Friday, March 13, 2015

Debt will make you free?

                Within the topic of neoliberalism, Shuster, Graeber, and the Comaroffs all touched on issues associated with the trend in development toward microfinance.  What resonated with me was the critique that challenges citizens to consider “the enchantments”[1], the package deal of democracy, nationalism, and freedom which springs from capitalism as an ideology.  Microfinance can be seen as emplacing personal debt in the third world, modeling the Grameen Bank value that “credit is a human right.”[2]  The poor of the world are already financing the debts of the nation-states they live in (a direct result of political neoliberalism) by bearing the burden of infinite production in a finite world. Encouraging debit/credit to support market solutions to poverty, is proposing an enterprise solution to a problem grounded in neoliberal capitalism itself.
                The story of the Indian farmer suicides in the video and article (link below) is an example of how these policies can culturally isolate individuals and result in tragedy--this is a form of microfinance based on a system that cultivates an  individual as a “tiny corporation” in a singular calculated paradigm organized “around the same relationship of investor and executive.”[3]

[1] Comaroff and Comaroff, p318
[2] Graeber, p380
[3] Graeber p377

Sunday, March 8, 2015

Historical relativism in the study of economics

I appreciate David Graeber's advocacy for historical relativism in economics throughout Debt, but in particular a passage from chapter 10 of the book struck me this week:
"To take what might seem an 'objective' economic approach to the origins of the world economy would be to treat the behavior of early European explorers, merchants, and conquerors as if they were simply rational responses to opportunities -- as if this were just what anyone would have done in the same situation. ... In fact, history makes it clear that this is not the case." (p314)
"Rational behavior" as defined by modern-day economists could have in certain historical contexts "require[d] the destruction of entire civilizations" (p314). Graeber then goes on to discuss the case of Cortes and his conquistadors. Cortes had debts to pay and destroyed the Aztec capital of Tenochtitlan with the mindset of not only repaying the debts but going over and above that rate for personal use. His soldiers, however, found themselves in debt to the system of repayment set up by Cortes and enacted by surgeons, barbers, apothecaries, and others for services rendered during battle. This debt was then forced onto the indigenous population, who were made to work to the death in the rich mines of the region.

The outrage against the "wildly inflated prices for basic necessities" (which in this case resulted in other atrocities) manifests repeatedly across time and space (p318). I think of the #Occupy protests, for example, or current movements arguing that higher education should be a right. I'm not saying that these movements will end up the same as the conquistadors' treatment of the Aztecs, but I do think it is poignant that the prices of commodities can skyrocket without reproach far beyond what can happen with basic necessities. Historical relativism aids the study of any historical culture, but certain behaviors or rather reactions do seem commonplace across time and space.

Religion and Economics in the Middle Ages

Chapter 10 of Debt by David Graeber examines the connections between religion, politics, and trade in several major civilizations during the Middle Ages. One of the major themes throughout this chapter is how religion has had a major influence on how people are permitted to trade. In the case of Christianity, it was generally considered immoral to lend money to anyone during this time period. In Islam, while it is a very similar religion to Christianity, had very different views on the morality of trade and loaning money, and merchants had a much more prestigious position in society. It seems logical that religion, which tends to be a major influence on how people conceptualize morality, is also very influential on how people share and trade their economic resources.

Another interesting concept that Graeber emphasizes in this chapter is how the widespread use of paper money changed how people began to use and conceptualize currency. Money had been used in the form of coins for centuries before, but when paper money was used it became more divisible, portable, and accessible to everyone. Paper money, along with religions which tended to encourage trade and travel, were some of the major factors which contributed to more communication between civilizations around the world. It appears that the world has been going through the process of globalization long before the time of the industrial revolution. One question to think about after reading this chapter is: How much does religion (especially Christianity) influence economic and political practices in the U.S. today?

Endlessly Generate Credit?

I really enjoy how Graeber closed chapter 11 in thinking about why capitalistic regimes are constantly "manufacturing" the means of their own imminent extinction (social revolution, nuclear holocaust, global warming). 

On page 360 he says, "Perhaps the reason is because what was true in 1710 is still true. Presented with the prospect of its own eternity, capitalism -or anyway, financial capitalism- simply explodes. Because if there's no end to it, there's absolutely no reason not to generate credit -that is, future money- infinitely.” 

He then adds that right after capitalism seemed to have won over socialism in the period leading up to 2008, several reckless bubbles happened soon thereafter, which brought the whole capitalism apparatus crashing down.  

Empiralism and Capitalist Ideologies

Graber’s recent chapters highlight the cultural, political, and economic changes that have shaped the way that money has affected the world. One aspect that is particularly interesting to me is the relationship that exists between warfare, slavery, coinage, and ultimately, debt. This might more simply be described as imperialism, though I think that the relationship is perhaps more specific. Empires sought to acquire more territory through military conquest backed either by their own citizens or by mercenary armies.  In either case the government was forced to pay its soldiers some sort of compensation, the most simple of which was through coins. The raw materials for these coins were usually procured through slave labor of the conquered nations. Governmental debt is at the heart of this phenomenon, with war financing war in a cycle of violence that usually did not end until the reach of the empire was such that it could no longer finance or control its borders, citizens, or future conquests.

This is particularly interesting because, according to Graber, this is a repeating relationship starting with empires in China, India, and the Mediterranean during the Axial Age, pausing during medieval times, and reoccurring during European imperialism and conquest. Also noteworthy, are the ideological similarities between this type of imperialism and capitalism. Forgoing the idealized free market aspect of modern capitalism, the individualistic and “for-profit” nature of both capitalist corporations and empires is very similar. Both necessitate further expansion and growth, both seek to drive out competition, and in each case there are many instances where morality becomes tied not to ethical treatment, but to the continuation of the company or state (often at the expense of the individual).

Within some contexts however, more recent capitalism may be linked to the increase the living standards and rights of those who reside within its systems. Perhaps this too can be understood through the individualistic nature of modern capitalism, which is a step away from the nationalistic perspectives of empires. If individualism of self, not government or organization, is a high cultural value, then it is not surprising that individuals will seek to increase their rights, opportunities, and fair treatment as to boost their reliance on self.  In practice, the realization of these rights is far from certain, but the ideology makes some sense. This is not say that capitalism necessarily promotes democracy or expanded rights, just that the sentiment and ideology of capitalism encourages us to better our positions, which can include better rights and higher living standards.

What's New Under the Sun?

     There were some really fascinating story lines introduced in Chapters 10 and 11 of Graeber’s, Debt. Americans tend to be both Eurocentric and myopic when it comes to history of any sort, but in particular, I believe capitalism is viewed as emerging from European thinkers, honed by the spirit of American entrepreneurship, but largely a construct of American dynamics.  I found Graeber’s  placement of capitalism within a broader cultural context and historical timeline to be exceptionally insightful.
     There are so many things to take away from these chapters, it’s hard to focus on one or two for the purposes of this post. Citing medieval Persian thinkers, Ghazali and Tusi, as the progenitors of Adam Smith’s argument for the “invisible hand” of the market is extraordinary. Tracing the exploitation of the “New World” to China’s demand for metal-based currency, another mind blower!  The path of “usury” throughout history—exploitative, forbidden, circumvented, rationalized, institutionalized and normalized—is a wonderful perceptive trip Graeber takes us on to illustrate the social construction (and political manipulation) of economic systems.  He also lays the ground for exploring neoliberalism in these chapters as he hints at the American equation of capitalism = democracy.
     Perhaps what resonated most deeply for me in these chapters is the idea of morality in markets.  As a local food system scholar, there is consensus that liberating ourselves from the destructive impacts of unsustainable agriculture and our globally exploitative, corporate-controlled dominant food system resides in the social---it rests, in large part, on cultivating relationships of trust in the context of place.  From what Graeber tell us, the language we now use to describe the future food economy is one that medieval Islamic scholars would have recognized as their own: the market as a manifestation of mutual aid, profit-sharing, markets as being about cooperation not competition, the role and value of social capital and of nurturing networks of trust, the value of place.  As they say, there is nothing ever truly new under the sun!