that Ground Zero is ‘hallowed ground’ which would be defiled by a community center, don’t simply brush them off with a reference to strip clubs.  Instead, join with the lost soul in religious brotherhood.  There’s bound to be a Starbucks nearby where the two of you can take communion.  Though it seems like the conflict over Park51 may tear this country apart, remember: we are a nation full of faith.  With enough good works, we are sure to make it through.

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In a shameless bid to increase traffic to my otherwise unnoticeable little blog, I’ve uploaded David Harvey’s recent interview about capitalism for those who can’t watch it through the BBC.

David Harvey on Capitalism Today from Herr Naphta on Vimeo.

Thanks to Antonovich from the Lenin’s Tomb comments for originally ripping it.

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