Debt: The First Five Thousand Years

[Michael]

Anthropology meets Economics! :popcorn:

This is a very interesting article that I stumbled across earlier that I found quite interesting. I've re-read the article a couple of times now and think it may be of interest to others here since it touches on the 'culture' of economics as much as the history of economics - and from the perspective of an anthropologist no less! This is economics, political theory, history, anthropology, modern culture and human society topic, all rolled into one! :D

Remarkably, the cited article is a reasonably short one, given the topic. :)

Article (http://www.metamute.org/en/content/debt_the_first_five_thousand_years)

Debt: The First Five Thousand Years

Anthropologist David Graeber argues that it is only with a general historical understanding of debt and its relationship to violence that we can begin to appreciate our emerging epoch. Here he begins to fill in our historical knowledge gap.

What follows are a series of brief reflections (part of a much broader work in progress) on debt, credit, and virtual money: topics that are, obviously, of rather pressing concern for many at the current time.

I will add that I get a distinct impression that David Graeber is approaching the whole topic from a distinctly 'marxist' perspective, but I'm stating that only for reference - every author has a perspective. In this case, I consider the topic to be far more expansive and thought-provoking than any kind of minor bias might impinge upon.

Now I can approach this from a couple of different angles, so I'll wait for some replies before I get into critiquing or expanding on the ideas raised in the cited article.

Just for starters, I've always viewed 'economic history' as primarily driven by the 'technology of war'. This perspective suggests that technology originates in the art of war (and/or the need for war) and that advances/changes in military technology produce (or drive) the real changes that are observed over time in political culture. This is my own 'theory of economic history'. I mention it here because it is both complementary and conflicting with the 'theory of economic history' given in the cited article.

On this basis, I'm 'forced' to quibble with the way David Graeber interprets particular economic events, suggesting that the 'war' theory of economic history is not to be dismissed so easily and replaced by this 'alternative' theory as to the driving force of economic history. This issue is not the only one in the article that I'm interested in discussing. I'm also interested in the general subject of debt - or the 'history of debt' or the 'philosophy of debt' or even the 'culture of debt' that are all discussed in the article.

Either way, it is always a pleasure to look at history with a fresh perspective - this 'short' article is a darn good one for doing that! :)

[phungus420]

This is probably the most interesting thing I've read in months.

[Michael]

This is probably the most interesting thing I've read in months.
I'm inclined to agree. A remarkably interesting article just packed with ideas. Oddly enough, this thread isn't drawing much interest. But it is extremely interesting to me (and phungus too!) so I'll continue with it and just have a discussion with myself about the article and see where that leads. :D

One thing that strikes me about this article is that I pick up a new angle, or a new idea each time I re-read the article through. That's an amazing amount of ideas packed into such a short article. Here's a good example - three paragraphs in length...
Or could one look at brief cycles – sub-cycles perhaps? This is particularly clear in the US, where one can see a continual alternation, since WWII, between periods of relative peace and democratic mobilisation immediately followed by a ratcheting up of international conflict: the civil rights movement followed by Vietnam, for example; the anti-nuclear movement of the ’70s followed by Reagan’s proxy wars and abandonment of détente; the global justice movement followed by the War on Terror.

Or should we be looking at financialisation? Are we dealing with Fernand Braudel or Giovanni Arrighi’s alternation between hegemonic powers (Genoa/Venice, Holland, England, USA), which start as centers for commercial and industrial capital, later turn into centers of finance capital, and then collapse?

If so, then the question is of shifting hegemonies to East Asia, and whether (as Wallerstein for instance has recently been predicting) the US will gradually shift into the role of military enforcer for East Asian capital, provoking a realignment between Russia and the EU. Or, in fact, if all bets are off because the whole system is about to shift since, as Wallerstein also suggests, we are entering into an even more profound, 500-year cycle shift in the nature of the world-system itself?
This time it was the middle paragraph here that really got me thinking. I'm wondering if this is actually true - that there is a direct theoretical connection in the rise and fall of a financial-based hegemon power. I never thought of that before, but it looks obvious when one considers the temporal sequence of Venice, Holland, England & USA. It does look like financial based hegemonic power is very unstable and fleeting.

For contrast, consider the field of 'materials engineering'. In this field (somewhat comparable to the field of 'commercial capital') we can see that Germany was a notable leader in this field circa 15th century. Other nations have had various reputations for innovative and fine quality materials engineering (Italy, France, England, USA, Japan in temporal sequence again), but Germany has remained pretty much the leader here all along. The same thing seems to be true for 'fashion clothing' industry. France (and Paris in particular) has had domination in this field going on now for many centuries. History is replete with references to trendsetting Parisian fashions from medieval, renaissance and modern times. Italy has been France's only rival in all this time. In other words, it seems quite 'normal' for some nations to maintain a market leader position in a particular field or sector for many hundreds of years running (Germany in engineering, France in fashion, for examples).

As is noted in the article, leadership in the 'commercial finance' sector seems to be comparatively unstable. It is interesting to note that the military arts seem to be similar to 'commercial finance' sector in being one of instability and fleeting fame with new hegemons always coming and going over time (military hegemons always seem to 'rest on their laurels' and prove incapable of shifting to new military dynamics that arise to counter the hegemon's specialized (and inflexible) military system.

I suppose it ought to be relevant here to note that the rise of the USA as a hegemonic power has been based almost entirely upon the fields of military arts and commercial finance...

Anyway, what really has me thinking about this topic is to figure out how/why financial hegemons don't succeed. History suggests that financial hegemons have a limited lifespan. I'm curious what might be the cause of that (keeping in mind that German engineering and French fashion have kept strong leadership positions in their respective fields for many centuries).

I suppose the first place to look for a clue would be the military field because that one is so well-studied with many examples - and a notable pattern of instability and fleeting fame for hegemons and/or nations aspiring to leadership positions. In that field, it is usually changes in the technology of the art that gives rise to the changes over time (exemplified by the traditional "infantry vs cavalry" epoch shifts throughout history). I wonder if there is something about commercial finance that fits this type of pattern?

Anyway, these are just some of the sideline issues that I keep thinking about whenever I think about his article. The real issue of the article is given here:

Then, the argument goes, a new cycle began in which workers tried – or were encouraged – to buy into capitalism itself, whether in the form of micro-credit, stock options, mortgage refinancing, or 401ks. It’s this movement that seems to have hit its limit now, since, contrary to much heady rhetoric, capitalism is not and can never be a democratic system that provides equal opportunities to everyone, and the moment there’s a serious attempt to include the bulk of the population even in one country (the US) into the deal, the whole thing collapses into energy crisis and global recession all over again.
Is this perhaps some previously unexpected or unidentified flaw in capitalism? A limit to the physical size of the capitalist class itself? Again, I've never considered this angle. Food for thought.

... if everything were going the way it generally has tended to go, for the last 500 years, East Asia would emerge as the new center of capitalist dominance.
Indeed. One ought to expect Japan to become the new hegemonic financial power, to be supplanted by China in turn. Except - this doesn't seem to be happening... :ummm:

Complicated topic... :)

[Dominick]

Is this perhaps some previously unexpected or unidentified flaw in capitalism? A limit to the physical size of the capitalist class itself? Again, I've never considered this angle. Food for thought.
New ? Unexpected ? Unidentified ?
:help:
That has been its most prevalent critique since day one. Of course the participation is limited. It requires exploitation by definition.

[Michael]

New ? Unexpected ? Unidentified ?
:help:
That has been its most prevalent critique since day one. Of course the participation is limited. It requires exploitation by definition.
No, that critique has never really existed beyond placard waving protesters as an assumption and is entirely driven by the theory that capitalism is an evil conspiracy by definition and thus, must be limited to the elite few.

Fact is there has been substantial and constant growth in the size of the capitalist class for long, long time. Of course it can never constitute a majority of the population, but there is no theoretical reason that the proportion can't rise a percentage point or two.

Thus, my interest/surprise on the appparent fact that systemic limitations appear to have caused severe problems due to the expansion of the capitalist political class. There is no shortage of aspirants to the capitalist class, nor is there any shortage of capital to fund such expansions. The failure appears to be entirely political (not endemic or theoretical). The assymetry of information problem seems to be increasingly to be politically mandated rather than an unintended consequence of economic production - this is likely the real cause of the issue here.

[Michael]

Btw, Marx specifically in his writings explicitly defines "exploitation" as a strictly technical term with no moral content.

In this respect, capitalism is exploitive by definition. All production processes are exploitive by definition.

Of course, almost every critic of capitalism assumes a moral argument that exploitation is by definition evil. Such a statement is absurd.