Spring Grab Bag

A new study claims that desertification of the Sahara may have been exacerbated by human activities such as herding. The Sahara Desert is an interesting case, in the sense that its development was a case of cattle before crops. The reason was because the highly variable rainfall and climate made a mobile way of life like herding far less risky than crops which cannot be moved and demand consistent levels of rainfall. But it seems that the needs of cattle may have altered the environment in negative ways.

BY the way, those desert herders may have been the source of much that was unique about Egyptian culture. Many of those features are still seen in African herding cultures such as Nuer and Masai today.

A new paper authored by archeologists with Seoul National University has suggested that the Sahara Desert, once green and wet, dried out as a result of the actions of ancient peoples. The spread of agriculture depleted the Sahara’s plant life and caused the region’s the shift to a desert biome, the paper claims.

Humans may have transformed the Sahara from lush paradise to barren desert (The Conversation)

Was the Sahara Desert Created by Humans? (Science News Journal)

Ancient Humans Created the Sahara Desert, Says Archaeologist (Sputnik News)

Is human sacrifice linked with hierarchy?

In almost all societies, killing within a tribe or clan has been strongly taboo; exemption is granted only to those with great authority. Anthropologists have suspected that ritual human sacrifice serves to cement power structures — that is, it signifies who sits at the top of the social hierarchy.

How human sacrifice propped up the social order (Nature)

Is our narrow definition of agriculture causing us to miss other methods of “agriculture” –of humans transforming the landscape to meet their needs in sustainable ways?

Indigenous writer Bruce Pascoe has recently published a book called Dark Emu: Black seeds, agriculture or accident? that challenges the popular perception of our Indigenous past. He argues that the economy and culture of Aboriginal and Torres Strait islander people has been ‘grossly undervalued’ for the past 200 hundred years. The early writings of white explorers and settlers are central to his argument; they described the cultivated way Indigenous people managed the land.

‘Hunter-gatherer societies forage and hunt for food and do not employ agricultural methods or build permanent dwellings,’ he writes. ‘But as I read these early journals, I came across repeated references to people building dams and wells, planting, irrigating and harvesting seed, preserving the surplus and storing it in houses, sheds or secure vessels … and manipulating the landscape.’.

Rethinking Indigenous Australia’s agricultural past (ABC)

And, related, more evidence that Amazonia was once a food forest, centered around perennials and tree crops:

“Large areas of the Amazon are less pristine than we may think,” said Hans ter Steege, a tropical ecologist at the Naturalis Biodiversity Center in the Netherlands, and an author of a paper published in Science on Thursday. “The people who lived there before Columbus left serious footprints that still persist in the composition as we see today.” He was one of more than a hundred researchers who found that domesticated tree and palm species — like cacao, cashews, the açaí palm, the Brazil nut and rubber — were five times more likely to dominate the modern Amazonian forest than nondomesticated plants.

How the Amazon’s Cashews and Cacao Point to Cultivation by the Ancients (New York Times)

Amazon forest ‘shaped by pre-Columbian indigenous peoples’ (BBC)

Evidence of agroforestry in the ancient Amazon (tywkiwdbi)

Archaeologists Have Discovered More Than 450 Large Geometrical Geoglyphs in the Amazonian Rainforest (Science News Journal)

Another example of humans transforming the landscape: An ancient oasis in China’s remote desert (BBC)

It’s built around the Turpan Water System, an underappreciated engineering marvel:

The system has wells, dams and underground canals built to store the water and control the amount of water flow. Vertical wells are dug at various points to tap into the groundwater flowing down sloping land from the source, the mountain runoff. The water is then channeled through underground canals dug from the bottom of one well to the next well and then to the desired destination, Turpan’s irrigation system. This irrigation system of special connected wells has been claimed to originate in Iran (e.g., the qanat system), to have originated indigenously, or to have been invented in other parts of China. Both historical and archaeological research convincingly point to the origins of this technology as arriving from more western regions along with indigenous innovations.

The Irish potato famine was caused by wealthy landlords who prized profit over people — and thousands starved (Raw Story). It was caused by replacing communal structures with capitalist markets, but we can’t acknowledge that.

The route that eventually became the Silk Road developed based on the movement of nomadic herders:

Our model shows that long-term strategies of mobility by highland nomadic herders structured enduring routes for seasonal migrations to summer pastures, which correspond significantly with the evolving geography of ‘Silk Road’ interaction across Asia’s mountains,” said Michael Frachetti, lead author of the study and an associate professor of anthropology in Arts & Sciences at Washington University.

Silk Road evolved as ‘grass-routes’ movement (Phys.org)

Eurocentric history focuses on Greece as the birthplace of democracy, but cultures in the Americas may have had a more democratic arrangement as well:

…Tlaxcallan is one of several premodern societies around the world that archaeologists believe were organized collectively, where rulers shared power and commoners had a say in the government that presided over their lives. These societies were not necessarily full democracies in which citizens cast votes, but they were radically different from the autocratic, inherited rule found—or assumed—in most early societies.

It wasn’t just Greece: Archaeologists find early democratic societies in the Americas (Science)

An anthropologist considers how humans invented numbers:

Numbers are this really simple invention. These words that reify concepts are a cognitive tool. But it’s so amazing to think about what they enable as a species. Without them we seem to struggle differentiating seven from eight consistently; with them we can send someone to the moon. All that can be traced back to someone, somewhere saying, “Hey, I have a hand of things here.” Without that first step, or without similar first steps made to invent numbers, you don’t get to those other steps. A lot of people think because math is so elaborate, and there are numbers that exist, they think these things are something you come to recognize. I don’t care how smart you are, if you don’t have numbers you’re not going to make that realization. In most cases the invention probably started with this ephemeral realization [that you have five fingers on one hand], but if they don’t ascribe a word to it, that realization just passes very quickly and dies with them. It doesn’t get passed on to the next generation.

How Humans Invented Numbers—And How Numbers Reshaped Our World (Smithsonian)

Was the apprenticeship system and the skills it inculcated critical in the rise of Europe and the Industrial Revolution?

Before the Industrial Revolution, almost all useful knowledge was tacit. The main mechanism through which tacit skills were transmitted across generations was apprenticeship, a relationship linking a skilled adult to a youngster whom he taught the trade. Apprentices spent most of their waking hours in the master’s workshop, where they learned from the master and more experienced apprentices and journeymen. As apprentices spent time in the shop, they gradually acquired the skills of the master, often through imitation and guided learning-by-doing…What we argue is that the institutions governing the intergenerational transmission mechanism were of central importance to the dissemination of best-practice techniques. The nature of the apprenticeship system based on personal contacts and mostly local networks was a central factor in the closing of gaps between best-practice and average-practice techniques. We argue that apprenticeship institutions in Europe led to faster dissemination of best-practice technical knowledge and contributed, ultimately, to Europe’s technological primacy.

Apprenticeship and the rise of Europe (Naked Capitalism)

Reddit consideration of why the continent of Africa is impoverished today: ELI5: Why is Africa, as a whole, such an impoverished continent?

Rather than hunter-gatherers being “old by age 30”, it seems like that is a more accurate description of people in modern, industrial societies:

The healthiest hearts in the world have been found in the Tsimane people in the forests of Bolivia, say researchers. Barely any Tsimane had signs of clogged up arteries – even well into old age – a study in the Lancet showed. “It’s an incredible population” with radically different diets and ways of living, said the researchers. They admit the rest of the world cannot revert to a hunter-gathering and early farming existence, but said there were lessons for all of us.

‘Healthiest hearts in the world’ found (BBC)

And, related, Anxious, depressed, distracted — what if the cure is just outside? (Grist)

A geomagnetic spike hit the ancient kingdom of Judah in ancient times. If this were to happen again today, the electrical grid could be a smoking ruin.

Earth’s geomagnetic field wraps the planet in a protective layer of energy, shielding us from solar winds and high-energy particles from space. But it’s also poorly understood, subject to weird reversals, polar wandering, and rapidly changing intensities. Now a chance discovery from an archaeological dig near Jerusalem has given scientists a glimpse of how intense the magnetic field can get—and the news isn’t good for a world that depends on electrical grids and high-tech devices.

Astonishing geomagnetic spike hit the ancient kingdom of Judah (ars Technica)

Sometimes it takes new technology a while to catch on:

By 1907, only 8 percent of Americans lived in homes served by electricity nationwide. It was not dispersed super swiftly because the infrastructure had to be built. Once that was in place, the question was whether you could you afford it. For every new technology, people have to be persuaded that it’s important. I think the thing that made them really want electricity was the radio, which didn’t become ubiquitous until the 1920s and ‘30s.

How the war of the currents brought power to cities (CityLab)

And also: How the world’s first cities got started (CityLab). Similar thesis to what I wrote about the origins of cities.

Before there was Jesus, there was Apollonius of Tyana.

Climate change and the rise and fall of civilizations (NASA)

Is the idea that all scientific inquiry in the Middle Ages was squashed by the all-powerful Catholic Church just a myth that need to be laid to rest?:

About once every 3-4 months on forums like RichardDawkins.net we get some discussion where someone invokes the old “Conflict Thesis”. That evolves into the usual ritual kicking of the Middle Ages as a benighted intellectual wasteland where humanity was shackled to superstition and oppressed by cackling minions of the Evil Old Catholic Church. The hoary standards are brought out on cue. Giordiano Bruno is presented as a wise and noble martyr for science instead of the irritating mystical New Age kook he actually was. Hypatia is presented as another such martyr and the mythical Christian destruction of the Great Library of Alexandria is spoken of in hushed tones, despite both these ideas being totally untrue. The Galileo Affair is ushered in as evidence of a brave scientist standing up to the unscientific obscurantism of the Church, despite that case being as much about science as it was about Scripture.

It’s not hard to kick this nonsense to pieces, especially since the people presenting it know next to nothing about history and have simply picked up these strange ideas from websites and popular books. The assertions collapse as soon as you hit them with hard evidence. I love to totally stump these propagators by asking them to present me with the name of one – just one – scientist burned, persecuted, or oppressed for their science in the Middle Ages. They always fail to come up with any. They usually try to crowbar Galileo back into the Middle Ages, which is amusing considering he was a contemporary of Descartes. When asked why they have failed to produce any such scientists given the Church was apparently so busily oppressing them, they often resort to claiming that the Evil Old Church did such a good job of oppression that everyone was too scared to practice science. By the time I produce a laundry list of Medieval scientists – like Albertus Magnus, Robert Grosseteste, Roger Bacon, John Peckham, Duns Scotus, Thomas Bradwardine, Walter Burley, William Heytesbury, Richard Swineshead, John Dumbleton, Richard of Wallingford, Nicholas Oresme, Jean Buridan and Nicholas of Cusa – and ask why these men were happily pursuing science in the Middle Ages without molestation from the Church, my opponents usually scratch their heads in puzzlement at what just went wrong.

The Dark Age Myth: An Atheist Reviews “God’s Philosophers” (Strange Notions)

Is it possible that ancient people saw the world very differently than we do?:

Homer’s descriptions of color in The Iliad and The Odyssey, taken literally, paint an almost psychedelic landscape: in addition to the sea, sheep were also the color of wine; honey was green, as were the fear-filled faces of men; and the sky is often described as bronze… Not only was Homer’s palette limited to only five colors (metallics, black, white, yellow-green, and red), but a prominent philosopher even centuries later, Empedocles, believed that all color was limited to four categories: white/light, dark/black, red, and yellow…

It turns out that the appearance of color in ancient texts, while also reasonably paralleling the frequency of colors that can be found in nature (blue and purple are very rare, red is quite frequent, and greens and browns are everywhere), tends to happen in the same sequence regardless of civilization: red : ochre : green : violet : yellow—and eventually, at least with the Egyptians and Byzantines, blue.

Blue certainly existed in the world, even if it was rare, and the Greeks must have stumbled across it occasionally even if they didn’t name it. But the thing is, if we don’t have a word for something, it turns out that to our perception—which becomes our construction of the universe—it might as well not exist. Specifically, neuroscience suggests that it might not just be “good or bad” for which “thinking makes it so,” but quite a lot of what we perceive.

The Wine-Dark Sea: Color and Perception in the Ancient World (Clarke’s World)

And, related, non-Western “traditional” peoples’ perception is different than our own:

One explanation for their astonishing focus may come from the cattle rearing itself. Identifying each cow’s markings was apparently essential for their daily life – and this practice may perhaps train the eye with a focus and attention that was lacking in all modern societies. “I think that does come from their traditional lives – the powers to concentrate,” says Davidoff. But it could also be that modern life itself makes us more easily distracted by our surroundings. And it is for this reason that Opuwo is so interesting, as younger generations slowly migrate to the shanty villages on the edge of the small town…

To discover how this move might influence the Himba’s psychology, Davidoff’s team compared Himba migrants to the small town, with those still living the traditional lifestyle. As they had expected, the Himba who had spent years living on Opuwo were less focused on the local details than those living in the countryside. But you didn’t need to have spent your whole life in the town for it to have an effect; the team found that even very short day trips to Opuwo seemed to have had a lasting impact their perception, making them less focused on differences in the local details (and more conscious of the overall shape) when comparing two abstract figures, for instance. Needless to say, the influence was much greater for those who lived in the town – but it was still present even for the Himba who had only visited a couple of times. “There does seem to be a ‘dose effect’ – the more of it you have, the greater the effect becomes,” says Davidoff.

The astonishing focus of Namibia’s Nomads (BBC)

Real Solutions

In the Netherlands, an elder care facility also acts as a dorm, bringing old and young people together to their mutual benefit: The Nursing Home That’s Also a Dorm (CityLab)

Related: The Dutch prison crisis: A shortage of prisoners (BBC) Compare to the U.S.

Is depression an evolved response that actually has a beneficial purpose?

Some psychologists, however, have argued that depression is not a dysfunction at all, but an evolved mechanism designed to achieve a particular set of benefits. I’ve certainly considered whether it’s done that for me, both in high school and later in life. If they’re right, it means that our thinking about depression needs an intervention too.

Does depression have an evolutionary purpose (Nautilus)

Planners hope more benches in urban centres will help build friendlier cities: ‘Street seats’ aim to revolutionise cities through sitting (BBC)

Forget shorter showers; individual solutions won’t save the planet:

As narrator Jordan Brown says, no matter what environmental problem you consider, whether it’s the water crisis, the waste crisis, the emissions crisis, you name it, our personal actions account for very little of what’s going wrong. The vast majority of the problems can be traced back to the industrial economy, which consumes most of the water, generates most of the plastic waste, creates the most emissions, and so on and so forth.

What we do as individuals, he argues, does almost nothing to change the big picture. For example, municipal household waste accounts for only 3 percent of waste in the United States, so what’s the point of encouraging people to go zero waste at home?

Brown identifies four problems with perceiving simple living as a political act.
1) It is based on the notion that humans inevitably harm their land base. This fails to acknowledge that humans can help the Earth.
2) It incorrectly assigns blame to the individual, instead of targeting those who wield power within the industrial system – and the system itself.
3) It accepts capitalism’s redefinition of us as consumers, rather than citizens. We reduce our potential forms of resistance to ‘consuming vs. not consuming,’ despite there being far broader resistance tactics available to us.
4) The endpoint of logic behind simple living as a political act is suicide. If every act within our economy is destructive, and we want to stop this destruction, then the planet would be better off with us dead.
Personal solutions can’t save the planet

Personal solutions can’t save the planet (Treehugger)

Spain’s abandoned coal belt is trying to survive through innovation rather than going back to the past:

…Javi Fernandez’s small house is surrounded by edible plants. Among traditional winter crops grown in this area, like verza, a kind of cabbage, there’s also mustard, Jerusalem artichokes, and shiitake mushrooms. It’s a small patch of bounty amid miles of empty, rolling hills.

Rather than study engineering to work in the coal mines like both his father and grandfather, Mr Fernandez studied agriculture in Cuba. “I couldn’t afford to go to a paying university so I studied for free at the ISCA University, in San Jose de las Lajas,” he beams, digging through the 400 sq m (4,300 sq ft) of artichokes he has planted.

Will Spain’s coal belt survive through online barter? (BBC)

Paris compost urinals open near Gare de Lyon station (BBC)

How food waste can feed the hungry, train the jobless and fight loneliness too (Treehugger)

The food waste fighter (BBC)

On a chilly summer’s night in the centre of Copenhagen, a crowd gathers around the entrance of a restaurant called Dalle Valle. It’s 22:30 and the dinner buffet is winding up and the kitchens are about to close. But these people, mostly in their 20s and 30s, are here for the food that the diners inside didn’t want.

Dalle Valle is one of hundreds of restaurants and cafes listed in an app called Too Good To Go, which lets you order takeaway food that would otherwise be thrown away, for knock-down prices. It’s an example of many social initiatives set up in the last few years to address the growing problem of food waste. And in Denmark, they are leading the world.

The country where unwanted food is selling out (BBC)

Our Society Doesn’t Work

Spending large amounts of time indoors under artificial light and staring at computer screens has helped produce a “myopia epidemic” with as many as 90 per cent of people in some parts of the world needing glasses. Industrial food production has also turned primates’ taste for sugar — which evolved to persuade us to gorge on healthy fruit when it was ripe — into one of the main causes of the soaring rates of obesity in the Western world. And our sense of smell is under attack from air pollution, producing an array of different effects, including depression and anxiety.

‘Mismatch’ between the way our senses evolved and modern world is making us ill, experts warn (Independent)

The Basic Psychological Structure of Our Society Does Not Work (Ian Welsh)

Is the dark really making me sad? Writing this from Milwaukee in March, most definitely, yes.

Old, but relevant: Is Civilization A Bad Idea? (NPR)

What does it mean to be human? (Mosaic Science) Related: Neanderthals may have medicated with penicillin and painkillers:

Neanderthals living in prehistoric Belgium enjoyed their meat – but the Neanderthals who lived in what is now northern Spain seem to have survived on an almost exclusively vegetarian diet. This is according to new DNA analysis that also suggests sick Neanderthals could self-medicate with naturally occurring painkillers and antibiotics, and that they shared mouth microbiomes with humans – perhaps exchanged by kissing.

Neanderthals may have medicated with penicillin and painkillers (New Scientist)

Architecture

A beautiful rammed earth house in China based on vernacular forms: Modern rammed earth home echoes region’s natural cave dwellings (Treehugger) Also, this Australian home uses tent fabrics to meld inside and outside: Modern Australian tent house seamlessly brings nature inside (Treehugger)

Architecture’s forgotten drawing: the section:

With their Manual of Section, the three founding partners of LTL architects engage with section as an essential tool of architectural design, and let’s admit it, this reading might change your mind on the topic. For the co-authors, “thinking and designing through section requires the building of a discourse about section, recognizing it as a site of intervention.” Perhaps, indeed, we need to understand the capabilities of section drawings both to use them more efficiently and to enjoy doing so.

Studying the “Manual of Section”: Architecture’s Most Intriguing Drawing (ArchDaily)

Interesting article on digital techniques and traditional architecture, probably of interest mainly to architects/engineers: Modern Design from Historical Perspective (AUGI)

Could these techniques give a rebirth to more traditional forms/ornamentation and away from arbitrary ad-hoc form-finding by “starchitects” held together by space-age technology? Related:

Professor Alan Short of the University of Cambridge has published a book advocating for the revival of 19th-century architectural ideas to address the crippling energy use of modern skyscrapers. The Recovery of Natural Environments in Architecture proposes an end to the architectural fetish for glass, steel, and air conditioning, instead drawing inspiration from forgotten techniques in naturally ventilated buildings of the 1800s. The book is a culmination of 30 years’ research and design by Prof. Short and his colleagues at the University of Cambridge.

In his book, Prof. Short highlights a developed, sophisticated science of natural ventilation used in the 19th-century, exemplified by the first Johns Hopkins Hospital in Baltimore. After three years digitally modeling the hospital, Prof. Short and his team noted that ventilation performance in the building was equivalent to a modern-day computer-controlled operating theater. During the 19th-century, public anxiety over toxic air led to the development of public buildings devoted to exceptional air quality, a mindset which Prof. Short argues has been lost in the computer-controlled ventilation of modern skyscrapers.

New Book Calls for an End to Our Fetish for Conditioned Skyscrapers (archdaily)

A gallery of round architectural plans. Related, Round runways could save a lot of land, reduce fuel consumption and cut noise (Treehugger)

The Other Fictitious Commodities

One of Karl Polanyi’s central insights concerns the existence of “fictitious commodities,” which are land, labor and capital.

Land and labor are things that, prior to the Great Transformation, were part-and-parcel of the fabric of society and not merely chattel to be bought and sold in impersonal markets. Industrial capitalism determined these should be distributed by markets rather than by traditional means, and central governments proceeded to create these markets by destroying alternative social structures. Capital was deliberately brought about through deliberate state action by monetizing these items, establishing markets for them, and creating centralized financial systems and regulations to facilitate these markets.

The problem is that, as Polanyi points out, these things are decidedly NOT commodities. They are the very fabric of society itself. They are “fictitious” because they are not objects produced in order to be bought and sold—they have no basis in production or sale other than their ability to be sold on the market. Unlike true commodities, they cannot go unsold; absent some other subsidy, workers must work in order to survive, and everybody needs land to live on. Land, for example, is theoretically bought and sold in “free” markets, yet the supply of this “commodity” is inherently limited–we cannot create more of it.

This also demonstrates the impossibility of having a “pure” market society. Markets are subject to all sort of irrationality such as panics and bubbles, despite the fact that economics textbooks invariably depict markets as idealized systems automatically heading towards equilibrium, even though such things exist nowhere in the actual world we inhabit.

Ironically, even though labor is described as a commodity sold in the “labor market,” conventional (neoclassical) economists insist that supply and demand play no role whatsoever in these markets! So, for example, increasing the supply of workers by, say, massive amounts immigrant labor, is said to have no effect whatsoever on domestic wages. Neither does the addition of millions of additional workers via globalization. Rather, according to economists, in this “market” everyone simply gets what they produce, no more and no less!

Earlier, I cited arguments pointing out that what made social democracies such as Northern Europe much more functional societies was not socialism per se, but the decommodification of land and labor. Government policies decouple both of these things from existing in “pure” markets to some extent, which leads to better social outcomes:

Which political system does happiness economics support? (Aeon)

But the point I want to make is that land, labor and capital are not the only fictitious commodities. These were the major ones in 1944 when Polanyi wrote his book. But, if he were writing today, I’m sure he would include three other fictitious commodities that are having a massive impact on our economy today.

The three other fictitious commodities are: HEALTH CARE, EDUCATION, and NATURAL RESOURCES.

Several things tie these items together. For one, your need for these “commodities” has nothing to do with your ability to pay. Your desire for these commodities has nothing to do with your preferences. Your information about these commodities and options for purchasing them are highly restricted and circumscribed. Also, you cannot choose NOT to purchase these commodities, at least not without severe and deleterious consequences to your health and income prospects. In other words, consumer choice does not enter into the choice whether or not to buy them. As such, it makes no sense to treat these as true commodities distributed in “free and open” price-fixing markets. Yet, for reasons of capitalist ideology, we must consistently pretend that they can be and are so delivered.

1.) Health care. That this is a “fictitious commodity” should be obvious to anyone with half a brain. Health care is not, nor can it be, a “product” produced for sale in a market and distributed by impersonal forces of supply and demand. The idea of using markets to distribute health care is so bizarre as to beggar belief.

In fact, this fact is obvious to the rest of the world outside of the United States, so, it is a strange thing to have to even argue against health care being a market commodity, because only Americans believe it. Recall Polanyi’s description of a price-fixing market:

“a site, physically present or available goods, a supply crowd, a demand crowd, custom or law and equivalencies…Whenever the market elements combine to form a supply-demand-price mechanism, we speak of price-making markets…”

That doesn’t sound much like the health care market does it? No one wakes up in the morning one day and decides to go out and buy some health care. They come down with a fucking disease! They need treatment, sometimes urgently. What they have wrong with them has nothing to do with their capacity to pay. They have no expertise or knowledge with which to evaluate the health care “product” (much less the “perfect knowledge” posited by neoclassical economic theory). They are dependent on outside experts. There may even be traumatic injury involved such as a car accident (and there frequently is). Are victims of a car crash supposed to be “rational consumers of health care services?”

Also, everyone has a physical body, so everyone needs health care. On the other hand, most consumer goods are voluntary purchases. You cannot choose not to need health care; whether you need it or not has nothing to do with your actions. Yes, you can take care of yourself, but even Olympic athletes have health care issues that require treatment, from asthma to appendicitis. In traditional price-fixing markets, purchasing the commodity, from a Persian rug to a silk scarf, was a choice, not a requirement to go on living.

Advertising for hospitals and doctors abounds, and yet most people have extremely limited choices for where they can go to get treatment and which doctors they can visit (e.g. in-network and out-of-network). How can anyone honestly claim that “competition” in this system makes it more efficient? Getting any sort of clear pricing for medical services is next to impossible; you only know how much it costs when the (enormous) bill shows up in your mailbox. And the recent highly-publicized hiking of drug prices by predatory capitalists surely proves that supply and demand has little to do with drug pricing. After all, it’s not like you have much of a “choice” whether or not to purchase these products, especially if no generic is available. It’s more like a hostage racket than a “free” market.

Even with the completely “transparent” pricing desired by libertarians, it’s difficult to believe that the “invisible hand” left alone will perfectly align adequate supply with demand, especially with an aging population. Typically you need to purchase most health care at the end of life when your purchasing power is at its low ebb. Even with “Chemo-While-U-Wait” shops on every streetcorner as envisioned by libertarians, there is a price below which health care services will not fall. Should we just deny them to people then? Ron Paul acolytes may applaud this idea, but most non-sociopaths will probably not simply accept sitting by helplessly and watching grandma slowly die from cancer because she cannot afford to pay the corner clinic on her limited income.

Medical costs are currently a significant source of personal bankruptcy. It’s difficult to imagine people voluntarily bankrupting themselves through voluntarily purchases of any given commodity, even automobiles. That should be another indication that health care is no ordinary “product.”

Moreover, what you typically purchase is not even health care, but health insurance, which is redistributive by its very nature. And under the current system in the U.S., you are forced by law to buy this “product.” I wonder how that comports with the ideology of “free” markets. A single pool of people is by nature more efficient than multiple competing ones, which is why all other counties use a single-payer health system as their base.

It seems like we just need to constantly maintain this fiction that there is even a market in healthcare at all. In fact, we already intervene in this market all over the place, from health care for veterans to subsidies for the poor. The supposed “free” market in health care is entirely a creation of government regulations, absent which there would not even be a “market” for health care at all.

I need not belabor this point. Here is an excellent summary of many of the reasons why health care is not a commodity:

Health – A Market Like No Other (Whistling in the Wind)

2.) Education. In the United States, education has become a commodity to be sold by educational institutions and bought by “consumers,” typically by going heavily into debt. Even supposedly “not-for-profit” institutions have become essentially predatory money-making operations. And they are complemented by a vast for-profit education industry expressly designed to prey upon the poor and the desperate who are trying to further their skills to compete in an increasingly winner-take-all global economy.

Now, like labor markets described above, education has another quirk that makes them different from markets determined exclusively by supply and demand. What we’ve seen is this: as demand for the product has increased exponentially, the price of the “commodity” has not fallen, but has risen into the stratosphere at multiple times the rate of inflation! And it shows no signs of slowing down.

In modern industrial economies, an educated workforce is recognized as a social necessity by most people. At one point, even basic literacy and numeracy were rare in the population when farming was still the most common type of labor. To that end, public provisioning of education and universal access were once recognized as the foundation for any prosperous society beginning in the nineteenth century (and earlier in some places). Restricting education only to the children of rich elites was recognized as obviously contrary to American ideals of meritocratic individualism, not to mention economic suicide.

Sometime in the post-war period, this changed, especially in the United States. Employers started using collage as a lazy weeding program for new hires, and a Bachelor’s degree became simply “the new high school diploma.” At the same time, this was accompanied not by an expansion of support for post-secondary education, but a withdrawal of support and government disinvestment in educational systems across the board. Under neoliberalism, the burden of paying for higher education was placed on the workers themselves, and college was transformed into a (highly risky) “investment” in ones future which was required to produce a positive return (ROI). Colleges began to compete against one another in markets, offering luxurious amenities and spending enormous sums to hire “celebrity” professors, as well as purchasing advertising which did not help educate a single student.

Because you need to go to school for your labor to be worth something anymore, this “commodity” is not really a choice, but a requirement. So, for example, if you want to be an engineer, well then, you have to get an engineering degree. Only certain institutions are even allowed to offer this “product” (the accredited degree). These institutions are widely separated in geographical space—they are only located in certain places, meaning access is highly restrictive.

Furthermore, your desire and aptitude to be an engineer has nothing do with how much money you happen to have in the bank. That is, you cannot choose NOT to purchase this product and still be an engineer. Rather than a single product at the point-of-sale, a degree requires you to labor for at least four years to acquire these skills (making it very different than, say, buying a house), and this is typically BEFORE you have any significant income! In fact, you need to purchase this “product” in order to the HAVE any significant income! Often times, the “price” (i.e. tuition) rises dramatically during those four years, and there is nothing you can do about it. And colleges can create sudden and arbitrary rules to make you pay more for the “product” such as requiring more credits for no valid reason other than the fact that they can (this actually happened at my architecture school–they upped the credit requirements for graduation from 48 to 60 simply because they could). What other kind of “commodity” is that true of? Even land and houses have a one-time negotiated purchase price which is known to all parties at the time of sale!

And what else has the “market-centric” approach to education led to in the United States? One effect is schools building grandiose architectural follies designed by brand-name “starchitects” in order to “compete” with other institutions simply to attract a small slice of high-income tuition whales, many of whom come from overseas (even while Americans have less and less access to their own educational system). Americans happily train the world’s rich kids but abandon their own people to the wolves. And then there are the athletic departments taking over college campuses, leading to everything from millionaire sports coaches to multi-million-dollar stadiums, all paid for by heavily-indebted tuition donkeys. This is even while most classes are being taught by non-unionized adjuncts who are so poorly paid that they often must rely upon public assistance. Finally, there’s the administrative bloat and college presidents/provosts who get free palatial homes to live in, salaries in the high six/low seven-figures, and gilded pensions and benefits. How do any of these things help create and maintain an educated workforce?

Do we want only the children of rich parents to be able to be engineers? Or doctors? Or lawyers? Or architects? Or accountants? How is that consistent with our ideas of meritocracy? Right-wingers and conservatives like to retort that truly intelligent and talented people will always somehow find a way have their education paid for through grants/scholarships. etc.That is, money is not a barrier to educational access. Arbitrary and random “gifts” of money for the lucky few help them to uphold this argument, allowing them to maintain their just-world belief systems.

Two points about that fact: first, it is obviously false. But, even if it were true, it merely reinforces the point that education should not be a market commodity!

The fact is that these institutions are really tollbooths to the few remaining professions that pay a living wage anymore. As such, they are able to charge whatever they want, and there will be people willing to pay it. And that means that the idea of a market mechanism being applicable here is just as ridiculous and outrageous as with health care! Education is not a “product”; it is vocational training, and most societies traditionally have had other effective ways to train the skilled labor they needed which did not rely on predatory markets. Many still do today. In reality, higher education in the U.S. seems less like a marketable product and more like a twenty-first century version of indentured servitude. And educational support is under assault worldwide.

3. Natural Resources. Obviously, forests, rivers, farmland and mineral deposits–to name just a few examples–are not produced expressly for sale. They are simply there. Neoliberal economics wants to recast all of nature as “ecosystem services” to be bought and sold in price-fixing markets for ideological reasons. In fact, there are even efforts to create highly artificial markets in carbon via “cap and trade” schemes. Under the Neoliberal ideology, only markets–and not, for example, common resource ownership or rationing–can adequately deal with these scarce natural resources.

[Payments for ecological/environmental services] is a form of commodification, of creating new things out of nature which can be sold. The commodities created thus are ‘fictitious commodities’. Real commodities are discrete entities (coffee beans, timber or diamonds), that are produced to be sold. In contrast commodities like land, money and labour are fictitious, they are not produced specifically to be sold, and they do not physically change hands when sold. What are exchanged are title deeds (with respect to land) or agreements to access time (with respect to labour) in return for notes (bank or promissory) which promise to pay the bearer funds, or simply electronic numbers in bank accounts (with respect to money). Markets in such commodities require complicated social and political exercises to subdivide landscapes into titled parcels, create the banking and state apparatus that allows money to be trusted, and create labour pools and skills.

The enthusiasts for PES recognize the social engineering that fictitious commodities require determining how much carbon, or water, is created by particular land covers, who can own them and how they might be exchanged requires the construction of complex apparatuses for measuring, valuing and titling…They require a demand for the new products to be created. With such commodities created, and with markets established for their exchange and circulation, considerable (trillion dollar) opportunities open up. Without the investments required socially and politically to free PES’ fictitious commodities from their social and ecological contexts, huge potential markets are lost.

…The creation of fictitious commodities of land and labour does not alter the fact that the places and people who provide them still have an entirely separate existence, beyond their commodity form.This means that what markets do to land and labour can have profound social and ecological consequences. Markets may demand homes or nature reserves be surrendered for a mine but the result will be painful. Labour may be laid off in a recession, but the psychological consequences to individuals and families are immense. As Polanyi observed, ‘to allow the market mechanism to be sole director of the fate of human beings and their natural environment… would result in the demolition of society’. So it may be with the carbon, water and other services promoted in PES. The commodities thus created and exchanged cannot be separated from their social and ecological contexts. Forests may only be valued for their carbon, but they cannot be reduced only to their carbon. Critics note that markets have a tendency to forget the social and ecological contexts of their commodities. The consequences of such commodity fetishism are potentially considerable for PES. How markets behave with respect to the commodities they peddle depends very much on the social structures in which they are embedded. This is why the performance of actually existing PES schemes matters so much.

Ecosystem services and fictitious commodities (PDF)

What’s more, much like land, we cannot increase the production of these commodities. Renewable resources like forests can theoretically be regenerated, but not in the time frame that is acceptable to the quarterly balance sheets of finance capitalism. The ultimate stock of non-renewable resources such as petroleum and minerals can only go in one direction—down. This is deceptive, since price-fixing markets only rely on the flow of that particular resource at a specific point in time. The price of oil is determined not by how much oil there is (the stock), but how much is available to the market right now (the flow). In fact, for many such commodities, high prices provide an incentive to increase the extraction of the non-renewable resource, ensuring that it is drawn down even faster. The ultimate amount of the resource has no bearing until it is exhausted (e.g. rhino horns and elephant tusks).

The Markets’ Greatest Failure (Whistling in the Wind)

The consequences for the natural world and the ecosystem are devastating. You cannot have a market without a society, and yet market mechanisms are literally destroying the natural resources without which the human life-support system could not exist. Yet, in the past, common-pool resources were often collectively managed and highly regulated. However, free-market capitalist ideology forbids us from even considering these options.

Conclusion

These other three “fictitious commodities”—especially health care and education—are more relevant than ever before in our current economic situation, because it is these things which are currently destroying the American quality of life. By contrast, actual commodities are cheaper than ever before! In fact, actual commodities—not fictitious ones—have become so cheap as to be practically free. Dollar Stores and Wal-marts are filled with cheap, superabundant (albeit shoddy) goods. Even high-tech electronics can be had at astonishingly low prices. Technology that would be considered miraculous even a decade ago can be purchased with the equivalent of a few days’ salary. Food is also remarkably cheap today, although arguably, like durable goods, much of it is of inferior quality. Still, even quality foods can be purchased for what have historically been low prices, if one knows where to look.

Many electronics-based products have declined in price. According to Yahoo finance the following reductions have occurred: televisions (down 77.9 percent); computers (down 88.3 percent); audio equipment (down 39.3 percent); and videocassettes, video discs and other media, including rentals (down 20.4 percent). Over the last decade they also document a 6.6 percent drop in the price of new cars and trucks, 44.4 percent drop in the price of toys, 11 percent drop in clothes, and the cost of a timepiece fell 6.2 percent. Reducing prices result in individuals having greater income to spend on other items, which from a purely consumption standpoint increases their welfare. In these cases the “magic of the market” actually works to create greater consumption and prosperity. Polanyi conceded that even though commodification of labor imposed severe cultural and social costs to workers and their families, it also contributed to economic “improvement” and growth.

Escaping the Polanyi matrix: the impact of fictitious commodities: money, land, and labor on consumer welfare (PDF)

In fact, many goods need to be made artificially scarce in order to be turned into marketable commodities. I’m referring to what economists like to call “non-rival, non-excludable” goods—easily reproducible technologies that can be duplicated and distributed at no marginal cost, such as software, books, movies and music. And it is these “commodities” which are forming an ever-larger and more important share of our economy! They can only be turned into commodities at the cost of massive central-state enforcement; for example, spying on peoples’ home computers and draconian copyright legislation. Many such goods are already provided “free-of-charge” (e.g. Google and Facebook) but paid for by highly intrusive and wasteful advertising that people are constantly trying to avoid (adblockers, etc.), or by massive data gathering which violates peoples’ privacy with the end-goal of even more intrusive marketing tactics to manipulate us (and potentially political repression to boot).

In fact, it is the inexpensiveness of such items that leads defenders of the status quo to insist that everything is better than ever. Everybody has cell phones! You can look up anything you want on Google! Even the poor are fat!!! I’m sure you’ve heard these arguments before.

But this ignores the crux of the problem—pretending that the fictitious commodities should be distributed by markets in the first place. More and more of our economy consists of these fictitious commodities. In fact, it’s so common we even have a term for it–the “Eds and Meds” economy. Health care and education employ and ever-greater share of our workforce. Add in digital goods which are made artificially scarce, and it appears that much of our twenty-first century economy is not centered around the production of actual goods and servies at all (which are practically free), but instead forcing these fictitious commodities to somehow behave like actual commodities. To this end, we are creating artificial “pretend” markets which are highly inefficient and easily gamed just to maintain this fiction!

The real problems Americans face today are with these fictitious commodities. High housing costs are destroying Americans’ budgets. The costs of living in virtually any urban areas are simply unaffordable given what salaries are. Education costs have turned us into debt serfs. Millions of Americans have inadequate health care, and many people are literally dying because of it. Drug costs are eating into Americans’ paychecks. And overall jobs are going away thanks to automation and outsourcing, preventing many Americans from even earning any salary by selling their labor—workforce participation continues to decline with every passing year.

Low-income Americans can no longer afford rent, food, and transportation (VOX)

In order to solve the fundamental problems with our economy, we need to come to terms with these fictitious commodities. The first step might be to acknowledge that they are fictitious commodities in the first place. One aspect of the problem, I would argue, is that we are wedded to market mechanisms when we should ideally be moving beyond the market. Too bad the “science” of economics won’t let us even consider this. This means that we need to look elsewhere for answers.

Economic History Conclusion

I hope you enjoyed my summaries of the ISCANEE volumes edited by Michael Hudson.  I apologize for the length of those posts. These are essentially the “long” versions; the “rough draft'” i.e. summaries for my own use. If I were to use them in a book chapter, for example, I would summarize and condense a lot of the material, with much shorter citations. By the way, that’s true of a lot of the stuff on this blog. Of course, there’s far more material in these books than I can reasonably summarize, but I tried to hit the most notable points and the most interesting ideas.

Here’s Wikipedia’s summary on Michael Hudson’s biography page:

In 1984, Hudson joined Harvard’s archaeology faculty at the Peabody Museum as a research fellow in Babylonian economics. A decade later, he was a founding member of ISCANEE (International Scholars Conference on Ancient Near Eastern Economies), an international group of Assyriologists and archaeologists that has published a series of colloquia analyzing the economic origins of civilization. This group has become the successor to Karl Polanyi’s anthropological and historical group of a half-century ago. Four volumes co-edited by Hudson have appeared so far, dealing with privatization, urbanization and land use, the origins of money, accounting, debt, and clean slates in the Ancient Near East (a fifth volume, on the evolution of free labor, is in progress)(This is now out-CH). This new direction in research is now known as the New Economic Archaeology.

I don’t think I’m going to review the other two volumes in the series. There is one on the details of the accounting techniques which were developed in Babylonia: Creating Economic Order: Record-keeping Standardization and the Development of Accounting in the Ancient Near East. I think that’s been covered in enough detail in the other volumes. We don’t need to get into the nitty-gritty of how they did it.

The other remaining book is essentially the “main course” in the series: Debt and Economic Renewal in the Ancient Near East. From my understanding, the first two books–on privatization and urbanization, were mainly about setting the groundwork for this volume. After that volume was published, additional volumes on accounting and labor in the ancient world were published to round out the picture (with the one on labor being the last and most recent book released).

However, I think Hudson’s work on debt cancellation is pretty well known by most people at this point (at least, the people likely to read this blog), so I don’t know if the book would shed any further light on this topic. I think the basics are quite well-known: debt grows faster than the ability to repay; ancient societies recognized this as a threat to the stability of their societies, so they implemented regular debt cancellations including the Jubilee Year described in the Bible. Then, when debt and interest-bearing loans came to the West, the debt cancellations were forgotten, leading the social disintegration in Greece and Rome. Those societies reconfigured themselves around money economies and held debt claims sacrosanct. Eventually, creditor oligarchies led to slavery, and, later, the disintegration of the Roman empire, serfdom, and the Middle Ages.

So, in lieu of any more reviews, I’ll just link to a recent talk by Hudson himself describing the inception of the books and their conclusions: If We Don’t Solve The Problem Of Economic Polarization, We’re Going To Go Into Another Dark Age. With that we’ll conclude this economic history phase for now. Some highlights:

The rulers had what we would call an economic model. They realized that every economy tended to become unstable as a result of compound interest. We have the training tablets that they trained scribal students with, around 1800 or 1900 BC. They had to calculate: How long does it take debt to double its size, at what we’d call 20% interest? The answer is 5 years. How does long it take to multiply four-fold? The answer is 10 years. How much to multiply 64 times? The answer is 30 years. Well you can imagine how fast the debts grew.

So they knew how the tendency of every society was that people would run up debts. Now when they ran up debts in Sumer and Babylonia, and even in in Judea in Jesus’ time, they didn’t borrow money from money lenders. People owed debts because they were in arrears: They couldn’t pay the fees owed to the palace. We might call them taxes, but they actually were fees for public services. And for beer, for instance. The palace would supply beer and you would run up a tab over the year, to be paid at harvest time on the threshing floor. You also would pay for the boatmen, if you needed to get your harvest delivered by boat. You would pay for draught cattle if you needed them. You’d pay for water. Cornelia Wunsch…found that 75% of the debts, even in neo-Babylonian times …were arrears.

Sometimes the harvest failed…[a]nd…they couldn’t pay their fees and other debts. Hammurabi canceled debts four or five times during his reign…because either the harvest failed or there was a war and people couldn’t pay. One reason they would cancel debts is that most debts were owed to the palace or to the temples, which were under the control of the palace. So you’re canceling debts that are owed to yourself.

Rulers had a good reason for doing this. If they didn’t cancel the debts, then people who owed money would become bondservants to the tax collector or the wealthy creditors, or whoever they owed money to. If they were bondservants, they couldn’t serve in the army. They couldn’t provide the corvée labor duties – the kind of tax that people had to pay in the form of labor. Or they would defect. If you wanted to win a war you had to have a citizenry that had its own land, its own means of support.

Basically what you had in the Bronze Age and every ancient society was a different concept of time than you have today. You had the concept of time as circular. That meant economic renewal. The idea was that every new ruler, every new reign, began time all over again. It wasn’t really time, it was really the economy had to start from a new position of equilibrium. This equilibrium – basically freedom from debt, the ability to support yourself – had to start afresh.

Economists look at ancient Near Eastern history and think: “You couldn’t have had Clean Slates, you couldn’t have canceled the debts, because then you would have had anarchy.” The fact is that proclaiming a Clean Slate was the way to avoid anarchy. It was the way to restore people to self-sufficiency. So in Sumer and in Babylon, every major ruler would proclaim a Clean Slate. We have the records to detail this century after century. The word that they used was andurarum, a word that has the sense of “a river flowing.” You sort of restore the flow. It really meant that bond servants were free to go back to their families.

These Clean Slates had three elements: Number one, they would cancel the personal debts – not the business debts, not the debts denominated in silver among merchants and other rich people. These debts were business contracts, and they remained in place. It was the petty debts, the consumer debts, that were canceled. Number two, lands that had been forfeited were restored: the crop rights, if they’d been pledged to creditors. And three, all the human beings who had been pledged as bondservants would be free to return to their families.

What happened between writing the Bible…and Jesus?…We don’t know really what happened up until the time of Jesus, except that there was at that time the same war between creditors and debtors that there was in Rome. Every Roman historian of the time – Livy, Plutarch, Diodorus – they all blamed the fall of the Roman republic on the creditors behavior of assassinating the debtors’ leaders, the rule by violence and the takeover of the economy by creditors after centuries of debt war. We know that this was going on throughout the whole ancient world, including in the Near East.

We know that in the very first sermon that Jesus gave when he returned to Nazareth…was to proclaim freedom for the captives, and release for the prisoners, and to proclaim the year of the Lord’s favor, deror, which meant, basically, a Clean Slate. …What does it mean: Is he saying forgive us our sins, or forgive us the debts? Well, most of religion’s leaders, certainly the vested interests, say: “He’s talking about sins,” that religion and Christianity is all about sin, it’s not about debt.

Actually, the word for sin and debt is the same in almost every language. Schuld, in German, means the debt as well as the offense or the sin. It’s devoir in French. Basically you had exactly the same duality in meaning Akkadian, the Babylonian language. The reason goes back to an idea, called wergeld in parts of Europe, which is universal – we have it in Babylonia too. If you injure somebody: if you hurt him or you kill him, either you have to go into exile in the city of refuge, or the family gets to kill you, or you settle matters by paying. And the payment – the Schuld or the obligation – expiates you of the sin. So the word for the payment of the offense is the same as the offense, and you’d expect this similarity to occur in every language.

Some of the Qumran [Dead Sea] scrolls really proved that what was at issue was debt. ..

Well, you can imagine how upset most religions were when they found these scrolls. They said they must be by this sectarian group, the Essenes. They must be a radical group, sort of like the Trotskyists. We can just sort of ignore them. But it turns out now that biblical scholars have found that the Qumran caves seem to be the library of the Temple of Jerusalem. During the wars with Rome they moved the library to the caves of Qumran in order to keep them from being destroyed when the Temple was sacked and burned down. So these scrolls were the very core of Judaic religion.

 The fight of Jesus against the Pharisees was about this. At first Jesus said: “Good to be back in Nazareth, let me read to you about Isaiah.” In Luke 4 says it that this was all very good, and they liked him. But then he began talking about debt cancellation, and they tried to push him off a cliff.

 So basically you have the whole origin of Christianity was a last gasp, a last fight, to try to reimpose this idea of the economic renewal – of a Clean Slate – that goes back at least to the 3rd millennium BC and probably all the way to the Neolithic.

So you have this last attempt to try to get a Clean Slate, and we know what happened to Jesus. His followers were not able to bring it about. So by the 1st and 2nd centuries of our era, what could the Christians do? You’re never going to get the Roman Empire to announce a Clean Slate…So all the Christians could do was have charity. Well, the problem with charity is that you have to be rich in order to lend to somebody. It’s like what David Graeber did with Strike Debt. You can buy the debt and pay somebody else’s debt and give money away, but that doesn’t really fix the system. The result was, it really was the end times. The choice was: either you’re going to have economic renewal and restore people’s ability to support themselves; or you’re going to have feudalism.

That basically is how the Roman historians described Rome as falling. The debtors were enslaved, not only the debtors but just about everybody was enslaved, put in barracks on the land. Finally, you needed to have a population, so you let people marry and you gave them land rights – and you had slavery develop into serfdom.

Well we’re going into a similar situation today, where I think we’re going into a kind of neo-feudalism. The strain of today’s society is as much a debt strain as it was back then.

If We Don’t Solve The Problem Of Economic Polarization, We’re Going To Go Into Another Dark Age by Michael Hudson (Dandelion Salad)

For a take on more recent developments, see: How Bankers Became the Top Exploiters of the Economy (Counterpunch)

Privatization in the Ancient World – Summary

The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than the democratic state itself. That in its essence is fascism: ownership of government by an individual, by a group, or any controlling private power.
– Franklin D. Roosevelt

In today’s world, we tend to make a distinction between “public” and “private” property. But to what extent was this distinction made in ancient societies? We know that foraging cultures do not make such distinctions, and it is in such cultures that we have spent most of our existence as a species. So when and how did such concepts emerge? And what were the social relations bound up in this transformation? These are the critical issues taken up in Privatization in the Ancient Near East and Classical World, the first book in the series of five volumes published by Harvard’s Peabody Museum as part of the colloquiums coordinated by the Institute for the Study of Long-Term Economic Trends (ISLET), co-edited by economist Michael Hudson.

While the modern “science” of economics lionizes individual private ownership and alienable private property, seeing such things as “natural” and “primordial,” it appears that these concepts developed relatively recently in history. Ancient cultures had very different ideas about land tenure and usage. The emphasis was on self-sufficiency and social cohesion, rather than maximizing profit or efficiency. Private property was not “absolute” but a social contract between the members of a society.

…French economist Emile de Laveleye[‘s] Primitive Property found ancient attitudes toward property governed by the idea of  ensuring for all families the means of self-support on the land: “Whether in Europe, Asia and Africa, alike among the Indians, Slavs and Germans, and even in modern Russia and Java, the soil was the joint property of the tribe, and was subject to periodical distribution among all the families, so that all might live by their labor, as nature has ordained.”…this practice was grounded in the classical ideal of equality as a precondition for liberty and democracy. Ancient lawmakers “had recourse to all kinds of expedients: inalienability of patrimonies, limitations on the right of succession, maintenance of collective ownership as applied to forests and pasturage, public banquets in which all took part…” This primitive egalitarianism was the true “state of nature” in Laveleye’s view, not John Locke’s fantasy of private land ownership stemming from a primordial social contract. Surveying the fields of history and anthropology, Laveleye found private property in land to be a relatively late development, emerging only in Roman times…p.4

It appears that property in the modern sense, immune from communal and public overrides, made its first incursions on royal lands in southern Mesopotamia, followed by subsistence lands that had been rendered redundant by the shrinkage of the landholding community’s member families. This surplus land seems to have passed into the market process as property “sold at the full price” voluntarily rather than as property relinquished under economic duress.

If this is indeed the case, then privatization of subsistence land, alienable irrevocably at the owner’s personal discretion, is not something primordial as social contract advocates have argued, but developed relatively late in history. It is thus necessary to examine how privatization developed in each particular ancient society. How far did each society progress (or fail to progress) toward a Roman-style codification of owner rights? What common denominators emerge as the levers of privatization. pp.7-8

Business began in the public sector

One of the big revelations of this book is that what we think of “business activities” began not by the efforts of individual entrepreneurs or families, but in what might reasonably be called the “public” sector.

Now, an obvious problem here is defining exactly what we mean by “public” and “private.” This is always tricky, especially when dealing with times and cultures very different than our own. Scholars have described Sumeria’s temples not as a “public” sector, but a “communal” sector that was administratively distinct from household activities. The temples were not under the control of any particular clan or household, which allowed them to undertake certain functions which would not have been socially acceptable for solitary individuals:

A generation ago, economic historians such as Mikhail Rostovtzeff and Fritz Heichelheim depicted “the state” as being antithetical to private property. Yet public investment by large institutions was undertaken long before the emergence of a private sector as our modern epoch knows it. Contemporary research by Assyriologists points to the state as the great catalyst of private enterprise. It was Sumerian public institutions that created usufruct-yielding lands and set them corporately apart from the periodically reallocated communal subsistence lands…

Definitions and concepts are of critical importance in tracing these dynamics. Southern Mesopotamia’s communally held land was not part of the public sector, yet neither was it private in the modern individualistic sense of the term. It belonged in principle to the community, and originally it was not freely alienable, for an obvious reason: As long as taxes and a stipulated quota or corvee labor were paid by the community, the appropriation and withdrawal of land by private individuals would have thrown the fiscal and labor burdens onto the community’s remaining members…(p. 36)…the Sumerian economy …embrac[ed]… the communal sector of self-supporting cultivators, the temples functioning as what might call public utilities, and the palaces. Each of these three sectors had its own source of handicraft labor and its own form of land tenure, none of which originally were individualistic or “private” in character.

It was…the public sector that innovated the basic array of institutions needed for profit making enterprise: corporate organization, writing and account-keeping, contracts and their formalities, weights and measure, and interest-bearing debt. However, Sumerian public investment ultimately catalyzed the growth of a private sector which ended up undermining temple and palace control. This was just the opposite of the Chicago School scenario whereby private self-seeking is primordial but repeatedly stifled by state activism and taxation…pp. 43-44

If this public entrepreneurial initiative is difficult for many observers to acknowledge today, it is because the modern world has virtually inverted the relations of Bronze Age enterprise and finance. Profit-making investment is now left almost exclusively to the private sector. But this privatization took thousands of years to achieve. Today’s public sectors no longer are creditors as in Bronze Age times; they are in debt, obliged to levy taxes co cover the cost of their operations rather than relying on their own enterprise. p.39

So we can see that what we call “business” activities began in the public/communal sector, for the public’s benefit, and not through countless individuals making anonymous transactions in “free and open” markets. Such “collective” activities were necessary for larger and more complex societies to form historically, contrary to the libertarian propaganda put forth by modern economics.

As Karl Polanyi pointed out, in most ancient and traditional societies, economic activity was undertaken primarily for subsistence rather than gain—“habitation,” rather than “improvement.” The supposed “natural” instincts to accumulate, hoard, barter, profit and haggle turn out to be not natural at all, but socially determined. Once again, to review:

The  outstanding  discovery of recent historical  and anthropological research is that man’s economy, as a rule, is submerged in his social relationships. He does not act so as to safeguard his individual interest in the possession of material goods; he acts so as to safeguard his social standing, his social claims, his social assets. He values material goods only in so far as they serve this end. Neither the process of production  nor  that  of  distribution  is  linked  to   specific   economic  interests  attached to the possession of goods; but every single  step in that process is geared to  a number  of social interests which  eventually ensure that the required step be taken. These interests will be very different in a  small hunting  or  fishing community  from those  in  a vast  despotic  society, but in either case the economic system will be run on noneconomic motives.

Indeed, given everything we know about human social relationships in tribal cultures, surplus-producing activities could have *only* began in the public (i.e. communal) sector:

In retrospect, we can see the logic in public enterprise appearing prior to private enterprise. The accumulation of capital requires a sustained generation of economic surpluses. These in turn require forward planning and account-keeping, and hence the design of standard weights and measures for form the basis for pricing and charging interest. In addition, land rent and interest presuppose the creation of contractual formalities and enforcement procedures. This seems to be why private gain-seeking emerged first and foremost at the center of society, in its public entrepreneurial institutions.p. 8

Sumer’s city-temples accumulated unprecedented amounts of capital. Indeed, it was probably only such public institutions that could have placated the adherents of the archaic consumption-based ethic and generated surpluses in socially acceptable ways. Personal self-seekers could not have easily made the breakthrough on their own, for they would have been condemned as greedy…pp. 37-38…Looking back from today’s vantage point, when private enterprise is overwhelmingly dominant, we must ask why private forms of wealth did not take the lead from the outset. The simple explanation is that a private sector in the modern sense of the term did not yet exist in Bronze Age times.

For a deeper answer it is necessary to review the anthropological record and the subsistence basis of most tribal economies. Almost everywhere they have been studied, such communities have displayed little interest in investing wealth to accumulate more wealth. The tendency is to disparage personal wealth accumulation as being impolite, rude or miserly. Furthermore, the tribal communities known to modern anthropologists have little specialized administrative apparatus; their exchange of goods and services is conducted in an informal person-to-person fashion rather than a formally “economic” manner.” …p.45

Sumer’s great contribution to civilization was a complex of innovations that broke through the traditional “anthropological” or “soft” inrerpersonal reciprocity of gift exchange to create the first known economic regime. The Sumerian innovations included bulk trade, standardized (hence, impersonal) money prices and lot sizes, sharecropping rents, wage-ration allotments, interest and contractual forms, and indeed the general system of weights and measures. All these innovations found their initial focus in the city-temples,” which were organized on the basis of a number of economic innovations that have shaped the entire world’s subsequent evolution.

It would not be too much to call these temples history’s first formal business corporations. Organizing an export trade to obtain foreign metals, stone, hardwood and other raw materials not found in the southern alluvium, Sumer’s temples legitimized capital accumulation, that is, the and to build up monetary savings….

The account-keeping for which public bureaucracies have been notorious throughout history often is viewed as a costly overhead, yet it is a precondition for managing costs and budgeting resources to generate a profit. In this respect public accounting helped pave the way for private management to emerge. Without it, private enterprise would have had to start from scratch among the Indo-European speakers who settled the Aegean and Italy… p. 9

This is a direct contradiction to the thesis promoted by libertarians. In their telling, individual “strivers” engaged in entrepreneurial activities from the get-go because our “natural human instinct” is always to maximize our personal gain to the greatest extent possible. Such behavior causes “free” markets to form ex nihilo where value is exchanged. Then, government comes along and taxes away nearly all the surplus from the value-creators to build gargantuan monuments and wage war solely for the benefit of a feckless, parasitical bureaucracy that sponges off the “makers.”

While surpluses were accumulated in the temples and storehouses of the cities, subsistence on the land was much more oriented to providing for the basic daily needs of the household and its members. To this end, the alienability of land was subject to much more restrictions:

It would be anachronistic to call the cultivators who belonged to Sumer’s landed groupings either a “private” or a “public” sector. They were not characterized by private property, for their subsistence land holdings were not theirs to freely sell or pledge for debt, at least not more than temporarily. Inasmuch as citizens held their allotments in exchange for an obligation to serve in the army and provide corvee labor duties, alienability of this land would have meant a loss of their citizenship status and its associated obligations.

To prevent this public loss, communities imposed constraints in the alienation of land…The land was redivided periodically or alienated as some families grew larger, others smaller, and new entrants joined the commune (these groupings often were open in character, (e.g. as the later Irish gelfine). Families held tenure rights to cultivate this land, but were not “free” to transfer it as they chose-or, for that matter, to forfeit it permanently and thereby lose their economic freedom, citizenship rights and consequent obligations to serve in the army and to provide corvee labor.

Land transfers among communal sector families did occur, but traditionally were limited to only temporary duration. The function of the communal land was to support its holders, not to yield a formal economic rent.p. 44…The early documented land sales from commmunal groupings to the palace suggest that such transfers were irrevocable only when the purchasing party was the king. But a widening array of exceptions developed, enabling formal property to emerge…p. 45

It was therefore this dynamic “interplay” between individual households and the communal sector in the cities that led to the explosive growth of the economy of southern Mesopotamia after 4000 BC. These communal “public” institutions are what allowed something resembling a modern economy to be established in the first place.

In today’s world, the government undertaking any business activity at all is considered something that must be avoided at all costs. We’re told that all such activities must be left to the “private sector.” This assumes that the private sector is inherently “efficient,” and the government is always corrupt and wasteful. Under the Market system the government’s sole purpose is to create a “beneficial business climate” for powerful private interests (business owners, CEO’s, stockholders, bankers, etc.) to do as they please, and the Invisible Hand of the Market will sort it all out. The depiction of governments as merely “parasites” on private sector activities is very convenient for those powerful private interests. Keeping governments in constant debt also acts as a constraint on their activities.

It used to be thought that southern Mesopotamia was a “temple state” where everything was owned and centrally planned by temple scribes and priests. Some textbooks still depict it this way. But this is inaccurate. In fact, most economic production took place in the household. Rather than running production directly, the temples used economic planning to collect and redistribute the surpluses throughout the society.

Most writers have emphasized the nature of state control over craft production. There is, however, ample evidence to suggest that craft production also was undertaken in the context of a private market economy…A potter was involved with a staple finance commodity when producing ceramics for the state authority, but he (or she) could and did produce pottery for a market economy, thus involving the production of wealth finance. A single producer could be (and the texts indicate that they indeed were) involved with both public and private domains of production.

…In sum, although the texts suggest large-scale industrial production controlled by the state, the archaeological record suggests that most craft production took place outside the physical context of a centralized state bureaucracy. This is most clearly evident in the case of pottery…One can hardly avoid the conclusion that the distribution of these commodities was not directed by state bureaucrats from centralized warehouses. These everyday essential goods were obtained from private craftsmen who produced them for purchase or barter within a market economy. No doubt, as in the case of potters, they also produced specific quotas for delivery to state institutions…

Mesopotamian texts suggest that craftsmen and farmers, in fact all primary producers, were responsible for providing a specific amount of their products for delivery to a state authority. I believe that the documentary evidence allows for the following interpretation: all primary producers were responsible for delivering to the state a set quota, a specific amount of manufactured product. Thus, the staple and wealth finance in the hands of the state institutions came in the form of specific quotas derived from primary producers. When the primary producer filled his/her/their quota, the remainder of time and labor was their own. This is what the third-millennium texts elaborate upon when discussing the office concerned with the bala, meaning “to turn over.” That which they “turn over” is their quota. The texts clearly indicate that primary producers were responsible for “turning over” their quotas, the balas, to the state.

Redistributive and household methods of production were not, then, distinct “stages” but interwoven with each another from the start. Redistribution was accomplished via a standardized pricing system administered by the temples. Such prices were not set by price-fixing markets; they were instead established by the temples themselves. However, such prices did eventually carry over into the “private” sector over time. It was this establishment of a society-wide pricing mechanism, and standardized units of currency that allowed money and markets to form, and not the spontaneous higgling and haggling of countless anonymous individuals. So we see that once again, it was the activities of centralized institutions that allowed markets to form in the first place.

The city-temples were the central organs through which the Sumerians mediated the economic surplus (P. 42)…Before price-seting markets developed, public institutions were the major vehicle for distributing output at standardized prices. For these large institutions it was natural for prices to be administered, if only as an internal control to check abuses and as a means of keeping accounts in commmon denominators such as silver and barley. Common prices, once established in this way, helped catalyze the development of market exchange, and ultimately price-seeking markets for goods and services that did *not* pass from the the public institutions to the rest of the economy.

…Karl Polanyi’s idea of a “redistributive stage of development” preceding that of market pricing therefore must be superceded by the recognition that public distribution took place largely via the pricing mechanism. Setting such prices was part of the public administration of measures, weights and interest rates (which were among the last prices to be deregulated, precisely because of the visible role of coercion between strong creditors and dependent debtors falling below the break-even level). Such prices were accordingly announded at the outset of many early royal laws, and appear throughout Hammurapi’s laws. p. 296

Alongside these price exchange systems, older means of gift exchange and subsistence production continued to be employed. Thus, the existence of markets (contractus) did not alter the prevailing social relations (status). Market relations were employed by strangers, foreigners, people who had no organic social relations, or between people of vastly different status:

Of course, most output was for self-use, and hence either was unpriced or exchanged at prices which, under normal conditions, followed the lead of the large institutions whose transactions tended to dominate the market (p. 296)…Private household production existed alongside that of the temples, but seems to have been oriented more towards subsistence needs with only marginal production for the market. The products of these households probably were less specialized and luxurious than those produced in the temple and palace workshops… (p. 42)

The impersonal economic formality of public institutions stands in contrast to the customary familial or neighborly informality. Throughout the Bronze Age, gift exchange continued among people of similar rank, while commercial exchange characterized relations among people of different status, or on opposing sides of the public/private divide, or from different communities. Debt obligations of the “anthropological” type among persons of similar status did not bear interest as late as the eranos loan clubs found among Athenian gentlemen, in contrast to loans from the rich to the poor or financial claims by public institutions on the citizenry at large. p. 43

Thus, we can accurately characterize the economy of these ancient Near Eastern societies as a “mixed” economy. One example of the way in which the temple activities interfaced with the broader household economy can be seen in the use of standardized weights and measures, including, as noted above, the price schedules denominated in silver shekels or bushels of barley. Another was the existence of multiple calendar systems: a lunar one for festivals, and a solar one for economic planning:

One example of how public and private modalities can coexist is reflected in Sumer’s elaboration of the calendar from a lunar one governing communal festivals to a solarized public-sector one. Neolithic and even paleolithic communities appear to have based their festivals on lunar rhythms, but lunar months vary in length and hence are unsuitable for allocating standardized rations.

Sumer’s temples and palaces needed to schedule large-scale flows of barley and other commodities on a regular basis, and therefore took the lead in introducing a 360-day public sector calendar composed of twelve equal 30-day months. This public solar calendar was adopted alongside the popular lunar calendar. (A similar dual calendrical system survives today for setting movable feasts such as Christian Easter, the Jewish New Year and Islamic Ramadan.) p. 42…

The 360-day public year left an extra five days to balance out the true solar year, and an eleven-day excess of the solar year over the lunar year. This interregnum–a “time out of time”–became the occasion for the New year festivals that provided the occasions for new rulers to renew the social and economic cosmos by cancelling agrarian debts, freeing debt bondsmen and restoring the status quo ante, above all lands that had been forfeited to creditors. p. 42

Just as public and private calendars coexisted, so did public and private modes of production. Public commerical production stood in contrast to production stood in contrast to production on communal subsistence lands. Likewise, different rates of interest were adopted for the two spheres of economic activity: silver-denominated commercial debts accrued at 1/60th per month, while agrarian barely debts accrued at higher rates, typcially 33-1/3% per year by the end of the third millennium. The result was a dual financial system operating as a bimonetary standard. pp. 42-43

There is a debate to what extent were temples truly “public” institutions, and to what extent were they actually “fronts” for certain powerful families? Were these actually set up as “trusts” for certain powerful families? Where did the public’s interest end and the private interest begin? How much of the temple activities were undertaken under the guise of providing public benefits on the surface, while behind the scenes administrators were really feathering their own nests? We have several examples of leaders abusing their power. We also have accounts of reformers attempting to restore fairness and balance. In some instances, the same leader can be engaged in both activities simultaneously.

Privatization and corruption

Communal activities and the interface between the temples and the households eventually gives rise to a true “private” sector, whose activities expanded over time. Eventually, these communal activities were more-or-less subsumed into private households–the earliest “privatization.” The people who led this trend were those most intimately connected with the redistributive apparatus–the temples and the palaces, and the merchants whose job it was to interface with those institutions (tamkarum). They managed to use their positions to profit from what might be called “business” activities even while maintaining a veneer of public-spiritedness. In contrast to the conventional story, the history of entrepreneurship really begins when these “business” activities are decoupled from their original context and taken over by powerful individuals and households.

Privatization was accompanied by a rollback of the safeguards designed to protect the average person. This did not lead to a release of pent-up entrepreneurial energy from the , but rather oppression as the powerful took advantage of their positions and cut insider deals. Protections against debts were relaxed. Hudson makes an analogy to Russia after the Soviet Union fell, where people in privileged positions took over much of what had formerly been communally owned property and industries and ran them for their own benefit.

It appears to have been military expansion that caused the repurposing of the old redistributive apparatus into centered around tax collection/tribute. The palace ceased to play its former role as a “great provider” and instead became a military/administrative center. As victorious palaces conquered and absorbed surrounding cities and states, they used the bureaucratic apparatus developed in the temples to collect the taxes. Wealth flowed to the top of the social pyramid via conquest, even as the common person lost their lands and independence in such conflicts. In addition, captured lands were often redistributed as personal property to the ruler’s friends and allies in a sort of “spoils system.” This reminds me of a quote I once read about military conquest abroad generally being accompanied by repression at home.

From the early Bronze Age to late classical antiquity, historians can trace society’s economic dynamics (and the economic surplus) becoming more individualistic and free from central oversight. Individualism first emerges, culturally and economically, not from members of the “communal” (non-public) sector, but from palace rulers and their families…Personal property in the modern sense developed originally in the palace sector. It was the ruler’s own property that was the first to be made immune from communal-sector redistribution. Sargon’s dynasty took over the temples to make the flow of surplus a one-sided tribute for vanquished cities to the new capital at Akkad. In this respect military conquest was a major catalyst of privatization. Palace warlords captured what originally had been public institutions, and transformed them into instruments of their personal and economic power. p. 26

The upshot of privatization was economic polarization between creditors and debtors, landlords and tenants, patricians and clients, while the private sector grew richer largely at the expense of the public sector. A major effect of the privatization of subsistence land, for instance, was a change in the economic uses to which the land’s yield was put. Babylonia’s subsistence cultivators had been obliged to provide corvee labor, serve in the army, and pay taxes or other fees to the palace in exchange for holding land. But the new private appropriators kept the land’s usufruct for themselves rather than passing it on as taxes. The debtor’s labor services, crops and, in time, title to his land were taken as interest and, ultimately, forfeited as collateral for debt. This often obliged the remaining commuity members to make up the individual debtor’s fiscal shortfall; otherwise the net yield available to the palace was simply reduced.

A related consequence of privatization was a shift away from growing grains for the self-support of cultivators to more luxury-oriented and capital-intensive cash crops (olive trees and grape vines in the Mediterranean), increasingly on large estates which came to be stocked with slaves by the time of Rome’s great latifundia.p. 35

Hudson identifies four major means of land privatization in the ancient Near East:

1.) One form occurred when Sumerian rulers appropriated communal land and temple estates as their own personal property…this characteristic of individualism is first found in the royal household , from which it diffused downward via the royal bureaucracy to the rest of society.

2.) A second type of privatization occurred when rulers gave property away to their relatives (often as dowries) or companions, or assigned control of these properties (or at least their prebend rents) as tribute to local chieftains…

3.) A related type of privatization occurred as a product of political decentralization, most notably when palace control collapsed. In such crises, royal managers or warlords tended to seize the royal lands and workshops. This occurred as Hammurapi’s Babylonian empire fell apart, and after 1200 BC when Mycenaean Greece fell into a Dark Age.

4.) A fourth type of privatization became the most prevalent: the transfer of communally held lands to creditors or other absentee buyers. Beginning in southern Mesopotamia, subsistence lands were appropriated by individuals from outside the local kinship-based groupings by royal collectors, creditors or merchants through debt foreclosure; outright purchase at distressed prices; or, less frequently, at the “full market price.”

Rather than the heroic view of entrepreneurship promoted by economists, in this view entrepreneurs look more like opportunists, taking over institutions designed to serve the public good for their own purposes.

Privatization comes to the Mediterranean world

As Hudson tells it, the economic planning tools were brought from the temples of the Near East to the palaces of the Aegean world. The palaces of the Minoans and Mycenaeans contained vast storerooms which collected the output of many different households, which was then redistributed. But they did not have interest-bearing debt and loans. Then, after the Bronze Age collapse, the centralized palaces collapse and are seized by private warlords or “big men.” Greek society reconfigured itself along feudal lines. Phoenician merchants brought the concepts of debt and interest payments (along with the alphabet) to the Greeks, but they did not bring along the idea of debt forgiveness and Clean Slates.

This creates two major differences between debt in its original context the its new one 1.) There was less of an communal role played by centralized institutions in the Mediterranean world, and 2.) The rights of creditors were privileged above those of debtors. In the classical world, rather than periodically expunging the debts, such claims were held as sacrosanct! For this reason, the classical world–Greece and Rome–develop into what Hudson calls creditor oligarchies. It is this tradition which we have inherited in the West.

Greek history begins not with Athens and Sparta, but in the western periphery of the Late Bronze Age world, in Mycenae and other Late Bronze Age towns c. 1400-1200 BC. Here, Mesopotamian practices were transmuted into something new as the Mycenaean Greek palaces adopted syllabic record keeping (Linear B), sealing, and large workshop production–but not interest bearing debt…Not only is debt missing, but money too: “Since the palace revenue is presumably derived from feudal dues and from foreign conquest, monetary or other media of exchange do not play any significant part in the records…In lieu of money and the flexibility it affords for an efficient specialization of labor, the Mycenaeans denominated their levies in standardized “bundles” of commodities fixed in proportion. In the Pylos Ma- tablets, for instance, a number of townships are put down for contributions whose mutual proportions of six commodities remain constant at 7:7:2:3:1-1/2:150.

No evidence of debt appears in Greece and Italy until it is introduced by Syrian and Phoenician merchants around the 8th century BC. Without intersectoral debt balances there was little need for rulers to cancel arrears as part of general restorations of order. Thus, the entire character of kingship became less commercially oriented (and less public).pp. 18-19

The fact that centralized public property and traditions of royal oversight were weakest in Greece and Italy probably contributed to the fact that privatization developed most easily in these formerly peripheral regions after palace authority collapsed throughout the Mediterranean and Levant c. 1200 BC in the wake of a general social breakdown and drastic shrinkage of the population and commercial activity. p. 19

Interest-bearing debt became the prime level of classical privatization, enabling wealthy family heads to pry away the land of smallholders. Elected officials in some Greek city-states pledged *not* to cancel the debts or redistribute the land — just the opposite principle of Bronze age rulership. Under these conditions, the protected property was no longer that of the citizenry at large, but the large estates and fortunes of the few. Debt relations became even more polarized in Rome, where wealthy creditors turned what had been communally held subsistence landholdings into latifundia slave plantations. p. 27

With no Clean Slates to cancel the mounting debts, the Law of Cumulative Advantage and Creeping Normalcy are free to do their dirty work unimpeded. The result is a downward spiral of debt repeatedly reducing of much of Classical society to landless debt serfs.

This debt became a major societal problem. Debt serfs could not afford to equip themselves for the army and train. They could not contribute to the commonwealth via taxes. They could not tend to their own land to produce food. They lost voting rights. Debt was hollowing out society. As a result, the relationship of the state to its citizens was transformed. Corvee labor obligations were replaced by hired and slave labor. Civic contributions were replaced with bequests from wealthy individuals. Soldiers were replaced with mercenaries. Democracy was replaced with plutocracy.

As privatization increased, the city-states had to levy taxes in order to hire mercenaries, rather than continuing to provide cultivators with land tenure rights in exchange for military and other labor services. In classical Greece, property taxes paid in coin paid for public work, which was performed mainly by immigrants and other non-citizens, or slaves (a reflection of the demeaning status of public labor throughout antiquity).

The passing of rents, interest and profits into private hands (especially those of the wealthy) led to the taxation of the commons for the benefit of large landowners. This was done in such a way as to aggravate the dispossession process. The state meanwhile reduced its role as public entrepreneur as its functions were taken over by private entrepreneurs…the Roman state increasingly absorbed the costs or “externalities” associated with private wealth-seeking by the richest families (including the cost of defending the land against both domestic civil warfare and foreign enemies). p. 28

With the privatization of land, and the parallel shift of the handicraft export industries into private hands came tax crises. The wealthiest families managed to avoid taxes, while pushing more of their own expenses onto the public budget. Instead of government reforming land tenure or taking over industry and socializing its revenues, economic control passes almost entirely into private hands. For all practical purposes, the wealthiest landowners became “the state” in alliance with barbarian war chieftains who seized land by military force. p.29

The classical world embraced privatization and individual wealth accumulation to a much greater degree than ever before. I find it ironic that Western history is often portrayed as a contrast between the “slavery” and “despotism” of Near Eastern cultures, and the “freedom” and “equality” of the Greek and Roman world. But as we saw, Near Eastern cultures allowed for debt forgiveness and redistribution of land. Classical antiquity, however, drove people into debt bondage, had massive wealth disparities, consolidated productive land into the hands of a few wealthy families, and had massive amounts of slaves working in many critical industries. Is our view of history backwards?

Privatization in Ancient Rome

If the temples of Mesopotamia were the first large-scale businesses enterprises in history, Rome was the first to introduce the innovation known as the corporation – the publicani, or publican societies. Rome manged its expanding empire under a regime of privatization.

During the [Punic] war, the Roman army, which had previously provided its own food and clothing, needed others to provision, arm, and supply it. Since there were few public employees, the Senate turned to private businesses. The need for public contractors became even greater after the war, when Rome required managers, accountants, and tax collectors to operate its captured mines, quarries, forests, grazing meadows, and fisheries. The army, keeping order, had little capacity to manage these new resources. Its forces consisted only of militias raised for particular expeditions. The governors, who served only a year or so, rarely cared enough to build managerial staffs. Their eyes remained firmly fixed on a future in Rome.

The contracts for managing state resources, ultimately extended to providing public supplies and services, including the collection of customs dues and other levies, were auctioned off around the Ides of March, when an official would solicit bids in the Roman Forum. The bidder, known as the manceps, had to provide guarantees of performance, secured  with pledged property. A guarantor’s liability passed to his heirs, and title to the pledged property was held under seal in the temple of Mercury.

Many of these contracts were too large, risky, long lasting, and complex for individuals. Nor could individuals or partnerships risk the open-ended financial liabilities that the contracts could entail. Partnerships, which dissolved when any partner died, were also too unreliable. Roman lawyers instead found and adapted an ancient entity, the societas publicani. Publican societies became the first business corporations in Western history.

As public contractors, publican societies could hire employees; own necessary assets like cash, land, buildings, and slaves; and make contracts. Limited liability and perpetual life allowed them to attract the large investments they needed. They profited not only from contracts, but also seized every business opportunity that their large staff and financial power could turn to profit. They supplied and traded with the Roman legions and their soldiers and often dominated local commerce as well.

Their most valuable public contracts were for tax farming: private tax collection…Roman taxes took many forms. Property taxes were the most important, although the Senate, whose members owned a great deal of Italian land, used the spoils of victory over Macedonia to eliminate property taxes in Italy–an exemption they enjoyed for several centuries. There were also border tolls, customs duties, and sales taxes on slaves. Augustus created the inheritance tax for Roman citizens in 6 C.E. Caligula taxed food, lawsuits, porters’ wages, and prostitutes, and his successor Vespasian added -vegetables and public toilets…

Publican societies became so profitable that virtually the entire Roman elite, including senators who were theoretically prohibited from commerce, avidly invested in them. Shares of ownership, called particuiae (“little parts”), were traded in the Forum, making it perhaps the world’s first stock exchange. Equestrians, who faced no bar to active involvement even if they belonged to senatorial families, often sponsored the societies and managed operations…

The government’s relationship to publicans evolved over time in a way that strikingly resembles the evolution of international business by modern corporations. Initially, the government sold territories to the publicans, who like independent distributors ran their own operations and took a large share of the revenues. These deals were often corrupt and costly to the treasury. Later, when a large imperial staff allowed closer supervision, the publicans merely earned a commission on the revenues collected. By the third century C.E. the imperial staff had taken over collections completely and publican societies disappeared. OBMM: 149-151

It was the dispossession of Rome’s peasant farming class via debt, and its replacement with large villas staffed by chattel slaves, which hollowed out Rome’s agrarian economy. The wars with Hannibal had destroyed the Italian countryside, and the distressed farmers had no choice but to sell their land at fire-sale prices. These farms were bought up en masse by wealthy senators, equestrians and patricians. Because the slaves flowing in from every corner of the empire were so cheap to acquire, these large plantations were staffed with them instead of the sturdy yeoman farmers of days past. The property laws were rewritten by the rich to favor their own interests:

During 121-100 BC, Rome’s large landowners destroyed the Gracchi and passed three agrarian laws “favoring the increase of large estates. The first…allowed everyone to sell the portion of land which he received.” This law unblocked the way for impoverished landholders to sell their shares to large state-owners. The new landlords occupied the ager publicus without any firm legal sanction, and were permitted to keep this appropriation by a second Roman law, which left this public land “in the hands of its present holders, a rent being paid by them, the amount of which was to be distributed among the citizens…Finally, the third law abolished even the rent; so that nothing remained of the laws of the Gracchi but a single clause, favorable to the aristocracy, which gave a definite title to the possession of public land.”

The result…was that “A few sumptuous villas, and immense pasturages, replaced the varied cultivation, which had been carried on by small proprietors of Latin Samnite, Etruscan or Campanian origin, and had maintained so many flourishing cities. To maintain the populace of Rome and to support the luxury of the great, it was necessary to pillage the the conquered countries. Praetors, proconsuls, and public [tax] farmers, fell on the provinces like birds of prey, and ruined them to support the idleness of Rome. Economic polarization, having dried up the internal market by reducing cultivators to poverty and dependency, thus became the motive for Roman imperialism to seize from abroad what no longer was being produced at home. This dynamic inspired Pliny to decry that latifundia perdidere Italiam, jam vero et provincias, “Latifundia have ruined Italy.”

Underlying Rome’s economic self-destruction was its property-oriented law. Land ownership was legitimized simply by virtue of possession, regardless of how the land was used or what the social consequences were. This was the ultimate in privatization. Considerations of public interest were set aside, and the status quo was blessed…

It was this replacement of small farms with plantations centered around export crops that drove the rise of markets in importance and the use of money, replacing earlier tribal and village relations. As a consequence, the Roman world was much more market-oriented and monetized than any previous society before:

Roman agribusiness…began with the Second Carthaginian War. As in Greece and Pergamum, war’s slaughter of peasants made it possible. Italian deaths numbered in the hundreds of thousands and even survivors were often absent for seven years or more while Hannibal’s armies ravaged their families and farms. Many peasants lost their land or sold it at distressed prices, and others fared worse, as noted by Sallust: “While the generals and the cliques seized the spoils of war, their soldiers’ parents and children were driven from house and home if they had stronger neighbors.

Just as this calamity for peasants was allowing those who profited from the war-patricians whose estates supplied the city and the army, officers enriched with Carthage’s booty, and sundry war profiteers–to acquire land at fire-sale prices, the market system that had replaced subsistence farming around Rome was making it feasible to generate profits by raising crops for sale. The value of supplying that market would only increase during the republic’s remaining centuries as more and more Romans got their provisions from it: 60-90 percent of Rome’s residents by the end of the republic in 31 B.C.

Patrician eagerness for profit helped drive this commercialization. Rome enjoyed an explosion of wealth as publican societies won huge new contracts to operate the mines, forests, fisheries, and other facilities captured from the Carthaginians in Spain. Newly prosperous landowners, publican shareholders, and military officers flush with Carthaginian booty financed increasingly extravagant displays of luxury. An intense new interest in money took hold while conservatives like the historian Sallust complained that avarice was “the root of all evil. Greed undermined loyalty, honesty and the other virtues. In their place it taught arrogance, cruelty, disregard for the gods and the view that everything was for sale.”

After the war with Hannibal, patricians with access to markets were…keen to make farming pay. They read agricultural manuals, used cultivation methods recommended by Greek science, and invested for productivity…The greatest innovation, however, was to use enslaved farm labor. This became feasible where land acquired in the wake of the war came largely free of peasants, clearing the way to use slaves. Slaves were more productive than peasants. Peasants came with hungry families, set their own work schedules, and produced no more than they had to. They participated only marginally in the cash economy, consuming roughly 60 percent of what they produced, using 20 percent for seed, and paying rent and taxes before they could make the occasional purchase. They stoutly resisted change, and as citizens they could not be easily coerced.

Slaves, on the other hand, did what they were told. They were normally single men fed five pounds of mostly cheap gruel per day. It has been estimated that twenty slaves could be fed on what eight peasants and their families consumed. Moreover, in the decades after the war little or nothing was spent to clothe or house field slaves, who were branded in the face, slept in chicken coops, and normally went chained and naked under the overseer’s whips. Although they quickly died, replacements were cheap. In Italy, the use of slaves even cut the one tax landowners had to pay, a head tax on peasants. According to most historians, the Italian slave population, most of them on farms rapidly grew to what contemporaries estimated at two million by the late republic and remained at that level for centuries afterward.

The most profitable cash crop, according to Pliny the Elder, was animal husbandry. Some of the richest Romans owned vast properties devoted to sheep….agribusiness represented a shift in emphasis among mixed field and orchard crops, nothing like modern monoculture, Farms were very small, including those devoted to agribusiness. This was mainly because cultivation was so slow…. The main difference between the subsistence farms of independent peasants and the agribusiness-oriented villas was the larger proportion of land that villas devoted to cash crops like grapes and olives instead of commodities like grain. Grain accounted for 75 percent of the Roman diet, but even the urban poor spent as much on oil and wine. Accordingly, these were highly profitable.

Villas were complex enterprises. In addition to their farm revenues they could also provide lodging, food, fodder, fresh horses, and draft animals to travelers and exploit resources like woodlots and clay, stone, metal, and salt deposits, their slaves produced bricks; manufactured flour, bread, wool, shoes, and clothing; and repaired carts and tools. Many villas kept fish hatcheries and, near Rome and other large cities, sold flowers, fruits, vegetables, poultry, milk, and more exotic products…With their cash revenues, villas participated fully in the market economy.  A patrician might own several villas, visiting them for recreation or to check accounts and consult on strategic issues like the acquisition of neighboring properties. As Columella recommended, a procurator might over see them all and keep track of their iron tools, performing management, accounting, and audit functions much like a modern billionaire’s estate manager, whose role “usually involves overseeing multiple residences…

The combination of private corporate enterprise and the desire for riches and loot from the provinces continued to be a major driver for imperial expansion. But as Rome conquered more and more territories, it brought in less and less value. The people at the top of Roman society, whether businessmen, equestrians, senators, or generals, all entered into self-serving compacts designed to expand the empire, and hence increase their riches. But for average Romans, including the disappearing “middle class” who bore the brunt of taxation, all they got was more poverty and death. Corruption became rampant as self-seeking behavior replaced acting in the public’s welfare. Privatization and corruption spelled the downfall of the empire:

While generating huge profits the publican societies were causing the military considerable grief in the provinces. Publicans aimed to maximize revenues, and the short term of their five-year contracts made exploitation rather than cultivation the method of choice. With revenue a simple measure of success, their agents had to be ruthless or lose their jobs, whatever their personal sympathies. The managers and financiers back in Rome lived far away, like the upper management of multinationals today, and could easily ignore the hardships they imposed. The result was that the publicans “were often dishonest and probably always cruel. In Spain, where powerful tribes remained hostile to Rome, the publicans provoked such frequent rebellions that the Romans called it the horrida et bellicosa provincia (“horrible and warlike province”).

Uprisings were of little concern to publican management so long as the army suppressed them. Normally, then, publicans reaped the benefits of their ruthlessness while largely escaping its costs. The soldiers, on the other hand, were endangered. They also suffered personally from dishonest publican suppliers. In one horrible instance, when Rome was on the brink of destruction by Hannibal it hired publicans to gather and deliver urgently needed provisions for Scipio’s army in Spain where it was desperately trying to cut Hannibal’s supply route. Instead, the patriots bought and sank rotting old ships to simulate a natural loss, sold the provisions on the black market, and claimed compensation for the alleged loss.

Governors had difficulty controlling publicans. Short terms and minuscule staffs made supervision difficult. Moreover, they or their families were often investors. Governors also depended on publican societies. Publican couriers carried their mail, and the societies often provided branch funding governors abroad and collecting reimbursement in Rome. As Cicero wrote to his brother Quintus, the governor of Asia, we oppose [the publicans], we alienate from ourselves and the state an Order which has deserved exceedingly well of us and which has been linked to the state by Our efforts; if on the other hand we comply with them in every case, we shall allow the complete ruin of those for whose welfare and interests we are bound to have regard. Indeed, many governors less scrupulous than Cicero joined the publicans in exploiting the provinces for themselves. So despite enormous military antagonism, the publicans usually had a free hand.p. 160

In Rome, during the decades after defeating Hannibal, the Senate had opposed new military interventions abroad. Fighting in Spain and on the frontiers of Africa kept the militia busy, burdening the Roman citizens who comprised it. The Senate authorized foreign expeditions only reluctantly, and quickly withdrew the army afterward.
Moreover, the conspicuous consumption of the newly rich displeased many upper-class conservatives.

But many were making serious money from their investments in publican societies. Polybius wrote that “there is hardly anyone who is not involved either in the sale of these [public] contracts or in the kind of business to which they give rise. Some buy the contracts in person from the censors; some become partners of the purchasers; others stand surety or pledge their own property on their behalf.

In addition, a military foray against Philip V of Macedonia and Scipio Africanus’s spectacular victory over Hannibal and Antiochus III at Magnesia in 189 B.C.E. revealed the easy pickings available in the Hellenistic kingdoms, just as Xenophon’s Anabasis had earlier whetted Hellenic appetites for Persian conquests. Scipio Africanus, prosecuted for skimming off a portion of the Seleucid booty, took enough to leave senatorial fortunes to each of his daughters. By 171 B.C.E., when Pergamum’s persuasive King Eumenes II advocated a preemptive war against Philip V’s successor Perseus of Macedoma, the Senate’s resistance to imperialism had vanished…

After a surprisingly difficult struggle, Rome prevailed. The legions looted Macedonia’s royal palace, seizing more than six thousand talents of silver from the treasury, and triumphantly sailed the Macedonian royal barge up the Tiber. King Perseus was paraded in chains before a thrilled Roman populace, along with booty officially totaling almost twelve thousand talents. The Senate annexed Macedonia’s royal estates, and publican tax farmers turned the tactics honed in Sicily, Spain, and Carthage to collecting Macedonia’s taxes. The new revenues allowed the Senate to abolish Italian property taxes.

After this, Rome’s colonial empire expanded steadily. Macedonia and later Greece were made provinces, the Seleucid and Ptolemaic rulers became Roman dependents, and in 133, 96, and 74 B.C.E. respectively, Pergamum, Bithynia, and Cyrenaica in North Africa were bequeathed to Rome. Hellenistic city-states sought Roman patrons and lobbied the Senate with bribes and offers of market access in ways now common in Washington and Brussels. pp. 161-162
Roman and Italian businessmen came to command the raw materials and labor forces in virtually every Hellenistic land. The filaments of commerce, linking the personal interests of influential Romans with the Eastern upper classes, rapidly multiplied and strengthened. Romans served as bankers to businessmen, cities, and kings; invested in mortgages, land, ships, and trade; and worked as merchants and farmers as Athens flourished as a cultural tutor to Rome, much as London and Paris were to early twentieth-century America. Romans bought Greek art and became so Hellenized that many contemporaries thought Rome a Greek city.

Despite their love for Greek culture, Romans treated the Hellenistic states with no more consideration than they did the provinces in Spain and Africa. The effect was actually worse, since there was much more to steal or destroy: Deprived under Roman rule of police, welfare, or justice, Hellenistic lands were thrown into chaos, while the Senate blandly ignored pleas for help and intervened only to protect Romans and their aristocratic friends. Some historians even suspect a deliberate indifference, since these conditions generated so many slaves for agribusiness. Hellenes, used to themselves under the limited sovereignty of the Eastern kings” bitterly detested these policies.

They rose up in outrage, and Rome responded in force. In the 146 B.C,E, the legions brutally suppressed uprisings in Macedonia and Greece leaving Corinth so crushed that Cicero found it a heap of ruins seventy’ years later-and finally destroyed Carthage. They plowed the city under, sowed it with salt, and pronounced a curse on anyone who tried to restore it. Its fifty thousand survivors were sold into slavery. p. 162

Provincials were not the only ones to suffer appalling losses…Few Romans apart from governors, certain traders, and publican society investors actually benefited, and Rome’s police actions were so expensive and unrewarding that only Sicily and Asia were profitable provinces. One hundred thousand Roman and Italian men died between 200 and 150 B.C.E., proportional to nearly 3,000,000 deaths in modern America. The survivors gained little, even from their triumphs. The troops who sold 150,000 Epirotes into slavery netted about two weeks’ wage each (16 denarii).

Even the pound of silver that Cato gave his troops in Spain paid only three months’ living expenses, hardly fabulous spoils of war. Upon returning home, Roman veterans continued to find destroyed farms, stolen property, and scattered families. Italians endured even harsher military service and returned to similar losses. But lacking Roman citizenship, they were also denied access to the food, shelter, and employment available in Rome itself.

The most miserable of all were the slaves. The supply of unskilled laborers was so large that their lives were cheap. They were chained, fed starvation wages, whipped to work, and left virtually naked and unsheltered. A slave could be tortured to death on the mere suspicion of misbehavior, while all of an owner’s slaves would be tortured to death if he was murdered. Such treatment drove slaves to desperate revolts. In 135 B.C,E, a Syrian slave styling himself King Eunus of Antioch led two hundred thousand followers in capturing several Sicilian cities and holding off Roman armies for three years. This revolt inspired uprisings at Rome, Athens, and Delos. More followed, along with continuing insurrection in Spain.p. 161-163

While the plebeians fought and died for the “glory of Rome,” in the end, it was really all about the money.

As Hudson tells it, the unrestrained use of debt—devoid of any protections for creditors—eventually hollows out any society and causes it to decline and fall. The reason is quite simple: only independent, self-sufficient people can truly participate in society as equals with a stake in that society’s success and its future. When you reduce the majority of your population to serfs and chattel, then they no longer have any stake in the society. They withdraw support. Society decays and falls apart. People seek other options.

One can’t help but by struck by the parallels with America in the twenty-first century: an impoverished and demoralized population reduced to debt servitude and kept constantly distracted by bread and circuses; ownership of productive assets concentrated in the hands of a tiny, well-connected elite; “achievement” culture; an increasingly “winner take all” society combined with a pervasive “might makes right” mentality; the looting of the public treasury by private contractors aided by rampant political corruption and cronyism; the funneling of taxpayer money into the pockets of well-heeled insiders, increasingly pointless and unprofitable military adventures abroad, tax reductions for the wealthiest members of society and the shifting of tax burdens onto the few remaining productive activities, venal and incompetent leaders surrounding themselves with pomp, gaudy and grandiose architecture; lavish and conspicuous displays of wealth and sybaritic excess; a rigid and hierarchical class system; mass migrations and porous borders; the use of mercenaries and contractors in place of citizen-soldiers; one can even add a changing climate to the mix. One can almost hear the laughing whisper of history from among the dead stones: “Make Rome Great Again!!!”

In his book Are We Rome, Cullen Murphy indicts creeping privatization–the substitution of self-seeking private interests for the public good–as a critical factor in the collapse of the Rome and rise of the subsequent feudal era:

Serious challenges to any society can come from outside forces-environmental catastrophe, foreign invasion. Privatization is fundamentally an internal factor, though it has an impact on the ability to face external threats. [Ramsay MacMullen in his important study Corruption and the Decline of Rome]…asked his question-How does power become powerless–out of dissatisfaction with the many theories put forward to explain Rome’s gradual decline in the West. His answer is privatization–the deflection of public purpose by private interest.

Such deflection of purpose occurs in any number of ways. It occurs whenever official positions are bought and sold. It occurs when people must pay before officials will act, and it occurs if payment also determines how they will act. And it can occur anytime public tasks (the collecting of taxes, the quartering of troops, the management of projects) are lodged in private hands, no matter how honest the intention or efficient the arrangement, because private and public interests tend to diverge over time. Privatization, whether legal or corrupt. It is how the gears of government come to break. In Rome. the consequences were felt in every area of society.pp. 97-99

This is the story MacMullen traces, as throughout the empire a lubricious glaze of venality came to coat every governmental surface. What accounts for the change? No one factor, MacMullen believes, but some combination of many–the sheer growth in the government’ s administrative reach; as a result, the transformation of “public service duty of the curial class into a lifelong career for a larger group; the flight of the elite from public service anyway, because the demands could prove so onerous: the ambiguity of many laws, allowing money to sway judgments; the increasing severity of punishments, which people would pay anything to escape; and the generally poor communications, which among local officials abetted a sense of impunity (“What happens in Bithynia stays in Bithynia”).

A bronze plaque was affixed to a public building in Timgad, in Numidia, a city built as a bastion against the Berbers, which literally provided a recommended price list for payments to ensure the prosecution and success of various kinds of litigation….Time and again imperial decrees throughout the later empire attempt to put a stop to skimming, extortion, and the illicit use of office; or, failing that, to codify what may be permissible. But the emperors are standing athwart the tide, and the imperial pronouncements have a doomed, forlorn, ritual feel to them. Modem newspaper headlines like “Congress Votes New Curbs on Lobbyists” convey something of the same formulaic quality… AWR? pp. 104-105

IN THE END, Rome was heading toward something the Romans couldn’t, by definition, have a term for. But we do: it’s the Middle Ages. The precise definition of “feudalism” is one of those things on which medievalists can’t quite agree-the field is divided into warring fiefdoms- but the historian F. L. Ganshof discerned in feudal society one basic quality: a dispersal of political authority amongst a hierarchy of persons who exercise in their own interest powers normally attributed to the state. Public interest had become private.

This isn’t the place for an extended excursion across a thousand years of Western history. In brief, for many centuries power was wielded in Europe by monarchs and vassals as if it were a form of private property. ‘The levying of taxes, the raising of armies. the meting out of justice-these things were done in e name of the ruler, and the fruits of his administration were enjoyed by those who acknowledged the ruler’s personal lordship. The eventual path away from the Middle Ages was marked by the halting emergence of governments defined by communal interest rather than private prerogative. But sometime in the late twentieth century the arrow began changing direction… AWR? pp. 108-109

The modern logic of privatization

One major point that Hudson makes is that in the ancient world, unlike today, there was no assumption that powerful people acting in their own narrow self-interests would lead to beneficial social outcomes! There was no “logic” of privatization. Rather, it was generally assumed that oligarchies usurping the public purpose was a bad thing and should be avoided if possible. Powerful private interests usurping the public good was associated with immorality and collapse, rather than with progress and efficiency. There was yet no “science” of economics to tell them otherwise:

…nobody in antiquity advanced the idea that private property and personal self-seeking would bring about a more efficient social system than communal property or private property managed unselfishly. Just the opposite: The stoics disparaged private self-seeking. Antiquity produced no Milton Friedman or Margaret Thatcher, nor did an Adam Smith emerge to suggest that an invisible hand would guide personal self-seeking to increase the nation’s wealth. The policy objective was not efficiency, but “straight order” in Babylonia, social equity for the Biblical prophets, and an appeal to the “constitution of the fathers” (patrios politeia) by the Athenian oligarchs and by Cicero’s upholding of patrician Roman values. Creditors were not euphemized as savers performing a public service; they were condemned throughout antiquity as usurers preying on the poor. Nobody suggested that debt-ridden economies might work their way out of debt by saving and investing more. In these respects there were indeed was no doctrine of privatization in antiquity.

Mesopotamian rulers viewed the privatization of enterprise from a different perspective than that of today’s political philosophers. Modern governments are charged with the duty of defending creditor claims against debtors’ rights to their own economic freedom and means of livelihood. But Bronze Age rulers protected debtors against creditors…Mesopotamia’s public institutions coped with this problem of economic inequity and private patronage by countering the arrogance that tended to be inherently associated with wealth. p.53

One result of the modern world emerging out of Rome’s collapse rather than directly from the Mesopotamian upswing is that our legal traditions sanctify debt obligations rather than providing for their cancellation when they grow too heavy. Modern industry is financed with borrowed money via mortgages, bonds, and bank loans. Even our governments are debtors, not creditors as in the Bronze Age. Indeed, in an attempt to service these public debts, governments throughout the world are privatizing natural resources and public utilities long considered to be part of the national patrimony…p. 56

We all know what happened to the Roman empire after is latifundia dynamic ran its course. It declined and fell. Is something similar in store for today’s topheavy debtor economies? Will market forces again become swamped by a new growth in debt overhead? Will a new polarization enable the wealthiest classes once again to free themselves of taxes and other traditional obligations of ownership? Or will history be different this time around? p. 3

Conclusion

Privatization is at the core of the Neoliberal project that has managed the world since the 1980’s. Hollowed-out states act as little more than agencies collecting and funneling taxpayer money to private corporations. Public services in every area of life, from public transportation to health care, are sold off at fire-sale prices or shut down altogether. Politicians sit on the boards of these corporations and have their political campaigns funded by them. Lucrative jobs and lobbying positions await them when they leave Washington. Everything from K-12 schools to basic infrastructure is now under the control of private enterprises acting to maximize profits, rather than in the public’s best interests. It is, in Matt Taibbi’s phrase, a “Griftopia.” Another term might be “kleptocracy.”

Once again, private industry is not taking entrepreneurial risks, but seizing the commons and acting as costly toll-bridges to essential services–in other words, becoming rentiers. Even national defense and incarceration are profit centers for giant mega-corporations, which explains America’s vast carceral state and perpetual wars around the globe (compare to World War Two which was concluded in four years by our central government). We are told every day that the private sector is honest, efficient, and cost-effective, and that the government is corrupt, bloated, inefficient, and wasteful. But, of course, we are given this message by a media which is the property of those very same corporations. Privatization ensures that corrupt and wasteful government becomes a self-fulfilling prophecy (to be fixed by more privatization!)

It appears that private interests diverting resources from the state into their own hands played a large role in the downfall of the Roman Empire. So did reducing entire populations to debt servitude and taking away their dignity and self-reliance. One wonders how far along this trend must go before people realize that the narratives they are being fed by the corporate media and economists are self-serving lies, and decide to rise up and demand a different way of doing things.

SOURCES:

Privatization in the Ancient Near East and Classical World. Baruch Levine (Editor), Michael Hudson (Editor). Peabody Museum of Archaeology, 1996.

Are We Rome? Cullen Murphy. Houghton Mifflin Company, 2007.

The Origins of Business, Money, and Markets. Keith Roberts. Columbia University Press, 2011.

Urbanization and Land Ownership in the Ancient Near East – Summary

This is the normal world. You go to work in a city. All around you are enormous new buildings. They look alike. But you will never be able to afford to live in them. Because they are not really homes. They are blocks of money, bought by global investors, whose money has nowhere else to go.
ADAM CURTIS–Living in an Unreal World.

Urbanization and Land Ownership… begins by looking at the very beginnings of cities as ritual meeting places. These locations would be the places where people would come together at various times throughout the year to conduct what we might call “doctrinal rituals.” Humans, as the most social of species, used these rituals to bind disparate people together. At these sites, various transactions would take place, including feasting, trading, barter, and various dealings and exchanges including bride exchange. Because of their social role, these places acquired a “public” character early on, in the sense of establishing social order, agreed-upon rules, negotiation, and justice. These were places of exchange and communion, and remain so to this day. Most early cities (including Athens and Rome) were associated with their temples. From there, such cities developed into “ports of trade” where people and goods interacted in webs of exchange.

In the beginning, Alexander Marshack points out, the organizing principle had to be time. Hunter-gatherers, who normally were widely dispersed, needed a common means of reckoning just when to come to designated areas. Such gatherings were as much temporal as geographic events…Marshack…shows that the first written notations were calendars. They were associated with “urbanization” in the sense of scheduling when group members would come together…Ease of access to such sites…was important…the major Upper Paleolithic gathering spots, such as Les Eyzies’ caves, were situated on riverine locations.

The elaborate art that survives from these seasonal gathering sites appears to be of a ceremonial character, attesting to the complexity of the rituals being performed tens of thousands of years before the urban civilizations of Mesopotamia and Egypt…the social structures that shaped the way in which scattered groups convening at designated places (often ritual sites) developed already in Paleolithic times, long before the Neolithic and its agricultural revolution. These urban institutions governed temporary occupation of sites at particular times of the year to conduct exchanges of various forms, including marriages…

While archaeologists used to think that urban agglomerations just suddenly arrived on the scene sometime after the agricultural revolution due to population pressure, in fact humans had already established complex means of cooperation in war, trade, and politics long before, as Michael Hudson notes:

By the time populations settled down on a year-round basis and built temples and walls, houses and workshops, they already had developed a long legacy of customs governing how to come together. Some of these institutions evolved out of the social need to exchange food, crafts, and other basic materials and also to contract marriages linking clans, to provide various forms of mutual support, and to resolve disputes.

It was these religious/public institutions that gave cities their distinctive character, not just practical concerns arising from increased population density. The “cosmological symbolism” that began with cromlechs and tumuli became embodied in the brick and stone temples and walls as humans began to claim territories for themselves and adopt a more sedentary lifestyle during the Holocene:

It was more or less natural for compact sites in which far-flung groups of people had to congregate on mutually planned occasions to be structured, by analogy, as spatial calendars. While animals migrated back and forth across the fields and forests to mate, moult, and give birth in rhythms that marked the pulse of the archaic year, the sun and moon swept back and forth between their northern and southern solstice points on the eastern and western horizons…

The occasional character of designating certain spots for such gatherings at specified calendrical intervals may help explain the symbolism so widespread in archaic cities throughout the world, with their four quarters and four to twelve gates. This spatial symbolism of the year’s division into seasons and months – which is found in Egyptian urban symbolism… and also in China – appears to reflect the civic function of integrating early law with the natural regularities of the heavens. This “natural law” cosmology symbolized and indeed helped sanctify the worldly order emanating from urban centers.

At first glance a discussion of the cosmology of ancient urban sites might seem to have little to do with things as mundane as land use, and townhouse prices. But in archaic times the social and economic kosmoi had not yet become separated. The common objective was to create order, to make rules for people to come together in ways that were perceived to be grounded in nature and therefore mutually acceptable.

Rather than reflecting a merely technological impulse, the most archaic urban sites appear to have played a ceremonial role in creating what could be called a cosmology of social life. In the Early Bronze Age, Mesopotamia’s temples and palaces elaborated exchange relations and their associated functions such as laws, weights and measures, contractual forms, and even proclamations of “forgiveness” of various offenses, fines, and personal debts of various forms so that the community and its families could maintain their economic viability and overall balance.

Calendrical concepts from the Stone Age carried over into a general idea of “measurement” which originated in cities. Not only was land parceled out by the rulers, for example, but the time was parceled into twelve months, along with weeks, days, hours, minutes and seconds. It is commonly known that our twelve-fold and sixty-fold divisions in calendars and mathematics (e.g. 360 degrees in a circle, 60 minutes in an hour, twelve months in a year, etc.) derive from these measuring systems to this very day. Standardized weights led to the first systems of money and currency. Initially, donations to the temple were standardized against weights of barley, then later against weights of silver. Commerce and law, too became standardized, and this is why cities become the very first places of formalized law and government. Written contracts overseen by scribes used standardized measures of weight and time and were stored in temple archives. It is not so much that cities exerted true political control over the countryside–as Michael Hudson points out, they did not. Rather, these temples were the root sources of the institutions that have come to govern our world.

With writing and account-keeping came weights, measures, and standardizarion, and this also shaped early urbanization. Politically, the ideology of Mesopotamian cities was to create an evenly measured and “straight” cosmology of economic and social relations. Sumerian and Babylonian iconography represents rulers characteristically holding the measuring stick and coiled measuring rope to layout temple precincts…Such orientation aimed at grounding cities and their rule symbolically in the eternal regularities of natural order, as reflected in the celestial movements of the heavens.

In the commercial sphere, the principle of equity is exemplified by common prices, at least for transactions with the large public institutions. The fact that standardized prices are to be found most clearly in Mesopotamia’s temples and palaces was inherent in their internal account keeping and planning needs, which also called for sacred oversight of uniform weights and measures. Temples also oversaw the sanctity of contracts, including property transfers. All these were standardized and made subject to strict formalities. One result was to make cities places of lawful rule, in contrast to the often wild countryside and mountains.

In my previous posts on the origin of cities, I pointed out that the earlier view of an impersonal bureaucracy and hereditary ruling class forming out of kinship structures is outmoded. Rather than anything like an impersonal government bureaucracy chosen by merit (which first developed in China), the social structures continued to be dominated by kinship relations and households, and the interaction between small, large, and institutional households formed the dynamics of emerging economic and political systems, as Professor Lamberg-Karlovsky describes:

The archaeological evidence clearly supports the contention that within greater Mesopotamia, from the 6th to the end of the 4th millennium, the household was the primary unit of production and consumption. A household may be defined as a residential group that forms both a social was well as an economic unit of production and consumption. Members of the household consisted of kin and clients providing voluntary labor. Status was defined by the ability of one member of the household to exploit the labor of another–gender and age being the variables allowing for exploitation.

Max Weber, in his study of agrarian relations was perhaps the most prominent in a long line of scholars and historians who argued for the primacy of household organizations in the ancient Near East. Unfortunately, Weber’s emphasis on the importance of the oikos, the household, was almost entirely forgotten due to…Father Anton Deimel…[Whose]…student Anna Schneider popularized the view that within Mesopotamian city states the templewirtschaft, the temple economy, formed the focus of centralized power controlling both labor and land. The idea that initially the temple, and later the palace, held absolute sway over the political and economic organization of the community remains a belief with a powerful hold on the reconstruction of ancient Near Eastern society…

Over the past few decades a concept has emerged in discussing late-fouth-millennium-Mesopotamia best referred to as the emergence of a “managerial revolution.” This view contends that there was an evolutionary displacement of the family, of the household, and of kinship by managerial bureaucracies. Central to this view is the belief that with the emergence of a managerial bureaucracy, the concomitant social and settlement hierarchies become divorced from kinship patterns and household activities. Less explicitly stated, but implied, is the emergence of a bureaucratic meritocracy and the importance of individualism within the new social order. This conventional perspective argues for the increasing importance of a faceless bureaucracy replacing an earlier significance of kinship and the household…Studies…indicate that the household, the family, and the role of kinship continued to play a decisive role in the economic and political organization of Mesopotamia…Kinship was neither marginalized nor replaced by a meritocracy of individualism, rather, and increasing managerial bureaucracy emerged that was controlled by kin-related individuals. Written records and archaeology provide evidence for the emergence of large institutional households (oikoi) by the end of the fourth millennium. These institutional households were self-sustaining and autarchic economic units. The household (oikos) constituted ‘the center of the productive economic  activities we now handle through the market.’ It contained the communities’ basic economic activities and was the focal unit of social organization. With reference to the large village (polis), the household formed the building block for all larger social, economic, and political units…

The household, as the building block of the neighborhood, the village, and the city, has an exceptionally long history in the Near East. Modern ethnoarchaeological studies attest to its enduring significance today. The evolution of the household forms the foundation for an understanding of the social order and its evolution in the Near East. Throughout most of the Near Eastern Bronze Age in Anatolia, the Iranian Plateau, and the Levant, the domestic household remained the principal institution of ownership, production, and consumption…

In my earlier post, I noted how cities became the centers of redistributive systems, and out of this evolved their essential role as centers of surplus storage, economic activity, defense, and emerging political control.

Redistributive systems involve symmetry and centricity, and as the centers of these webs of interdependence, cities, growing up around ceremonial complexes, became the nucleus of such redistributive systems. We’ve already seen that the Mesopotamian city states were ways of economically integrating people living in diverse ecological zones. One interesting paper by Elizabeth C. Stone makes a distinction between “city states” (as in Mesopotamia, Greece, and the Maya) and “territorial states” (such as Egypt and Peru). Professor Stone argues that these two forms of early states have distinctive political and economic structures which are based on the geographical character of the land the people inhabit:

…there are…key differences in the environments in which we find city states and territorial states….these are not defined by basic divisions between irrigation societies versus non-irrigation societies…Instead these distinctions focus on the two key resources for agricultural production: land and labor…territorial states are found in areas where arable land is both permanent and bounded, providing a clear opportunity for elites to maintain the necessary labor force through their control over access to arable land. City states” by contrast, are found in areas where productive land is both temporary and mutable, forcing the elites to find means other than direct coercion in order to maintain the necessary agricultural labor force.

To illustrate these differences, we can take Egypt and Inca Peru as examples of territorial states, and Babylonia, the Maya, and the Yoruba as examples of city states…control over land represented control over the labor force needed to work it in territorial states, allowed the development of a hierarchical political system in which positions of authority were carefully controlled and were assigned on the basis of inheritance. The result was a highly centralized political system based on a powerful ruler supported by an hereditary aristocracy. The rest of the population was essentially disenfranchised. As social mobility was virtually unknown, a clear and permanent divide was maintained between the elites and the bulk of the population.

…Where several of these polities were located in adjacent regions, the takeover of one by another was relatively easy. Once the neighboring elites had been co-opted into the expanding state (whether accompanied by military threats or actual battle), the land they controlled would have accompanied them. The inclusion of local elites in the new ruling class would effectively remove potential sources of opposition from within then new state…

City states, by contrast, could not use coercion in order to maintain their labor force. If they tried, there was always the possibility that people would vote with their feet and leave state society altogether. Under these circumstances, any political system had to involve the population as a whole in decision making, at least at the most basic level. Popular assemblies and advisory councils thus typify city states; they are much less common in territorial states….Decision-making in city-state societies was the result of consensus building between the various elites. The large institutions, the agriculturally based population, the merchants, and the artisans all competed with one another for political ascendancy and forged a larger consensus through the organs of popular government…

Even though these elites held real political power in city states, unlike those in territorial states, they could not become entrenched. Instead, social mobility tended to be high, as different families rose and fell in status over time. The high cost of elite status – reflecting the need to maintain the loyalty of one’s followers, coupled with a partitive system of inheritance- further weakened the population’s economic base from generation to generation. In due course, new elites would rise to the top, often based on wealth accumulated as a result of the high levels of entrepreneurial activity typical of city states- … The net effect was that the major divisions within city states were not vertically based on class as in territorial states, but rather horizontally based on affiliations between elites and their nonelites.

In the economic realm, city states placed a heavy emphasis on entrepreneurial activity. Merchants and artisans represented a significant independent segment of society. While they participated in the larger political system, they also were responsible for the economic success of the city-state system…in city states the surplus production of the agricultural sector did not fall into the hands of the central administration through direct appropriation as much as through the exchange of rural products for urban ones…without a relative degree of economic freedom, the economic fluidity needed to make possible the high levels of social mobility in city states could not have been achieved.

The downside of the city-state system lay in the impossibility of extending this political system over large distances. The city state worked because the key political players all lived in the same city and therefore had the possibility of settling their differences through face-to-face interaction….The physical separation that existed between city states, however, meant that their differences were more often settled by active warfare than by discussion.

The problems began when one city state succeeded in conquering its neighbor or neighbors. Unlike territorial states, where the hierarchical system of political organization easily could be extended to any freshly absorbed territories, this was not the case with city states. When the latter were joined together into larger imperial units-which happened with some frequency · two quite different types of political organization were in place. The process of consensus building continued within the basic units of society -that is, the old city states-but this existed side by side with the imposition of imperial rule by the conquering state. Because of the conflict between the philosophies behind these two systems, the city states never became fully reconciled to their absorption in the larger unit. This eventually lead to the collapse of the system back into city states.

These political considerations engendered very different patterns in urbanization and land-use between territorial states and city states:

…cities characteristic of hierarchical territorial states are characterized by a unified but not very large urban space, in which the major institutions–religious, political, economic, etc. are physically concentrated. The population of these centers are dominated by elites, bureaucrats, and highly skilled craftspeople — especially those who produce goods for elite consumption, with only their servants and slaves constituting any nonelite segment. Finally, it is within these cities that both wealth and high-quality luxury goods are concentrated. Beyond these settlements lie the scattered farmsteads and villages of the bulk of the population, whose material culture remains are little different from their Neolithic ancestors, since they have virtually no access to the goods produced by the urban-based artisans.

By contrast, the urban centers of less hierarchical city-state societies are large and populous, but broken into many different sectors. Most obvious are the physical divisions between the major political, religious, and economic institutions, but the residential sector is also subdivided into numerous face-to-face communities or neighborhoods. Unlike cities in territorial states, these neighborhoods are not made up entirely of elites, nor are there some elite and nonelite areas. Instead, each residential district is similar to others in providing housing for all social classes. The presence of large numbers of nonelites in these cities — many of whom are farmers — allows for a more even distribution of manufactured goods, with no segments of society denied access to these goods. Finally, since the key resource in these societies is labor rather than land ownership, even quite small settlements have their own elites and populations with access to manufactured goods.

I’ve already covered some of the concepts of land ownership my previous post on Labor in the Ancient World. Labor and land tenure are intimately intertwined: most labor throughout human history from the beginnings of agriculture through the Industrial Revolution has been done by farmers to coax a surplus from the soil. But who owns the soil? This has been a major question confronting any human society once the shift from foraging takes place. “Land reform” has been a major political issue from Babylonia to ancient Rome. The major communist revolutions in the twentieth century were all in agrarian societies and were based on land reform (Russia, China, Cuba, Vietnam), unlike what Marx envisioned (who believed that industrialization was a necessary precursor to Communism).

Some major ways of allocating land rights historically have been as follows:

  • Farmers own and farm their own land (Yeomanry)
  • The land is collectively owned and farmed (e.g. a Commune or Kibbutz)
  • The land is nominally owned by someone else, but farmed by others. This could involve:
    • Serfdom: farmers are “attached” to the land, that is, they are part of the property as much as the plants and trees and water, and are bought and sold along with it. Serfdom is different from slavery-instead of being bound to a person, serfs are bound to land. While this is usually depicted as a form of oppression, it does protect farmers from arbitrary eviction and the subsequent loss of land tenure. Serfdom structures appear to have been common in ancient Egypt.
    • Sharecropping: Farmers surrender a portion of their crop over to the nominal owners of the land in exchange for tenure rights. This persisted, for example, in the United States South until well into the late twentieth century. The medieval feudal system was based around sharecropping.
    • Plantations: A large-scale landed estate or ranch where a resident workforce, free or unfree (typcially the latter), lives and works on the property. These are usually large tracts of land designed to produce some sort of export commodity (grain, wine, cotton, tea, sugar, tobacco, etc.) The most famous historical examples are the Roman latifundium and Spanish hacienda. Most of the techniques of human organization employed on factory workers during the industrial revolution were first developed on slave plantations.

In addition, we can distinguish three major modes of unfree (compulsory) labor:

  • Chattel slavery; People are property, and can be bought and sold. Sometimes slaves have rights, sometimes not.
  • Debt slavery (i.e. debt bondage, bonded labor, indentured servitude, etc.): Working to pay off a debt, real or imagined. A percentage (up to 100%) of your income or work output is surrendered to a creditor for a certain period of time.
  • Corvée labor: A duty to perform labor for a specified period of time, often to an institution in lieu of taxation.

The first large-scale industry where cash payment was utilized appears to have been mercenaries until the Industrial Revolution where wage slavery became the norm.

A word about that term: slavery. The reason it is used is because it was widely recognized in the ancient world that any time workers were compelled to labor at times and places and for durations not of their own choosing there was a coercive apparatus involved, and hence, it was a form of slavery. Under markets, that coercion comes from the need to continually procure enough money to purchase the basic necessities of life (food, clothing, and shelter), and the lack of ownership of income-generating property or assets. Since the worker is told what to do, when to do it, where to do it, how to do it, and how long to it for (unlike a free worker), it was commonly recognized as a form of slavery; Cicero noted that receiving a wage was itself a form of bondage: “whoever gives his labor for money sells himself and puts himself in the rank of slaves.” Although clearly distinct from chattel slavery (where workers are property and can be bought and sold), the compulsory apparatus is still there. We’ve just normalized it, much as chattel slavery was normalized everywhere in the world until the nineteenth century.

We’ve seen that corvée and debt bondage appear to be the first forms of compulsory labor to emerge. Corvée was more or less egalitarian (although managers were often exempt, as was the case in ancient Egypt). Debt bondage, however, caused classes of debtors and creditors to emerge. In extreme cases, debt was passed down through generations, leading to caste systems. Ownership of preferred plots of land and other property was likely passed down through generations as well, encouraging the inequality spiral.

As we saw in the last post, land tenure was precipitated on supplying labor for collective construction projects (i.e. infrastructure) in early societies. This seems to have been remarkably consistent in the days before labor markets and fossil fuel-powered machinery. And land ownership appears to have been primarily distributed through usufruct—rights were assigned to use the fruits of the land, but not the rights to sell or to significantly alter it (abusus).

A common question asked throughout the book is when did a true real-estate market develop? That is, when did land became an alienable “thing” that could be bought and sold by private individuals? And when did this become a true market, with prices set by supply and demand? We are so accustomed to thinking of this setup as “natural” that we forget that most cultures throughout history have not recognized the absolute alienability of land or it’s transfer via markets. The volume never really comes up with a convincing answer to this question. We have a lot of contracts on stone tablets, but it’s difficult to reconstruct any dynamics of a real estate market based on them. One scholar points out (in my opinion correctly) that the real roots of our modern real estate markets should be sought in Medieval England, and that Egypt and Babylonia have little to teach in this regard.

One can only sell, forfeit, or otherwise transfer what is privately owned. To put matters the other way around, without being able to transfer one’s land at will, there is no real “ownership” in the modern sense of the term. The public buildings and areas were the distinguishing feature of archaic cities, set apart from any single clan’s control (save that of the ruler). How then are we to explain the alienation of urban houses and gardens occurring so much more readily in Sumerian and Babylonian towns than in the countryside for rural subsistence barley-land?

At what point does the documentary record enable us to find prices for order to build a townhouse? Is there any evidence of buyers tearing down existing structures to build newer, larger, and better ones? In today’s world such shifts in land use represent the single most important economic dynamic of urbanization, as generations of real estate developers can attest.

Hudson makes an analogy with a contemporary (at the time of publication) issue – the breakup of the Soviet Union. Under Communism, all land belonged to the state, and could not be bought and sold by private sellers. Hudson points out that at the time of publication, Yeltsin was attempting to privatize land, thus establishing a real estate market. Hudson argues that the transfer of land was more like a collusion between connected insiders than anything like a true and impersonal “free” market, and points out that there are valid reasons for placing limits on land transfers. However, custom and tradition, not to mention the needs of agriculture, must have greatly constrained any true “market” in land from forming up until well after the Industrial Revolution in most places.

It is easy to overlook how culture-bound modern real estate markets are. The day before our colloquium opened in St. Petersburg, for instance, president Boris Yeltsin unveiled Russia’s proposed new income tax law, a week after issuing a decree permitting companies to obtain ownership of the land under their buildings. The decree was illegal. Only the Duma (Russia’s parliament) is empowered to enact such a law, and it steadfastly refused to do so. This created a crisis with regard to who would control the land and receive its usufruct: the community (the state or locality) or private owners, starting with the best-placed public officials and their friends. Without a land law no legal context existed for real estate rights to be sold or otherwise transferred. No clear idea could be formed of the worth of urban enterprises or their fiscal role in the post-Communist economy.

This situation is strikingly similar to that of Bronze Age Mesopotamia in a number of ways. Most obvious for purposes of this colloquium is the absence of modern market relations. Also similar is the contrast between urban and rural land. Subsistence lands could not legally be sold or transferred in the ancient Near East, and they are likewise blocked from sale in Russia today. In both cases, however, there was a jockeying for position by outsiders (especially creditors) to gain some sort of rights to this land. In Russia today the outcome remains unclear – the same kind of grey area as seems to have existed in the Old Babylonian epoch. In both cases one finds land being transferred without a legal framework to govern such transfers.

Emerging from seven decades of communism, Russians have only sketchy ideas of how to estimate land values or the price at which to rent out urban sites. Indeed, the creation of a modern “western” real estate market does not appear to be inevitable, for as debates in Russia remind us, there are good age-old reasons for not creating laws that facilitate the ready transfer of land rights. When the China Hotel in Moscow recently was sold for a million rubles, it was an insider giveaway, as were other transfers of prime sites. An anthropologist might call this ‘gift exchange” on the part of President Yeltsin to his cronies. Most land transfers (can we really call them “sales”?) in recent years have been insider deals … Indeed, one can view the past nine centuries of English history as the long consequence of William the Conqueror assigning land to his military officers…

It appears that many people owned both rural and urban properties, blurring the distinction between city and countryside. Urban “professionals” would derive income from their rural estates. Village craftsmen would have shops in urban areas. There were no real words distinguishing between urban agglomerations of various sizes; all urban areas, no matter their size, were considered of a piece.

This juxtaposition of urban to rural does not well suit the analysis of Bronze Age Mesopotamia. A symbiosis existed between cities and their surrounding lands. Most owners of townhouses held subsistence lands in the countryside, as such land provided the basis for citizenship (to use another rather anachronistic word)

The idea of cities as housing large aggregations as distinct from small villages or hamlets also is anachronistic, for the Sumerians and Egyptians used the same word to designate large and small cities alike. What was essential was not size, but structure. Indeed, “in the beginning” (prior to the Neolithic), this structure probably did not even involve year-round residence, but seasonal visitation for rituals and other social interaction. The characteristics of cities were those of gathering places and as such were influenced by the social purposes for such gatherings. These purposes were basically public and communal, such as attending the festivals that formed the basis for social cohesion in ancient times.

The essence of cities (before “the state” existed as such) was to act as the nexus of order, including legal judgment, which was long anchored in religion (at a time when religion itself dealt much more with worldly relations than is now the case). Cities were given their character largely by their city-temple and palace, at least in southern Mesopotamia (Babylonia), which forms the major focus of this colloquium.

Rural land appears to have been mostly inalienable. It was not bought and sold, but passed down in families through the generations. If land was forfeited by a family, such as through debt, it was restored to the original owners during the periods of debt cancellation (clean slates). Land and buildings in cities, by contrast, were apparently freely bought and sold, but their prices appear not to have been determined by supply and demand, or by favored location:

The term “land ownership” (and hence, of real estate or real property) …requires some caveats to be borne in mind. First of all, there were different kinds of land: subsistence lands in the countryside (which were deemed inalienable on more than a temporary basis by their holders) and surplus-producing lands that were part of the market-orchards, vegetable gardens, and townhouses. These were alienable.

The idea of ownership necessarily involves the notion of alienability, mainly through direct sale or forfeiture to creditors. Rural land could be alienated temporarily but was supposed to be redeemed by its customary holders or else was restored to them by royal edict. Permanent sale of land was limited mainly to the cities…

Inasmuch as subsistence land provided the basic means of self-support for most families, it could not be sold or otherwise alienated. But, urban townhouses were not necessary for this role. Society could afford more leeway for the transfer of these properties. Given their more or less free alienability, the question naturally arises as to how their prices were determined…There seems no trace of an early intention to increase real estate values, to say nothing of anything as modern as real estate developers hoping to see temples or other public structures built near their own sites so as to increase the value of their property.

In order to signify that such sales were final, and that all the traditional formalities were observed, the term “sold at full price” was commonly used in the documents.

Land alienations were held not to be valid unless “the full price” was paid. A modern economist would be tempted to infer that this indicates the existence of a fairly well-understood market, but that ancient societies recognized that strapped cultivators would only sell their lands (‘”lose their homestead”) under conditions of extreme economic distress. This view would suggest that land sales were only valid if sold “at the full price,” so as to save distressed sellers from being taken advantage of. However, the members of this colloquium find this not to be the case. The words do not seem to represent what they would in to day’s market economies. Transferring land “at the full price” appears to mean simply that all proper formalities were obeyed and properly witnessed by all the affected relatives and neighbors of the seller. In Sumerian times a formal meal with some exchange of presents would have been held to attest to the legitimacy of the land transfer. The meaning of “price” in the phrase “full price” thus appears to mean “condition of transfer.” In archaic times the conditions of land transfer were much more far-reaching than merely paying a sum of money.

One important concept is that you can have multiple, overlapping claims to the same land. We tend to think of absolute or “fee simple” ownership, as the norm. But even in our society, land ownership is subject to restriction – zoning laws, government panels, community groups, etc. In ancient societies, for example, you might have the people living on the land having a certain set of rights, the nominal “owners” having a different set of rights, a creditor having a different set of rights, and the community (embodied by the ruler) with a different set of rights, all to the same plot of land. As Douglass North writes:

Feudal law did not recognize the concept of land ownership. Its basic characteristic was that several person had jurisdiction or held and shared particular rights to the same piece of land. The king, the tenants in capite, the mesne tenants, and the tenants paravail (or, more simply, the king, the lords, and the peasants) each held particular rights to receive income, called incidents, from the land.

In summary, then, we can discern several broad categories of land use in ancient Near Eastern cultures:

(1) Sacred lands of the temple. Permanent and inalienable. Not under the control of any particular clan–only the ruler or the high priest. Not subject to transfers, sales, clean slates, reallocation, etc. This permanence and regularity meant that cities were the cultural, economic and political centers of their respective communities.

(2) Prebends (land stipends) set aside for maintenance of the temple staff. These lands were not alienable, but were rented out for sharecropping by the temple household. The first land rents and interest payments were charged here.

(3) Subsistence lands which were passed down through generations. Ownership was the right to the output of the land rather than absolute ownership (usufruct). Land was owned and maintained by families/households rather than solitary individuals.

(4) Rural land where usufruct rights were temporarily surrendered through debt. These reverted to their original owners during Clean Slates.

(5) Landed estates owned by the literate gentry in return for their managerial services. Many of these estates included a dependent labor force that we might call serfs.

(6) Common lands where multiple claims prevailed. These might be true commons (of which little written documentation would exist), or what anthropologists might call clan lands or corporate kinship lands. These were owned by groups–often kinship groups–rather than individuals, families, or institutions.

(7) Land which was transferred “at full price.” i.e. subject to ceremonial restrictions. The scholars find that most property transfers were not whole farms but parcels – plots of land that were too small for a subsistence farm. This suggests that transfer of lands was done piecemeal, i.e. whole farms were not bought and sold, just small pieces of land which eventually added up over time. Most likely nothing like a “market” in the modern sense.

(7) Townhouses, shops, orchards, gardens, and other “improved” property in urban areas which could be bought and sold. However, there appears to be little relation between the locations of such buildings and their prices. Urban real estate did not gain in value based on proximity to institutions or scarcity, nor was it an “investment” unlike today. Neither was urban land considered more valuable than rural land. The was no “speculative” real estate market; those developed later, for example, in ancient Rome.

Finally, I think this passage by Margaret Mead about the Paupauan Arapesh of New Guinea, quoted in Karl Polanyi’s Trade and Market in Early Empires, well captures the fluidity of economic relations in ancient cultures and the difficulty of trying to explain them in terms of our modern fossil-fuel powered market oriented money society:

A typical Arapesh man …therefore is living for at least part of the time (for each man lives in two or more hamlets, as well as in the garden huts, huts near the hunting bush, and huts near his sago palm) on land which does not belong to him. Around the house are pigs which his wife is feeding, but which belong either to one of her relatives or to one of his. Beside the house are coconut and betel palms which belong to still other people, and the fruit of which he will never touch without the permission of the owner, or someone who had been accorded the disposal of the fruit by the owner. He hunts on the bushland belonging to a brother-in-law or a cousin at least part of his hunting time, and the rest of the time he is joined by others on his bush, if he has some. He works his sago in others’ sago clumps as well as in his own. Of the personal property in his house that which is of any permanent value, like large pots, well carved plates, good spears, has already been assigned to his sons, even though they are only toddling children. His own pig or pigs are far away in other hamlets: his palm trees are scattered three miles in one direction, two in another: his sago palms are still further scattered, and his garden patches lie here and there, mostly on the lands of others. If there is meat on his smoking rack over the fire, it is either meat which was killed by another, a brother, a brother-in-law, a sister’s son, etc. and has been given to him, in which case he and his family may eat it, or it is meat which he himself killed and which he is smoking to give away to someone else, for to eat one’s own kill, even though it be only a small bird, is a crime to which only the morally, which usually means with the Arapesh mentally, deficient would stoop. If the house in which he is, is nominally his, it will have been constructed in part at least from the posts and planks of other people’s houses, which have been dismantled or temporarily deserted, and from which he has borrowed timber. He will not cut his rafters to fit his house, if they are too long, because they may be needed later for someone else’s house which is of a different shape or size…This then is the picture of a man’s ordinary economic affiliations.

As Polanyi points out in that book, unlike other commodities, if land is scarce, we cannot produce more of it, and so the price will only go up. Also, the price can theoretically fall to zero just as easily.

In a time where there are more empty houses than homeless people, economic activity is constricting to a small number of urban archipelagoes, and the average income is unable to purchase—or even rent—adequate shelter in many urban areas, we need to start thinking about new ways to distribute lands and dwellings beyond simply real estate markets. There is nothing natural or inevitable about such arrangements, as a glance through history shows.

Fun Facts

NFL games contain 15 minutes of action in a 60-minute clock time that requires over three hours to broadcast.
https://www.theguardian.com/sport/2016/nov/16/nfl-time-games-too-long-speed

A zeptosecond is a trillionth of a billionth of a second.
http://www.huffingtonpost.com/entry/zeptosecond_us_582be255e4b0aa8910bdb138

Almost all the US jobs created since 2005 are temporary.
http://qz.com/851066/almost-all-the-10-million-jobs-created-since-2005-are-temporary/

Smog is related to nearly one-third of deaths in China, putting it on a par with smoking as a threat to health

Severe air pollution has shortened life expectancy in China by an average 25 months.
http://www.scmp.com/news/china/society/article/2056553/smog-linked-third-deaths-china-more-deadly-smoking-study-finds

In the US, at least one person a week is shot by a toddler.

Only one member of the US Congress identifies as unaffiliated with any religion
http://www.bbc.com/news/magazine-38517967

The term “genuine leather” isn’t reassuring you that the item is made of real leather, it as an actual distinct grade of leather and is the second worst type of leather there is.
https://www.reddit.com/r/todayilearned/comments/5mkkyh/til_the_term_genuine_leather_isnt_reassuring_you/

In 1940, the median American hadn’t finished 9th Grade.
https://twitter.com/mattyglesias/status/819038140270870528

Many Areas of Appalachia and Mississippi Delta Have Lower Life Expectancy Than Bangladesh.
http://www.nakedcapitalism.com/2017/01/many-areas-appalachia-mississippi-delta-lower-life-expectancy-bangladesh.html

The opioid epidemic killed more than 33,000 people in 2015. Overdose deaths were nearly equal to the number of deaths from car crashes. In 2015, for the first time, deaths from heroin alone surpassed gun homicides.
https://www.nytimes.com/2017/01/06/us/opioid-crisis-epidemic.html?_r=0

1 in 4 Alabamans are functionally illiterate.
http://www.uab.edu/backsoon.html

Young people today that have a degree with debt earn roughly the same as young workers with no degree in the late 1980s.
http://www.businessinsider.com/comparing-millennials-to-baby-boomers-2017-1?utm_content=buffer4ef1e&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer-ti%2F/#millennials-have-accumulated-about-half-as-many-assets-as-the-same-age-group-had-in-1989-they-also-make-about-10000-less-on-average-1

Spam Accounts for Two-Thirds of Total Email Volume.
http://247wallst.com/technology-3/2017/02/02/spam-accounts-for-two-thirds-of-total-email-volume/

Seventy billion plastic bottles and 1 trillion plastic bags are produced every year globally.
http://www.counterpunch.org/2017/02/03/our-plastic-oceans/

Only three known species go through menopause: killer whales, short-finned pilot whales, and humans.
http://www.sciencemag.org/news/2017/01/study-suggests-surprising-reason-killer-whales-go-through-menopause

The Inventor of Vaseline Claimed that He Ate a Spoonful of it Every Morning.
https://www.mindblowing-facts.org/2013/01/the-inventor-of-vaseline-claimed-that-he-ate-a-spoonful-of-it-every-morning/

Upper-class types and even members of the British Royalty ‘applied, drink or wore’ concoctions prepared from human body parts, and they continued to do so until the end of the 18th century.
http://www.npr.org/sections/thesalt/2017/02/22/515668867/cannibalism-its-perfectly-natural-a-new-scientific-history-argues

Labor in the Ancient World – Summary

First of all: what is work? Work is of two kinds: first, altering the position of matter at or near the earth’s surface relatively to other such matter; second, telling other people to do so. The first kind is unpleasant and ill paid; the second is pleasant and highly paid.
Bertrand Russell-Ch. 1: In Praise of Idleness

I was able to get my hands on a copy of Labor in the Ancient World, the last in a series of five colloquia published by the Peabody Museum of Harvard University edited by economics professor Michael Hudson. What follows is a brief summary of some of the major themes and takeaways that I thought stood out.

One of the recurring themes in the book is that the concept of work as a “disutility”—that people are inherently lazy and will not lift a finger unless compelled to do so by either the threat of bodily harm and/or starvation on the one hand, and necessity of remunerative reward on the other (i.e. the carrot and the stick)—is pure hokum. This is entirely a fabrication of the modern pseudoscience of economics which is designed to make human behavior subject to mathematical modelling, but it has no basis in actual reality:

In the late 19th century neoclassical economics transformed the subject into “the Calculus of Pain and Pleasure,” by introducing the concept of utility, and creating a theory based on the assumption that each individual aims to maximize their own utility. By introducing a mathematical component, the new theory offers… “a basis for distributing income that is independent of political decisions or moral judgments.” The discussions about class struggle and distribution of wealth, which previously dominated the economics debate, became obsolete. Ever since, the mathematical component has become the norm in mainstream economics.

Rigged: How Mainstream Economics Failed Us All (The Minskys)

Cultures without an official government or any coercive apparatus are able to build large monuments as an expression of their shared culture, as we saw. This ranges from the Ahu of Easter Island, to the marae of Tahiti, to the henges of Northern Europe, to the temples of Malta, to the living megalithic tradition of Borneo. In addition, the spectacular works of art from the Ice Age, from rock art to bone carvings, testify to what Thorstein Veblen called “the instinct of workmanship.” Rather than inherently lazy, people are inherently active. The difference is that people do not wish to do work that is boring, dangerous, or repetitive, at times and places and for durations not of their own choosing.

We know from recent psychological studies that intrinsic motivation for work requires three major components: mastery, autonomy and purpose. People have, quite literally, always “worked,” they just didn’t have “jobs.” People work for a complex variety of reasons that don’t simply boil down to simplistic mental calculations of pleasure and pain, as this post points out:

Work itself can have an intrinsic motivation. Work is such a key part of who we are that when people introduce themselves they usually state their occupation directly after their name as part of their identity (“I am a . . .”). People want to have a skill in life and to achieve something. For many people, work can provide this sense of achievement. Throughout my career I have seen a lot of hard workers, even in jobs that weren’t glamorous or well paid (some weren’t even paid). There is an urge among most people to do a good job, regardless of how much money they’re getting. After all, why do I write this blog? I’m not getting paid or any other benefit. Nor is it easy, you wouldn’t believe me if I told you how many hours I put into this blog post. I write it because I love writing and I’m proud of the end result (well, most of the time).

Even if we didn’t need money, people would still work. It defines us, gives us meaning, a sense of achievement and something to be proud of. Money alone can’t motivate people if they have no control over their job or feel that it serves no purpose. The evidence shows that it can often make things worse.

What Motivates People to Work? (Whistling in the Wind)

Indeed, we must distinguish between labor and compulsory labor. The presence of large stone monuments and other earthworks long before anything like literate, urban civilizations–in the case of Gobecki Tepe, even before plant domestication–testify to the fact that labor could not have been coerced. Nevertheless, there were certainly individuals who used “extra-institutional” means and “free-floating power” to influence communities and organize labor, especially via religion.

We also saw that a work feast was the principle way of marshaling collective labor in ancient times–not wages or threats of punishment. As someone who has helped many people move over the years, I can testify that beer and pizza are still a potent way to marshal voluntary labor even our own time. As Michael Hudson describes:

“By the time written records appear in the third millennium BC, labor had long been mobilized for large building projects that must have involved entire communities. From the early Neolithic through the Bronze Age, this mobilization was organized on different principles from those of the modern world. In view of the ever-present option of flight, it must have been on a voluntary basis. Members of the community were self-supporting on the land, not obliged to compete to find work.”

“Also, the most archaic employment of labor could not have been based on barter or market sales of crops or handicrafts, because (apart from working to produce its one subsistence) labor initially was organized to construct public ceremonial sites and buildings, irrigation works, and to serve in the military. No exchange value was initially involved. And when free labor did come to be organized for commercial purposes, the process was initiated mainly by chieftains, temple and palace officials, whose fortunes merged in a symbiotic relationship with these large institutions.” [LAW: 650]…Being organized communally…the ‘output’ of labor was not marketable or had exchange value. The work produced social value, creating ceremonial building, city walls, irrigation systems and roads as ‘social capital.’ Hence, modern supply and demand curves for labor and its remuneration based on the market value of its output are not relevant.

Several major themes emerge in the papers of the book, which I summarize as follows:

1. Corvee labor appears to have been the first tax, and was based on land tenure. Corvée is defined as:

“unpaid, unskilled manual labor extracted in lieu of taxation in the form of money or goods…it generally entailed involuntary service and normally involved a great mass of people from a given locality.”

Corvée was related to land tenure – in order to farm a given piece of land, one needed to supply labor to the larger community. This could have been anything from irrigation works, to temples to city walls. Military service was also a part of this. Labor conscription was timed so as not to interfere with the harvest.

Property rights–at least regarding land– were based on reciprocal obligations to the community from the very start. Thus, there is no inherent “natural” right to private property without corresponding social obligations. That concept began in England with John Locke, and was used as the philosophical basis for the Enclosure Movement.

A common theme of…this volume is that supplying labor was the prototypical ‘tax’ obligation, leading land tenure to be defined in fiscal terms. ‘The man responsible for the tax was the ‘owner’ as far as the state was concerned. Property ‘belonged’ to its holders in the sense of having the right to administer it in order to meet public obligations. This is the reverse of Locke’s justifying land ownership by the labor that landlords put into the land by clearing and improving it…Land rights were linked to the holder’s obligation to supply corvée labor for [public works], as well as for the military. [LAW: 652]

Instead of outright ownership of the land by individuals and families, land appears to have been distributed by usufruct in many traditional cultures – one had the right to the use of the fruits of the land, but it was not alienable; it still nominally belonged to the entire community. These topics are covered in more detail in their previous volume, Urbanization and Land Use in the Ancient Near East. Usufruct is defined by Wikipedia this way:

The holder of a usufruct, known as a usufructuary, has the right to use (usus) the property and enjoy its fruits (fructus). Fruits refers to any renewable commodity on the property, including (among others) actual fruits, livestock and even rental payments derived from the property. Unlike the owner, the usufructuary did not have a right of alienation (abusus), but he could sell or lease his usufructory interest.

…In indigenous cultures, usufruct means the land is owned in common by the people, but families and individuals have the right to use certain plots of land. Land is considered village or communal land rather than owned by individual people. While people can take fruits of the land, they may not sell or abuse it in ways that stop future use of the land by the community. The oldest examples of usufruct are found in the Code of Hammurabi and the Law of Moses. The Law of Moses directed property owners not to harvest the edges of their fields, and reserved the gleanings for the poor.

Land ownership in many Near Eastern cultures appears to have been superficially similar to the Iroquois/Huron system of ownership, which is typical of many traditional cultures that also do not recognize the alienability of land by solitary individuals, or it’s absolute status as “private property:”

The Iroquois had an essentially communal system of land ownership. The French Catholic missionary Gabriel Sagard described the fundamentals. The Huron had “as much land as they need[ed].” As a result, the Huron could give families their own land and still have a large amount of excess land owned communally. Any Huron was free to clear the land and farm on the basis of usufruct. He maintained possession of the land as long as he continued to actively cultivate and tend the fields. Once he abandoned the land, it reverted to communal ownership, and anyone could take it up for themselves…

The Iroquois had a similar communal system of land distribution. The tribe owned all lands but gave out tracts to the different clans for further distribution among households for cultivation. The land would be redistributed among the households every few years, and a clan could request a redistribution of tracts when the Clan Mothers’ Council gathered…

Economy of the Iroquois (Wikipedia)

As a matrilineal society, women’s councils (Clan Mothers) made the decisions regarding land use and redistribution in Iroquois society. In Mesopotamia, this role was performed by the temples; in Egypt all land was nominally owned by the Pharaoh’s household. Corvée duty in exchange for land tenure appears to have been remarkably common in cultures around the globe, enough for us to say that it was the “original” tax:

Outside the ancient Near East corvée was practiced–to offer just two examples–among the Incas and in ancient China. The Inca corvée, called mit’a, “turn” or “season” was a community service of specific duration (up to ten months per year) used for public projects such as the construction of roads and monumental architecture. All able-bodied citizens were required to perform it. Like the Mesopotamian corvée, the mit’a obligation extended to military service…one month of Chinese corvée was due from all free male citizens between the ages of twenty-two and sixty-five. This labor was in addition to two years of obligatory military service. ‘It was also possible in certain circumstances to pay for a substitute to perform the work.’

Wikipedia adds:

The obligation for tenant farmers to perform corvée work for landlords on private landed estates has been widespread throughout history. The term is most typically used in reference to medieval and early modern Europe, where work was often expected by a feudal landowner (of their vassals), or by a monarch of their subjects. However, the application of the term is not limited to that time or place; corvée has existed in modern and ancient Egypt, ancient Israel under Solomon, ancient Rome, China and Japan, everywhere in continental Europe, the Incan civilization, Haiti under Henri Christophe and under American occupation of Haiti (1915–1934), and Portugal’s African colonies until the mid-1960s. Forms of statute labour officially existed until the early twentieth century in Canada and the United States.

Piotr Steinkeller speculates that the first instance of regular corvée labor may have been necessitated by the need to maintain irrigation works:

I submit that the beginnings of the corvee coincided with the introduction of irrigation-based agriculture on the alluvium, which must have happened sometime during the Obeid period. This suggestion will probably raise some brows, since there has been a tendency lately to downplay the role of irrigation works and their social dimensions in the growth of Mesopotamian urbanism…the growth of Mesopotamian civilization was predicated on the presence of large-scale irrigation networks, which, as the need for surpluses steadily increased due to population growth and various other societal pressures, became progressively more and more extensive and complex. An obvious consequence of these processes was the development of ever more efficient and centralized instruments of control, which were necessary to ensure the coordination and smooth running of all the component parts of the system.

All these facts argue strongly that organized collective labor existed in Mesopotamia already during the Obeid period, and that its ‘invention’ was directly connected with the appearance of extensive irrigation networks. It is impossible to say which of them came first. In all probability these two phenomena developed more or lass concurrently, with the needs of agriculture dictating the use of labor force [sic] above that of a single family, and with the availability of labor so created enabling further expansion of the irrigation works. This spiral process led to the formation of village clusters based on a shared irrigation system and subordinated to a single agency of control, eventually resulting in the appearance of urban centers and city-states.

Which leads to the next point:

2. The coordination and management of labor required the birth of a managerial class. This managerial class became ever-more sophisticated as civilizations became denser and more urbanized. Chiefs and Big Men organized labor, later with the help of scribes and bureaucrats attached to their households who were often remunerated with grants of land in exchange for their services:

“One of the byproducts of the Neolithic monument building was…a managerial class. This role originally would have been played by chieftains as calendar keepers and organizers, dealing with outsiders, and centralizing some forms of specialized labor in their own households. Already by Pre-Pottery Neolithic B these men ‘held religious authority that legitimized their right to rule’.”

“…’Supernatural sanction, confirmed and certified by specialist practitioners, offered not only the legitimacy of rule, but the structure of order within the earliest villages.’ Social status was sanctified by authority centered on the individuals responsible for allocating resources, organizing rituals and mobilizing labor for building monuments and temples and other public works. Authorities ‘presided over ritual centers, the nascent forms of the later temples that became the focus of centralized political and economic power.’”

This association of elites with ritual centers became the nucleus for the urban/commercial centers of later cultures. Cities grew up around ritual centers–a concept explored in more detail in the Urbanization and Land Use volume.

We have seen that redistribution involves symmetry and centricity, and these two concepts determined the nature of city-states. We can think of these as sort of centrifugal and centripetal forces. The hubs in this scheme were the temples and palaces, and they became the centers of wealth. This made temples and ceremonial centers ‘scale up’ to become cities, and it was here where redistributive chiefs evolved into kings and rulers. These cities established symmetrical relationships between the city and the countryside, such that everyone was able to obtain what they needed. Market exchange appears to have played a marginal role in ancient cultures. The Urbanization volume tells us that alienable land (buying and selling real estate) began in the cities first, and that rural land was more, not less, valuable than urban, unlike today. In the countryside, land plots were occasionally sold, but for the most part was passed down through generations. Usufruct rights could be temporarily surrendered through debt, however.

It appears that one of the major purposes of the city state model in ancient Mesopotamian culture was to distribute the products of diverse ecosystems throughout the group. So, for example, a fishing village might give up surplus fish, and a farming village might give up surplus grain, and each received the surplus goods of the other in return. Thus, a core purpose of centralized locations such was to aggregate the produce from different ecological zones, as described by Professor Steinkeller:

As I would define it, the “temple state” was an integrating organizational scheme that brought together economic resources and social groups distributed among different ecological zones. It is clear that already in the Pre-Sargonic period rural populations of southern city-states were fully incorporated into the state economy This was true, as well, of individuals residing in and exploiting the most marginal ecological niches.

To make clearer what I have in mind, let me present, by way of illustration, a description of the so-called “vertical” economy of Andean societies under Inka domination, which, in my opinion, offers an instructive parallel to the southern Babylonian situation.

In the Andean economy, each community was divided into three of more groups, which were distributed among different ecological zones. To take the community of Chupaychu as an example, at 3,200 meters was the center or mother village of Chupaychu, where the ceremonial, political, and religious sites of the community were located and where the nucleus of the population lived and grew maize and tubers. In Puna, at 4,000 meters, small groups extracted salt and were engaged in the large-scale breeding of llamas and alpacas. In the Montana, a zone situated several hundred meters above the Amazon, some other families cultivated cotton and were engaged additionally in the collection of timber and coca leaves. In this arrangement, members of each group, though permanently domiciled in the ecological zone they were exploiting, retained all rights to fields belonging to the central village. In this way, each society formed a string of ecological and economic islands scattered around a center.

I would argue that the southern Babylonian city-states showed a similar type of organization, in which segments of a community, permanently domiciled among various ecological zones, at the same time retained full rights to fields and other resources belonging to the mother community. This is precisely the situation…in the city-state of Girsu/Lagash in the Pre-Sargonic period (and later, in Ur III times). There the “marginal” professional groups like sea-fishermen, salt-collectors, and foresters, though residing deep in the countryside, were regularly granted subsistence fields and other forms of alimentation by the temple estates with which they were institutionally associated. Because of this, the economy of Girsu/Lagash and other southern city-states could be described…as “horizontal” or, perhaps more aptly, as “cross-ecological.” [UAW: 291-293]

With the rise of writing as an information-processing technology, managers acquired considerable control over surplus labor and resources. Such ‘capital allocation’ appears to have been seen as having beneficial effect, allowing the “economy” to expand much more effectively that could have from isolated villages alone. These technologies began with tokens, and then proceeded to clay seals, “envelopes,” and finally to written clay tablets:

Managerial innovation was as important as material technology. Above all, writing was required for account keeping. Babylonian training exercised called for calculating the labor time and hence food needs (easily converted to silver value) for corvée labor to make bricks and construct walls, move earth and dig canals. From prehistoric Uruk to Ur III Babylonia we find a labor-time/dietary basis for economic planning by accountants calculating monthly food needs per worker, categorized by male, female, older and younger children.

Egyptian sources suggest that scribes were not from elite families. Their profession was independent from property owning. But their planning and writing functions helped support authority and economic control. In fact, only large complex institutions could have created the measures needed for market exchange to develop. Weights and measures, money and salaries had to be standardized, along with prices and remuneration rates, to schedule the flow of food and raw materials. [LAW: ]

3. Regular feasting was an essential feature of corvée labor. Work feasts go back to the very beginnings of human culture. As we saw earlier, feasting, and the debt/credit relationships engendered by them, may have kicked off the spiral of inequality in transegalitarian cultures and led to the emergence of the first Big men elites. We know that feasting was clearly done at ceremonial complexes such Stonehenge and Gobecki Tepe- evidence for such activities is plentiful. Whole villages may have been inhabited only at certain times of the year during such work times.

No doubt maintaining Neolithic practice, corvée activities had to attract and hold their participants. For Babylonia…rulers emphasiz[ed] their efforts to promote ‘public joy’ in corvée projects by invest[ing] such occasions with an atmosphere of feasting and plenty.’ This made the tasks ‘something closer to a prebend, an opportunity, a festival’ with the benefit of group membership and identity…what was being built was not just monuments and palaces but communal identity–a ceremonial expression of creativity–and great feasts and drinking parties when projects were completed…an Egyptian causeway scene [shows] ‘the completion of the king’s pyramid by the dragging and setting of the capstone (pyramidion) with a celebration of feasting, singing and dancing’ by the work crews, ‘perhaps a special feast out of many regular feasts we know so well from tomb and temple texts…We see racks of hanging meat, to be shared and consumed for the occasion.'[LAW: 652-653]

Indeed, the idea that the pyramids were built by unfree labor under whip-wielding overseers has long been debunked. These were skilled laborers in the employ of the Pharaoh, supplemented by the “musclepower” of the corvée, which was timed so as not to interfere with the harvest. Workers were given food and drink, and even medical care, by the authorities when called up. As Sir Leonard Wooley writes, “The building of the colossal tombs of the Egyptian kings was as much an act of faith as was the building of the great cathedrals of mediaeval Europe, and its object was not simply to minister to the vainglory of the ruler but to take out, as it were, an insurance policy for the country.” Which raises the next point:

4. There was a shortage, not a surplus, of labor in the ancient world. Most families were fairly self-sufficient in their daily needs. As Michael Hudson points out: “…the labor problem down through the Bronze Age was a shortage, not a modern ‘reserve army of the unemployed’ driven off the land. The organization of work to build basic infrastructure could not have been to coercive, because its participants would have run away. The corvee had to be organized with widespread assent.” As Piotr Steinkeller describes:

The fundamental difficulty of making free individuals to relinquish their labor [sic] is responsible for the fact that all ancient economies (and likewise modern underdeveloped economies of the Third World) were faced with a shortage of labor. This shortage was nearly always chronic, and often profound. A widely held view in economic history is that a shortage of labor resulting from a high land-to-population ratio (low population density) invariably led individuals to force others to work for them. Thus…economists have speculated that slavery and various forms of bondage (such as the sefdom of pre-modern Russia) invariably were adopted due to the shortage of labor vis-a-vis low population densities…In the context of bondage, the usual way of obtaining labor was debt-servitude, a pracice that is in use even today.

5. Slavery appears to have played a relatively minor role in the ancient Near East. Although commonly depicted as “slave states,” laboring under “Oriental Despotism” such ideas are outmoded. Most people worked either for themselves on family farms or in craft guilds, or for a salary-granting institution. Most war captives were killed or maimed, with only a few, mostly women, kept as slaves. These women were primarily domestic workers (and some must certainly have been sex workers). Women were no doubt easier to control due to their lower physical strength and aggressiveness. The ability to keep a large, hostile ethnic group in permanent subjugation was simply not present as this early stage, and flight was an ever-present option.

The major role of slaves appears to have been in domestic service. The only major industry to utilize large amounts of slave labor was mining–hazardous, dirty work where exposure to toxic substances meant premature death. Note that such techniques were used by Spanish conquistadors over Native Americans to obtain the precious metals that drove the Spanish money economy (co-opting the Inka mit’a system for their own purposes).

One common method of extracting labor from other human beings, which was widely practiced both in ancient and modern times, is enslavement. Slavery is by far the most economical way of obtaining labor, since it comes essentially free (except for the cost of acquiring a slave and the subsequent outlays to maintain and to police him), and since it makes labor available at all times. In addition, slavery is self-reproducing.

However, in the period before classical antiquity (Greece and Rome) slavery played only a marginal role in the economies of early states. Although slaves are documented in Mesopotamia and Egypt since the end of the fourth millennium B.C., their numbers were always small, and therefore this type of labor was never of much economic importance. In Mesopotamia slaves were predominantly those of the domestic of patrimonial variety. They usually worked as servants, and only rarely participated in productive labor or were trained as craftsmen.

[In Ur III Babylonia]…most of the foreign slaves…were women, who had been acquired by state institutions as part of foreign military operations…Although primarily employed as weavers and in grain processing, these females intermittently worked as agricultural workers as well, most commonly maintaining irrigation systems and assisting with the harvest. They also served as carriers and occasionally even as boat-towers…due to the absence in early states of security mechanisms allowing the utilization of large numbers of male slaves in productive labor, male prisoners of war were rarely turned into outright slaves. if they escaped slaughter–which was the usual method of dealing with them–they were blinded, and only then put to work, at certain specialized tasks. In Babylonia, such blinded captives usually worked in orchards as gardeners’ helpers, drawing water from the wells and irrigating fruit trees and vegetable plots.

Later, in the Classical World, money and debt servitude were adopted, but the clean slates were not brought along, and debt slavery expanded to huge proportions which threatened social stability and military security. Along with chattel slavery, debt slavery helped drive the plantation agricultural system of the late Roman empire (latifundia), which produced surplus export commodities for trade such as wine and olive oil.

These [debt] amnesties ended by Classical Antiquity. And the condition of slaves worsened as their role shifted from that of family members to being put to work in large-scale agricultural and handicraft production. In Athens slaves were foreign, and public labor was drudgery performed mainly by non-citizen metics. Dispossessed Roman citizens became mercenaries, fighting to extend the empire that had expropriated them for debt. Industry was associated with servile labor, mainly by the dependents forced into clientage on the estates of large landowners. ‘The very wages the laborer receives are a badge of slavery,’ wrote Cicero. By imperial Roman times a quarter of the population was reduced to debt bondage or slavery, ending up being housed in barracks on landed estates as economic life de-urbanized.”

Which leads to the next conclusion:

6. The major means of compelling unfree labor was debt. Indeed, unfree labor was of a piece; the Mesopotamian terms for ‘slave’ did not distinguish between debt and chattel slavery, although debt slaves were not considered “property” and could not be sold. Consider that with debt, no coercion is required, people will willingly work to pay of their debts out of their misguided sense of morality, as David Graeber pointed out in Debt: The First 5000 Years. In The Creation of Inequality, anthropologists Flannery and Marcus hypothesize that debt may have been the thing that caused rank-based societies to become stratified. In fact, the creditor and debtor classes may have been the very first classes in history to emerge!

Agrarian and personal usury became a major means to obtain labor services through debt bondage, and in time to pry away and rights. Local “big-men,” tamkarum merchants and palace collectors sought control of labor at the expense of central palace fiscal authority that sought to maintain land tenure rights/obligations as a means of assigning responsibility for providing corvee labor and service in the army.

7. Working for pay was marginal. Unlike today, where we need to sell out labor power to an employer willing to buy it as a condition of mere survival (unless you’re lucky enough to inherit wealth, that is), such exchanges in Mesopotamia were largely ad-hoc and voluntary, and did not constitute a true “labor market” in the modern sense of the term.

Well-to-do citizens could hire surrogates to perform their corvée duty–typically younger brothers or other relatives. Unlike manual labor for construction, handicraft work was typically remunerated on a piecework basis. Weavers worked at home, much like those in England before power looms were introduced. But by neo-Babylonian times, piecework labor by skilled craftsmen became more frequent, as did seasonal harvesting work.

It is clear that hired labor was predominantly used for unskilled tasks. the most common among those were harvesting, preparation of fields for cultivation, weeding, reed-collecting, irrigation works, transportation, and brick-making. However, there are also fairly frequent mentions of the hire of craftsmen, such as carpenters, reed-workers, leather-workers, felters, potters, and boat-caulkers.

How and from where was the hired labor obtained? … In the contexts of provincial economies, many of the hired workers were subordinates of temple households and other local organizations (such as the households of governors), who…were liable for corvée. After their corvée service was over, during the remaining part of the year, these individuals routinely hired themselves out for wages, most commonly, to the same institution they were associated with, and to which they owed their corvée.

The fact that during the Ur III period large numbers of free individuals regularly traded their labor for wages might perhaps suggest to some scholars that already at that early date their existed, in however rudimentary from, a “labor market.” Such a conclusion would be a gross simplification, however, since the Ur III hires were contracted for the most part within an institutional setting, with both wages and the mobility of hired workers being closely regulated and controlled by the state. Free agents they certainly were not…

Wages paid by the temples were not set by supply and demand, but on what was needed for survival–a minimum wage if you will. Initially, salaries were paid out directly in commodities, but later, as prices became standardized in the temples, wages were paid out in silver.

Third millennium temple and palace records show manual labor being paid at standardized rates, ranked by sex and age (and in time by occupation). The basis for most salaries was what adult men, women and children needed for basic sustenance. Schoolbook exercises calculated the food needed per worker, denominated in grain or bread equivalents directly convertible into standard weights of silver money. By Neo-Babylonian times such wages were paid directly in silver.

Ancient Pay Stub Shows Workers Were Paid In Beer (NPR)

Remuneration was done in three ways. For lower-strata “blue collar” workers, their remuneration came in the form of (1) a yearly (or monthly, weekly etc.) salary paid by the institution they were attached to, and (2) supplemental wages made by hiring themselves out to either institutional or private employers (what we might call “overtime” or “moonlighting”). For higher-ranking workers like administrative/managerial personnel (e.g. scribes), their remuneration came mainly in the form land allotments that their home institutions granted them in exchange for their services.

The first type – the wages—was commonly called še-ba, or “barley allotment,” with variations depending on what was given (e.g. siki-ba: “wool allotment, ì-ba: “sesame oil allotment’). These have typically been called “rations” in most history books about Mesopotamian society, but this is highly misleading, as Prof. Steinkeller elaborates:

In spite of its general acceptance and apparent usefulness…the word ‘ration’ is highly inappropriate as a description of še-ba, primarily because it misrepresents the social reality behind this phenomenon…The še-ba was a salary (monthly or yearly) that a given employee received from his home institution as a payment for services rendered, and not a form of organized alimentation…the amount of grain received as še-ba by individual worker families greatly exceeded their caloric needs, thus demonstrating that the allotment was actually consumed by a given family…Moreover, while še-ba is usually mentioned in connection with the lower-ranking employees, not infrequently it was given out also to administrators, scribes, messengers, elite soldiers, and various other individuals holding the status of free citizens. There are also instances where the employees usually compensated with land allotments are given še-ba instead. All these facts assure that še-ba was a form of salary or wages.

Another reason why še-ba is a bad translation…is the fact that, as universally understood, “rationing” denotes an artificial restriction of demand or consumption, an economic phenomenon that not only has nothing to do with the reality behind še-ba, but also one that taints negatively the nature of the relationship between the recipients of še-ba and the granting party. Because rationing by its very nature is restrictive–and therefore arbitrary and manipulative–that relationship unavoidably is perceived as an exploitive one. Neither applicable here is the nuance of “ration” as used in military contexts, since, unlike the še-ba, which was a regular form of compensation, military rations are issued ad-hoc to sustain soldiers on particular assignments of short (usually daily) duration.

And last but not least, the translations “rationing” and “ration” should be avoided for the simple reason that, outside of ancient Mespotamian studies (and to some extent Egyptology and Mycenaean studies), such terminological usage is practically unknown. Although similar forms of remuneration in kind existed in many other ancient civilizations, both in the Old and New Worlds, I could not find, in the pertinent historical and anthropological literature, any instances of the use of this terminology in reference to similar phenomena…In my view, the best rendering of še-ba and the related terms is “x allotment”.

It is important to note that translations of words are difficult, and have given us a distorted picture. When we translate words, we put them in the context of our own society, which distorts what those words meant to the people of the cultures who originally wrote them. This is a common theme in the Urbanization volume as well. As Prof. Ogden Goelet observes:

I think that even the most devoted scholar of ancient Egyptian grammar would admit when pressed that the single greatest impediment towards understanding most Egyptian texts lies not in our imperfect comprehension of their grammar, but rather our imperfect grasp of Egyptian vocabulary. By now it is a well-worn truism among Egyptologists that the Egyptians were intensely religious, yet had no word corresponding to our term “religion;” that they had a highly developed aesthetic sense, yet had no single word for “art;” that they ran a stable, complex, and highly bureaucratic society, yet had no equivalent to the term “the state.” The common theme behind all these observations is that we frequently fail to realize that the Egyptians might have viewed the world entirely differently from the way we do. Even common terms in our language like “town,” “city,” and even “temple” might not have precise equivalents among the Egyptians, because concepts such as these are often heavily dependent upon social constructions.

8. Elites often attempted to siphon off public labor for their own purposes. While labor obligations were owed to the temple and palace households as the proto-state, it was not uncommon for local elites and administrators to attempt to subvert official control and abuse both corvée labor and debt servitude for their own purposes. Local authorities used labor obligations to feather their own nests rather than for the public good. This trend became more pronounced during periods of central state weakness or breakdown:

Throughout history local authorities have sought to divert labor for their own purposes. Sometimes the central authority deters this power grabbing, as in England’s Star Chamber in the 16th and 17th centuries against aggressive local nobility. But the Bronze Age “Intermediate Periods” saw central power wane vis-a-vis that of local clan heads, chieftains and “big men.” Writing of Egypt’s first Intermediate period, Goelet finds that ‘the power of local elites apparently outweighed that of the monarch. The end result was that the status of mrt-laborers and other lower class individuals generally had declined from being serfs bound to the land to becoming purchasable chattel…Palaces remained dependent on local officials or contractors to supply labor, resulting in a political tug of war.

Assyriologists have found a similar reliance of Ur III and Babylonian rulers on local clan heads or lu-gal “big men” acting as contractors to supply labor and military support, especially in Mesopotamian “intermediate periods.”…as temple and palace activities were increasingly privatized in the hands of merchants and leasors of land or public enterprises, the resulting mixed economies had what today would be called a conflict between public and private interest.

This echoes a common theme in Hudson’s work – the breakdown of collective institutions, with their protections for the social order and debtors vis-a-vis creditors, and its replacement with the arbitrary rule of powerful individuals, did not typically result in an outpouring of “freedom” but it’s exact opposite—oppression, for most people. Note that this is the 180-degree opposite of the libertarian version of history heavily promoted by mainstream economics. Economic ideology is inherently biased against both labor and collective institutions in general, even while pretending to be an objective “science.” For example, we can see how well the rolling back of state protections has worked out for most people under Neoliberalism.

9. Labor to produce commodities for export was first organized by temples. Public institutions were essential for the first markets to develop. Prof. Hudson notes that the earliest public institutions were not debtors as in our own time (e.g. ‘national debt’), but rather creditors. Temples, as we saw, established price schedules to standardize tax levies, which eventually evolved into price schedules. They also undertook long-distance trading expeditions on behalf of the whole community.

In order to trade, one must have something to trade. Mesopotamia specialized in high-quality “value added” goods, and it is the employment of labor under the aegis of temples in the Industrial arts and crafts, that the idea of full-time dependent “employees” first takes place.

Southern Mesopotamia needed to trade to obtain metals and stone not found in local soils. Meeting this challenge required workshops to produce exports, mainly by dependent and proto-wage labor overseen by a temple or palace hierarchy, from foremen and scribe accountants to chief administrators. A merchant class was required to organize and conduct this trade, and also credit formalities to reimburse the large institutions for their advance of goods.

Skilled and specialized craft labor and technology were centered in temple and palace workshops but also worked “off the books,” evidently on a piecework basis for whoever could pay for their services. It seems that wives and daughters from the free community also earned money working at weaving or other handicrafts in addition to their household work on the land…Textiles were Mesopotamia’s major export and the employment of non-slave labor is best typified by the widows and war orphans assigned to weaving and other handicrafts in its temple and palace workshops. In contrast to the public infrastructure created by corvée labor, commodity production for trade aimed at gaining a monetary surplus by what today’s economists call profit centers.

Although they were only a small part of the labor force, skilled craftsmen required a broad range of collateral support activities to supply raw materials, schedule their deliveries, and provide tools. This large scale required management, oversight, account keeping and credit, and therefore was centered in the temples and palaces (and on large estates whose owners usually were associated with the temples (or the royal family).

Again, this squares with the idea that the first markets were not locals exchanging their goods and services for money, but were centered around long-distance trade for luxury items, as Carroll Quigley notes in The Evolution of Civilizations (although Quigley incorrectly emphasizes slavery in his account):

At least three times in history a society organized in small self-sufficient agricultural units has shifted to an urbanized commercial society by the growth of a demand for luxury goods of remote origin within the self-sufficient agricultural units. This occurred about 4000 B.C. in western Asia; it occurred after 900 B.C. in Classical antiquity; and it occurred after A.D. 1000 in Western civilization. Without a little thought on the subject we might be tempted to believe that a tradeless society consisting of self-sufficient agricultural units would begin to develop trade by the growth of local trade in necessities, but history and logic demonstrate quite clearly that the earliest commerce to appear in a tradeless society is in luxury goods of remote origin. There would be no possibility of any local trade in necessities among units that were self-sufficient in necessities. Only later, when remote trade in luxuries has given rise to urban concentration of commercial people who lack necessities, does such local trade develop. EoC: 290

Finally, I thought this post from Stack Exchange by Mark C. Wallace does a great job of explaining labor organization in ancient Rome, which is fairly typical for most agrarian societies prior to the Industrial Revolution:

The modern definition of unemployed is “having looked for work recently”. I’m not entirely sure that definition is appropriate for Rome. Modern Western Liberal Democracy is organized around the notion that “companies” provide employment, and that people seek employment. Unemployment results in a dramatic decline in economic and social status.

Although there were workshops in Rome, and there were teams that organized to perform tasks that no individual could, I’m not aware of anything that resembles the modern limited liability corporation. Roman politics and economics were based more on relationships than on companies. Romans belonged to a family, and to a tribe, and usually to some kind of patron/client relationship. Depending on their social class, they may have also belonged to one or more social organizations (e.g. burial society). If someone wanted to work, they would rely on these connections to find them employment. “Unemployment” didn’t really result in the kind of economic and social decline we find today because these social bonds provided a safety net. If for some reason you were isolated from your social network, that might be a definition similar to “unemployed”, but there were mechanisms (adoption, social organizations, etc.) that made the social networks fairly resilient.

…the proletariat lived off the dole. There was no real reason for them to look for work.

I believe, although I can’t check right now that the Aristocracy never worked; I believe the notion that work was unbecoming to the Aristocrat reaches back as far as Ancient Rome. Although they were never employed, they couldn’t be unemployed because they would never seek work. (Obligatory exception: The Aristocracy was obliged to engage in public service, including a number of civic offices).

Tradesmen looked for work, but they weren’t unemployed, they were just tradesmen looking for work. Technically, the self-employed can never be unemployed, it is just that their business is going through a slow spell.
Slaves never looked for work. Many were employed to perform tasks that were mere displays of wealth – for example some were chained to the doors of houses to act as gatekeepers.

Slavery also prevented unemployment in a different way; if for any reason your economic status declined precipitously, you could sell a relative, or ultimately yourself into slavery. You probably only wanted to do this if you had a marketable skill.

The ultimate bottom rung of the ladder was to be sold to a latifundum – a farm. I haven’t researched these very much, but my impression is that a slave on a latifundum may be the only historical example that is more horrifying than American chattel slavery.

How did ancient Rome deal with the unemployed? (History Stack Exchange)
What these ancient forms of organizing labor show us is that work does not need to be compelled by the threat of destitution, that “jobs’ are not required to keep society going, and that there are other means of organizing human labor besides the narrow options were are giving by economists.

Trump Appoints Bane to National Security Council

Bane will sit on the National Defense Council, and several government agencies will be under his exclusive control.

WASHINGTON, D.C.—In an unexpected development, this week Donald Trump announced the appointment of Bane as senior advisor to the White House. In a move certain to raise consternation inside Beltway circles, President Trump also issued an executive order giving Bane a prominent seat on the National Security Council, a position which is normally reserved for cabinet secretaries and high-ranking military personnel, as well as absolute control over several secretive government agencies answerable only to Bane himself. Despite the sudden, extraordinary and very unusual nature of this move, little is known about the president’s latest advisor.

Journalists immediately began digging into Bane’s past to uncover any details about the appointee. Next to nothing is known about Bane’s life before about six months ago. His age, birthplace, birth date, parentage, and real name are a total mystery. Almost immediately, rumors began circulating on the internet claiming that he was born and raised in a centuries-old foreign penitentiary known as “the Pit.” Some sources have claimed a connection between Bane and a number of foreign countries, including Russia, but none of these stories have been substantiated. However, Bane’s more recent political connections are sure to cause some controversy, particularly his association with the so-called Alt-Right, his prior membership in the League of Shadows, and his work for Goldman Sachs.

In a press conference Monday, Mr. Trump criticized journalists for going on what he referred to as a “witch hunt,” and especially singled out news sources owned by Wayne Enterprises as purveyors of “fake news,” accusing Mr. Wayne of “holding a grudge,” and being against the Trump administration from “day one” to pro-Democrat leanings. He also dismissed as a “totally false” reports that Bane had some sort of “inside information” on President Trump and his family, or a thermonuclear device hidden somewhere in a major American city, adding “We’ve got a lot of killers in this country.” As Trump was escorted out of the conference by several burly men, members of the assembled press corps began shouting, “Tell us about Bane! Why does he wear the mask?”

In his first meeting with the assembled journalists, surrounded by anonymous henchmen, Bane noted that, “No one cared who I was until I put on the mask,” setting up an adversarial tone for the rest of the interview. Refusing to answer any questions, Bane then made the following remarks directly to the camera, bypassing the reporters:

“We don’t believe there is a functional conservative party in this country and we certainly don’t think the Republican Party is that. It’s going to be an insurgent, center-right populist movement that is virulently anti-establishment, and it’s going to continue to hammer this city, both the progressive left and the institutional Republican Party. It doesn’t matter who we are. What matters is our plan.”

“Now we came here not as conquerors, but as liberators to return control of this country to the people. We take America from the corrupt! The rich! The oppressors of generations who have kept you down with myths of opportunity, and we give it back to you–the people. America is yours! None shall interfere. Do as you please. Step forward those who would serve. For an army will be raised. The powerful will be ripped from their decadent nests, and cast out into the cold world that we know and endure. Courts will be convened. Spoils will be enjoyed. Blood will be shed. The police will survive, as they learn to serve true justice. This great nation, it will endure. America will survive! America, take control! Take control of your country. This… this is the instrument of your liberation!”

There are very few official interviews on record with Bane, even with right-wing affiliated media outlets such as Breitbart and FOX, so the media are mostly in the dark as to his political philosophies and core beliefs, which remain a mystery. However, on 22 August 2016, writer Ronald Radosh recounted a conversation he reportedly had with Bane at a party he attended in 2013:

[…] we had a long talk about his approach to politics. He never called himself a “populist” or an “American nationalist,” as so many think of him today. “I’m a Leninist,” Bane proudly proclaimed. “I’m necessary evil.”

Shocked, I asked him what he meant.

“Lenin,” he answered, “wanted to destroy the state, and that’s my goal too. I want to bring everything crashing down, and destroy all of today’s establishment. Your money and infrastructure have been important–until now. I’m America’s reckoning, here to end the borrowed time you’ve all been living on.”

At the same party, Bane is allegedly said to have remarked to prominent businessman and Democratic donor Bruce Wayne, “The shadows betray you, because they belong to me. We will destroy America and then, when it is done and the United States is ashes, then you have my permission to die.” Bane is also alleged to want to bring about something he calls “The Fourth Turning.” Later that same evening, according to eyewitnesses, an unknown member of the waitstaff was allegedly heard asking Bane, “have we started the Turning?” to which Bane replied, “Yes, the Turning rises.” He told Vanity Fair last summer that Trump was “a blunt instrument for us … I don’t know whether he really gets it or not.”

An anonymous White House staffer told the Washington Post off the record that Bane’s influence over the President and his cabinet is considerable. He recounted once seeing Bane casually place an open palm on Vice President Mike Pence’s shoulder while quietly asking, “Do you feel in charge?” Such stories, even unconfirmed, are sure to raise fresh concerns about the outsized role unelected advisors will play inside the Trump White House.

Also, on Tuesday, a vote is expected on Betsy DeVos, a wealthy Republican Party donor and a former Michigan Republican Party chairwoman whose brother is Erik Prince, the founder of the controversial private security company Blackwater.

The New Double Movement

I hope you enjoyed the summary of the Great Transformation. We’re now seeing the Double Movement taking place around the world as globalization hollows out communities and even entire nations, bestowing its benefits to an ever-shrinking oligarchy who, as we learned last week, are buying up millions of acres of remote property and nuclear-hardened bunkers all over the world to retreat to when it all falls apart (if they’re not eyeing up offshore Seasteads or rockets to Mars, that is), while leaving the rest of us to our own devices. Much of the world has turned into the itinerant laborers, the “masterless men,” whom Polanyi wrote about as the human toll from the imposition of labor markets and the destruction of local economies. Except now those laborers migrate not within their own country seeking paid employment, but disperse en masse across the globe, inundating already stressed communities with millions of desperate refugees.

It is the inevitable consequence of a world run by markets.

Meanwhile, the world spirals into chaos. Syria and Yemen have already collapsed; much of the Middle East and North Africa are failed states, from Algeria to Pakistan; Europe struggles under the burden of austerity, and America and Russia have devolved into a banana-republic-style authoritarian kleptocracies. Many of the so-called “successful” Asian industrial nations have air that is literally unbreathable by humans, and small oceanic countries are on the verge of being swallowed up by the waves.

And yet we’re constantly told by journalists and the media that we’ve never had it better!

This article from the BBC highlights the ongoing rush of the problem, and suggests that it’s only going to get far, far worse as long as we let “The Economy” be the only guiding force for society, and let the chips fall where they may:

In the US, voter anger with globalisation may have led to Donald Trump’s election victory, but those who voted for him could be disappointed as his aim of bringing back jobs is unlikely to work, says Prof [Richard] Baldwin… Protectionist trade barriers won’t work in the 21st Century, he says. “Knowledge crossing borders in massive amounts [is the] big new disruptive thing.” It’s going to help people in Africa and Asia compete more effectively with people in the West, as communication advances mean workers in the developing world will be able to control robots to do jobs in Europe and the US at lower cost, he says.

Developing world labour costs can be a tenth of what they are in the West, says Prof Baldwin. “They can’t get here to take the jobs but technology will soon allow virtual migration, thanks to telerobotics and telepresence.” Ever-faster internet speeds becoming globally more widely available, coupled with the rapidly falling prices of robots will allow workers, for example in the Philippines or China, to remotely provide services to a country like the UK – where the sector accounts for about 80% of the economy…”All you need is more computing power, more transmitting power and cheaper robots – and all that is happening.”

In the 19th Century, the first wave of the industrial revolution triggered an upsurge in global trade. Steam power, the end of the Napoleonic wars and the subsequent era of peace cut the costs of moving goods internationally. Global wealth became increasingly concentrated among just a few nations; the G7 group – the US, Germany, Japan, France, the UK, Canada and Italy – saw their share of the world’s wealth rise significantly.

But from the 1990s a second wave of globalisation kicked in, with the rise of information and communications technology. There’s been a dramatic change of gear, and “a century’s worth of rich nations’ rise has been reversed in just two decades,” says Prof Baldwin. Old-style globalisation “worked on a calendar that ticked year by year” whereas the current wave of globalisation is being driven by IT which is changing and disrupting economies and societies with increasing rapidity…

Will globalisation take away your job? (BBC)

The double movement is particularly strong in nations where the working classes have been thrown under the bus, and which have a harsh, bitter, “work or starve” culture, especially the Anglo-Saxon countries like the UK and the US. In addition, these countries had also instituted a de-facto “open borders” policy over the past few decades in order to drive down domestic wages in the unprotected service sector (while preserving protections for the credentialed professions). Other countries with less of a knee-jerk fear of “socialism” did not have quite the same results, as the benefits of globalization were more widely distributed instead of partitioning society into lords and serfs, for example, Germany and Japan.

In America, by contrast, it’s every man for himself, and anyone who is not immediately useful to the corporate bottom line is castigated as a “taker/scrounger/waster/useless eater/water drinker/parasite, etc.” and the best thing they can do for society, the thinking goes, is to die off as quickly as possible (which is implicitly encouraged through U.S. government policy, for example, tying health care to employment, and abundant, readily available opiates and firearms).

In other words, in the language of Peter Frase’s “Four Futures”, some cultures have slowly inched closer to egalitarianism and abundance, while the Anglo-Saxon nations have enthusiastically embraced Rentism and Eliminationism (with the latter unstated policy in the U.S.). Is it any wonder, then, why the politics in the Anglo-Saxon countries is so acrimonious so as to threaten democracy itself?

All of this has created a backlash, especially in developed economies, as many voters say they are losing out or seeing little of the benefits that globalisation supposedly brings. Prof Baldwin says protectionist policies, such as those of Donald Trump, are ultimately counterproductive. If firms become inefficient by being forced to move jobs back to the US, then ultimately they will lose their business to international competitors.”People are so angry they are doing things that are not in their own interest. Cures are being sold which are not related to the problem.”

He points out that the backlash is not the same in every single country. It often depends on how governments deal with workers who may be displaced by technology. “For instance, in Japan they take care of their workers, and there really isn’t an anti-globalisation feeling there,” he says – unlike in the UK and the US. As a consequence, even businesses that are benefiting from greater automation are increasingly sensitive about the potentially negative social and political consequences.

John Robb, too, points out that America uniquely decided that brunt of globalism would be exclusively borne by its poor and middle classes, with no protection whatsoever, and that this was always a policy choice by American elites:

Unfettered access to US markets (the most valuable in the world) led to twenty plus years of rapid economic globalization that lifted billions of people out of poverty and made many countries rich. However, neoliberalism ..destroyed the only engine of prosperity and political stability in the US, the US middle class. It did this through:

Asymmetric competition. The US was, and still is, the only major nation in the world to fully embrace neoliberalism. Every other country or economic bloc, from China to the EU, has barriers in place to rig the market to create or protect good jobs at home (think: Germany, China, South Korea, Japan…). These barriers work and incomes in these countries has zoomed while US incomes stagnated.

The Neoliberal Trade (jobs out, wealth in). For decades, the US traded millions of good jobs in manufacturing and services for tens of thousands of amazing jobs on Wall Street (NY) and Silicon Valley (CA). This inflow of wealth at the topline created a sense of prosperity even though the median income and the quality of life of the middle class collapsed.

Non-cooperative elites. It didn’t take long before the power and the wealth of the elites benefiting from unfettered globalization became immense. In fact, these US neoliberal elites became so powerful, they were able to completely opt out of the US system of taxation — none of the elites, from Apple to Google to Wall Street banks/funds to the wealthiest American citizens pay taxes. With most of the wealth generated by the US immune to taxation, the US government quickly became a bankruptcy in progress ($20 trillion in debt and growing fast). Worse, this perpetual fiscal crisis eliminated any chance that government services (like in health care, retirement, etc. proposed by Bernie Sanders) could be formulated to cushion the damage done by neoliberal economics.

Trump’s Rollback of the Neoliberal Market State (Global Guerrillas)

Robb points out that as the U.S. middle class was hollowed out as a matter of public policy, in it’s place came the empowerment of the lone individual through what he calls cultural neoliberalism—what most people associate with so-called “political correctness” and “identity politics.”

The effects of neoliberalism put US political elites in a bind. Neoliberalism made it impossible for the US, as it had for two centuries, to grow the middle class economically anymore. The US economy didn’t provide good jobs to the middle class anymore due to the neoliberal trade and it didn’t have the funds to cushion the loss of income with services due to the tax avoidance of non-cooperative US elites. So, it decided to double down on neoliberal ideology by applying it to US cultural identity. Cultural neoliberalism now became the primary political good of the state…By making this shift it became …a market state. A market state, in contrast to the nation-state’s focus on broad economic prosperity and cultural integration, focuses on providing opportunity to the individual.

This “Market State” is exactly what Polanyi feared, and Cultural Neoliberalism eroded cultural capital by giving rise to the strident “politically correct” culture and quasi-Maoist thought policing that the alt-right takes an almost fetishistic delight in reacting against (another sort of “double movement”).

…the rise of the neoliberal market-state didn’t actually solve the internal contradiction of the neoliberal economics…barrier free trade allows a few people to take everything at the expense of everyone else. Like its economic cousin, cultural neoliberalism only benefited a minority of Americans (particularly those already benefiting from economic neoliberalism in NY and CA) while offering nothing but increasingly acrimonious identity politics to the majority. All of this might have continued indefinitely, but for the financial crisis of 2008. That crisis set in motion a deep unrest..that powers Trump’s socially networked insurgency…that is now actively dismantling the neoliberal market state…

So, as Robb describes, Trump is indeed a “double movement” in reaction to Neoliberalism, exactly as Polanyi predicted would happen. Of course the economic priesthood–militant adherents to the “liberal creed”–are howling like stuck pigs at the pushback against their cherished doctrines.

Karl Polanyi had much to say about the Market’s deleterious effects on labor and society back in the 1940’s. The idea that labor is just another commodity like any other to be allocated via impersonal markets in which the state must never “interfere” (even while the state aggressively protects property rights through extensive spying and jailing) is perhaps the most destructive idea currently pushing the world to the brink of apocalypse.

To allow the market mechanism to be sole director of the fate of human beings and their natural environment indeed, even of the amount and use of purchasing power, would result in the demolition of society. For the alleged commodity “labor power” cannot be shoved about, used indiscriminately, or even left unused, without affecting also the human individual who happens to be the bearer of this peculiar commodity.

In disposing of a man’s labor power the system would, incidentally, dispose of the physical, psychological, and moral entity “man” attached to that tag. Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime, and starvation. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed.

Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society. Undoubtedly, labor, land, and money markets are essential to a market economy. But no society could stand the effects of such a system of crude fictions even for the shortest stretch of time unless its human and natural substance as well as its business organization was protected against the ravages of this satanic mill.

And:

…the market for the factor of production known as labor power…could serve its purpose only if wages fell together with prices. In human terms such a postulate implied for the worker extreme instability of earnings, utter absence of professional standards, abject readiness to be shoved and pushed about indiscriminately, complete dependence on the whims of the market. Mises justly argued that if workers “did not act as trade unionists, but reduced their demands and changed their locations and occupations according to the requirements of the labour market, they could eventually find work.” This sums up the position under a system based on the postulate of the commodity character of labor. It is not for the commodity to decide where it should be offered for sale, to what purpose it should be used, at what price it should be allowed to change hands, and in what manner it should be consumed or destroyed.

Here’s a good quote from a more recent thinker:

The 19th and 20th century experience of liberalism has shown us that we can’t conceive of society similarly to the market. We have to start thinking differently or we will fall for the first demagogue that comes along. The state has to be responsive to the weakest sections, which is not how the market works. We need a new social compact of social welfarist democracies. It is politically catastrophic to have huge concentrations of wealth with miserable conditions for large sections of society.

We Can’t Think of Society As Similar to the Market: Pankaj Mishra (The Wire)

This excellent article by Charles High Smith makes a point very similar to the Great Transformation: What Would a Labor-Centered Economy Look Like? (Of Two Minds). He points out that capital only acquires value in a healthy society. It is not an intrinsic property of nature like mass or length. In order to acquire value in markets, capital must be sustained by all sorts of extra-market forces which comprise a healthy society, from social trust to shared institutions. But such things cannot exist in a “pure” market society envisioned by libertarians and Neoliberals; everything must be for sale in markets! It is self contradictory, and a recipe for collapse.

Smith describes many different types of capital. First there is the obvious – tangible items such as land, raw materials, manufactured goods, plants, factories, buildings, crops, and so forth. There is also the financial capital brought about through systems of money, credit and banking. Market liberals typically deal deal only with these. But there are other forms of “capital” that are even more important.

There is also human capital, that is, the know-how to utilize the raw materials effectively. After all, the market is not just goods, but services and inventions made possible through collective human knowledge and accumulated experience. The social connections and shared trust between people that allows any economic exchange to take place is social capital. The prior investments in infrastructure needed to mobilize resources—roads, bridges, canals, ports, dams, the electric grid, natural gas pipelines, broadband and cellular services, etc.—is infrastructure capital. This, too, is necessary; many countries without this form of capital cannot utilize their resources effectively which is one reason why third-world agriculture is so much much less productive than our own. This type of capital is not a product of “rugged individualists,” it is a collective project of a healthy, functioning society.

Conceptual underpinnings, such a standard money measurement (and even other forms of measurement such as the metric system, time zones, voltage, etc.), credit systems, legal and justice systems, corporate charters, and the like, are symbolic capital. The network of scientific journals and research institutions can be seen as a form of symbolic capital, for example, and one which has dramatically contributed to human well-being. Yet these things are intangible and not owned or controlled by any one person or corporation. No single person can “invent” a dollar or a kilometer, since it can only acquire value in a society, yet such things are essential for an advanced economy to function.

Finally, there is cultural capital. As Smith describes, “This is the network of trust and productive values that enable all the other kinds of capital to blossom and work together in a mutually beneficial system. A tool or factory or plot of land does not come with cultural capital. Tools without any cultural capital are left to rust.”

Smith’s crucial argument is that all of these forms of capital are required for the capital studied by economists to acquire value! Yet, many of these forms of capital exist “outside” the market – they cannot be owned or controlled by any single individual or corporation. And many such extra-market activities are not profitable by their very nature! No one has children for profit, for example. Yet a “pure” market society cannibalizes and undermines all these other forms of capital, meaning that it is self-liquidating, exactly as Polanyi described:

…the first thing we notice about cultural capital is that it resides in people, not credit or tools or even knowledge. Yes, this is a shocking development: people are required for capital to become productive…We call human effort labor…

The problem with that is most of human life and activity is unprofitable. How about beautifying your neighborhood? Have you noticed that impoverished neighborhoods tend to be ugly and run-down, and wealthy neighborhoods tend to be attractive and well-maintained? Where’s the profit in creating neighborhood beauty?

Is Google making billions of dollars from beautifying neighborhoods? How about McDonalds, or Amazon, or Apple or Netflix? If it was really profitable, wouldn’t these global corporations be all over it?

It turns out profits only flow from very specific kinds of things and services. The rest of human life has to be done by people who aren’t doing the work to maximize profit, because there is no profit in the work they’re performing…

Remember: new idea = symbolic capital that enables all the other forms of capital to work together more productively.

What Would a Labor-Centered Economy Look Like? (Of two Minds)

The point is clear: an environment in which profits can be made cannot be separated from a healthy society. When societies break down, when the governments libertarians despise with such vehemence are throttled back, profits do not soar, but wither and die. Social trust breaks down, people separate into warring camps, agreed upon standards such as a common currency disappear, cultural institutions such as legal systems break down, symbolic capital like credit and scientific inquiry fall apart, and crime becomes rampant. It becomes rule by the powerful—so-called gangster states (such as post-collapse Russia or Somalia). All these “unprofitable” activities and institutions make profits possible, and yet they are not owned or sustained by any one person! This is why all previous societies before the rise of our own American Ayn Rand-infused libertarianism have understood as self-evident the duty of the rich and powerful to maintain a healthy society through some level noblesse oblige. However, the new, modern conception of the Market is basically unalloyed Social Darwinism—quite literally Hobbes’ “war of all against all.”

Neoliberalism, in seeing housing, people, and even political offices, as simply commodities to be bought and sold in “free” markets, is causing society to fall apart. It is no surprise, then, that even growth and profits have been much lower under this system than under the more “embedded” economies of the immediate post-war period, which delivered more growth, equality, and political stability.

Smith goes on to describe the money-creation pyramid through which financial capital is injected into society. Money is typically described by economists as a neutral medium of exchange, a simple convenience to barter–of no consequence to the “natural” laws of economics. Smith demonstrates how false this is. Instead, it is a rigged system that redistributes society’s wealth to a small rentier oligarchy through supposedly impersonal market relations:

…if you give me $1 billion at .01% annual interest, I am instantly wealthy because I can buy assets yielding 3% and keep the 2.99% I earn for myself. In our credit-cartel-state form of capitalism, money is borrowed into existence at the top of the wealth-power pyramid, in central and private banks. Some modest amount of this new money trickles down the pyramid, but as you can see, not very much trickles down to all the people doing all the work that isn’t profitable, or to all the people without access to the nearly-free-money that’s available to those at the very top of the pyramid.

Now we know that instead of “trickling down” to the bombed-out Bantustans and rusting Magnetogorsks of the Heartland, that money goes to procure 400,000 acres of prime New Zealand real estate and escape helicopters complete with full-time, on-staff pilots. How long before even Republicans and libertarians get wise to the con? Indeed, as the Wall Street Journal reports, corporations are doing everything in their power to create as few new jobs as possible!

Never before have American companies tried so hard to employ so few people. The outsourcing wave that moved apparel-making jobs to China and call-center operations to India is now just as likely to happen inside companies across the U.S. and in almost every industry.

The men and women who unload shipping containers at Wal-Mart Stores Inc. warehouses are provided by trucking company Schneider National Inc.’s logistics operation, which in turn subcontracts with temporary-staffing agencies. Pfizer Inc. used contractors to perform the majority of its clinical drug trials last year….

The shift is radically altering what it means to be a company and a worker. More flexibility for companies to shrink the size of their employee base, pay and benefits means less job security for workers. Rising from the mailroom to a corner office is harder now that outsourced jobs are no longer part of the workforce from which star performers are promoted…

For workers, the changes often lead to lower pay and make it surprisingly hard to answer the simple question “Where do you work?” Some economists say the parallel workforce created by the rise of contracting is helping to fuel income inequality between people who do the same jobs.

“The End of Employees” (Naked Capitalism)

Combine this with the BBC article above, and we clearly see that society is coming apart.

Fearing some catastrophe – particularly since the election of Donald Trump – increasing numbers of the wealthy have been buying boltholes in places such as New Zealand, where they hope they might escape any disaster. But the evidence shows that greater equality makes societies more resilient and adaptable, better able to deal with shocks and uncertainty. That was why Britain’s leaders reduced inequalities in both world wars. They wanted to make people feel the burden of war was fairly shared and gain their participation in the war effort. As we face the threats of climate change and growing political and international uncertainty, reducing inequality becomes a necessity.

Studies have shown that people in more equal societies are more willing to help each other, trust each other, and to take part in community life. The evidence also suggests that they are less out for themselves and more responsive to the common good. But with rising inequality all that fades: trust and community life decline and violence increases. And in some of the most unequal countries, such as Mexico and South Africa, you find that people fear each other. Windows and doors are barred, and garden walls are topped with razor wire or electric fences. Studies of the rich democracies show that higher inequality leads to a higher proportion of the labour force working as security staff or in the police or prisons – occupations needed to protect ourselves from each other.

Prepare for the worst: this inequality rift will tear our society apart (Guardian)

Smith proposes injecting wealth at the bottom of the pyramid instead of the top:

So here’s a new idea: why not create new money at the bottom of the pyramid when people perform useful work in their communities? How about paying people for being producers, rather than paying them to be consumers…what would a labor-centered economy look like?

1. New money would be created at the bottom of the pyramid, in the accounts of people doing useful work in their communities. (The usual global corporations would continue making billions of dollars in profits from doing whatever highly profitable work was available.)

2. Being productive in terms of creating and sustaining cultural and infrastructure capital would be compensated; consumption of corporate goods and services would take care of itself without subsidies like guaranteed basic income.

3. Labor would be paid for being productive, and capital would serve labor.

I’m not sure I understand the mechanism he proposes–he mentions something about cryptocurrencies? To me, it seems that what this calls for something like the Job Guarantee we talked about a few posts ago, but perhaps Smith’s libertarian distaste for government is stopping him from proposing this idea.

In any case, clearly something must be done. The status quo is unsustainable. Yet, to date, I don’t see any real solutions inside the Overton Window. The current administration’s plan seems to be the ad-hoc elimination of taxes for selected large corporations in a quid-pro-quo exchange for preserving or expanding domestic employment. I doubt such an approach will deliver much success, especially with increasing automation and telecommunications as described above. Then what?

Summary of “The Great Transformation” by Karl Polanyi

“Elections cannot be allowed to change the economic policies of any country.”
–Wolfgang Schäuble (quoted by Yanis Varoufakis)

Libertarians contend that markets are somehow “natural” and that governments are somehow “unnatural.” Furthermore, they do not believe governments make markets; they believe that markets arise spontaneously out of our natural desire to exchange value, that is, to “truck barter and exchange” as Adam Smith put it. They contend that such exchanges have taken place since people first began to specialize in various occupations in the Stone Age, and that the only purpose of governments is to “extort” money from the productive classes to feed a useless, feckless bureaucracy at our expense. It would be much better, they argue, if governments would just disappear entirely and leave markets alone to run themselves. This, they believe, would be the epitome of “freedom.”

One of the most potent refutations of this view was written by Karl Polanyi back in 1944, coincidentally the same year that Friedrich Hayek published The Road to Serfdom. Polanyi’s book, The Great Transformation, argues that the world we inhabit today, where everything is distributed by markets, and markets alone, was not a spontaneous or inevitable development; rather, it was a project of concerted government action from the very beginning. Moreover, this phenomenon is very recent. Only in the last two-hundred years or so have we become dependent upon impersonal, arm’s length transactions and vast, global trade networks to provide for nearly all our daily needs. Even our social relationships are increasingly defined by markets and our role in them—our job becomes our whole identity, and companionship is rented by the hour.

In contrast to the hypothetical economies of the past, such as those dominated by barter postulated by Classical and Austrian economists, Polanyi based his theories on the burgeoning anthropological literature from around the world, along with an extensive review of history and the recent archaeological discoveries that had been made in the Near East.

Polanyi was particularly influenced by the work of anthropologist Bronislav Malinowski in the Trobriand Islands, an archipelago off the coast of New Guinea, during the 1920’s. Malinowski’s book, Argonauts of the Western Pacific, documented a pattern of exchange among Trobriand Islanders he called the Kula Ring. Malinowski asked a salient question: “why would men risk life and limb to travel across huge expanses of dangerous ocean to give away what appear to be worthless trinkets?” Clearly, they were not doing so in order to fulfill fundamental needs or to seek personal gain.

What Malinowski found was that these exchanges were done in a highly ritualized fashion, with red shell-disc necklaces being traded in a clockwise direction, and white shell armbands traded in a counter-clockwise direction. The display of these items was a source of prestige for the village and its chief, and the giving away of these gifts was indicative of the status relationships between one village and another. Upon presentation of the gift, the chief’s duty was to pass the gifts along to the next recipient in the ring.

Malinowski’s conclusion was that such exchanges served as a way of maintaining and reinforcing social bonds throughout the various islands that constituted the Trobriand culture. That is, this exchange was a means of social integration, and not competition for profit or gain. This ran completely contrary to Adam Smith’s contention that all economic transactions stemmed from a “natural instinct” to “truck, barter, and exchange.” What anthropologists were increasingly finding all over the world was that this supposed “natural” instinct did not exist at all, but was in fact culturally created and reinforced.

This led to Polanyi’s crucial insight that in many cultures, exchange was not necessarily about profit or gain, but rather exchanges were intrinsically bound up in the social relations of the particular culture. Polanyi called this concept embeddedness, and argued that rather than monetary exchanges between isolated individuals typical of markets, most of what we call “economic” exchanges emerged out of organic human relationships. This had been the case in earlier cultures and throughout most of history prior to the Industrial Revolution. Market trading using a medium of exchange was reserved for arm’s-length transactions between unrelated groups; internally, different customs prevailed. Among related people, trading for gain, that is, “profiting” at the expense of another, would have been corrosive to the social fabric. Polanyi called these different relationships status and contractus—status relationships were based on social relations such as kinship and class, while contractus relationships were based on formal laws and rules, written or unwritten.

The outstanding discovery of recent historical and anthropological research is that man’s economy, as a rule, is submerged in his social relationships. He does not act so as to safeguard his individual interest in the possession of material goods; he acts so as to safeguard his social standing, his social claims, his social assets. He values material goods only in so far as they serve this end…

The explanation, in terms of survival, is simple. Take the case of a tribal society. The individual’s economic interest is rarely paramount, for the community keeps all its members from starving unless it is itself borne down by catastrophe, in which case interests are again threatened collectively, not individually. The maintenance of social ties, on the other hand, is crucial. First, because by disregarding the accepted code of honor, or generosity, the individual cuts himself off from the community and becomes an outcast; second, because, in the long run, all social obligations are reciprocal, and their fulfillment serves also the individual’s give-and-take interests best. Such a situation must exert a continuous pressure on the individual to eliminate economic self-interest from his consciousness to the point of making him unable, in many cases (but by no means in all), even to comprehend the implications of his own actions in terms of such an interest. [TGT: 46]

Polanyi combed through the historical and anthropological literature and determined three primary methods through which goods and services were exchanged in traditional societies – reciprocity, redistribution, and householding.

Reciprocity is when one gift is exchanged for another of roughly equal value, as determined by the participants themselves. Often, such “dyadic” exchanges are separated in time and space; one person may give to another “open-handedly” without an immediate return in the expectation that he or she will be repaid at some future point. Sometimes this is described as a “gift economy.” Marxists called this “primitive communism.” The Burning Man festival is a modern-day example of this.

We can get some idea of what reciprocal exchanges are like by thinking about the way we exchange goods and services with our close friends or relatives. Brothers, for example, are not supposed to calculate the precise dollar value of everything they do for each other. They should feel free to borrow each other’s shirts or phonograph albums and ought not to hesitate to ask for favors. In brotherhood and friendship both parties accept the principle that if one has to give more than he takes, it will not affect the solidary relationship between them. If one friend invites another to dinner, there should be no hesitation in giving or accepting a second or a third invitation even if the first dinner still remains unreciprocated.

Yet there is a limit to that sort of thing—because after a while unreciprocated gift-giving begins to feel suspiciously like exploitation. In other words, everybody likes to be thought generous, but nobody wants to be taken for a sucker. This is precisely the quandary we get ourselves into at Christmas when we attempt to revert to the principle of reciprocity in drawing up our shopping lists. The gift can neither be too cheap nor too expensive; and yet our calculations must appear entirely casual, so we remove the price tag. [1]

The concept of reciprocity was later refined by anthropologists into Generalized reciprocity– a free exchange of goods without keeping track of their exact value and who owes what to whom, and Balanced or Symmetrical reciprocity, where a tangible return of an equivalent value is expected at a specified time and place. We may call this credit.

Redistribution is where some sort of centralized agent collects and redistributes goods throughout the members of the supporting group. This could anything from a headman distributing meat from a successful hunt to members of the tribe, to redistributive chiefs, all the way up to the complex palace and temple bureaucracies of ancient Egypt, Mesopotamia, the Minoans, the Inca, and other ancient civilizations.

Redistribution also has its long and variegated history which leads up almost to modern times. The Bergdama returning from his hunting excursion, the woman coming back from her search for roots, fruit, or leaves are expected to offer the greater part of their spoil for the benefit of the community. In practice, this means that the produce of their activity is shared with the other persons who happen to be living with them. Up to this point the idea of reciprocity prevails: today’s giving will be recompensed by tomorrow’s taking. Among some tribes, however, there is an intermediary in the person of the headman or other prominent member of the group; it is he who receives and distributes the supplies, especially if they need to be stored. This is redistribution proper.

Obviously, the social consequences of such a method of distribution may be far-reaching, since not all societies are as democratic as the primitive hunters. Whether the redistributing is performed by an influential family or an outstanding individual, a ruling aristocracy or a group of bureaucrats, they will often attempt to increase their political power by the manner in which they redistribute the goods. In the potlatch of the Kwakiutl it is a point of honor with the chief to display his wealth of hides and to distribute them; but he does this also in order to place the recipients under an obligation, to make them his debtors, and ultimately, his retainers.

All large-scale economies in kind were run with the help of the principle of redistribution. The kingdom of Hammurabi in Babylonia and, in particular, the New Kingdom of Egypt were centralized despotisms of a bureaucratic type founded on such an economy. The household of the patriarchal family was reproduced here on an enormously enlarged scale, while its “communistic” distribution was graded, involving sharply differentiated rations. A vast number of storehouses was ready to receive the produce of the peasant’s activity, whether he was cattle-breeder, hunter, baker, brewer, potter, weaver, or whatever else. The produce was minutely registered and, insofar as it was not consumed locally, transferred from smaller to larger storehouses until it reached the central administration situated at the court of the Pharaoh. There were separate treasure houses for cloth, works of art, ornamental objects, cosmetics, silverware, the royal wardrobe; there were huge grain stores, arsenals, and wine cellars. [TGT: 50-51]

Redistribution is further refined with the concepts of symmetry and centricity:

“Redistribution’s “supporting pattern” is centricity, movements of the products of land and labor into and out of a center…The central controlling power allocates the land, and recruits the labor, though a margin of freedom may be allowed for the “lesser” structures. Products of land and of the craft industries, move inward as tribute, taxes, rent, fines, dues, gifts, offerings, etc. and outward as retributions for services, rewards, also gifts, allocations of various sorts to the different sectors of the center and the periphery, that is, to the society as a whole, in terms of the status of the different sectors which compose the society.” [2]

Households were basically large estates of people related by real or “fictive” kinship under the control of a “pater familias,” or head of the household. The household, not the individual, owned considerable land and resources. Craft specialists were typically attached to households to provide for the needs of its members internally. It was the primary unit of economic production and consumption in most ancient societies. In fact, the very word “economy”’ derives from the Greek word for a household – oikos.

A household may be defined as a residential group that forms both a social and an economic unit of production and consumption. Members of the household consisted of both kin and clients providing voluntary labor. Status was defined by the ability of one member of the household to exploit the labor of another–gender and age being the variables allowing for exploitation. [3]

The emphasis of households was primarily on self-sufficiency, and exchange of goods and services was primarily done within the household. Occasionally exchanges would occur between households, and these might take the various forms listed above, along with market exchange.

The individualistic savage collecting food and hunting on his own or for his family has never existed. Indeed, the practice of catering for the needs of one’s household becomes a feature of economic life only on a more advanced level of agriculture; however, even then it has nothing in common either with the motive of gain or with the institution of markets. Its pattern is the closed group. Whether the very different entities of the family or the settlement or the manor formed the self-sufficient unit, the principle was invariably the same, namely, that of producing and storing for the satisfaction of the wants of the members of the group…It may be as despotic as the Roman familia or as democratic as the South Slav zadruga; as large as the great domains of the Carolingian magnates or as small as the average peasant holding of Western Europe. The need for trade or markets is no greater than in the case of reciprocity or redistribution. [TGT: 53]

All three of these arrangements provided the primary means of exchanging goods and services in ancient times, argued Polanyi, and not impersonal market exchanges with prices determined by forces of supply and demand. Because of their ideological bias, economists deliberately seek out and describe self-seeking market-oriented behaviors throughout history. If you look for evidence of market exchange hard enough, you are certain to find it. What they fail to describe is how essential—or non-essential—such markets were to the functioning of the societies in which they operated, or to the daily life of the average person.

Broadly, the proposition holds that all economic systems known to us up to the end of feudalism in Western Europe were organized either on the principle of reciprocity or redistribution, or householding, or some combination of the three. These principles were institutionalized with the help of a social organization which, inter alia, made use of the patterns of symmetry, centricity, and autarchy. In this framework, the orderly production and distribution of goods was secured through a great variety of individual motives disciplined by general principles of behavior. Among these motives gain was not prominent. Custom and law, magic and religion cooperated in inducing the individual to comply with rules of behavior which, eventually, ensured his functioning in the economic system. [TGT: 54-55]

Polanyi further argued that economic production and distribution in past societies was geared toward the support and maintenance of social relationships, and not on the constant increase and expansion of economic production; in other words, “habitation versus improvement.” The concept of embeddedness meant that economic behaviors were constrained by social forces. There was no concept of “an economy” set apart from the rest of society where one was expected to behave in a purely self-interested or “utility-maximizing” way until the writings of Classical economists, as Moses Finley writes:

[The ancients] in fact lacked the concept of an “economy”, a fortiori, they lacked the conceptual elements which together constitute what we call “the economy”. Of course they farmed, traded, manufactured, mined, taxed, coined, deposited and loaned money, made profits or failed in their enterprises. And they discussed these activities in their talk and their writing. What they did not do, however, was to combine these particular activities conceptually into a unit, in Parsonain terms into “a differentiated sub-system.” [4]

The final means of commodity exchange was via market exchange. Polanyi contends that markets, in fact, played only minor roles in most societies up until fairly recently, and that the above institutions were the primary means of economic production and distribution, not market exchange. The hypothetical markets emerging from bartering posited by Adam Smith and Austrian economics never existed. Neither were markets “free and open;” in fact they were heavily regulated and ritualized in order to keep them from having negative effects on social relations.

It might seem natural to assume that, given individual acts of barter, these would in the course of time lead to the development of local markets, and that such markets, once in existence, would just as naturally lead to the establishment of internal or national markets. However, neither the one nor the other is the case. Individual acts of barter or exchange…do not, as a rule, lead to the establishment of markets in societies where other principles of economic behavior prevail. Such acts are common in almost all types of primitive society, but they are considered as incidental since they do not provide for the necessaries of life.

Indeed, on the evidence available it would be rash to assert that local markets ever developed from individual acts of barter…Obscure as the beginnings of local markets are, this much can be asserted: that from the start this institution was surrounded by a number of safeguards designed to protect the prevailing economic organization of society from interference on the part of market practices…Towns, insofar as they sprang from markets, were not only the protectors of those markets, but also the means of preventing them from expanding into the countryside and thus encroaching on the prevailing economic organization of society.

Polanyi distinguishes between markets and price-fixing markets. In price-fixing markets, prices are determined solely through the forces of supply and demand. In many “primitive” markets, prices were predetermined or set at fixed equivalencies with one other (e.g. 5 bushels of grain = 1 pig). These were not markets as we know them today. In order to be a true price-fixing market, certain features need to be present:

“a site, physically present or available goods, a supply crowd, a demand crowd, custom or law, and, equivalencies… Whenever the market elements combine to form a supply-demand-price mechanism we speak of price-making markets. Otherwise, the meeting of supply and demand crowds, carrying on exchange at fixed equivalencies, forms a non-price-making market. Short of this we should not speak of markets, but merely of the various combinations of the market elements the exchange situation happens to represent.” [5]

Markets, however, were tangential to the regular operation of society. Internal (or local) markets are things like bazaars and farmer’s markets where local people meet to exchange goods and services. Competition and profit maximization was usually not a major part of these exchanges; the point was merely the exchange of goods one could not produce oneself or in one’s household. Long-distance, or External markets were the places where distant commodities—often luxury commodities such as silk, tea, porcelain, tobacco, and spices (and even slaves!)—were routinely brought and sold. However, the presence or absence of markets does not affect the prevailing social relationships, contrary to what economists claim.

The presence or absence of markets or money does not necessarily affect the economic system of a primitive society—this refutes the nineteenth-century myth that money was an invention the appearance of which inevitably transformed a society by creating markets, forcing the pace of the division of labor, and releasing man’s natural propensity to barter, truck, and exchange. Orthodox economic history, in effect, was based on an immensely exaggerated view of the significance of markets as such. A “certain isolation,” or, perhaps, a “tendency to seclusion” is the only economic trait that can be correctly inferred from their absence; in respect to the internal organization of an economy, their presence or absence need make no difference.

The reasons are simple. Markets are not institutions functioning mainly within an economy, but without. They are meeting place of long-distance trade. Local markets proper are of little consequence. Moreover, neither long-distance nor local markets are essentially competitive, and consequently there is, in either case, but little pressure to create territorial trade, a so-called internal or national market. Every one of these assertions strikes at some axiomatically held assumption of the classical economists, yet they follow closely from the facts as they appear in the light of modern research. [TGT:58]

External markets were usually confined to what Polanyi calls “ports of trade” in order to prevent them from encroaching upon the prevailing social relationships of the countryside. Such markets were heavily regulated by authorities. For example, medieval fairs took place at specified dates and locations, and fair-dealing was strictly enforced by kings and princes. Market trading was also facilitated by coinage minted by municipalities. Towns, which were the centers of long distance trade, served to quarantine trade rather than expand it:

…from the economic point of view external markets are an entirely different matter from either local markets or internal markets. They differ not only in size; they are institutions of different function and origin. External trade is carrying; the point is the absence of some types of goods in the region; the exchange of English woollens against Portuguese wine was an instance… Local trade is limited to the goods of the region, which do not bear carrying because they are too heavy, bulky, or perishable. Thus both external trade and local trade are relative to geographical distance, the one being confined to the goods which cannot overcome it, the other to such only as can. Trade of this type is rightly described as complementary…

These three types of trade which differ sharply in their economic function are also distinct in their origin. We have dealt with the beginnings of external trade. Markets developed naturally out of it where the carriers had to halt as at fords, seaports, riverheads, or where the routes of two land expeditions met. “Ports” developed at the places of transshipment…Yet even where the towns were founded on the sites of external markets, the local markets often remained separate in respect not only to function but also to organization. Neither the port nor the fair nor the staple was the parent of internal or national markets.[TGT:59-60]

The typical local market on which housewives depend for some of their needs, and growers of grain or vegetables as well as local craftsmen offer their wares for sale…are not only fairly general in primitive societies, but remain almost unchanged right up to the middle of the eighteenth century in the most advanced countries of Western Europe…But what is true of the village is also true of the town. Local markets are, essentially, neighborhood markets, and, though important to the life of the community, they nowhere show any sign of reducing the prevailing economic system to their pattern. They are not starting points of internal or national trade.[TGT:62]

Such a permanent severance of local trade and long-distance trade within the organization of the town must come as another shock to the evolutionist, with whom things always seem so easily to grow into one another. And yet this peculiar fact forms the key to the social history of urban life in Western Europe. It strongly tends to support our assertion in respect to the origin of markets which we inferred from conditions in primitive economies. …neither long-distance trade nor local trade was the parent of the internal trade of modern times—thus apparently leaving no alternative but to turn for an explanation to the deus ex machina of state intervention…[TGT:63]

Polanyi argues that it was through the mechanism state of state intervention that competitive, price-fixing markets came to replace the older, embedded economies which preceded it, rather than any sort of naturally occurring process as commonly portrayed in economic textbooks. It was not a matter of “weak” governments getting out of the way, but of powerful governments determined to break up existing community bonds and social structures and replace them with impersonal market exchanges that created the market as we know it today. This “Great Transformation” entailed a profound rending of the social fabric, and the deliberate dislocation and impoverishment of the peasant class.

Craft guilds and feudal privileges were abolished in France only in 1790; in England the Statute of Artificers was repealed only in 1813-14, the Elizabethan Poor Law in 1834. Not before the last decade of the eighteenth century was, in either country, the establishment of a free labor market even discussed; and the idea of the self-regulation of economic life was utterly beyond the horizon of the age…just as the transition to a democratic system and representative politics involved a complete reversal of the trend of the age, the change from regulated to self-regulating markets at the end of the eighteenth century represented a complete transformation in the structure of society.

This process began in heartland of the Industrial Revolution, England, and was driven by the rise of factory production. Polanyi documents the various methods by which land and labor were transformed into commodities for sale. He describes several pieces of legislation that were crucial to this development, including the suppression of the guilds, the Enclosure Movement & Highland Clearances, Game Laws, and the replacement of the Speenhamland system of outdoor relief with the New Poor Law, with its attendant workhouses. These legal transformations were regularly backed up by state violence. The idea that competitive national and internal markets formed “naturally” without any sort of government intervention is historically ignorant:

There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course. Just as cotton manufactures–the leading free trade industry–were created by the help of protective tariffs, export bounties, and indirect wage subsidies, laissez-faire was enforced by the state. The thirties and forties saw not only an outburst of legislation repealing restrictive regulations, but also an enormous increase in the administrative functions of the state, which was now being endowed with a central bureaucracy able to fulfill the tasks set by the adherents of liberalism.

The road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism. To make Adam Smith’s “simple and natural liberty” compatible with the needs of a human society was a most complicated affair. Witness the complexity of the provisions in the innumerable enclosure laws; the amount of bureaucratic control involved in the administration of the New Poor Laws which for the first time since Queen Elizabeth’s reign were effectively supervised by central authority; or the increase in governmental administration entailed in the meritorious task of municipal reform. And yet all these strongholds of governmental interference were erected with a view to the organizing of some simple freedom—such as that of land, labor, or municipal administration.

Just as, contrary to expectation, the invention of laborsaving machinery had not diminished but actually increased the uses of human labor, the introduction of free markets, far from doing away with the need for control, regulation, and intervention, enormously increased their range. Administrators had to be constantly on the watch to ensure the free working of the system. Thus even those who wished most ardently to free the state from all unnecessary duties, and whose whole philosophy demanded the restriction of state activities, could not but entrust the self-same state with the new powers, organs, and instruments required for the establishment of laissez faire. [TGT: 140-141]

Economists typically describe land, labor and capital as the crucial inputs of production. However, land and labor are emphatically NOT commodities produced for sale in markets; they are the very fabric of society itself! Polanyi calls such things “fictitious commodities,” and argues that subjecting these things to impersonal market forces alone would result in the “annihilation” of any given society. Also, without access to sufficient money and credit, markets cannot function adequately—they, too, are fictitious commodities, wholly dependent upon the mechanisms of state finance.

The crucial point is this: labor, land, and money are essential elements of industry; they also must be organized in markets; in fact, these markets form an absolutely vital part of the economic system. But labor, land, and money are obviously not commodities; the postulate that anything that is bought and sold must have been produced for sale is emphatically untrue in regard to them.

In other words, according to the empirical definition of a commodity they are not commodities. Labor is only another name for a human activity which goes with life itself, which in its turn is not produced for sale but for entirely different reasons, nor can that activity be detached from the rest of life, be stored or mobilized; land is only another name for nature, which is not produced by man; actual money, finally, is merely a token of purchasing power which, as a rule, is not produced at all, but comes into being through the mechanism of banking or state finance. None of them is produced for sale. The commodity description of labor, land, and money is entirely fictitious.

Polanyi’s central thesis is that what makes modern capitalism unique and distinct from all past economic systems was this transformation of all aspects of life—especially land and labor—into commodities which could be bought and sold in markets with prices set theoretically only by supply and demand. In addition, all the basic necessities of life, not just luxuries, would be distributed through markets alone. Although markets have existed in various forms throughout history, no other society in history prior to Western Europe has decided that price-fixing markets alone should be the sole factor regulating all aspects of life. In the past, markets were confined exclusively to commodity exchange, and then only in limited circumstances. Shutting down the market would not result in irreparable harm or damage to society. However, the guiding idea of liberal economists was, in Fred Bloch’s words, “Instead of the historically normal pattern of subordinating the economy to society, their system of self-regulating markets required subordinating society to the logic of the market.”

Production is interaction of man and nature; if this process is to be organized through a self-regulating mechanism of barter and exchange, then man and nature must be brought into its orbit; they must be subject to supply and demand, that is, be dealt with as commodities, as goods produced for sale.

Such precisely was the arrangement under a market system. Man under the name of labor, nature under the name of land, were made available for sale; the use of labor power could be universally bought and sold at a price called wages, and the use of land could be negotiated for a price called rent. There was a market in labor as well as in land, and supply and demand in either was regulated by the height of wages and rents, respectively; the fiction that labor and land were produced for sale was consistently upheld. Capital invested in the various combinations of labor and land could thus flow from one branch of production to another, as was required for an automatic levelling of earnings in the various branches. [pp. 130-131]

Another fundamental difference is the belief that such markets could be “self-regulating,” free from all political “interference,” and moderated solely by impersonal forces of supply and demand which, according to the newly-developed “science” of economics, were as regular and unchanging as Newton’s Laws of Motion. Polanyi calls this the “liberal creed.”  This creed demanded the complete separation of the economic sphere from the socio-political sphere; something that was also unprecedented in history:

A self-regulating market demands nothing less than the institutional separation of society into an economic and a political sphere…True, no society can exist without a system of some kind which ensures order in the production and distribution of goods. But that does not imply the existence of separate economic institutions; normally, the economic order is merely a function of the social order. Neither under tribal nor under feudal nor under mercantile conditions was there, as we saw, a separate economic system in society…Such an institutional pattern could not have functioned unless society was somehow subordinated to its requirements.

A market economy can exist only in a market society…A market economy must comprise all elements of industry, including labor, land, and money…But labor and land are no other than the human beings themselves of which every society consists and the natural surroundings in which it exists. To include them in the market mechanism means to subordinate the substance of society itself to the laws of the market.

The crucial point is this: labor, land, and money are essential elements of industry; they also must be organized in markets; in fact, these markets form an absolutely vital part of the economic system…The extension of the market mechanism to the elements of industry labor, land, and money— was the inevitable consequence of the introduction of the factory system in a commercial society. The elements of industry had to be on sale…But labor, land, and money are obviously not commodities; the postulate that anything that is bought and sold must have been produced for sale is emphatically untrue in regard to them…But the fiction of their being so produced became the organizing principle of society. [TGT:71-72]

Furthermore, market liberals envisioned uniting the entire world in a vast, global trade network; what Polanyi calls the “One Big Market.” In order for a self-regulating global market to function, an automatic money creation mechanism needed to be established—the gold standard. While the use of gold is often portrayed as the only “real” money since the beginning of history, in realty the gold standard is a nineteenth century invention designed to facilitate international trade. By keeping various international currencies pegged to a specified quantity of precious metal, it was thought, the money earned in one country would hold its value in another, that is, it would be “as good as gold.” Currencies would automatically adjust against each other; if a country had a trade deficit vis-a-vis another country, gold would flow out of the first country’s coffers and into those of the latter. This would reduce the rate of money creation in the deficit country and cause a devaluation of its currency, lowering its domestic consumption and making its goods cheaper in the One Big Market. This would theoretically ensure that trade imbalances would be “self-correcting.”

All Western countries followed the same trend, irrespective of national mentality and history. With the international gold standard, the most ambitious market scheme of all was put into effect, implying absolute independence of markets from national authorities. World trade now meant the organizing of life on the planet under a self-regulating market, comprising labor, land, and money, with the gold standard as the guardian of this gargantuan automaton. Nations and peoples were mere puppets in a show utterly beyond their control. They shielded themselves from unemployment and instability with the help of central banks and customs tariffs, supplemented by migration laws. These devices were designed to counteract the destructive effects of free trade plus fixed currencies, and to the degree in which they achieved this purpose they interfered with the play of those mechanisms. [TGT: 217]

Polanyi tells us that this liberal creed went from “academic interest” to “boundless activism” after 1830:

…Only by the 1820s did [the liberal creed] stand for the three classical tenets: that labor should find its price on the market; that the creation of money should be subject to an automatic mechanism; that goods should be free to flow from country to country without hindrance or preference; in short, for a labor market, the gold standard, and free trade [TGT: 135]…Not until the 1830s did economic liberalism burst forth as a crusading passion and laissez-faire become a militant creed. [TGT: 137]

Polanyi calls the idea of a society driven purely by markets a “stark utopia” and says such a thing is practically impossible to achieve. The “commodity fiction” of land, labor and capital can only be upheld through the constant actions of central governments. Absent these laws and rules the society would quickly fall apart. A “free” market depends on a healthy society in order to function, but the constant booms, busts, manias, panics, crashes, oversupply, undersupply, etc. of markets undermines the very stability of the society in which it operates. Libertarian ideas of markets being somehow “natural” phenomena, and that markets left alone, free from any collective oversight, can organize a whole complex society is a hopeless fantasy so long as land, labor and capital are necessary inputs. As Fred Bloch and Margaret Somers write:

Polanyi’s central argument is that a self-regulating economic system is a completely imaginary construction; as such, it is completely impossible to achieve or maintain. Just as Marx and Engels had talked of the “withering away of the state,” so market liberals and libertarians imagine a world in which the realm of politics would diminish dramatically. At the same time, Polanyi recognizes why this vision of stateless autonomous market governance is so seductive. Because politics is tainted by a history of coercion, the idea that most of the important questions would be resolved through the allegedly impartial and objective mechanism of choice-driven, free-market competition has great appeal.

Polanyi’s critique is that the appeal has no basis in reality. Government action is not some kind of “interference” in the autonomous sphere of economic activity; there simply is no economy without government. It is not just that society depends on roads, schools, a justice system, and other public goods that only government can provide. It is that all of the key inputs into the economy—land, labor, and money—are only created and sustained through continuous government action. The employment system, the arrangements for buying and selling real estate, and the supplies of money and credit are socially constructed and sustained through the exercise of government’s coercive power.

In this sense, free-market rhetoric is a giant smokescreen designed to hide the dependence of business profits on conditions secured by government. So, for example, our giant financial institutions insist that they should be free of meddlesome regulations while they depend on continuing access to cheap credit—in good times and bad—from the Federal Reserve. Our pharmaceutical firms have successfully resisted any government limits on their price-setting ability at the same time that they rely on government grants of monopolies through the patent system. And, of course, the compliance of employees with the demands of their managers is maintained by police, judges, and an elaborate structure of legal rules. [6]

The push to subordinate all of society’s basic constituents to impersonal market forces in the Nineteenth century gave rise to what he called the “double movement.” The more market liberals and governments pushed for a “pure” self-regulating market, the more the citizens, workers, and even businesspeople clamored for protection from the chaos and unpredictability this engendered.

To allow the market mechanism to be sole director of the fate of human beings and their natural environment indeed, even of the amount and use of purchasing power, would result in the demolition of society…While on the one hand markets spread all over the face of the globe and the amount of goods involved grew to unbelievable dimensions, on the other hand a network of measures and policies was integrated into powerful institutions designed to check the action of the market relative to labor, land, and money…Society protected itself against the perils inherent in a self-regulating market system—this was the one comprehensive feature in the history of the age.

While the movement to establish competitive internal markets was a top-down government affair, the resistance to it was spontaneous and unplanned, with no links between the various opposition movements in different countries. This gave rise to one of Polanyi’s most oft-quoted phrases, “Laissez-faire was planned; planning was not.” (p. 141). The people whose lives and livelihoods were ruined increasingly demanded protection from the constant dislocations of the One Big Market. This took many forms: The Luddite Revolts, the Revolutions of 1848, The Chartist Movement, the establishment of trade unions, the Owenite Movement, the establishment of welfare provisions such as the Liberal Reforms in England and the welfare state under Bismarck, and numerous Communist and Socialist movements. Resistance to the One Big Market did not break down simply along class lines; many merchants and small businessmen too sought protection from the chaos and unpredictability of the market as they saw their livelihoods threatened. As Polanyi tells us, “Paradoxically enough, not human beings and natural resources only but also the organization of capitalistic production itself had to be sheltered from the devastating effects of a self-regulating market.” (p. 132)

What this “double movement” meant was that no market economy is ever “pure,” nor can it be! It’s easy to see why—the market cannot simply be “left alone” to correct itself when it fails, because we are now all utterly dependent upon it for literally everything; it would literally entail the destruction of society! People need to sell their labor to survive, and they need land on which to live. If they do not have access to these things via the market, they will not simply lie down and die. People excluded from the market for whatever reason will fight back. To this end, citizens in various countries around the world fought for the establishment of democratic institutions to suborn the workings of the market to the needs of the people. However, market liberals consistently blamed such “interference” (i.e. “crony capitalism”) for the problems with the market, and insisted that everything would work out for the best if only government would simply “get out of the way,” a trend which continues unabated today.

This, indeed, is the last remaining argument of economic liberalism today. Its apologists are repeating in endless variations that but for the policies advocated by its critics, liberalism would have delivered the goods; that not the competitive system and the self-regulating market, but interference with that system and interventions with that market are responsible for our ills. [150]

The mechanisms of haute finance gave rise to what Polanyi calls “the Hundred Years’ Peace” in Europe, from 1815 to 1914. Market mechanisms relied on peace and political stability (along with British naval power) in order to function properly. However, by pegging a currency to gold, it prevented any increase in a nation’s internal money supply during times of economic expansion. This resulted in a series of “ruinous” deflations which caused cascading business failures and as series of regular financial crises throughout the course of the Nineteenth century.

The reaction to these circumstances took two forms. One, it caused the creation of central banking systems to extend credit in order to cope with the regular deflation cycles and spread risk throughout the economy. Central banking allowed the money supply to expand during periods of growth through the extension of credit. Eventually these banks were nationalized in order to spread the risk around to the greatest extent possible. That is, central banking is a result of free trade and the gold standard, not a distortion of it. And second, countries moved to expand their internal markets and ensure the regular supply of raw materials for industry by engaging in colonial ventures. Colonialism was a direct result of the need to supply national markets, and as a source to dump domestic overproduction. The world became cordoned off into competing “spheres of trade,” often enforced by tariffs and trade barriers. The need to create larger internal markets spurred a period of national consolidation (e.g. Italy, Germany, Russia, the United States).

Whether protection was justified or not, a debility of the world market system was brought to light by the effects of interventions. The import tariffs of one country hampered the exports of another and forced it to seek for markets in politically unprotected regions. Economic imperialism was mainly a struggle between the Powers for the privilege of extending their trade into politically unprotected markets. Export pressure was reinforced by a scramble for raw material supplies caused by the manufacturing fever. Governments lent support to their nationals engaged in business in backward countries. Trade and flag were racing in one another’s wake. Imperialism and half-conscious preparation for autarchy were the bent of Powers which found themselves more and more dependent upon an increasingly unreliable system of world economy. And yet rigid maintenance of the integrity of the international gold standard was imperative. This was one institutional source of disruption. [TGT: 217]

As Western powers acquired colonies abroad, they undermined the self-sufficiency of the local people and reoriented their economies to center around commodity production for Western export markets (rubber, coffee, cocoa, sugar, tea, bananas, palm oil, etc.). Instead of the self-sufficient village economies of the type described above where all community members are provided for, people in these societies would now be dependent upon the market to obtain everything they needed, including food and shelter, and upon earning sufficient wages to procure them. This, too, was not a “natural” development; Polanyi points out that the “Starving Indian and African” caricature is not a natural feature of history, but a creation of the global market economy. The imposition of market mechanisms and the destruction of traditional peasant subsistence economies by Britain in its colonies of Ireland and India (and elsewhere) caused the deaths or emigration of millions of people, as detailed in Mike Davis’ book Late Victorian Holocausts. While the death and suffering caused by the establishment of Communist regimes is common knowledge, these millions of deaths, along with many of the conflicts which occurred in Western Europe during Industrialization, have literally been erased from history.

This effect of the establishment of a labor market is conspicuously apparent in colonial regions today. The natives are to be forced to make a living by selling their labor. To this end their traditional institutions must be destroyed, and prevented from reforming, since, as a rule, the individual in primitive society is not threatened by starvation unless the community as a whole is in a like predicament. Under the kraal-land system of the Kaffirs, for instance, “destitution is impossible: whosoever needs assistance receives it unquestioningly.” No Kwakiutl “ever ran the least risk of going hungry.” “There is no starvation in societies living on the subsistence margin.” The principle of freedom from want was equally acknowledged in the Indian village community and, we might add, under almost every and any type of social organization up to about the beginning of sixteenth-century Europe, when the modern ideas on the poor put forth by the humanist Vives were argued before the Sorbonne.

It is the absence of the threat of individual starvation which makes primitive society, in a sense, more humane than market economy, and at the same time less economic. Ironically, the white man’s initial contribution to the black man’s world mainly consisted in introducing him to the uses of the scourge of hunger. Thus the colonists may decide to cut the breadfruit trees down in order to create an artificial food scarcity or may impose a hut tax on the native to force him to barter away his labor. In either case the effect is similar to that of Tudor enclosures with their wake of vagrant hordes. A League of Nations report mentioned with due horror the recent appearance of that ominous figure of the sixteenth-century European scene, the “masterless man,” in the African bush. During the late Middle Ages he had been found only in the “interstices” of society.” Yet he was the forerunner of the nomadic laborer of the nineteenth century [TGT: 163-164]

In former times small local stores had been held against harvest failure, but these had been now discontinued or swept away into the big market. Famine prevention for this reason now usually took the form of public works to enable the population to buy at enhanced prices. The three or four large famines that decimated India under British rule since the Rebellion were thus neither a consequence of the elements, nor of exploitation, but simply of the new market organization of labor and land which broke up the old village without actually resolving its problems. While under the regime of feudalism and of the village community, noblesse oblige, clan solidarity, and regulation of the corn market checked famines, under the rule of the market the people could not be prevented from starving according to the rules of the game. [TGT: 160]

These tensions eventually came to a head in the First World War. During the War, all nations went off the gold standard in order to pay for military operations. Immediately after the war, the industrial powers made the tragic mistake of going back onto the gold standard in order to try and return to the status quo ante. The result was the biggest market failure of them all: The Great Depression. In Germany, the need to pay extortionate reparations while remaining on the gold standard resulted in hyperinflation which destroyed the German economy and caused the impoverishment of the whole country. In every case, the collapse of the global market mechanism gave rise to grass-roots reactions around the world. In the United States, this took the form of drastic government interventions into the market economy via the New Deal, while preserving the democratic political structure. In Europe, this gave rise to Fascist movements which replaced the chaos and unpredictability of the market with the certainty and reliability of a unified central state under a strong leader. Instead of isolated individuals bound together only through tenuous market relations, Fascism offered a way to reestablish collective solidarity and to give people something to believe in that was greater than themselves through militant nationalism. Dictators like Mussolini in Italy and Hitler in Germany went off the gold standard and engaged in economic and military expansion.

Polanyi published The Great Transformation in 1944 as the Second World War was raging around the globe. He hoped that the wanton destruction of this conflict had taught us a lesson, and that urgent social needs would no longer be sacrificed to the exigencies of something as abstract and ephemeral as “the market.” He hoped that economic relations would once again start to become re-embedded in the political and social spheres, as indeed they had been prior to Great Transformation. He hoped the “stark utopia” advocated by market liberals had been discredited once and for all by the Great Depression and the Second World War.

For a time, it looked like this was the case. After the war, a strong state managed the cycles of the market economy via the economic ideas of Keynesianism, and strong labor unions protected the interests of workers. Roosevelt planned the “Four Freedoms” as the next phase of his New Deal (which went unimplemented after his death). Highly regulated corporations were tasked with protecting the interests of workers and communities. Western Europe established generous welfare states, to some extent disembedding housing and employment from the vagaries of the market. Taxes on wealth were high. The wealth of the middle classes grew as the fortunes of the very rich were curtailed.

However, we all know what happened next. Stagflation and the 1970’s Oil Crisis destroyed the Keynesian consensus, and the concepts of Neoliberalism- which advocates for the commodification of all things and the supremacy of markets —took charge in the industrialized nations after 1980. The New Deal was systematically dismantled brick-by-brick. Public welfare provisions were curtailed or made more stringent. Common-pool resources were sold off and privatized. Taxes on the wealthy were drastically reduced, and government budgets shrank. Labor unions were gutted, and workers were “disciplined.” Wealth disparities returned to Gilded-Age levels. This counter-reaction was described by political economist Mark Blyth in his book Great Transformations, which picks up where Polanyi left off, as well as Naomi Klein’s The Shock Doctrine: The Rise of Disaster Capitalism. The latter book argues that Neoliberalism was imposed on societies in crisis periods through top-down central planning and violence; The Great Transformation shows us that this has always been the case for markets since the very beginning.

Conclusion

For many people today, the world feels like it’s spinning of control. It feels like our institutions are impotent and our politicians can do nothing in the face of growing homelessness and poverty, unemployment, declining wages, mass incarceration, and increasingly unaffordable health care, housing, and education. People switch their vote from Democrats to Republicans; from Labor to Conservatives, and back, to no avail. The economy seems to follow its own inexorable logic about which nothing can be done besides fiddling with an interest rate here and there, or tweaking the tax rates. Capital and jobs flow around the world, seemingly out of any single nation’s control, leaving hollowed out communities in their wake. Wealth becomes ever-more concentrated. Economists tell us that things like globalization, outsourcing, and automation are simply forces of nature that cannot be stopped or curtailed, only forever mitigated. Libertarians, Austrian economists, and so-called “conservatives” tell us that the problem is simply too much government interference, and that by crippling government’s ability to intervene in the market economy and rolling back public welfare provisions we will all be made better off.

So long as the economy is considered to be something separate and apart from the wider society, and politicians are dedicated to prioritizing its needs at the expense of society, it is hard to see a solution to any the above problems. But once again we are reaching a crisis point. Polanyi would not be surprised at all by the double movement indicated by the vote of Great Britain to leave the European Union, the election of Donald Trump in the United States, or the various populist political parties that have sprung up across Europe, both on the far-right and far-left. After 1980, the establishment of a “pure” market economy, free from government “interference” once again became the guiding principle for politicians across the entire political spectrum, backed up and supported by economists and their theories, and we are now seeing the results. Last time, this reaction ended up with a world engulfed in war. Today, the danger is that it may do so again, only this time with far more deadly weapons and a much larger population. Are we destined to repeat the same mistakes?

Polanyi effectively brings the role of government and politics into the center of the analysis of market economies. And in doing so, he opens up possibilities that are often obscured in other currents of left thought. If regulations are always necessary to create markets, we must not discuss regulation versus deregulation but rather what kinds of regulations we prefer: those designed to benefit wealth and capital, or those that benefit the public and common good? Similarly, since the rights or lack of rights that employees have at the workplace are always defined by the legal system, we must not ask whether the law should organize the labor market but rather what kind of rules and rights should be entailed in these laws—those that recognize that it is the skills and talents of employees that make firms productive, or those that rig the game in favor of employers and private profits? [6]

Ever since the emergence of mass democracy after World War II, an inherent tension has existed between capitalism and democratic politics; capitalism allocates resources through markets, whereas democracy allocates power through votes. Economists, in particular, have been slow to accept that this tension exists. Instead, they have tended to view markets as a realm beyond the political sphere and to see politics as something that gets in the way of an otherwise self-adjusting system. Yet how democratic politics and capitalism fit together determines today’s world. Politics is not a mistake that gets in the way of markets. [7]

Sources

[1] Marvin Harris, Cows, Pigs, Wars and Witches. p. 123.

[2] https://jonfernquest.wordpress.com/2005/12/13/karl-polanyi-reciprocity-redistribution-and-market-exchange-in-economic-history/

[3] C.C. Lamberg-Karlovsky, Households, Land Tenure, and Communication Systems in the 6th-4th Millennia of Greater Mesopotamia. In Urbanization and Land Use in the Ancient Near East.

[4] Moses Finley, The Ancient Economy (1992), London: Penguin Books, p. 21

[5] Polanyi, K. The Livelihood of Man (1977) New York, Academic Press. p. 125.

[6] Margaret Somers and Fred Bloch. The Return of Karl Polanyi. Dissent Magazine, Spring 2014.

[7] https://www.foreignaffairs.com/reviews/review-essay/2016-06-13/capitalism-crisis

Further Reading

Wikipedia has a number of articles on related concepts:
Economic Anthropology
The formalist vs substantivist debate
Embeddedness
Summary of the Great Transformation by Polanyi (WEA Pedagogy Blog)
Karl Polanyi Explains It All (The American Prospect)
Karl Polanyi for President (Dissent Magazine)
Populist Backlash and Political Economy (Brad DeLong)
Polanyi on the market (Understanding Society)
The free market is an impossible utopia (Washington Post)