Latitudes not Attitudes or ‘Maps not Chaps’

Geography is … only a branch of statistics, a knowledge of which is necessary to the well-understanding of the history of nations, as well as their situations relative to each other.
–WILLIAM PLAYFAIR

I’ve been think a lot about the way geography shapes history. A lot of the big questions of history can be boiled down to simple geography.

What brought this to mind was this interview with Ian Morris:

Philip Dodd: “The three paradigms in which you want to work are biolgical, sociologicial…[and geographical]. Tell us why geography is so important to you…”

Ian Morris: “It follows on fairly directly from the ways I was thinking about biology and sociology. It seems to me the major implication of recent work in evolutionary biology is that human beings are all more or less the same things all over the world, which is—clever chimpanzees. That’s what we are. And we do the same things as most other kinds of animals, we’re just better at it…”

“It seemed to me, as I was looking for patterns across the last 15,000 years, was that the real motor for why some societies have developed at different paces than others was simply geography. That’s just what it came down to.”

PD: Give us briefly an example of how geography is determining.

IM: “The most glaring case of geographical determinism is the beginnings of agriculture the end of the Ice Age. There were only a few places in the world while wild species of plants and animals had developed that were potentially domesticable. If you were a hunter-gatherer in central Siberia, it didn’t matter if you were Albert Einstein, you were never going to domesticate plants and animals because it could not be done. If you lived in southwest Asia, it was massively more likely that domestication would happen there than anywhere else because these plants and animals are so densely concentrated there…”

“…Much of what humanists like to dwell on as agency I think is an obsession with the noise generated by human beings. We’re very good at thinking up grand theories about the afterlife for example—about things that very likely don’t exist at all. That is just a distinctively human version of the agency that generally applies to living things.”

“Plants have agency of a kind, bunny rabbits have a lot more, chimpanzees have a lot more still. We have most of all. And we have so much of it, that we clearly have in some ways moved wildly away from what we share with animals. But in other ways we continue to share a great deal of what we do with animals.”

“I like to say when I’m teaching that history is a subfield of biology. It’s the record of what one particular species does. And when you put it like that it’s hard to argue with [that]…”

Richard Cohen and The Ancient Egyptian Book of the Dead (BBC Arts & Ideas)

The interview is from a few years back in reference is Morris’ book Why the Rest Rules–for Now. In that book, he traces history back 15,000 years in order to find the reason why the societies of the North Atlantic ended up dominating and ruling much of the planet today rather than, say, the Middle East or Africa China or South America. The geography factor came up fairly late in his inquiry, and caused him to rethink his assumptions. As he says:

“This is something that actually didn’t fully dawn on me until I was quite some way into writing the book, and I had to go back to the beginning and start doing it all over again…The reason why the book ends up being rather a long one rather than a one-page thing saying ‘it’s geography’ [is because] geography is a somewhat complicated thing. On the one hand, physical geography determines how societies develop. But the way societies develop determines what physical geography means.”

In a column for the Daily Beast he summarizes some of his major conclusions:

When the world warmed up 15,000 years ago, geography dictated that there were only a few regions on the planet where complex societies could develop. This was because only a few regions had the kinds of climate and landscape that allowed for the evolution of wild plants and animals that could be domesticated; and farming could only arise in these places.

The densest concentrations of these plants and animals lay toward the Western end of Eurasia, around the headwaters of the Euphrates, Tigris, and Jordan Rivers in what we now call southwest Asia. It was therefore here, around 9000 BC, that farming began, spreading outward across Europe. Western Eurasia became the richest part of the world.

Farming also started up independently in other areas, from China to Mexico; but because plants and animals that could be domesticated were somewhat less common in these zones than in the West, the process took thousands of years longer to get going.

Ian Morris on Why the West Rules but China Is Next (Daily Beast)

On a similar theme is a book I read recently called Prisoners of Geography by Tim Marshall. It’s mostly about current geopolitical tensions than it is about geography, but it does cover some useful facts about why certain parts of the world developed in the way they did.

It’s a good illustration of how countries came to be, and why they are the way they are. Political scientists like to talk about “Path Dependence”—the fact that understanding why societies are the way they are now has a lot do with historical circumstances, sometimes stemming from a very long time ago. To cite just one example, when you look at current voting patterns in the U.S., counties which had the best conditions for growing cotton in Dixie are the most likely to vote for Democrats today, because they have a larger concentration of African-Americans to this day. And, of course, the conditions for growing cotton growing had to do with climate and geological processes that took place even before modern humans had emerged.

1. WESTERN EUROPE

But what really got me thinking about this was looking back at the history of financial innovations. It makes sense that these all began in places which had to have expansive trade by necessity. These were places that were rich in some resources, but poor in other critical ones, and so trading became a necessity. That’s why it is in such places that we must look to find their origins. You’ll find that in history, things are invented out of necessity when and where they need to be. Ian Morris articulates this as his ‘Morris Theorem’: “Change is caused by lazy, greedy, frightened people looking for easier, more profitable and safer ways to do things. And they rarely know what they’re doing.”

The Tigris-Euphrates valley is the major case in point. The well-watered flat river valleys produced lots of raw materials, but not much in the way of stone, gems, or precious metals. So it was here that the first trading “innovations” began such as writing, double-entry bookkeeping, bonds, insurance, tradeable debt, and the like. By contrast, the Nile region was much more self-sufficient. It’s trading was command-and-control, organized through the Pharaoh’s household which owned the major national resources, such as mines and the shipping fleet.

A Four Thousand Year Old Bond (Marginal Revolution)

Looking at Europe a different situation emerges. Why didn’t Europe, with all its geographical advantages, take the lead rather than the Middle East? Marshall notes some of the advantages:

The climate, fed by the Gulf Stream, blessed the region with the right amount of rainfall to cultivate crops on a large scale, and the right type of soil for them to flourish in. This allowed for population growth in an area which, for most, work was possible year-round, even in the height of summer. Winter actually adds a bonus, with temperatures warm enough to work in but cold enough to kill off many of the germs which to this day plague huge part of the rest of the world.

Good harvests mean surplus food that can be traded; this in turn builds up trading centers that become towns. It also allows people to think of more than just growing food and to turn their attention to ideas and technology.

Western Europe has no real deserts, the frozen wastes are confined to a few areas in the far north, and earthquakes, volcanoes, and massive flooding are rare. The rivers are long, flat, navigable, and made for trade. As they empty into a variety of seas and oceans, they flow into coastlines that are—west, north and south—abundant in natural harbors…These are the factors that led to the Europeans creating the first industrialized nation states, which in turn led them to be the first to conduct industrial-scale war. pp. 88-89

Well, we know that people tend to remain foragers rather than forming more complex societies if they can avoid it, because foraging offers a much better quality of life with a lot more freedom. Complex societies that produce surpluses end up allocating those surpluses to an elite managerial class that can then use its control over the surplus to dominate and control the majority. As Johnson and Earl put it, “…the benefits of a larger community must outweigh the costs before people will form one, or join an existing one…the intensification of the subsistence economy, itself an outcome of rising population and technological innovation, creates a problem that can best be solved by working in larger groups.” (The Evolution of Human Societies, p. 141) Populations in Northern Europe did not need to rely upon intensification as did those in the Tigris/Euphrates (or Yellow River) valley.

When you look at the Near East, their dependence upon massive, labor-intensive irrigation works which can only be produced and maintained communally, as well as their dependence upon annual cereal crops for sustenance, means that it was here that complex proto-states would likely form before anywhere else. The land in the great river valleys was far more fertile than the surrounding countryside, which was dominated by nomadic pastoralists living at lower densities.

Although hydraulic theories of state formation have fallen out of favor, it does seem as though more complex civilizations tend to form first in regions where large-scale irrigation is required for crops. The labor needed to maintain a large infrastructure requires more coordination between disparate villages, which in turn causes supra-regional associations to form which elites can control. This also spurs trade between villages.

In Europe, by contrast, crops were rain-fed. The fact that the continent was originally heavily forested also meant there were lots of places to hide from despotic elites. It was only when the larger, more complex Roman Empire conquered the numerous chiefdoms of Northwestern Europe and introduced things like writing, bureaucracy and money that these lands became organized into more complex, hierarchical civilizations than chiefdoms.

So the direction of cultural transmission was destined to be from East to West rather than West to East, expanding from eastern Eurasia and the Levant across the Mediterranean Sea to Greece, and later to the Italian peninsula. The trade around the Mediterranean became so intense during the Bronze Age that some consider it to be the first global economy.

The year 1177 BCE roughly demarks the disintegration of humanity’s first global civilization: the Late Bronze Age. At its peak, a booming trade in raw materials, agricultural goods, and finished products—from jewelry to pottery, spices and wine—encircled the Mediterranean and stretched north, perhaps as far as present-day Scandinavia, and east to Afghanistan and India. Then, after centuries of brilliance, the civilized world of the Bronze Age came to an abrupt and cataclysmic end.

Drought and unrest sparked global societal collapse in the Bronze Age. Is it happening again? (Quartz)

Where else on Earth do you get something like the Mediterranean Sea, a huge inland sea surrounded by diverse ecosystems separating continents, occupied by diverse cultures, and yet small enough to traverse fairly easily? Nowhere else that I know of. In fact, Neanderthals might have even sailed around the Mediterranean before humans showed up.

Evidence suggests Neanderthals took to boats before modern humans (Phys.org)

Fast forward to the Roman Empire. Why did the Western Empire fall, while the Eastern Empire continue to function for centuries more?

The reasons are complex, but it boils down to this: The Eastern Roman empire had older, more complex settled urban civilizations than the Celtic/Germanic barbarian West did. So it had a longer tradition of civilization, a higher tax base, a longer institutional history, older cities, and more trading links to more “developed” civilizations, most notably China and India.

Western contact with China began long before Marco Polo, experts say (BBC)

Rome itself was something of an “accidental capital”—never strategically well-placed and vulnerable to invasions (as indeed the Celts had done prior to the Empire). This forced the Latins to develop formidable armies, but their geographical location still made them vulnerable.

Byzantium, however, was ideally placed, and it is this reason why Emperor Constantine established his capital here and named it after himself. Constantinople is the ideal strategic location—the gateway between Europe and Asia, as Istanbul still is today. Thus, the Roman East was shielded from armies storming out of the North European plain by the Bosporus, the Mediterranean Sea, and the mountains. The only way to get to North Africa, the breadbasket of the Roman Empire, was through two “pinch points”—Gibraltar and the Bosporus. Coming from nomadic stock, the tribes had little maritime experience—the experienced Roman navy would have made quick work of any attempts by them to attack North Africa or the Levant by sea.

So the Romans managed to confine the barbarian wanderers to Europe, fighting skirmishes but never letting them cross over into Asia or North Africa. An attempt to reunify the empire under Justinian was brought down by plague. Eventually the Vandals managed to cross into North Africa. Once the barbarians did manage to sweep across North Africa, the Eastern Empire started to decline. It remained for the Muslims storming out of the desert in the seventh century, and later the Turks from central Asia, to deal the final blow.

With the gradual dissolution of the Western Roman Empire, it was destined that Europe would end up divided into multiple, competing nations, rather than coalescing back into a single unified state as China managed to do several times throughout its history. Once again, this is due mainly to geography:

If we take Europe as a whole, we see the mountains, rivers, and valleys that explain why there are so many nation states. Unlike the United States, in which one dominant language and culture pressed rapidly and violently ever westward, creating a giant country, Europe grew organically over millennia and remains divided between its geographical and linguistic regions. p. 89

Europe’s major rivers do not meet (unless you count the Sava which drains into the Danube in Belgrade). This partly explains why there are so many countries in what is a relatively small space. Because they do not connect, most of the rivers act, at some point, as boundaries, and each is a sphere of economic influence in its own right; this gave rise to at least one major urban development on the banks of each river, some of which in turn became capital cities. pp. 89-90

Europe’s second longest river, the Danube (1,771 miles), is a case in point. It rises in Germany’s Black Forest and flows south on its way to the Black Sea. In all, the Danube basin affects eighteen countries and forms natural borders along the way, including those of Slovakia and Hungary, Croatia and Serbia, Serbia and Romania, and Romania and Bulgaria. More than two thousand years ago it was one of the borders of the Roman Empire, which in tum helped it to become one of the great trading routes of medieval times and gave rise to the present capital cities of Vienna, Bratislava, Budapest, and Belgrade. It also formed the natural border of two subsequent empires, the Austro-Hungarian and the Ottoman. As each shrank, the nations emerged again, eventually becoming nation states. However, the geography of the Danube region, especially at its southern end, helps explain why there are so many small nations there in comparison to the bigger countries in and around the North European Plain. p. 90

When you look at a map of Europe, you can’t help but be struck by just how much coastline there is! Really, almost everywhere is not that far from a sea, river or ocean. Compare that to the massive continental bulk of Asia or Africa, for example. Plus, its rivers are long, flat and navigable. This practically guaranteed that Northern Europe would became a major trading center, and that’s exactly what happened. And that’s why so many trade innovations originated there, including capitalist markets.

When “civilization” finally took root in northern Europe thanks to Roman military pacification, ports of trade developed all along Europe’s coasts and rivers (London was an early one of these). Eastern Europe, distant from the Roman heartland and shielded by mountains, remained behind their western neighbors. Not to mention they had to fight off Mongols and Turks.

One thing I always found unique about Europe is that it was “separate yet unified.” That is, even though it was divided into separate nation states, it had a common religious bureaucracy maintained by the Catholic Church in Rome (arguably the first international corporation), and it had a common language in the form of Latin thanks to the legacy of ancient Rome, meaning that scholars from different cultures could communicate in a shared language and tradition, while still maintaining cultural diffeences.

Remember how we said the Eastern Mediterranean was where the older, urban civilizations and all the riches were? And how they had trading connections with the rest of Asia? Well, it’s here that the big lake called the Mediterranean came into play once again. Islamic empires formed throughout the Middle East which linked India and Southeast Asia to the Mediterranean economy. The Pax Mongolica connected East and West along the Silk Road. The entrance of luxury goods from the Abbassid Exchange like spices, cotton and tea created a space for merchants that had not been there before. While Northern Europe concentrated on exporting raw materials, the Northern Italians formed trading empires from their urban centers. They became the conduit between the kingdoms of Northwest Europe and the riches of the East.So it was that Venice, founded by refugees from the dying Roman Empire, became the merchant center of Europe. They were quickly soon joined by other Medieval communes throughout Northern Italy whose wealth would derive from trade instead of farming or raw materials.

Through a series of fortunate events in the ninth century, Venice became politically independent. This, together with Venice’s fortunate geography, uniquely positioned it to benefit from rising trade between Western Europe and the Levant. These two factors combined to enrich Venetian merchants, who used their newfound economic muscle to push for institutional change.

So it was that Northern Italy became the center of banking and trade. Their proximity and dealings with Islamic merchants led to the adoption of Arabic innovations such as Arabic numerals and checks. Here are just a few of the financial innovations that trace their history back to Northern Italy:

By the early fourteenth century, financial innovations included: the appearance of limited liability joint stock companies; thick markets for debt (especially bills of exchange); secondary markets for a wide variety of debt, equity and mortgage instruments; bankruptcy laws that distinguished illiquidity from insolvency; double-entry accounting methods; business education (including the use of algebra for currency conversions); deposit banking; and a reliable medium of exchange (the Venetian ducat). All these innovations can be related directly back to the demands of long-distance trade.

And nearby Genoa created the first quasi-state bank:

The Casa di San Giorgio came a long way and boasted a long history of banking operations. Some scholars even called the first modern bank, predating the Bank of England established on 1695. It also preceded the British East India Company as a private enterprise that administered territory, collected taxes, and raised armies. Indeed, so much the Casa had garnered power, influence, and wealth that Machiavelli praised its administration.

Casa Di San Giorgio: Genoa’s Premier Financial Institution (Exploring History)

By contrast, southern Italy, though not culturally behind in the days Roman Empire (Pompeii is near Naples), fell behind the north in innovation thanks to constant invasions by people like the Normans and Arabs. They would end up being ruled mostly by a succession of foreigners, hence developing a distrust of government institutions and history of corruption that persists to this day.

The countries of northern Europe have been richer than those of the south for several centuries. The north industrialized earlier than the south and so has been more economically successful. As many of the northern countries comprise the heartland of Western Europe, their trade links were easier to maintain, and one wealthy neighbor could trade with another-whereas the Spanish, for example, either had to cross the Pyrenees to trade, or look to the limited markets of Portugal and North Africa.p. 90

The contrast between northern and southern Europe is also at least partly attributable to the fact that the south has fewer coastal plains suitable for agriculture, and has suffered more from drought and natural disasters than the north, albeit on a lesser scale than in other parts of the world. As we saw in chapter one, the North European Plain is a corridor that stretches from France to the Ural Mountains in Russia, bordered to the north by the North and Baltic Seas. The land allows for successful farming on a massive scale, and the waterways enable the crops and other goods to be moved easily. pp.91-92

Of all the countries in the plain, France was best situated to take advantage of it. France is the only European country to be both a northern and southern power. It contains the largest expanse of fertile land in Western Europe, and many of its rivers connect with one another; one flows west all the way to the Atlantic (the Seine), another south to the Mediterranean (the Rhone). These factors, together with France’s relative flatness, were suitable for the unification of regions, and-especially from the time of Napoleon-centralization of power.

And, sure enough, France became the location of the earliest complex states to form in Northern Europe under Charlemagne (the Holy Roman Empire, the Carolingian Renaissance). it was in France where the great Champagne fairs of Europe took place. Eastern Europe, as we saw above, tended to miss out on the party; the Adriatic Coast is a partial exception, falling under the sway of the Venetians.

So it was that we can use the fairs of Europe as a starting point of Western capitalism. But, ultimately, it’s all due to geography.

WHY EUROPE DOMINATES THE WORLD

With the closing of eastern trade routes after the dissolution of the Mongol Empire and the fall of Byzantium 1453, the race was on for the maritime countries of Europe to find an alternate route to the Indies without dealing with Italian or Arab/Turkish middlemen. Portugal was uniquely placed to send its pelagic vessels south down the coast of Africa to find alternate trade routes. Eventually, they did so, circumnavigating Africa and crossing the Indian Ocean.

But it was an Italian sailing for Spain who would really change things. Ian Morris explains what happened next:

Western Europe—sticking out into the cold North Atlantic, far from the centers of action—had always been a backwater. But when Europeans learned of the East’s oceangoing ships and guns, their location on the Atlantic abruptly became a huge geographical plus.

The Atlantic, 3,000 miles across, became a kind of Goldilocks Ocean, not too big and not too small. It was big enough that very different kinds of goods were produced around its shores in Europe, Africa, and America; but it was small enough that the ships of Shakespeare’s age could cross it quite easily.

Ian Morris on Why the West Rules but China Is Next (Daily Beast)

So of course trade moved north, to the Atlantic Coast—Portugal, Spain, France and England. But it was the small Dutch Republic that ultimately took the lead thanks to a series of commercial innovations. Again, a glance at the maps tells us why the Dutch were so focused on maritime trade. The Low Countries are all below sea level, and their land has been painstakingly reclaimed from the sea by a series of dikes and walls built over centuries. On this reclaimed land sits a very dense population, surrounded by culturally different neighbors and connected by canals. The amount of fertile land was limited, and so the Dutch compensated with entrepreneurial skills. While Dutch farmers made the most of their limited land area, it was inevitable that the economy would come to center around commerce rather than agriculture or natural resources as in France and England. Merchants earned pride-of-pace here, unlike other cultures, and they became politically dominant. It was the early modern precursor to modern-day entrepôts like Hong Kong or Singapore. The wide, flat landscape also made Holland ideal for the innovative use of wind power, increasing their energy consumption. The Dutch were also early pioneers in the use of burning fossil fuel in the form of peat.

The amazing prosperity of the small ‘Republiek der Zeven Provinciën’ and its exceptional position among the European powers during most of the seventeenth century has fascinated generations of historians…The more comes in the open about the thriving Dutch Golden Age society, the more intriguing the question becomes, how so small a population (a million and a half at the vertex of its power) could manage to play leading parts on almost every scene of human activities…This study was motivated by the historical problem of why around 1600 the Republic assumed the mantle of leadership on the path of mankind’s economic and social development. The answer is: because it was able to extensively apply inland navigation and, by that, to fall back on its peat deposits when everywhere (also in the Netherlands itself) deforestation had progressed to such an extent, that wood had become an expensive fuel. Its exceptional position becomes even more evident, when it is considered that at the beginning of the Dutch explosion of prosperity each one of the cities in the ring Amsterdam, Utrecht, Gouda, Rotterdam, Delft, Leiden, Haarlem had an abundance of easily transportable (low peat) turf of excellent quality within a few kilometers of its gates. No wonder, that the centre of gravity of economic development became located in this part of the country.

Peat and the Dutch Golden Age (PDF)

Like Venice centuries earlier, the Dutch were a republic run by bourgeois merchant princes. By this time Protestantism, with its concept of an individual relationship to God supplanting older ideas of communal solidarity and mutual aid, had taken hold in Europe.

The Bank of Amsterdam (Amsterdamsche Wisselbank) was founded in 1609.The original conception of the bank was as a conservatively designed “exchange bank” –a ledger-money bank backed principally by coin–following the example of Venice’s Banco di Rialto. Through a series of innovations, however, the Bank of Amsterdam was ultimately able to achieve a greater degree of success than its Venetian predecessor. Almost until its demise in 1795, the bank was widely admired and served as an inspiration for public banks in other cities. The Bank of Amsterdam never issued notes, but by limiting its depositors’ withdrawal rights, was able to create a highly liquid, quasi-fiat asset in the form of its ledger money.

With the Protestant merchant coup d’etat in Britain known as the Glorious Revolution, the new Dutch king became subordinate to an English parliament increasingly aligned with mercantile, rather than traditional agrarian, interests (as demonstrated by the Corn Laws). The powerful English constitutional monarchy would reshape English society in the eighteenth and nineteenth centuries according the will of commercial interests, establishing the factory system, and consequently turning land and labor into commodities for sale to a greater extent than anywhere else. The rest, as they say, is history.

INDIA

The triangular Indian subcontinent, battered by monsoons and separated from East Asia by the Himalayas, and by deserts and mountains to the west, never had much of chance at conquering the world, despite its huge population. It’s contributions rest more in being the source of exotic products traded with both the Abbassid and European cultures.

One surprisingly important philosophical contribution, however, was India’s numerical system. The alphabet had first been developed in the Near East. But Indian mathematicians and philosophers came up with the idea of zero as a number. It is thought that the Hindu religious concept of “nothinginess” (shunyata) may have played a role in this. It’s hard to imagine the modern world without numbers, science and accounting.

“[T]he creation of zero as a number in its own right, which evolved from the placeholder dot symbol found in the Bakhshali manuscript, was one of the greatest breakthroughs in the history of mathematics. We now know that it was as early as the 3rd Century that mathematicians in India planted the seed of the idea that would later become so fundamental to the modern world. The findings show how vibrant mathematics have been in the Indian sub-continent for centuries.”

How India gave us the zero (BBC)

THE AMERICAS

North America had become populated at the end of the Ice Age when a corridor opened in the Canadian Ice Sheet, allowing migrants to march south into the North American continent from Beringia, an isolated Siberian region full of wild game (indeed, the last woolly mammoths would perish on Wrangel Island just as the first pyramids were under construction). Rising sea levels due to melting ice would submerge this region, permanently cutting off the the American population from Asia.

However, recent research has cast some doubt on the above theory. It now seems more likely that humans colonized the Americas by taking watercraft south along the western coast of North America, only later moving inland as the glaciers melted.

This research suggests there could have been two separate migration thrusts into North America, the first along the Pacific coastline around 15,000 years ago, and the second one when the ice-free corridor became habitable and human-friendly, around 12,600 years ago. But this new data presents another intriguing possibility. Perhaps there was only one single migration wave along the West coast, but once the ice-free corridor became habitable, these early settlers started to make their way northwards through the corridor all the way back into Alaska.

We Were Wrong About How Ancient Humans Colonized North America (io9)

Another controversial theory is that the Americas were at least partly colonized from Europe during the Ice Age:

The major evidence driving [the Soultrean] hypothesis is the presence of artifacts found in six sites in the eastern United States dating to somewhere between 18,000 and 26,000 years ago. These tools more closely resemble that of the Solutrean culture that endured in Europe between about 21,000 and 17,000 years ago than the Clovis culture that first appeared in North America about 13,000 years ago.

Could the first humans to reach the Americas have come from Europe? (io9)

The fact that North America was populated late in the game, due to its distance from the African homeland, along with its lack of domesticable herbivores (only llamas and alpacas), meant that civilization would inevitably be slower to take off here than in Eurasia; the thesis of Jared Diamond’s famous “Guns, Germs and Steel”.

The relative genetic isolation of the Beringian population would prove to be especially fatal, as this exacerbated their vulnerability to the relatively novel zoonotic diseases brought over by Old World colonists. North America became settled primarily by English, French and Dutch, while Central and South America became Spanish and Portuguese colonies. The two cultures took very different trajectories.

South America, despite its large land mass, has been relatively backward economically because of a combination of history and geography.
The limitations of Latin America’s geography were compounded right from the beginning in the formation of its nation states. In the United States, once the land had been taken from its original inhabitants, much of it was sold or given away to small landholders; by contrast, in Latin America the Old World culture of powerful landowners and serfs was imposed, which led to inequality.

On top of this, the European settlers introduced another geographical problem that to this day holds many countries back from developing their full potential: they stayed near the coasts, especially (as we saw in Africa) in regions where the interior was infested by mosquitoes and disease. Most if the countries’ biggest cities, often the capitals, were therefore near the coasts, and all roads from the interior were developed to connect to the capitals but not to one another.

Now Europeans themselves could grow the exotic items they so desired like sugar, coffee and cotton (along with new ones like cocoa). This would, in turn, spur the development of the factory system in Northern Europe. The potato would cause a population explosion, ensuring plenty of desperate factory workers. To replace the native workforce for their export plantations in the New World, the Europeans would resort to buying an enslaved workforce from the southern African continent.

AFRICA

So why did Africa, the birthplace of Homo sapiens, not became the center of world culture and trade, rather than the Near East, China or Europe? After all, it had the biggest head start of all! Plus, it has the greatest human genetic diversity, since everyone outside of the continent is descended from what is thought to be a relatively small population of migrants.

Given that Africa is where humans originated, we are all African. However, the rules of the race changed circa 8000 BCE when some of us, who’d wandered off to places such as the Middle East and around the Mediterranean region, lost the wanderlust, settled down, began farming, and eventually congregated in villages and towns.

But back south there were few plants willing to be domesticated, and even fewer animals. Much of the land consists of jungle, swamp, desert, or steep-sided plateau, none of which lend themselves to the growing of wheat or rice, or sustaining herds of sheep. Africa’s rhinos, gazelles, and giraffes stubbornly refuses to be beasts of burden–or as Jared Diamond puts it in a memorable passage, “History might have turned out differently if African armies, fed by barnyard-giraffe meat and backed by waves of cavalry mounted on huge rhinos, had swept into Europe to overrun its mutton-fed soldiers mounted on puny horses.”

But Africa’s head start in our mutual story did allow it more time to develop something else that to this day holds it back: a virulent set of diseases, such as malaria and yellow fever, brought on by the heat and now complicated by crowded living conditions and poor health care infrastructure. This is true of other regions—the subcontinent and South America, for example—but sub-Saharan Africa has been especially hard-hit, for example by HIV, and has a particular problem because of the prevalence of the mosquito and the tsetse fly. pp. 112-113

Most of the continent’s rivers also pose a problem, as they begin in highland and descend in abrupt drops that thwart navigation. For example, the mighty Zambezi might be Africa’s fourth-longest river, running for 1,700 miles, and may be a stunning tourist attraction with its white-water rapids and the Victoria Falls, but as a trade route it is of little use. It flows through six countries, dropping from 4,900 feet to sea level when it reaches the Indian Ocean at Mozambique. Parts of it are navigable by shallow boats, but these parts do not interconnect, thus limiting the transportation of cargo. p. 113

Another contributing factor, Marshall informs us, is simply the massive size of the African continent. Because maps are flat representations of a sphere, northern areas tend to be exaggerated in size, while those closer to the equator are depicted more realistically. While Prisoners of Geography has a good description of just how big Africa is, a picture is worth a thousand words, and this image went viral on the internet a while back:


The massive size of the continent, combined with variable microclimates and a complete lack of navigable rivers meant that civilizational development was held back.

Unlike in Europe, which has the Danube and the Rhine, this drawback has hindered contact and trade between regions-which in tum affects economic development and hinders the formation of large trading regions. The continent’s great rivers—the Niger, the Congo, the Zambezi, the Nile, and others—don’t connect, and this disconnection has a human factor. Whereas huge areas of Russia, China, and the United States speak a unifying language, which helps trade, in Africa thousands of languages exist and no one culture emerged to dominate areas of similar size. Europe, on the other hand, was small enough to have a lingua franca through which to communicate, and a landscape that encouraged interaction.p. 114

Even if technologically productive nation states had arisen, much of the continent would still have struggled to connect to the rest of the world because the bulk of the landmass is framed by the Indian and Atlantic Oceans and the Sahara Desert, The exchange of ideas and technology barely touched sub-Saharan Africa for thousands of years. Despite this, several African empires and city states did arise after about the sixth century CE: for example the Mali Empire (thirteenth to sixteenth century), and the city state of Great Zimbabwe (eleventh to fifteenth century), the latter in land around the Zambezi and Limpopo Rivers. However, these and others were isolated to relatively small regional blocs, and although the myriad cultures that did emerge across the continent may have been politically sophisticated, the physical landscape remained a barrier to technological development by the time the outside world arrived in force, most had yet to develop writing, paper, gunpowder, or the wheel p.114

When the Europeans finally made it down the west coast in the fifteenth century they found few natural harbors for their ships. unlike Europe or North America, where the jagged coastlines give rise to deep natural harbors, much of the African coastline is smooth. And once they did make land they struggled to penetrate any farther inland than roughly one hundred miles, due to the difficulty of navigating the rivers as well as the challenges of the climate and disease.p. 115

Southern Africa with its tropical diseases, lack of ports, and lack of navigable rivers, and cut off from the west of the world by the vast Sahara desert, remained divided and tribal, which it remains to this day. Even today its infrastructure remains underdeveloped.

But the most tragic part of Africa’s colonization by Europe (apart from the slave trade) was that countries were established solely on the basis of ensuring the political control of the colonizers.

In 1884 at the request of Portugal, German Chancellor Otto von Bismark called together the major western powers of the world to negotiate questions and end confusion over the control of Africa. Bismark appreciated the opportunity to expand Germany’s sphere of influence over Africa and desired to force Germany’s rivals to struggle with one another for territory.

The Berlin Conference was Africa’s undoing in more ways than one. The colonial powers superimposed their domains on the African Continent. By the time Africa regained its independence after the late 1950s, the realm had acquired a legacy of political fragmentation that could neither be eliminated nor made to operate satisfactorily. The African politico-geographical map is thus a permanent liability that resulted from the three months of ignorant, greedy acquisitiveness during a period when Europe’s search for minerals and markets had become insatiable.

At the time of the conference, 80% of Africa remained under Native Traditional and local control…Following the conference, the give and take continued. By 1914, the conference participants had fully divided Africa among themselves into fifty unnatural and artificial States.

How African countries got their borders (TYWKIWDBI)

CHINA:

At the other end of the Eurasian continent lay China, and complex civilizations formed very early here was well. Once again, the nucleus was the great river valleys where millet, and later rice, were grown:

The concept of China as an inhabited entity began almost four thousand years ago. The birthplace of Chinese civilization is the region known as the North China Plain, which the Chinese refer to as the Central Plan. A large, low-lying tract of nearly 160,000 square miles, it is situated below Inner Mongolia, south of Manchuria, in and around the Yellow River and down past the Yangtze River, which both run east to west. It is now one of the most densely populated areas in the world. p. 39

The heartland, as the North China Plain is known, was and is a large, fertile plain with two main rivers and a climate that allows rice and soybeans to be harvested twice a season (double cropping), which encouraged rapid population growth. By 1500 BCE in this heartland, out of hundreds of mini city-states, many warring with each other, emerged the earliest version of a Chinese state–the Shang Dynasty. This is where what became known as the Han people emerged, protecting the heartland and creating a buffer zone around them. The Han now make up more than 90 percent of China’s population and they dominate Chinese politics and business. p. 40

The Yellow River basin is subject to frequent and devastating floods, earning the river the unenviable sobriquet “scourge of the sons of Han.” Nevertheless, the Yellow River is to China what the Nile is to Egypt—the cradle of its civilization, where its people learned to farm, and to make paper and gunpowder. pp. 39-40

To the north of this proto-China were the harsh lands of the Gobi Desert in what is now Mongolia. To the west the land gradually rises until it becomes the Tibetan Plateau, reaching to the Himalayas. To the southeast and the south lies the sea.

The heartland is the political, cultural, demographic, and crucially—the agricultural center of gravity. About a billion people live in this part of China, despite it being just half the size of the United States, which as a population of 322 million. Because the terrain of the heartland lent itself to settlement and an agrarian lifestyle, the early dynasties felt threatened by the non-Han regions that surrounded them, especially Mongolia, with its nomadic bands of violent warriors…By the time if the famous Chinese philosopher Confucius there was a strong feeling of Chinese identity and of a divide between civilized China and the “barbarous” regions that surrounded it. There was a sense of identity shared by 60 million or so people. p. 41

China’s geography and history caused it to turn inward, instead of outward, and this has made all the difference.

By 200 BCE. China had expanded toward, but not reached, Tibet in the southwest, north to the grasslands of central Asia, and south all the way down to the South China Sea. The Great Wall (known as the Long Wall in China) had been first built by the Qin dynasty (221-207 BCE), and on the map China was beginning to take on what we now recognize as its modem form. It would be more than two thousand years before todav’s borders were fixed, however.

Between 605 and 609 CE the Grand Canal, centuries in the making and today the world’s longest man-made waterway, was extended and finally linked the Yellow River to the Yangtze. The Sui dynasty (581-618 CE) had harnessed the vast numbers of workers under its control and used them to connect existing natural tributaries into a navigable waterway between the two great rivers. This tied the northern and southern Han to each other more closely than ever before. It took several million slaves five years co do the work, but the ancient problem of how to move supplies south to north had been solved but not the problem that exists to this day, that of flooding.

The Han still warred with each other, but increasingly less so, and by the early eleventh century CE they were forced to concentrate their attention on the waves of Mongols pouring down from the north. The Mongols defeated whichever dynasty, north or south, they came up against, and by 1279 their leader, Kublai Khan, became the first foreigner to rule all of the country as emperor of the Mongol dynasty. It was almost ninety years before the Han would take charge of their own affairs with the establishment of the Ming dynasty.

By now there was increasing contact with traders and emissaries from the emerging nation states of Europe, such as Spain and Portogal. The Chinese leaders were against any sort of permanent European presence, but increasingly opened up the coastal regions to trade. It remains a feature of China to this day that when China opens up, the coastland regions prosper but the inland areas are neglected. The prosperity engendered by trade has made coastal cities such as Shanghai wealthy, but that wealth has not been reaching the countryside. has added to the massive influx of people into urban areas and accentuated regional differences. p.41-42

China’s vast distance from the New World was to prove fatal, as Ian Morris explains:

Before people could cross the oceans, it had not mattered that Europe was twice as close as China to the vast, rich lands of the Americas. But now that people could cross the oceans, this became the most important geographical fact in the world.

The Atlantic, 3,000 miles across, became a kind of Goldilocks Ocean, not too big and not too small…The Pacific, by contrast, was far too big. Following the prevailing tides and winds, it was an 8,000-mile trip from China to California—just about possible 500 years ago, but too far to make trade profitable.

Geography determined that it was Western Europeans, rather than the 15th century’s finest sailors—the Chinese—who discovered, plundered, and colonized the Americas. Chinese sailors were just as daring as Spaniards; Chinese settlers just as intrepid as Britons; but Europeans, not Chinese, seized the Americas because Europeans only had to go half as far.

Europeans went on in the 17th century to create a new market economy around the shores of the Atlantic, exploiting comparative advantages between continents. This forced European thinkers to confront new questions about how the winds and tides worked. They learned to measure and count in better ways, and cracked the codes of physics, chemistry, and biology.

As a result, Europe, not China, had a Scientific Revolution. Europeans, not Chinese, turned science’s insights onto society itself in the 18th century in what we now call the Enlightenment.

By 1800, science and the Atlantic market economy pushed Western Europeans into mechanizing production and tapping the power of fossil fuels. Britain had the world’s first Industrial Revolution, and by 1850 bestrode the world like a colossus.

One popular theory is that Grand Canal provided a substitute for outward exploration:

Was the Grand Canal a substitute for Chinese ocean exploration? (Marginal Revolution)

This comment to the above article does a good job of explaining why Portugal’s explorations were profitable enough to be self-sustaining, while Chinese “treasure ship” fleets were more about projecting power, and were not economically viable in the long term (even if Gavin Menzies claims are correct):

The way European and Chinese explorations were initiated was a bit similar, a state funded project to achieve non-economic goals. But China gave huge resources to the project, while Portugal had strictly limited resources, the land income of military monastic orders (Order of Aviz, Order of Christ) that became under-employed after Portugal ended reconquista. Crusades in Morocco were tedious and rather fruitless. Henry the Navigator, younger brother of the king got the history changing idea of sending ships further south than Morocco even though nobody knew what they will encounter. But risking few lives was exactly what military orders were doing: taking care of the younger sons of nobility so they would not become highway robbers, rebels etc. However, even “rich” orders had scant resources in a kingdom with one million inhabitants so as soon as possible explorations were aimed to give some profit and sustain themselves. One should also note that ships that were seaworthy in the stormy seas of western Atlantic were seaworthy pretty much everywhere. After some 30 years, explorations that had budget fitting the dedicated budget of the orders started to yield increasing profits, and after 70 years Africa was circumnavigated and reaching Asian trade routes and lucrative markets became imminent. Then the neighboring Spanish hopped onto the bandwagon etc. Later European monarchs from countries closer to the mercantile center of Europe actively supported piracy and other “omnivorous” sources of profit. In other words, the continuation of expeditions beyond the lifetime of Henry the Navigator had good economic case.

Zheng Ho was a friend of the Chinese emperor and he got approval and budget to build Treasure Fleet that informed barbarians about the glory of the Empire of the Center. The ships were huge and magnificent, but following the traditional Chinese shipbuilding that allowed to navigate without difficulty in the zone of Trade Winds, but probably not so much beyond that. Circumnavigation of Africa would require sustained effort and decades of initially fruitless technological progress. Ships were loaded with beautiful products from state supervised manufactories, e.g. porcelain, and were bringing back “gifts from barbarians”, that could delight the emperor but were not justifying the huge expense. Having a giraffe in the imperial menagerie was a success that Confucian scholars in the administration of the empire did not appreciate, they would rather trim the budget and decrease taxes. And once the patron and friend of Zheng Ho was replaced with his successor the program was abolished.

It is easy to see that China could not achieve through “explorations” what they were getting anyway by foreign traders visiting their ports. More irrational was the lack of military navy that would defend the coast against Japanese pirates. In the same time, that was actually related to the renovation of the Grand Canal. That renovation was related to the change of capital from Nanjing or Beijing, and the change of focus in the foreign affairs from the south-central sea cost to the steppe of Manchuria and Mongolia, and internally, the calamities faced by the coastal Chinese were neglected to focus on the danger from the nomads. Basically, for a huge empire internal politics are much more important that whatever happens beyond the borders, and the directions of foreign policy are mostly dictated by the internal circumstances of the ruling elite. Some contemporary states come to mind…

The most popular explanation for why it was foggy England rather than China (which had plenty of coal) that started the Industrial Revolution was articulated by the economic historian Kenneth Pomeranz, and also has to do with geography, specifically where those coal deposits were located:

What, then, does account for the “great divergence” of the book’s title? Pomeranz argues for the importance of two factors, essentially exogenous “shocks” outside the price system that had important effects on the economy: the distribution of energy-generating resources and the accident that Europe discovered the New World, whereas China did not.

The first argument might be termed “geology is destiny.” Coal was the chief energy-generating resource significant for the Industrial Revolution. The location of major coal deposits was a critical factor in determining the viability of industrialization. England’s coal deposits were located almost exactly where manufacturers would have placed them if they had had a say in the matter; transportation costs therefore were low and were made still lower by the ready availability of efficient water transport. Compare this development-friendly geographic distribution in Europe with the geographic distribution in China. Although China was blessed with large coal reserves, they were located for the most part in the thinly populated northwest, hundreds of miles from the potential manufacturing centers in the south and east. Thus, China was at a relative disadvantage compared to Europe in terms of the luck of the geological draw. At the same time that coal in eighteenth-century Europe was cheap and readily available to fuel industry, in China that resource remained relatively expensive and in large part a curiosity relegated to the collections of rock hounds.

The second argument is another variation on the “good luck versus bad luck” theme. The fortuitous (for Europe) circumstance of the discovery of the Americas and the subsequent availability of resources for the Industrial Revolution that this discovery entailed were the exogenous factors. The flow of cotton, sugar, timber, and tobacco to Europe from the New World gave economic development there a significant boost at a critical time; China enjoyed no advantage even remotely comparable.

The Great Divergence (The Independent Review)

THE MIDDLE EAST

Although the Near East was where complex civilization first emerged in Eurasia, it fell behind China and Europe in the Early Modern period for reasons which are still debated. The sack of Baghdad by the Mongols appears to have been a critical blow for Islamic civilization.

The most salient geographical fact about it in my mind has to be—that’s where the oil is! This factor was unimportant until liquid hydrocarbon fuels became essential to the Industrial Revolution, particularly for transport. Now it’s arguable the most important geopolitical factor in the world.

The Greater Middle East extends across one thousand miles, west to east, from the Mediterranean Sea to the mountains of Iran. From north to south, if we start at the Black Sea and on the shores of the Arabian Sea off Oman, it is two thousand miles long. The region includes vast deserts, oases, snow-covered mountains, long rivers, great cities, and coastal plains. And it has a great deal of natural wealth in the form that every industrialized and industrializing country around the world needs–oil and gas.

It also contains the fertile region known as Mesopotamia, the “land between the rivers” (Euphrates and Tigris). However, the most dominant feature is the vast Arabian Desert and scrubland in its center, which touches parts of Israel, Jordan, Syria, Iraq, Kuwait, Oman, Yemen, and most of Saudi Arabia, including the Rub al Khali or “Empty Quarter.” This is the largest continuous sand desert in the world, incorporating an area the size of France. It is due to this feature that not only the majority of inhabitants of the region live on its periphery, but also that, until European colonization, most of the people within it did not think in terms of nation states and legally fixed borders.

The notion that a man from a certain area could not travel across a region to see a relative from the same tribe unless he had a document, granted to him by a third man he didn’t know in a faraway town, made little sense. The idea that the document was issued because a foreigner had said the area was now two regions and had made up names for them made no sense at all and was contrary to the way in which life had been lived for centuries. pp. 135-136

As with Africa, it was the partitioning of antagonistic tribal cultures into modern nation states by European powers which set the stage for much of the chaos taking place in that region today. Climate change is certain to make this even worse in the future.

In 1916, the British diplomat Colonel Sir Mark Sykes took a grease pencil and drew a crude line across a map of the Middle East. Ie ran from Haifa on the Mediterranean in what is now Israel to Kirkuk (now in Iraq) in the northeast. It became the basis of his secret agreement with his French counterpart Francois Georges-Picot to divide the region into two spheres of influence should the Triple Entente defeat the Ottoman Empire in the First World War. North of the line was to be under French control, south of it under Brit:ish hegemony. p.136

…there was violence and extremism before the Europeans arrived. Nevertheless, as we saw in Africa, arbitrarily creating “nation states” out of people unused to living together in one region is not a recipe for justice, equality, and stability. Prior to Sykes-Picot (in its wider sense), there was no state of Syria, no Lebanon, nor were there Jordan, Iraq, Saudi Arabia, Kuwait, Israel, or Palestine. Modem maps show the borders and the names of nation states, but they are young and they are fragile.p. 137

RUSSIA

Finally, Russia, far to the north and east and mostly landlocked except for the ports on the Black and Baltic seas (until its later expansion across Siberia) was destined to be behind Western Europe. It formed a unique culture of its own, mixing East and West. Not until Peter the Great would it take its place among the great European powers.

But the biggest factor was it’s exposure to the nomadic pastoralist raiders of the vast Eurasian grasslands, most notably the Mongols. These steppe nomads would plague both Russia and China throughout their history. Not only would the wrenching changes of the North Atlantic pass by Russia by until much later in history (serfdom was abolished in 1861), but the leaders Russia to this day would obsess over establishing buffer zones to protect the Slavic heartland from invasion:

Russia as a concept dates back to the ninth century and a loose federation of East Slavic tribes known as Kievan Rus, which was based in Kiev and other towns along the Dnieper River, in what is now Ukraine. The Mongols, expanding their empire, continually attacked the region from the south and east, eventually overrunning it in the thirteenth century.

The fledgling Russia then relocated northeast in and around the city of Moscow. This early Russia, known as the Grand Principality of Muscovy, was indefensible. There were no mountains, no deserts, and few rivers. In all directions lay flatland, and across the steppe t the south and east were the Mongols. The invader could advance at a place of his choosing, and there were few natural defensive positions to occupy.

With no natural barriers, and surrounded by enemies, the Russians needed to develop a strong authoritarian state to survive at all.

Enter Ivan the Terrible, the first tsar. He put into practice the concept of attack as defense–i.e., beginning your expansion by consolidating at home and then moving outward. This led to greatness. Here was a man to give support to theory that individuals can change history. Without his character, or both utter ruthlessness and vision, Russian history would be different.

What they did was to spend several centuries developing a “buffer zone” around Moscow, at the same time establishing ports where this landlocked power could interact with the outside world via trade instead of just being invaded.

The fledgling Russia had begun a moderate expansion under Ivan’s grandfather, I van the Great, but that expansion accelerated after he carne to power in 1533. It encroached east on the Urals, south to the Caspian Sea, and north toward the Arctic Circle. I r gained access to the Caspian, and later the Black Sea, thus taking advantage of the Cau .. casus Mountains as a partial barrier between it and the Mongols. A military base, was built in Chechnya to deter any would … be attacker, be they the Mongol Golden Horde, the Ottoman Empire, or the Persians. There were setbacks. but over the next century Russia would push past the Urals and edge into Siberia, eventually incorporating all the land to the Pacific coast far to the east.
When they finally got to the Baltic Sea and established St. Petersburg, the rulers decided that it was time for Russia to become a great European power.

In the eighteenth century, Russia, under Peter the Great-who founded the Russian Empire in 1721-and then Empress Catherine the Great, looked westward, expanding the empire to become one of · the great powers of Europe, driven chiefly by trade and nationalism. A more secure and powerful Russia was now able to occupy Ukraine and reach. the Carpathian Mountains. It took over most of what we now know as the Baltic States-Lithuania. Latvia. and Estonia. Thus it was protected from any incursion via land that way, or from the Baltic Sea.

This chapter of the book was excerpted by The Atlantic, and be read here:

Russia and the Curse of Geography (The Atlantic)

Next time we’ll take a closer look about how a few accidents of geography led to the formation of capitalist markets in Western Europe based on a new theory.

Stock-ing the Deck

Bonds aren’t the only way the One Percent are screwing us over. We already looked at bonds, but stocks, too, are being manipulated by the rich to their benefit and our detriment, as Mark Blyth explains in the podcast we heard from last time:

[11:30]What’s the marginal value of a dollar to someone who’s got a hundred bucks? That dollar means something. What about 1000,000 bucks? What about a billion; a thousand million? And yet they’re the same people that refuse to pay any taxes. They’re the people that refuse to have any stake in their communities. They’re obsessed in their companies with shareholder value and returns constantly going back to the same people.

Think about Apple. Everybody’s favorite company, right? These guys have got a 250 billion dollar pile of cash they don’t know what to do with. They keep it on balance sheets abroad; they don’t use it. They then issue bonds, because their stock is so valuable because it’s in every single [exchange-traded fund] imaginable, so it’s impossible for the value of their stock to go down. So they then issue bonds, take the money from that, buy back their stock, watch it go up in value–because, of course, there’s less stock so that means it’s more valuable–and then they reward themselves more salary gains because their price went up!

Here’s a good video from Robert Reich explaining the concept:

It’s a common refrain that the fortunes of the rich make us all better off. That is, we are not made poorer by their riches. But this is patently untrue! The money that goes to stock buybacks is money NOT going to employee salaries (or R&D or productivity enhancements or…).

Stock buybacks are the product of two relatively modern economic features. One was the fact that it was illegal until the Reagan administration, where it was an early form of deregulation. Then came the idea that corporations should maximize shareholder value to the detriment of all else, and the tying of executive compensation to stock price. These factors collected to form a witch’s brew of bad incentives.

Finally, add decades of tax cuts for the wealthiest Americans, who have no productive investment options (because they have more money than they know what to do with while everyone else is broke). So what to they do? Buy back stocks to artificially raise their value, of course! And most of the wealth of rich comes from stocks and bonds (not “hard work”). What do they NOT do with the money? Raise their workers’ salaries. As for R&D, they can always count on the taxpayers to foot that bill, while forcing those same taxpayers to pay through the nose for any profitable invention that might result.

So there’s a good case to be made that the main end product of the latest round of tax cuts is a stock market bubble, along with the price inflation of assets that the rich mostly buy (like art and real estate). Meanwhile, wages remain stagnant, even in a “tight” labor market.

No one is hurt by the fortunes of the rich, eh?

Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate…Companies are working overtime to make their owners richer in the short term, more so than to improve their longer-term competitiveness or to invest in their workers.

The restaurant industry spent 140 percent of its profits on buybacks from 2015 to 2017, meaning that it borrowed or dipped into its cash allowances to purchase the shares. The retail industry spent nearly 80 percent of its profits on buybacks, and food-manufacturing firms nearly 60 percent. All in all, public companies across the American economy spent roughly three-fifths of their profits on buybacks in the years studied. “The amount corporations are spending on buybacks is staggering,” Milani said. “Then, to look a little deeper and see how this could impact workers in terms of compensation, was staggering.”

How much might workers have benefited if companies had devoted their financial resources to them rather than to shareholders? Lowe’s, CVS, and Home Depot could have provided each of their workers a raise of $18,000 a year…Starbucks could have given each of its employees $7,000 a year, and McDonald’s could have given $4,000 to each of its nearly 2 million employees.

“Workers around the country have been pushing for higher wages, but the answer is always, ‘We can’t afford it. We’d have to do layoffs or raise prices,’” Tung said. “That is just not true. The money is there. It’s just getting siphoned out of the company instead of reinvested into it.”

The report examines the period just before President Donald Trump’s $1.5 trillion tax cut came into effect, leading to an even greater surge of buybacks and thus an even greater surge of new wealth for the owners of capital, as wages have continued to stagnate. The tax legislation cut both the top marginal corporate tax rate from 35 to 21 percent—dropping the estimated effective tax rate on profitable businesses to just 9 percent, well below the effective tax rate for households—and encouraged firms to bring money back from overseas.

What did publicly traded corporations do with that money? Buy back shares and issue dividends, mostly…analyses from investment banks and researchers have estimated that 40 to 60 percent of the savings from the tax cut are being plowed into buybacks. One analysis of companies on the Russell 1000 Index—which consists of big firms, much like the Standard & Poor’s 500 does—found that companies directed 10 times as much money to buybacks as to workers…Companies do not get better because of buybacks; it is just that shareholders get richer.

Both by increasing inequality and reducing corporate investment, and thus productivity gains, buybacks might be bad for the overall economy, too. A high-inequality economy is one with less consumer spending and demand across the board, thus one with a lower GDP. A low-investment economy is a more sclerotic and less innovative one, and thus one with a lower GDP.

Are Stock Buybacks Starving the Economy? (The Atlantic)

Despite historically high profits and trillions in cash, corporations refuse to pay workers more. Instead, they use their earnings to buyback stock or increase dividends. The Trump tax cuts are magnifying this behavior, which is what happened after the 2004 American Jobs Creation Act, another time when corporations repatriated foreign cash holdings at a lower tax rate.

These decisions are short-sighted. Workers are also consumers. If they have more money, they will spend it, and consumer spending is a boon to economic growth and job creation. Corporations can afford to invest in their people and choose not to, hindering the health of the economy overall.

By Tripling Its Stock Buybacks, Apple Robs Workers And The Economy (Forbes)

ADDENDUM:

Not only are there more stock buybacks, but there are fewer publicly-traded companies overall. The stock market is shrinking, and profits are only being earned by a small fraction of them. And investing is increasingly becoming an insiders game, even more than it already was:

In the mid-1990s, there were more than 8,000 [publicly traded companies]. By 2016, there were only 3,627…Because the population of the United States has grown nearly 50 percent since 1976, the drop is even starker on a per-capita basis: There were 23 publicly listed companies for every million people in 1975, but only 11 in 2016…

■ The companies on the market today are, on average, much larger than the public corporations of decades ago. Fast-rising upstarts are harder to find.

In 1975, 61.5 percent of publicly traded firms had assets worth less than $100 million, using inflation-adjusted 2015 dollars. But by 2015, that proportion had dropped to only 22.6 percent.

■ Profits are increasingly concentrated in the cluster of giants — with Apple at the forefront — that dominate the market. For a far larger assortment of smaller companies, though, profit is often out of reach. In 2015, for example, the top 200 companies by earnings accounted for all of the profits in the stock market… In aggregate, the remaining 3,281 publicly listed companies lost money.

In theory, as a shareholder, you are entitled to a piece of a company’s future earnings. That’s one of the main arguments for buying stock in the first place. But the reality is that you often are buying a piece of a money-losing proposition. Aside from the top 200 companies, the rest of the market, as a whole, is burning, not earning, money.

■ A quirk of accounting is at the root of some of that profit deficit, especially for smaller and younger companies. Increasingly, value resides in intellectual property — “intangibles” like software and data and biological design — rather than in the production of physical objects like cars.

But under generally accepted accounting principles, or GAAP, which American companies must follow, research and development must be deducted from corporate income — and those charges can reduce or eliminate profits. (Capital expenditures — in physical things like factories — appear on corporate balance sheets, not income statements, and don’t reduce profits.)

Without deep knowledge of a company’s critical research — which businesses may be reluctant to share, for competitive reasons — it’s difficult for outsiders to evaluate a start-up’s worth. That makes it harder to obtain funding, and it may be partly responsible for certain trends: why there are fewer initial public offerings these days, why smaller companies are being swallowed by the giants, and why so many companies remain private for longer.

The Stock Market Is Shrinking. That’s a Problem for Everyone (New York Times)

Of Human Bond-age

I’ve often said that collectively we’ve made the decision to borrow from the rich instead of taxing them.

The thing is, when the government borrows, it isn’t actually borrowing. After all, it is the sole issuer of the currency, so why would it have to borrow it’s own currency? From whom? From itself? Where else would the currency come from?

It’s as if you had to “borrow” your paid-off car and drive it into work every day. How can you borrow something you already own?

Who are the “lenders” to government? Why are they loaning their government it’s own money? How can that be? Where does the money that the private sector is “making” come from? After all, they are not literally “making” it, which would technically be counterfeiting. There is no alternate source of dollars “out there” that the government must work to procure (although private loans in banks DO create money, something I’ll discuss in another post).

And so how, then, can the U.S. government be consistently broke as we’re often told?

Anyway, all this questioning was confirmed for me by an appearance by Mark Blyth on the Mixed Mental Arts podcast. Blyth wrote a book about austerity, which he calls a “dangerous idea.” He wanted to go all the way back to discuss the source of this idea, and here’s what he found:

[43:19-46:36] Mark Blyth: “So the basic problem is this. If you go right back—because I wanted to do the intellectual history of what I call this dangerous idea —where do you start? Well, you start with John Locke. You start out with Locke’s chapter on property. He starts with this puzzle: Everything is held in common and we’re all creatures under God. How can we have unlimited wealth and private property?”

Well, let’s do this thing about improvements, so he does this thing, and that’s how he gets it. And then he realizes very quickly that you’re going to end up with an incredibly unequal world, and that might be bad, so then he has to do something he hates because he’s a Liberal. He invents the state. Because if you don’t have a state that’s strong enough to protect your property rights, then why would you ever invest to get your property, right? But if the state’s strong enough to do that, then it can take your property.

So this is the tension. This the American constitution, and everything is written in this sort of classical frame. So the problem is, when you come along and you get to [David] Hume and [Adam] Smith and others a hundred years later—those Scottish Enlightenment figures—what they’re figuring out is that this whole thing called debt is kind of interesting. Because what you can do is you can issue bonds now and somebody will give you real money which you can then spend on a promise that you will pay it back later on.

Well, if you give that to any politician, you know that’s going to be abused. You know that’s the case. But here’s why they like it. You see, because you’ve got this highly unequal world now, and because you’ve got lots of private property, you need a big state to protect that, and police it, and all the rest of it. But you don’t want to pay any taxes. So if you don’t want to pay taxes to protect your property, then you’re going to have to get the income to do it somewhere else. Well, how about bond markets? Because then the state can issue bonds, and it can tax future taxpayers. And I—the guy who’s already got all the private property—I can buy those bonds.

So in a sense, I’m giving the state a loan that I get back all the money with interest, and the state then is able to protect my property rights. That’s awesome!

Hunter Maats: And also it’s sufficiently complicated that probably the people that you’re fucking over won’t understand [what’s going on]…

MB: To recap: I have a problem. I need the state to protect my property rights. I don’t want to pay any taxes and I hate the state. But I need a state otherwise I won’t have any income or any property. So I’ve got to pay for that and I don’t want to pay taxes, so what am I going to do? I’ll invent a bond market. I’ll get the state to issue bits of paper; I’ll lend it the money; I’ll get all the money back with interest, and then future taxpayers—not me—will pay for it.

HM: So you’re setting yourself up for the ultimate human experience: I get to own everything, I get to have my property secure, and I pay for nothing.

MB: Now let’s jump forward to today. There’s a piece in Foreign Affairs by a guy called Sandy Hager that points out that for all the shitting and panic and dire [warnings] that go on about the U.S. national debt, most of it’s owned by the one percent. Why? Because it’s an interest-bearing asset that’s actually incredibly secure because If the United States defaults on its debt, we’re already in Mad Max world. So we have this story about debt as being unproductive and bad and it’s from excessive spending, and blah, blah, blah. You follow the history all the way through, this is basically Liberalism trying to pay for itself on the cheap.

[…]

[50:47] Mark Blyth: …So debt’s basically a class-specific put option to use the language of finance. I get to have the asset and the asset security and you pick up the insurance if it all goes wrong. And that’s true. But there’s also a productive story here.

So let’s go back to me being able to go to a decent school, going to a public university, and becoming a professor from what are very humble origins. Well, that’s because governments issue debt, and then they build infrastructure and they hire teachers, and they invest in schools, and they do good shit with it. And then you end up with a virtuous circle world—and here’s what I mean by this. Imagine if I stayed in Britain. If there were no welfare state, what are my most likely outs? I’m in the army or I go to prison. Lots of kids that I went to school with went both of those ways. But a lot of us managed to get out.

Now at the level of income I am now in Britain, I would be paying 40-45 percent of my income in taxes straight to the government. So over a five-year period at that bandrate, given what I am now, I have paid back every single cent that was invested in me, and then some. So you can have public debt and public financing which is incredibly productive of human and physical capital assets. We’re in the worst possible world—we generate debt, but we don’t do the investment.

Mixed Mental Arts #320: Not So Austere – Mark Blyth (YouTube)

We generate the debt, but we don’t generate the investment. Yep. And therein lies the problem. We’re in hock to the one percent who own all the bonds, but we’re getting nothing in return!

Then, as Blyth points out, the one percent use the deficit “we” are leaving to “our grandchildren” to justify destroying the already threadbare social safety net–the only thing keeping huge amounts of Americans from being even poorer and more destitute than they already are (many Americans have little to no savings).

And expanding the safety net is impossible, we’re told by the powers-that-be, because “where will the money come from???” Watch any interview with Alexandria Ocasio-Cortez, for example, and I guarantee you will hear this question. I’ll address that in a bit.

It’s clear that this whole operation–borrowing from the rich instead of taxing them, and using the resultant debt to claim that government is ‘bankrupt’–is a core strategy under Neoliberalism. I wasn’t able to find the exact article Blyth referenced above, but I did find another very good one by the same author–Sandy Hager, who has written an entire book about the politics behind bonds and who owns them.

In the article, he talks about a concept I first read about in Wolfgang Streeck’s terrific collection of essays, How Will Capitalism End? In that book, Streeck talks about the rise of Neoliberal debt states. From the end of the Second World War through about the 1980’s, governments more-or-less raised taxes on their wealthy citizens to fund their operations without relying too much on borrowing. Then, with the rise of Neoliberalism, states began reducing taxes on the wealthy and corporations, and funding their operations more and more through debt.

The Politics of Public Debt (Public Seminar)

Across the globe, taxes on corporations plummet (Washington Post)

In essence, what the transition from the tax state to a debt state means is that the Federal Government chooses to borrow from the bondholding classes rather than taxing it. And in deciding to furnish wealthy households and large corporations with risk-free assets instead of levying taxes on their incomes, the debt state reinforces the existing pattern of inequality. This raises further questions about the long-term stability of current arrangements. The debt state is likely to persist into the foreseeable future, and the reason has to do in large part with the role played by foreign ownership of the public debt.

The problem I highlight in the book is not a large public debt. As Abba Lerner first demonstrated in the 1940s, the outstanding level of public indebtedness is inconsequential so long as it is being accumulated as part of a macroeconomic strategy to achieve non-inflationary full employment. In fact, for a monetarily sovereign entity like the US Federal Government, which issues debt in a currency it fully controls, bankruptcy is never really an issue because the Federal Reserve can purchase government bonds when the private sector does not want them. The existence of a powerful bondholding class should provide no solace for “deficit hawks” eager to find evidence to support their fear mongering about the supposed unsustainability of the public debt.

The real problem, then, is a large unequally distributed public debt. This distinction is absolutely crucial. From an emancipatory point of view, the point is not to try to eliminate or even reduce the public debt, but to find ways to tackle the inequality that underpins the public finances. As mentioned earlier, the emergence and consolidation of the debt state was driven primarily by tax stagnation and declining tax progressivity. The debt state, in other words, has come into being because the Federal Government has come to rely on borrowing from the bondholding class instead of taxing it. Restoring progressivity to the federal tax system, by increasing tax rates on wealthy households and large corporations, would therefore go a long way in addressing the growing inequalities in ownership of the public debt and in the ownership of wealth and income more generally.

https://roarmag.org/magazine/sandy-hager-public-debt-bondholding-class/

Of course, this problem could easily be solved. The one percent has accumulated more than enough wealth and assets—including incalculable shadow wealth hidden in offshore accounts—to deal with the global debt. And besides, they own the debt, remember? A lot of their wealth is due to the fact that they are the creditors of this debt. Remember, the state’s liabilities are someone else’s assets, and assets and liabilities always sum to zero, as Blyth points out.

[47:00] Mark Blyth: The United States has never been richer. It’s got a 17 trillion dollar debt in an 18 trillion dollar economy. The net figure is probably about 12 trillion, right? Here’s the thing—that’s an interest-bearing asset. When the treasury says, “Who wants to buy our debt?,” it never fails; everybody wants to buy it. Why? Would you like to buy a Euro bond? The Euro might not be there in five years. That’s toilet paper. You want to buy a Chinese bond? Oh, you can’t.

So if you want a safe, secure asset where you give somebody 10,000 dollars and ten years later you get it back and they pay you interest in the meantime, it’s us, and it’s always been us. The majority of that debt is owned by big financial institutions and the one percenters in the income distribution. Over 70 percent of that debt is held domestically in the United States. We talk a lot of crap about debt—it’s stuff we owe to ourselves. It’s rich people lending the government money so the government can give them back money so they can hand them back their own money.

Why does nobody talk about this? How come a blogger like me can figure this out, but the entire mass media is silent? (this is a rhetorical question, of course; I know the answer).

A good insight into how government “borrowing” works (and my overused quotation marks really are appropriate here) is provided by this episode of the Odd Lots podcast. A side note—this was posted on Naked Capitalism. Although the podcast is still available as of this writing, when I went to the official podcast page of the Odd Lots Podcast (produced by Bloomberg), this episode was mysteriously not there. Not to get all conspiratorial here, but maybe this is information they don’t want the general public to hear? Anyway, here’s some of the conversation with bond trader Brian Romanchuk. Listening to the interview should hopefully make it clear that government “borrowing” is not really borrowing at all. Here’s their introduction:

Joe Weisenthal: There is a sort of naïve view about how people talk about government debt. Particularly with US government debt, there’s often this view that sees the government as a typical borrower like a household or a person trying to borrow money to buy a car. And as we know, it doesn’t really work that way and that can really lead people to a lot of false assumptions about what interest rates are going to do and what the Market is going to do.

Tracy Alloway: Deep down in my gut I have always been uncomfortable that the US can borrow extraordinary amounts of money and not have major, major impacts…

And the interview:

Joe Weisenthal: Now, one of the things we talked about in the intro is we have to dispel the myth that the U.S. is just like any other private sector borrower. So we’ve established that the bonds on paper look the same. It looks like any other corporate bond or a loan that might get turned into a bond-like instrument. But its fundamentally different and the key difference is the source of funds. So explain to us structurally why the U.S. is a different type of borrower.

Brian Romanchuk: Well, the key difference is the U.S. controls its central bank. The horrible counterexample is a place like the Euro area where the countries don’t control their central bank. Ultimately, all the bonds say, ‘We’re paying you U.S. dollars.’ The U.S. dollar is a liability of the US Federal Reserve, and the US Federal Reserve—the Fed—is owned by the Treasury. So that gives you the one big picture difference than any other borrower.

The other issue is, for the government, they’re more concerned about the macro consequences of spending and not so much the financial. A smaller borrower—an individual bank, no matter how big they might be—aren’t really worried about the effect of their spending on the overall economy. And that is a key difference.

Tracy Alloway So, why can’t the US government just borrow as much as it wants—enormous amounts of money? What are the negative effects that are going to happen if it does that?

BR: It’s not the borrowing per se that’s the problem. If there’s a problem, it would be on the spending. Because what is the government buying? Maybe they’re buying good things, maybe it’s bad things. One can always debate what to spend money on. But from a macro perspective, what the worry is, is that if the government starts buying too much stuff, it will drive up the price of everything, i.e. there’s inflation. But the borrowing is the flip-side of the spending because if they’re spending…it’s a mistake to worry about what they’re borrowing; what are they spending on?

JW: …Why is it not a risk that on day lenders just won’t show up?

BR: The reason why governments can get away with this is—their spending creates the money that then is sucked back in by the bond auction. It’s a circular flow. And this is why, yes, there’s a demand for borrowing by the government, but at the same time they’re supplying money that then is recirculated back into the bond market.

JW: So let’s say the government want to spend ten billion dollars more on some new aircraft program for the military. That ten billion dollars that they spend winds up in the bank account of some private defense contractor. And then that money in the bank–perhaps via a circuitous route–ends up being back invested in government bonds. Do I have that right?

BR: Yeah, that’s basically it…what happens is, if the government sends a defense contractor ten billion, they’ll have a ten billion deposit on the bank, the bank in return will get 10 billion transferred to them from the Fed, and they have 10 billion as a deposit at the Fed. These are reserves; because the Federal Reserve is a bank. The customer might want that 10 billion in the bank account because they have expenses.

But the bank itself, what’s it going to do with the 10 billion? It has an asset on the balance sheet which is a deposit at the Fed which is a low risk asset which used to pay nothing but now very little. And they want to do something else with that asset on their balance sheet and so they then go out and say, ‘We want something that gives a higher return.’ Essentially, how the loop gets closed is, they say, ‘Look, there’s Treasury Bonds. We buy them.’ They should have an expected return higher than leaving the money on deposit at the Fed. And so the bank will go out and buy the Treasury Bonds in the auction, because otherwise they’re stuck with a deposit at the Fed that’s paying them very little.

…For every buyer there’s a seller, and scare stories often revolve around forgetting that basic principle. Someone with a dollar has to buy. Pricing can change, of course. If you’re worried about pricing, Treasury prices would go down relative to other things, but the flows will still cancel out.

We’ve talked about this before—the basic difference between holding money in a bank account and in bonds is just that one has a higher return. All you do is shift funds between one account and the other via keystrokes, much like you might transfer your money from a checking account to savings account (checking being more liquid since checks can be written against it). It’s just that one account is considered ‘money’ and the other as ‘debt’. But, basically, the debt is just a place to store cash, and hence a higher-yielding but less liquid form of money (money is debt, remember?). Bonds are also an alternative to stocks, which are also lending money, just lending ti to private-sector entities rather than public-sector ones. From a different episode of this podcast:

In long-term rates [bonds] are an alternative to stocks. The difference between stocks and bonds is if you buy a bond and hold it to maturity you’ll earn the coupon, and depending on whether inflation is or isn’t a problem you’ll give some of it back in purchasing power. Stocks on the other hand, give you a yield based on their dividends, but they also have a lot more upside if things work out pretty well, and then of course they have a downside if they don’t.

Back to the interview:

JW: So we’ve established that for the US, credit risk isn’t really a thing because the dollars that come to buy treasuries come from [government] spending. We’ve also established that you don’t even need to be a reserve currency for this phenomenon to exist because it’s [also] in Japan which also has lots of debt, and Canada and Australia and New Zealand [which are not anyone’s reserve currency]. Then the question is, why can’t all countries do this? Think of a country like Venezuela and the debt they have. Why can’t they just spend and keep a stable currency and a stable market?

BR: There’s policy differences between Venezuela and the U.S. coming down to the strength of the tax system. The IRS, as everyone knows, is a powerful organization. Income tax has the effect of damping economic activity, and so it controls inflation better than in a country with a weaker tax system. My pet theory is that the difference comes down to the effectiveness of the tax regime for inflation control. That’s a major difference.

There is also a question of what is produced. If you’re dependent on foreign imports for a lot of goods, then your domestic inflation is driven by your exchange rate. Whereas the US is relatively a closed economy when compared to other countries. Changes in the exchange rate don’t have much of an effect on prices. If the US dollar falls 10 percent, it’s not really noticeable in domestic prices.

And their conclusion:

So the big picture is that, it’s not the borrowing per se; it’s not the gap between government’s expenditure and its revenues; it’s really about the capacity of the economy to absorb all that spending. That’s what theoretically would drive inflation. And then the link between inflation and what the Fed does, that would be what ultimately determines what long-term rates are going to do. Once you answer that, then you can decide whether it makes sense to buy a bond.

And then also just this idea that there’s different growth or inflationary impacts of different kind of fiscal policies. If you were to give Bill Gates a one billion dollar tax cut or whatever it is, it’s probably not going to do much because Bill Gates has more money than he knows what to do with. Whereas if you were to put it towards consumption, and typically something that we don’t have much capacity in like housing or something like that, then you might see a real inflationary impact.

One other point I think is key is that there has this question of the tax cuts are blowing out the deficit and who is going to buy all that debt? And the simple answer is: a bunch of people just got tax cuts, and so they’re going to have a lot more money. So we already know who’s going to buy it—it’s those people that have more money in their bank account. If you think of this closed loop phenomenon, it allows you to anticipate who is the new entity that’s going to be doing the buying.

This Is What’s Actually Happening When The Government Auctions Bonds (Odd Lots)

Which brings us back around to the core point. Cutting taxes on the already wealthy won’t stimulate the economy. What it will do is allow them to buy the government’s debt and get paid back with interest, rather than paying taxes. It also allows them to fund political campaigns.

As advocates of Modern Monetary Theory point out, it’s not a theory—it’s descriptive of how the monetary system actually works. One of its originators, Warren Mosler, was a bond trader who saw how all this operated and put the pieces together.

Are We Really Broke?

So if debt is actually money, are we truly ‘broke’ as we keep hearing from certain  politicians? Is the U.S. really on the verge of bankruptcy as some would have it?

The MMT Podcast episode 5 has a lot of good stuff in it. Although it’s mainly about the Job Guarantee (again, a topic for another post), it has this exchange which is relevant to our discussion. If the government goes into “debt” by enhancing the productive economy, say, by providing people with jobs, it need not be inflationary—no more than hiring any other Federal Employee or crediting government contractors:

[1:16:39] Rohan Grey: To go to the question of, What if we set up a public policy regime where governments felt able to create money? The first thing about that is, government debt is a form of money! If you’re a sophisticated pension fund manager with 100 billion dollars of assets, you’re not storing your cash in twenty-pound bills; you’re storing it in Treasury securities.

So if you’re holding Treasury securities of, say, three month duration, you’re holding that to satisfy your cash holding needs in your portfolio allocation. So when a government runs a deficit of 100 billion dollars and it finances that by issuing 100 billion dollars of treasury securities, that’s a form of “printing money” not dissimilar from issuing 100 billion dollars of cash or 100 billion dollars of reserves.

Christian Reilly: The thing that makes the dollar bill good is the same thing that makes the dollar bond good.

Rohan Grey: That’s right, that’s what Thomas Edison said a while back in a great article for the New York Times. So that exact point is understood by sophisticated financial players and not necessarily something that gets articulated to the average person, particularly by the Right wing who love to talk about how we’re ‘burdening our grandchildren’ and ‘spending beyond our means’ and this type of stuff.

A Job Guarantee vs a Universal Basic Income (MMT Podcast)

I looked up that Thomas Edison quote above. I found this page about it, and what Edison was essentially arguing was that going into debt to financiers to build a new power station at Muscle Shoals (which Henry Ford was proposing) was pointless when the government could just issue the money! That’s why he said that the same thing which makes a bond valuable (the ability to tax) also makes a dollar valuable:

…any time we wish to add to the national wealth we are compelled to add to the national debt…If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good. The difference between the bond and the bill is that the bond lets the money brokers collect twice the amount of the bond and an additional 20 per cent, whereas the currency pays nobody but those who directly contribute to Muscle Shoals in some useful way.

” … if the Government issues currency, it provides itself with enough money to increase the national wealth at Muscles Shoals without disturbing the business of the rest of the country. And in doing this it increases its income without adding a penny to its debt.

“It is absurd to say that our country can issue $30,000,000 in bonds and not $30,000,000 in currency. Both are promises to pay; but one promise fattens the usurer, and the other helps the people. If the currency issued by the Government were no good, then the bonds issued would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges at the hands of men who control the fictitious values of gold.

Of course, this money was going to productive investment: a new power plant. As Blyth says above, this productive spending would not be inflationary. It’s what you actually want the government to do (infrastructure development).

What excessive bond debt does do, however, is give the moneyed elite control over the state.

Countries that do “too much spending” on their own citizens, for example, housing, schooling, infrastructure and health care, find themselves punished by what are called “bond vigilantes” who object to governments operating what they call “loose” monetary polices.

This Odd Lots podcast (which IS still available on their site) talks with the initiator of the term “bond vigilantes.” Here we see how foreign bondholders exert control over internal political decision-making:

Tracy Alloway: Over in Turkey we’ve also seen some financial drama where president Erdogan is basically exerting influence over the central bank and trying to prevent them from hiking interest rates at a time when there is a lot of inflation and they should be hiking interest rates. So if you were to ask Erdogan about bond vigilantes I’m sure he would probably shake away any of their concerns and say that the bond market isn’t the right entity to be exerting fiscal influence over political decisions. Do you think the bond market should be influencing political or fiscal decisions?

Ed Yardeni: I’m not a preacher; I don’t do good or bad; I do bullish or bearish. I deal with fact on the ground. The facts on the ground are that Turkey is dependent on capital inflows from abroad, and that partly because their yields have been higher because they are deemed to be a credit risk. But they weren’t terribly higher. Turkey was getting some pretty good rates until Ergogan decided that he didn’t like an independent central bank.

Now, look, the bond vigilantes always have an issue with the central banks, but it gets to be much, much worse in terms of their reaction if the central banks is believed to not be independent, or to be blatantly politically driven. So what we’re seeing here is global bond vigilantes. It’s certainly not locals in Turkey who’ve pushed their interest rates up and their currency into the abyss, it’s been foreigners who have been looking for good opportunities, and thought that Turkey was relatively stable and that their fiscal and monetary policies were relatively acceptable. And when they turned unacceptable, they left. This is an example of the posse saddling up and leaving the country which is what happened in Turkey and as a result rates spiked up dramatically and the currency took a dive.

The bond market first and foremost wants to make sure that inflation remains down. Maybe I shouldn’t say first and foremost, because much more important is making sure that you get your money back. It’s both the inflation rate and the credit risk. Very often what happens is the bond market gets its way, the policy makers hear the message being sent by the bond vigilantes, they put up their hands and say, ‘All right well give you what you want!’

’Bond Vigilantes’ Inventor Explains Why They Showed Up In Italy (Odd Lots)

What he’s saying about the central bank being “politically driven” is code-speak. If the Central Banks bail out bankers and bondholders, that’s not political, but if the government spends money on its own people, the vigilantes will draw their weapons and punish that government. Yet it’s funny that they never do that if taxes are cut on the very rich (would would also theoretically undermine the currency). That sort of policy is “acceptable.” And that’s how turning from tax collection to funding state operations via debt gives the moneyed interests control over the state, as Streeck points out. Austerity is really the result of a coup d’etat by big finance.

The Most Important Lesson In (Macro)Economics

Finally, circular flows are important in another way. Whistling in the Wind had a good article about the most important lesson in economics, which is: Your Spending is my income.

Economics is a broad and vast field comprising intricate areas that would take years to master. This makes it very hard to summarise or reduce it to a simple point. However, if there was one simple lesson that I wished everyone knew about economics, one easy sentence or sound bite that could explain the essential core to people who know nothing else about economics, it would be: “My spending is your income”. This simple point, properly understood, explains everything you need to know about the important policy issues of the economy. It doesn’t explain everything, but it explains the important parts.

The Most Important Lesson of Economics (Whistling in the Wind)

However, I would call this the most lesson in Macroeconomics. Macroeconomics considers the operating behavior entire economies. Your household is one element in an economy. The Macroeconomy is the sum total of everybody—all businesses and housholds—which we divide into three sectors: public, private and foreign. These sectoral balances must all sum to zero, due to accounting identities. This is necessary to understand how economics works at the nation-state level.

Here’s Mark Blyth making the exact same point on MMA.He also points out what heppens when most of income goes to one tiny segment of the population–demand is suppressed and you wind up in a slump:

MB: Here’s a very simple way about how I think about the world. Is it good to save? Yes. Is it good if everybody saves all at once. Well, then what would happen? Then nobody would be in the shops spending. It’s a very simple thing, right?

So the more we save, the less domestic demand we’re going to have. Now, if you’re the Germans you can create artificial demand by selling the rest of the world BMWs. But we don’t all have that trick. And the United States is a very large domestically-focused economy.

So if the income and wealth in the country is very skewed into very few hands—a great line that a friend of mine who owns a pillow factory said, ‘I only need one pillow. I’m not going to buy a thousand a day; I own the factory.’ How many fridges is Mitt Romney going to buy? I bet he’s got a SubZero; he doesn’t need two. So where do you expect the demand to come from if everybody else has basically got $500.00 in checking and is terrified that if they get a medical bill they’ll be in bankruptcy court?

So then we have to say to ourselves—if that’s just a series of factual statements, then why is it so hard to realize that if the investments that are supposed to be done in society to create jobs and growth and all the rest of it aren’t creating jobs, aren’t creating growth, why do we allow these people to have the right to do this

This is the basic understanding of Keynesianism. If the price” of money is already free–the so-called “zero lower bound–then government spending, not austerity, is the only thing that will re-employ the masses, whether on jobs or just welfare (e.g. a UBI). This is hardly non-mainstream; Paul Krugman, for example, has repeatedly made this argument from his perch at the New York Times:

For the essence of what’s happening now — the key to understanding the mess we’re in — is that sometimes the economy is not like a household, that our individual choices sometimes lead to outcomes that are in nobody’s interest.

In particular, when you have economy-wide deleveraging — when everyone is trying to spend less than his or her income, so as to pay down debt — you have a fundamental adding-up problem. My spending is your income, and your spending is my income, so if both of us try to spend less at the same time, what we end up achieving is mutual impoverishment.

Ah, you say, but the price mechanism will take care of that. Indeed: in normal times interest rates rise or fall to match desired spending to the economy’s productive capacity. But what if the interest rate needed to achieve this outcome is negative? Well, that can’t happen — so when the deleveraging shock is big enough, the economy goes into a depression.

And that’s the world we’re in!

The Economy is not like a Household (New York Times)

Because debt is money we owe to ourselves, it does not directly make the economy poorer (and paying it off doesn’t make us richer). True, debt can pose a threat to financial stability — but the situation is not improved if efforts to reduce debt end up pushing the economy into deflation and depression.

Nobody Understands Debt (New York Times)

Accounting Identities (New York Times)

Why are own politicians–theoretically public servants and “our employees” lying to our faces about how U.S.A., Inc. operates? This should be the biggest scandal of our time. Instead, we’re distracted by hot-button social controversies while the One Percent truly put our entire society in a state of bong-age.

Fun Facts

Average water system rates rose 41 percent between 2010 and 2015, and experts predict the average monthly cost of water will increase by $49 over the next five years, up from the current national average of about $120 a month. If that happens, water will become unaffordable for one-third of American households. (According to the EPA, the threshold for water affordability is 4.5 percent of household income.)

The American Society of Civil Engineers estimates that 2 trillion gallons of treated water are wasted each year owing to main breaks.

https://www.thenation.com/article/pittsburghs-water-system-is-why-we-shouldnt-run-america-like-a-business/

Each day, the United States loses an estimated 6 billion gallons of clean drinking water to leaks – roughly enough to supply all the homes in Chicago, Detroit, Houston, Indianapolis, New York, Los Angeles, and Seattle combined – some 15 million households in total.

https://www.csmonitor.com/Environment/2018/0205/The-Oklahoma-leak-busters

Currently we are having (as a species) over 120 million babies per year. This works out to over 335,000 human babies born every day – compared to a total extant population of all the other Great Apes (bonobos, chimpanzees and gorillas) of about ~200,000!
https://cassandralegacy.blogspot.com/2017/11/why-do-we-need-jobs-if-we-can-have.html

There was no marriage gap between rich and poor a couple of generations ago, but one has been opening up. The Office for National Statistics divides Britain into seven social classes. According to a study prepared for The Spectator, someone in the top class (i.e., company directors, university lecturers, etc) is 48 per cent more likely to be married than someone in the bottom social class (builders, office cleaners). At the turn of the century, the gap was 22 per cent. To those who think marriage is a quaint irrelevance, such figures don’t matter. But if you think that marriage is the most powerful sponsor of health, wealth and education, then it ought to be alarming. A new inequality is being bred in our society. Why?

Figures for the proportion of children born outside marriage seldom rose above five per cent from the Victorian era right up to the 1960s. Then things started to change. By the time of Prince Charles and Lady Diana’s wedding, in 1981, it was 13 per cent. Since then, it has almost quadrupled. And the decline of marriage has been far more pronounced in working-class areas than in genteel middle England. The Marriage Foundation recently discovered that 87 per cent of mothers from higher income groups are married today, compared with just 24 per cent of those at the other end of the social scale

https://www.spectator.co.uk/2017/12/why-marriage-is-increasingly-for-the-royals-and-the-rich/

Men travelling first class tend to weigh more than those in economy, while for women the reverse is true.
http://www.bbc.com/news/business-41835933

180.8 million people are represented by the 49 senators who caucus with the Democrats.
141.7 million people are represented by the 51 senators who caucus with the Republicans.
65.9 million people voted for Hillary Rodham Clinton and Tim Kaine to be their president and vice president
63.0 million people voted for Donald Trump and Mike Pence to be their president and vice president.
http://www.bradford-delong.com/2018/02/note-to-self-this-is-your-reminder-1784-million-people-are-represented-by-the-48-senators-who-caucus-with-the-democ.html

Title: Why Cities Boom While Towns Struggle Wall Street Journal. Kevin W: “Important takeaway – ‘From 2010 to 2016, large cities generated 73% of the nation’s employment gains and two-thirds of its output growth. A study by the Economic Innovation Group found that from 2010 to 2014 just 20 counties accounted for half the new business formation in the entire U.S.’”
https://www.nakedcapitalism.com/2018/03/links-3-16-18.html

The subprime car-lending industry — charging exorbitant rates for car-loans to people least suited to afford them, enforced through Orwellian technologies, obscuring the risk by spinning the debt into high-risk/high-yield bonds — is collapsing. The three most prominent lenders in the subprime auto sector shut down spectacularly and suddenly through bankruptcies and fraud investigations (and the bankrupt ones are said to have been fraudulent!).

Meanwhile, the borrowers — lent money that everyone understood they couldn’t afford, backed by assets that depreciated by 50% the day they were acquired — are defaulting and missing payments like crazy, at a rate that puts the subprime housing bubble in the shade.
https://boingboing.net/2018/04/09/self-driving-off-a-cliff.html

Facebook donated to 46 of 55 members on the committee that questioned Mark Zuckerberg
https://www.reddit.com/r/worldnews/comments/8aj0gw/facebook_donated_to_46_of_55_members_on_committee/

Americans waste a whopping 38 billion tons of food every year. That’s equivalent to nearly 170,000 Statues of Liberty, or 19 billion Ford F-150s.
https://www.treehugger.com/green-food/were-thinking-about-food-waste-all-wrong.html

If plastic waste in the ocean were recycled into LEGO bricks, it could build 19 Empire State Buildings.
https://www.treehugger.com/plastic/how-many-skyscrapers-could-be-built-years-worth-ocean-plastic.html

Doctors have the highest suicide rate of any profession. In the United Sates, it’s estimated that one doctor dies by suicide every day.
https://cmajnews.com/2018/05/29/has-suicide-become-an-occupational-hazard-of-practising-medicine-cmaj-109-5614/

22% of men without college don’t have jobs.
https://theconversation.com/22-of-men-without-college-dont-have-jobs-heres-why-theyre-being-left-behind-97055#link_time=1528114899

…no progress has been made in reducing income and wealth inequalities between black and white households over the past 70 years, and that close to half of all American households have less wealth today in real terms than the median household had in 1970.
http://www.wiwi.uni-bonn.de/kuhn/paper/Wealthinequality_7June2018_edt.pdf

“By 2050, the world’s air conditioners would be using the current electricity capacity of the US, the European Union and Japan combined.”
https://www.bbc.com/news/business-44466214

Taken together, it seems that the majority of our U.S. population is currently under the influence of some form of psychoactive substance or drug, whether prescribed or not, or whether legally used or not, that changes brain function, mood, consciousness and behavior. And, let’s not forget alcohol in this context since 70 percent of U.S. adults drink alcohol, and more than 1 in 4 binge drink.
https://theconversation.com/suicide-nation-whats-behind-the-need-to-numb-and-to-seek-a-final-escape-98137

J.R.R. Tolkien and Adolf Hitler both fought at the battle of the Somme.

There are whales alive today that were born before Moby-Dick was written in 1851.

A decapitated planarian flatworm grows a new brain complete with all its old memories.

Splenda was an insecticide that became a sweetener when an assistant misheard an order to “test” it as “taste” it.

http://tywkiwdbi.blogspot.com/2017/12/things-you-wouldnt-know.html

Random Forbidden Thoughts

Today, no main theme, just some random forbidden thoughts:

1. Communism has lifted more people out of poverty than any other economic system!

Boosters of capitalism like to say that it has “Raised more people out of extreme poverty than any other system!” They never tire of repeating this claim. But, technically, shouldn’t that distinction really belong to Communism? I mean, not just the Soviet Union and China, which went from essentially feudal monarchies to industrial and military superpowers in the twentieth century, but in the last twenty years or so, China has lifted almost 800 million people out of poverty. And as we all know, China is ruled over by Communists! That’s just a fact.

In other words, technically, we have the Communists to thank for alleviating world poverty!

Now, of course, I’m trying to be a bit provocative here. It’s an effort to “Own the Libs” (i.e. Libertarians).

Now, to deal with the obvious arguments: Capitalists will say that China only became rich when it abandoned doctinaire Communism and embraced Western-style capitalism. And, of course, that’s partially true. But there are a couple of subtle distinctions to be made here.

First, is Chinese “capitalism” anything like what we see in West? If it is, then you’ve got to acknowledge the HUGE role the state plays in it (state capitalism). If it’s not, then you’ve got to admit that “Capitalism with Chinese Characteristics” has done the lion’s share of lifting people out of poverty during the reign of global Neoliberalism, not laissez-faire or Neoliberal austerity as applied in the rest of the developed world.

So you can’t have it both ways. You can’t tout the glories of laizzez-faire Neoliberal night-watchman capitalism AND at the same time tout statistics about global poverty alleviation. That’s completely disingenuous.

Not only that, but you also have to acknowledge that this version of capitalism has little to do with “freedom,” and is, in fact, highly authoritarian. What if it is found that capitalism works better under oppression than under democracy? What then? What will “classical liberals” use to justify their preferred economic arrangments? And will they continue to pretend that the state is somehow not involved in making it work?

What happens if and when capitalism becomes more oppressive than communism ever was?

2. Capitalism in the supermarket aisles

And, speaking of simplistic arguments, one of the other things capitalist boosters always point to are the supermarket shelves overflowing with food. This is tangible proof of capitalism’s superiority, they say, and who can argue with that? There are many stories of Communists defecting to the West and literally falling down weeping the minute they enter a supermarket. I call this the “Capitalism delivers the goods”™ argument. But were those communists of yore really gazing upon the results of the completely unfettered “free market?” Or was it something else entirely?

If you look closely at the products on the shelves, nearly all of them got there in one way or another thanks to extensive government intervention in the economy!

It’s a fact that almost none of the stuff on the supermarket shelves groaning with food got there thanks to the “natural” workings of the free market. Rather, it is a mixture of regulated markets, private and public land ownership, and government intervention that has evolved over time. Furthermore, this hybrid system has evolved without any sort of central planning or conscious top-down design, meaning it—and not “free and unfettered “markets—could be described as the best reflection of the bottom up empirical knowledge so famously touted by the Austrian economists like Mises, Hayek, et. al. It’s the ultimate source of our plentiful, cheap, and affordable food.

So if we’re thankful for the cornucopia we discover every time we enter a supermarket (and we should be), then I think we should drop the idiotic pretension that it’s all down to the “free market” and acknowledge the hybrid system we’ve developed precisely by ignoring free market fundamentalism and its purblind advocates. And maybe we should acknowledge that system and its successes instead of advocating a return to the first principles espoused in Econ 101 which have been shown by experience not to work.

When it comes to the food supply, is there any arena where the completely free market is allowed to operate with no state intervention? Perhaps local farmers markets. But if we really had to depend on those alone for all our groceries, would we have the same level of capitalist plenty to brag about? I mean, even Communist states eventually embraced local farmers markets, gardens and roadside stands. If we had to pay small farmers the true cost of the food they produce, would there be as much gloating by capitalists about our superabundance? After all, some of these same free-market-libertarian capitalists will complain when they have to pay $5.00 for kale or $3.00 for carrots at their local farmers markets. Now Imagine if they had to buy all their groceries that way like their great-grandparents had to. Maybe that would temper their enthusiasm for the free market.

Libertarians love the free market as an intellectual exercise, but they are fortunate that they don’t actually have to live in their imaginary world.

How much it’s really the government that is responsible for our bounty really deserves an entire book written about the topic. I can’t do the subject justice here, but let’s just take a few examples to illustrate the point.

I’ve written before about all the ways dairy (milk, cheese, butter, yogurt, etc.) is regulated and subsidized in the U.S. (I live in Wisconsin, after all). Basically, supply and demand are “smoothed over” by government buying up excess supply to keep prices reasonably high for producers. The excess is eventually sold off if and when prices spike too high for consumers. The end result is that you can buy a gallon of milk for more or less a stable and remarkable cheap price at the supermarket.

But what if that didn’t happen—what if we kicked away all those subsidies as the libertarians advocate? Well, it’s not a theoretical exercise—that’s the way it used to be in the bad old days. What happened was wild price swings, gluts, and oversupply. Then, as dairy farmers went broke and threw in the towel (adding to unemployment), prices rose, so consumers couldn’t afford it anymore. After all, it takes decades to start a functioning dairy farm. It’s not something that can just be ramped up and down at as spot prices dictate in the real world outside of libertarian fantasies.They reason it’s not done that way anymore is because it didn’t work!

Compare that to today where I can reliably expect to walk into my local supermarket and expect to pay about $2.50 for milk year-round. That’s where your bounty comes from. But we all have to pretend it’s all down to the blind workings of the free market and impersonal supply and demand forces thanks to misinformation and ideology promulgated by Econ 101 courses. As David Graeber points out, these are taboos–things that “everybody knows” but no one is allowed to say out loud.

People used to pay a much higher percentage of their income for food. The average worker at the time of the French Revolution spent half their daily wage on bread. That had to be driven down in order to develop a viable consumer economy. Cheap food was a state-driven project to help the capitalists from the beginning. Richard Manning goes into some of the details in his landmark book Against The Grain. He quotes the departing head of agribusiness monolith ADM, Dwayne Andreas, admitting that any CEO dumb enough to think that the free market operates in agriculture is incompetent and should be fired: “[the] Free market is a myth. The reason we don’t call it socialism is that socialism is a bad word.” (p. 144)

Now multiply that by every major commodity you care to imagine, from corn to peanuts to sugar. If you seriously do a deep-dive like a professional agricultural economist would, I’m willing to bet that you find almost nowhere where the free market operates as portrayed in Econ 101 indoctrination textbooks.

Not to mention that one of the things that keep good so artificially cheap for consumers in the U.S. today is explicitly a market failure—monopsony! If I recall correctly, there are only two milk buyers in the United States for dairy farmers to sell their product to, so they can put the squeeze on strapped farmers, transferring the risk from consumer to producer. As I recall, a similar situation exists for beef and pork–only 3-4 companies exist to buy them from the producers, keeping prices artificially low. I’m willing to bet that something similar is true for just about every agricultural product on the shelves today.

My point is that its disingenuous to deploy the “Capitalism delivers the goods”™ argument and point to our current system which exists almost entirely in opposition to free market principles as espoused by libertarian market fundamentalists.

Why does this matter? Because libertarians like to promote a “rugged individualist” approach to life for us wage earners, where no one should ever become “dependent” on government for “handouts.” At the same time, corporate producers are utterly dependent upon handouts–writeoffs and subsidies which we all benefit from–but which we have to pretend don’t exist. This is what is meant when people like me use the phrase “socialism for the rich; capitalism for the poor.”

After all, the government could theoretically do for us workers what it does for dairy–and all the other commodity producers. It could buy up excess labor supply in down times and discharge in it in flush times, keeping the “price” for labor—i.e. wages—high and steady. Instead it does no such thing. It lets labor “find its price” justifying it’s non-interference according to free market principles and dogma.

I first heard this idea espoused by the Australian MMT economist William Mitchell. He used the example of the wool industry in Australia. He called such government subsidies and interventions a “full employment of wool scheme,” which benefited the politically powerful commodity producers, and realized it could just as easily be applied to labor (since labor is commodified under capitalism). This assumes, of course, that government wants high wages and not low ones; that is, it works for the good of society in general and not for the narrow corporate interests who fund political campaigns (who overwhelmingly benefit from bargain basement wages). I think we all know the reality behind that one. But then, isn’t that the real problem we need to solve?

In fact, the whole idea of occupational licensing, as economist Dean Baker often points out, is to keep the supply of the licensed occupations limited, and keep hence wages higher than they otherwise would be in globalized labor markets. That’s why urban, educated “professionals” have not seen their wages crater the way their working class brethren have. Thus, they have an easy time touting the benefits of capitalist free markets.

Which raises another issue:

3. Is the modern nation-state strong or weak???

It’s conventional wisdom that national governments have been hollowed out thanks to globalism. That is, in a globalized world, no single nation state has the power to do much of anything anymore—guarantee high wages, safe working conditions, provide generous social benefits, etc. No nation state can raise taxes on corporations in a globalized world, the argument goes, because transnational corporations can always move their headquarters or shift money abroad beyond the reach of parochial taxing authorities.

The Powers that Be (TPTB) constantly inform us that this is a “historical inevitability” about which nothing can be done, ironically deploying a Marxist-style dialectical materialist argument. The nation-state is a slow-moving dinosaur bound for extinction, they say; the fast-moving globalized corporation has all the real power. It’s simply “the March of Progress,” aided and abetted by technology, and those left behind in the expanding sacrifice zones of the Post-Industrial world must either move, adapt, or be left in the dust.

It leads to what’s been termed the Hollow State. The Hollow State is still a sovereign entity in outward appearance—it still has a standing army, a national legislative body, regulations, circumscribed borders, police, a flag, and so on; but it no longer has any real control over its economic affairs. Instead, that’s been delegated to the anarchic global marketplace and supranational economic institutions beyond the reach of the voting public or local politicians. Countries need to be competitive with the lowest taxes and least amount of regulations anywhere on earth in a neverending race to the bottom. There’s nothing that can be done about this, argue TPTB—it’s as inevitable as the moon or the tides, and besides, it’s already raised millions of people out of poverty! (see topic #1 above).

But a potent counterpoint to this case is made by the same economist I mentioned earlier, Australian William Mitchell, in a powerful book co-written with Thomas Fazi called Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World. He argues that the state apparatus is still potent, despite what Neoliberals claim, and that it is still the best weapon in the progressive arsenal for systemic reform. He argues that the “weak” state articulated by Neoliberals is really just an illusion. In reality, the state is just as powerful as it ever was, it’s just that the state apparatus has been appropriated by financial institutions and retooled for the benefit of a small circle of transnational business elites rather than the citizenry:

The authors show how neoliberal ideology, in its official anti-State guise, has been little more than a convenient alibi for what has been an essentially political and State-driven project aimed at placing the commanding heights of economic policy in the hands of capital and especially Finance Capital.

Far from neoliberal globalisation making the Nation State out of date, all its key elements were the result of choices deliberately and consciously made by national governments as their ruling elites set out to limit State sovereign rights.

The authors call this a process of “depoliticisation” of policy. Its principal elements were: the reduction of the power of parliaments via-a-vis the executive; making central banks formally independent of government; adopting constitutional limits on debt-to-GDP ratios and public spending, as with the 2012 Stability treaty, thereby limiting what politicians can do at the behest of their voters; enforcing free movement of goods and capital, and, above, all shifting government powers from the national level to the supranational.

‘Reclaiming the State – a Progressive Vision of Sovereignty for a Post-Neoliberal World’ (Village Magazine)

C. P. Chandrasekhar gives the best one-sentence definition of Neoliberalism I’ve yet seen: “…the framework of measures that preaches market fundamentalism but uses the state to engineer a redistribution of income and assets in favour of finance capital and big business.”

Here’s Mitchell himself, taking on the conventional wisdom espoused by the corporate media and economists in his blog:

Here are a few simple questions to start with:

If the nation state is dead why does Wall Street spend billions of US dollars trying to influence who wins government and once government is decided on influencing the outcome of specific legislation.

Over the period that…the nation state has [supposedly] lost relevance, the total spending in the US on lobbying has gone from $US1.45 billion (1998) to $US3.36 billion (2017) and the number of unique, registered lobbyists who have actively lobbied has risen from 10,404 to 11,502.

Why does “Dark Money” exist? Billions are spent in an effort to influence elections for the ‘nation state’. Why, if the nation state is dead?

[…]

Why do organisations such as the Dow Chemicals spend $US13.6 million lobbying government in 2016, if the state no longer has the capacity to limit their activities?

Why do “Many of the UK’s largest companies shroud their lobbying efforts in secrecy and do not disclose their political engagements to the public or shareholders” and spend billions of pounds lobby government?

Why did “six of the big energy companies” spend “tens of millions of dollars for a climate change denial campaign, despite knowing the claims were false”?

Even though the Greek government surrendered its currency sovereignty upon joining the Eurozone, why did the ECB essentially threaten to bankrupt its financial system in 2016 at the time of the referendum if they didn’t think the government had any legislative capacity to take independent decisions?

Tobacco, gambling, medicines, energy, and the rest – why do they outlay billions to influence government legislation if the state has withered away?

The answers to all these questions are obvious and seem to have evaded …many on the Left who have bought the globalisation has undermined the state hype.

The Left propaganda that the state is powerless – continues (BillyBlog)

I think Mitchell and Fazio’s arguments are pretty potent and deserve consideration for those of us who want to halt or reverse the damage Neoliberalism has wrought on the societies across the world, especially here in the United States.

4. The Left “Has No Ideas”

And while I’m at it, I’d like to give a shout out to the Left Out podcast which I’ve been listening to recently. They’ve been focusing on economics as of late, and here are a few of the interviewees they’ve had on:

Michael Hudson

Steve Keen

Stephanie Kelton

David Harvey

Anne Pettifor

They are hosted by Democracy at Work, which also hosts Richard Wolff’s Economic Update podcast.

Isnt it interesting how the Left supposedly “has no ideas?” At least that’s what we’re told, anyway.

And isn’t it also interesting that you won’t hear any of these public intellectuals—often with prestigious university posts and large followings—in any of the so-called “Intellectual Dark Web” podcasts, videos or live events despite its claim to be simply a post-partisan, non-ideological intellectual movement centered wholly around the principle of “free speech”? You hear a lot from the IDW about embracing alternative viewpoints and how the Left wants “safe spaces” and “hates free speech.” Yet it seems to me like there are some opinions that they don’t want more widely disseminated. For example, I wonder if we’ll see them taking up the cause of this silenced individual who was the victim of blatant state censorship:

West Point graduate who wore Che Guevara T-shirt discharged (BBC)

If they do, indeed, do that, it might change my opinion that they are mostly a stalking horse for discredited reactionary ideas like Social Darwinism and Neoliberal economics. I won’t hold my breath.

If you want to know what alternatives there From the article above, the book by Mitchell and Fazio belies the lack of ideas on the Left:

Reclaiming the State analyses the elements of such a nationally-based progressive socio-economic programme – central to which is State control of currency, credit and banking. The authors are confident that in the coming years the growing mass of citizens threatened by the forces of neoliberalism will more and more choose the reality of national democracy, imperfect though it may be, over the fantasy of a democratic global society of atomised individuals, which is the implicit vision of neoliberalism.

They recognise, however, that a compelling socio-economic programme is not enough to enable progressives win the hearts and minds of the people. If the political Left is to become relevant in the form of successful mass political parties again it needs to make its own the rhetoric of nationhood, as Ireland’s James Connolly and countless pioneers of the classical Labour and socialist movements did in their day.

They conclude: “Beyond the centrality of the State from a political-economic point of view, the Left has to come to terms with the fact that for the vast majority of people that do not belong – and never will belong — to the globe- trotting international elite, their sense of citizenship, collective identity and common good is intrinsically and intimately tied to nationhood… In this sense, a progressive vision of national sovereignty should aim to reconstruct and redefine the national State as a place where citizens can seek refuge in democratic protection, popular rule, local autonomy, collective goods and egalitarian traditions, rather than a culturally and ethnically homogenised society. This is also the necessary prerequisite for the construction of a new internationalist world order based on interdependent but independent sovereign States”.

‘Reclaiming the State – a Progressive Vision of Sovereignty for a Post-Neoliberal World’

These economic ideas are already commonly deployed in the service of the military industrial complex, the financial industry, banks and transnational corporations. It’s only us workers and citizens who are told that we must “live within our means” and “tighten our belts.” There’s no reason we can’t lift our own people out of poverty as effectively as the Chinese Communists have been able to.

5. The Battle for Money Has Begun

And speaking of ideas about money, I had meant to write about the various currency and banking reform proposals floating around Europe, but in the interim one was already voted down–the Vollgeld proposal in Austria. The other one is in Italy.

Was that a good thing? I don’t know. It seemed like there were some very good ideas, and some questionable ones. My knowledge of Vollgeld comes mainly from this piece by Martin Wolf in the Financial Times, which makes it seem like a good idea. Given what I know about the private banks’ ability to “create money” and how that leads to handicapping the state and causing speculative bubbles, I’m tending to think that these proposals might be beneficial:

According to a database compiled at the IMF, 147 individual national banking crises occurred between 1970 and 2011. These crises afflicted small and poor countries like Guinea, and big and rich ones, like the US. They were colossally expensive, in terms of lost output, increased public debt and, not least, political credibility. Within just three years from 2007, cumulative output losses, relative to trend, were 31 per cent of gross domestic product in the US. In the UK, the recent crisis imposed a fiscal cost only exceeded by the Napoleonic war and the two world wars…

So how does [the financial/banking] industry create mayhem on this scale? And why is it allowed to do so? It does so — and is allowed to do so — because…banks create money, which is an essential public good, as a byproduct of their lending, which is an important economic good.

We want banks to have risky assets and safe liabilities. Yet the liabilities of a highly leveraged, risk-taking institution cannot be safe and will unavoidably seem least safe during a crisis. Yet it is then that people want their money — their reserve of purchasing power in a frightening world — to be at its safest. Worse, it is often easiest for banks to justify lending more just when they should lend less, because lending creates credit booms and asset-price bubbles, notably in property.

The willingness of the public to treat bank liabilities as stores of safe purchasing power provides stable funding, until panic sets in. To reduce the likelihood of panic, governments insure bank deposits, liquidity and even solvency. That makes crises rarer, but bigger. The authorities are simultaneously supporting banks and reining in the excesses created by support. This is a system designed to fail.
An alternative way to make the system safer is to strip banks of the power to create money, by turning their liquid deposits into “state” or “sovereign” money. That is the idea backed by the Vollgeld initiative.

An alternative way of achieving the same outcome would be via 100 percent backing of deposits by claims on the central bank — an idea proposed by free-market Chicago School economists in the 1930s. The rest of the financial system would then consist mainly of investment banking and mutual funds. The latter shift risk on to the investors automatically. The former might need to be regulated, but mainly on capital…the proposal raises questions about the purposes to which the new sovereign money might be used.

The obvious possibility is to use the money to finance the government. This idea is highly objectionable to some: it would surely create big challenges. Yet those challenges are nothing like as fundamental as was transferring responsibility for a core attribute of the state — the creation of sound money to a favoured set of profit-seeking private businesses, co-ordinated by a price-setting government institution, the central bank. In no other economic area is public power so mixed with private interests…

There are many other ideas in this broad area that seem worth pursuing. One would be to allow every citizen to hold an account directly at the central bank. The technological reasons for branch banking are, after all, perishing quickly…no private institution should have better access to the public’s central bank than the public itself does. Furthermore…the central bank could operate monetary policy by lending freely against safe mortgages. The central bank would not need to lend to banks per se at all. It would focus on assets.

The fundamental point here is that the burden of proof should not be on those who favour change. After a long series of huge and destructive crises, it falls rather on those who support the status quo, even today’s modified status quo…

Why the Swiss should vote for ‘Vollgeld’ (Financial Times)

The Italian proposal is somewhat different. It looks like a way to create an alternative government-backed sovereign for state spending to currency to compete with (and ultimately supplant) the Euro:

We present here the mini-BOT proposal drawing principally from the book of Borghi Aquilini.

Mini-BOT are planned to be a type of IOU (“I owe you”) that will be issued in paper form and small denominations (€1 to €500). Borghi even presents facsimiles of the new mini-BOT mimicking the euro banknote in his book. In a first step, the government would use mini-BOTs to pay public arrears. Mini-BOT, unlike traditional BOT, would pay no interest and would have no maturity.

The government would guarantee accepting mini-BOT for future tax payments, thereby implicitly safeguarding, according to its proponents, its value. Proponents also hope that mini-BOT would be used for payments between private agents. That being said, parties other than the government would not be obliged to accept mini-BOT. It is planned, however, to accept mini-BOT as legitimate mode of payment to settle energy bills or buy train tickets or other goods and services supplied by publicly owned companies.

The crucial idea of the mini-BOT is that it would be used as means of payment. Due to their character (paper form, small denominations) it is hoped that they will be spent locally, thereby stimulate growth in the Italian economy. Thus, Borghi sees mini-BOT as a tool of fiscal expansion without relying on the euro.

However, there is also another side to the mini-BOT which is important to highlight. Borghi explicitly points out that mini-BOT are seen as a necessary step to the abandonment of the euro by Italy: “It’s true that mini-BOTs are in euro but once they will be widespread they will form a sort of ‘spare wheel’ that will make the transition to our currency much easier. [ …] the day of the passage [to the new currency] it will suffice to declare the mini-BOT the new money.”

A Hard Look at the Mini-BOT, the Parallel Currency Idea of Italy’s New Ruling Coalition (Naked Capitalism)

‘Mini-BOT’ money & debt cancellation: Are Italy’s populist ideas worth hearing? (Glint)

One thing I do know is that money evolves over time, and we currently have many problems with the status quo. It’s time for a change. There are also very good proposals for debt abolition out there from Michael Hudson and Steve Keen:

Some ways to introduce a modern debt Jubilee (VoxEU)

‘Quantitative easing for the people?’ (BBC)

6. The Internet is finally going away.

It’s finally happening – the internet is going away. I’ve noticed that there are very few places I can visit anymore. More and more sites are being paywalled (Financial Times, WSJ).

I installed Adblocker on the advice of a reader because all the software bloat was literally crashing my computer on most news sites. Now, however, those news sites are blocking anyone with the Adblocker plugin installed from visiting their site and I refuse to disable it. (Business Insider, the Onion, etc.)

Combine those two and there are very few news sites I can visit anymore. I estimate that about 50 percent of the links on Naked Capitalism are off limits to me. Some sites can still be visited by browsing “incognito,” (NYT, WaPo) but I doubt even that will work forever.

Not to mention all the spyware, malware and viruses that are ubiquitous. My computer acts up constantly, and my virus/malware checkers can find nothing.

What does that mean? I don’t know. It’s a lot harder blogging today, that’s for sure. It probably means I’ll spend more time analyzing books and working on long-form essays, and even less time on the news of the day.

7. Peak Oil is Dead! Long live Peak Oil!!

It seems like the whole idea of Peak Oil disappeared after Armageddon failed to materialize on schedule in 2008. Then the Mayan 2012 apocalypse came and went. Everyone breathed a big sigh of relief. It was all just chicken little hysteria.

Or was it?

I started to wonder when I read this in the Washington Post. Wage gains are being wiped out by inflation driven by oil prices (shades of the 1970’s):

In May, U.S. inflation accelerated to its fastest pace in more than six years — and wiped out what little wage growth the typical American worker had seen over the past 12 months in the process.

The consumer price index was 2.8 percent higher this past pay May than it was the same month one year ago; that increase leaves real average hourly earnings for production and nonsupervisory workers (a.k.a. the vast majority of workers) 0.1 percent lower than they were 12 months ago.

Notably, while wage growth was infamously tepid during the Obama years, the low-inflation environment of 2015 and 2016 did allow ordinary workers to secure real raises. Part of the uptick in inflation this year is a product of rising oil prices, a phenomenon over which the American president has little control…Regardless, the fact that workers aren’t seeing any real wage gains at … the peak of an economic expansion is a crisis. … If workers can’t secure a bigger slice of the economic pie at a time of 3.8 percent unemployment, when can they?

The reason there was no pressure on oil prices for the last decade or so is because the economy was in the shitter. But now it’s coming back, although I doubt trump has anything to do with it—it’s just the cyclical nature of capitalism. But now that net demand is increasing, there is once again upward pressure on oil prices, just as the experts predicted. And it’s apparently increasing inflation and eating up wage gains. Add to that the fact that it’s happening at the same time as people are dropping out of the work force and housing is becoming unaffordable almost everywhere in the U.S. leading to an acute housing crisis.

Peak Oil was once resigned to the dustbin. But it was just resting. I suspect that we will once again be having more uncomfortable discussions about high energy prices in the very near future.

8. Housing Bubble 2.0?

It’s petty obvious we are in the midst another housing bubble. I get offers to buy my houses nearly every single day.

But when I saw a handwritten sign recently offering to teach people to “be their own boss” by learning how to flip houses, I realized how bad it is.

It’s 2008 all over again. House prices rising at ridiculous rates, speculators rushing in, houses changing hands in a matter of days. Easy money. No doubt it will end the same way. How much of this great economy is due to another wave of false enthusiasm and speculative bubbles? Perhaps all of it. How long can we go on like this?

9. Mini-Bleg

I have a problem on my computer where the cursor will randomly jump to another location on the page while I’m typing. Has anyone even heard of this problem anywhere else? You could not design a more exquisite form of torture of a writer than this, and ironically I use this computer mainly for writing this blog. It’s pretty frustrating to have your thoughts end up in the middle of another sentence and entire paragraphs randomly disappearing. Any ideas how to fix it?

Also, does anyone know of a cheap and easy way to digitize books. I have some rare used books that I can’t get newer copies of that are falling apart, and I’d like to have them for reference. I see scanned books on the internet, but I’m not sure how it’s done. Any advice? Thanks.

Foragers, Farmers, and Fossil Fuels – Review

One of the books I cited in my review of Walter Scheidel’s The Great Leveler was Foragers, Farmers, and Fossil, Fuels by Ian Morris.

Ian Morris is part of the “Stanford School,” a loosely-affiliated group of scholars attempting to quantify history to come up with long-term patterns and trends. Inequality, for example, is measured by the Gini coefficient. Historians then attempt to define Gini coefficients through time in order to determine the levels of inequality and their change over the course of history. This presents obvious difficulties, as many pre-industrial economies were not heavily monetized. Instead, they were run through more traditional means such as reciprocity, redistribution and householding. Markets were tangential places where people dipped in and out of as needed. Some occupations, like merchants and traders, spent most of their time there. Others, like peasants or religious and military leaders, spent considerably less time interacting with it.

Nevertheless, attempts to quantify historical data such as Gini coefficients over time are engaged in by people like Walter Schiedel and Morris. The Great Leveler, for example, has sections devoted to explaining just how inequality was determined for the purposes of the book. I omitted these from my review because were not relevant to casual readers, and those curious about in the nitty-gritty can read it for themselves in the book.

Morris takes quantification even further than Scheidel. He uses the general criteria developed by the UN to measure civilizational development (energy capture per capita, organization, information technology, and war-making capacity) and applies them to societies throughout history from the Stone Age to the present-day in order to compare developments between various civilizations over time. He even published an entire book on these methods called The Measure of Civilization, in 2013.

There are problems with this approach, however, as Graeber and Wengrow point out:

Let us leave Morris’ prescriptions aside but just focus on one figure: the Palaeolithic income of $1.10 a day. Where exactly does it come from? Presumably the calculations have something to do with the calorific value of daily food intake. But if we’re comparing this to daily incomes today, wouldn’t we also have to factor in all the other things Palaeolithic foragers got for free, but which we ourselves would expect to pay for: free security, free dispute resolution, free primary education, free care of the elderly, free medicine, not to mention entertainment costs, music, storytelling, and religious services? Even when it comes to food, we must consider quality: after all, we’re talking about 100% organic free-range produce here, washed down with purest natural spring water. Much contemporary income goes to mortgages and rents. But consider the camping fees for prime Palaeolithic locations along the Dordogne or the Vézère, not to mention the high-end evening classes in naturalistic rock painting and ivory carving – and all those fur coats. Surely all this must cost wildly in excess of $1.10/day, even in 1990 dollars. It’s not for nothing that Marshall Sahlins referred to foragers as ‘the original affluent society.’ Such a life today would not come cheap.

This is all admittedly a bit silly, but that’s kind of our point: if one reduces world history to Gini coefficients, silly things will, necessarily, follow…

How to Change the Course of Human History (Eurozine)

It is the nature of capitalist economies to commodify resources that agrarian and preindustrialist societies typically got for free. Thus, the commodification is recorded as a net benefit, but the loss of the free stuff is unaccounted for in the balance-sheet calculus, distorting the measures of “progress.”

In fact, much of capitalist economic growth is simply commodification: turning things into salable commodities in order to distribute them via markets and money, thus producing something quantifiable where there was none before. However, the overall qualify of life is not affected, or even reduced (since you must now sell your labor to earn the money to purchase the things you once got for free or nearly free).

Also, many other things, such as the decline of social capital and loss of natural resources are not included at all in the final tally. Such things are also notoriously difficult to measure. Yet any true accounting of wealth, for example, must subtract losses from gains. If you “gain” ten million dollars, but owe eleven million in debt, you have not gained much at all. Yet, by excluding debts, I could produce a very comforting graph of your income over time.

That is, there are some things that can’t be properly measured or quantified (or to quote the old credit card slogan, “There are some things that money can’t buy.”). This is also a major problem with Steven Pinker’s exhaustive number-crunching defense of Neoliberalism, but that’s a topic for another post.

For his next book after MoC–Foragers, Farmers and Fossil Fuels, Morris focuses on energy capture as the chief determinate of social complexity. This alone should endear him to students of energy and peak oil/resources. Unlike most conventional economists and historians, he does not argue that Malthusian constraints were overcome solely by the application of capitalist institutions—for example, “free and open” markets, sacrosanct private property, the division of labor, banking, insurance, wage labor, corporations, stock markets and so on. Indeed, those existed since ancient times. Rather, he correctly attributes it to energy capture. That is, he believes, as do I, that capitalist institutions and scientific advancement were a result of increasing energy capture in Northwest Europe, and not their cause. Capitalist institutions alone would never have provided an escape from Malthusian constraints. In this regard, he has the arrow of cause and effect pointing the right way. He does, however, not follow this idea to its logical conclusion, as we’ll see later.

But Morris’ book is not about economics. Rather, it’s about values. The core thesis of the book is that any civilization’s core values were determined by the amount of energy they were able to capture and utilize. Thus, for example, foraging societies were far more egalitarian than farming ones, because resources depended upon natural bounty rather than human labor, and cannot be commodified. High geographic mobility precluded elite hoarding. The lack of heritable wealth ensured equality, and the diffusion of the use of deadly force throughout society prevented coercion by aspiring elites.

Subsequently, he argues that every civilization has a natural, or “Goldilocks” level of inequality which is determined by its method of energy capture. Too little inequality, and it does not function; too much and the society will break down. He makes this point in an article for the New York Times:

Economists often measure inequality using the Gini coefficient, a scale running from 0 to 1, in which 0 means that everyone in a society has exactly the same wealth, and 1 means that one person has everything and no one else has anything. Anthropological studies of foraging societies suggest that their Gini coefficients for income and accumulated wealth both averaged around 0.25. In farming societies, however, the average income inequality almost doubled, to 0.45. The Roman Empire scored around 0.43, England in 1688 about 0.47, and France on the eve of the Revolution an eye-watering 0.59. Inequality in accumulated wealth increased even more, regularly topping 0.80…[J]ust as in the farming and foraging worlds before it, our fossil fuel world has a “right” level of inequality, and societies that move toward it will flourish, while those that move the other way will not. Successful governments know this and apply taxation and other measures to push economic inequality toward what they hope is the sweet spot…If the twists and turns of economic history over the last 15,000 years and popular will are any guide, the “right” level of post-tax income inequality seems to lie between about 0.25 and 0.35, and that of wealth inequality between about 0.70 and 0.80.

At the same time, the patterns of the past tend to reveal new questions just as much as they answer old ones. Farming swept away foraging and fossil fuels swept away farming; today, there are signs that the fossil fuel world, in turn, is coming to an end. New energy sources, technologies that break down boundaries between mind and machine, and shifts toward living in virtual rather than physical spaces all threaten to make the 21st century the biggest rupture in history, dwarfing the agricultural and industrial revolutions.

If so, then we should learn another lesson from history: that what works well in one age can fail completely in another. It’s quite possible that a century from now worrying about the right level of inequality for a fossil fuel society might seem as irrelevant as worrying about the right level of inequality for Neanderthals does today.

To Each Age Its Inequality (New York Times)

Morris is, as always, highly readable with plenty references to sources for further reading. The book itself is based on a series of public lectures (the Tanner lectures), and so is approachable and mercifully free of jargon. The book also contains reactions to the lectures from various scholars including Richard Seaford (whose work on Greek money we looked at), philosopher Christine M. Korsgaard, and collapse novelist Margaret Atwood.

The blurb for the lecture states that “the way a society produces energy creates the ‘right’ amount of inequality for it to thrive, from foraging groups to the Roman Empire.”

I was quite put off at first by his seeming value judgment and apparent argument from nature – ie: what happened historically was the most efficient way for it to happen. But listening to the lecture he qualifies this a bit by saying that it isn’t the ‘morally right’ but ‘factually right’ amount of inequality that would allow societies in certain periods to thrive over their competitors.

Essentially, his argument is:

People’s opinions on hierarchy and inequality are based on how they extracted fuel from nature.

Foragers: no wealth or power inequality, but some gender inequality

Farmers: high wealth and power inequality, and high gender inequality

Fossil fuel users: low wealth and power inequality, and low gender inequality

He says that there are some exceptions to these patterns, but that we should look at the most successful examples of each society.

He relates the current economic crises to the fact that we have exceeded some sort of ideal level of inequality for how our economies work. He explains away exceptions to his ‘pattern’ by saying that each society was free to choose whatever system they wanted to, but that what they chose was not necessarily the ‘best level of inequality’ that would allow them to organize large-scale labour.

https://libcom.org/forums/theory/prof-ian-morris-each-age-gets-inequality-it-needs-27032016

1. Foragers.

Most wild animals in nature are foragers, as were all humans until relatively recently. Morris has a good definition of foraging: foragers do not alter or modify the genetic makeup of their subsistence. This allows room to include the large number of foraging societies which clearly cultivated some foods, but did not feel the need for fully-fledged domestication of plants or animals. Morris mentions that anthropologists today talk about a foraging spectrum rather than a “typical” foraging society. Indeed, there is evidence that humans processed and ate–and even stored–annual seeds and grains for thousands of years before they decided to cultivate them via farming. They did know how to domesticate (selectively breed) animals, however, as the dog demonstrates.

Stone Age Britons Were Eating Wheat 2,000 Years Before They Farmed It (NPR)

Stone-age people were making porridge 32,000 years ago (New Scientist)

Foragers need to be highly mobile due to seasonal variations, and while they do significantly alter the environment around them with things like fire-stick farming, for example (unlike previously thought), they do not make large permanent investments in goods, settlements, architecture, infrastructure, and the like. This leads to both low hierarchy and low material inequality. No one bosses foragers around—if anyone tries to become too domineering, their “followers” can just walk away. This keeps despotism in check. Since there is no dynastic wealth to pass along (only embodied wealth), foragers are very politically egalitarian, even “fiercely” so.

The major exceptions to this rule are the so-called affluent foragers. Morris uses the Native American Pacific Northwest cultures, the prehistoric Baltic and the Jōmon around the Sea of Japan as examples of this. These are foragers whose locations were so rich in natural resources that could live much like farmers, with permanent settlements of several hundred people, hereditary leaders, large objects and monuments (e.g. oceangoing boats and totem poles), trade networks, slaves, and so forth. But only certain areas were abundant enough to support such cultures without intensive cultivation. Thus, the generalizations of high egalitarianism and low hierarchy are less applicable to these cases:

There are two partial exceptions to this generalization, both of which seem to prove the rule. The first comes from a handful of prehistoric sites that do preserve evidence of wealth inequality, above all, Sungir in eastern Russia. Here, excavators found a group of burials dating around 26,000 BC. Most held few or no grave goods, but two—one containing a fifty-year-old man, the other a boy in his early teens and a slightly younger girl—stood out sharply. More than 13,000 carved mammoth ivory beads had been sewn into their clothes. Around the bodies were dozens of ivory ornaments, including a little carving of a mammoth and several spears, and more than 250 fox teeth adorned the man’s hat and boy’s belt…Why Sungir produced these unique finds remains unclear, although it seems a safe bet that it was a special mammoth-hunting spot; what is clear, though, is that the wealth took the form of tiny, eminently portable objects that could easily be carried from one hunting spot to the next. Sungir perhaps shows that under the right circumstances-where there were rich resources that could be converted to portable forms-economic and perhaps political hierarchies could develop among foragers. pp. 36-37

The second set of exceptions comes…from the prosperous foragers of North Americas Pacific Coast. For several centuries, abundant wild food (especially fish) allowed these foragers to live in semipermanent villages, sometimes with hundreds of residents. Because they stayed in one place for much of the year, they found it worthwhile not only to build houses but also to accumulate possessions, and some people built and accumulated much more than others. The hunting and gathering were so rich here, it would seem, that the Chumash, Nootka, Kwakiutl, and other groups could even break the Sungir rule, progressing from small, portable riches to large, immovable ones. p. 37

The values of foragers are probably well-known by now. Hierarchies are very low, and not permanent. There are indeed “hierarchies of competence” as Jordan Peterson might put it, but there were no hereditary leaders, institutional leaders, bureaucrats, plutocrats or permanent serfs:

Everywhere from the Arctic to Australia, ethnographers have commented on foragers’ aversion to political hierarchy. (In the excellent Cambridge Encyclopedia of Hunter-Gatherers, for instance almost all the contributors observe that the people about whom they are writing have no institutionalized leaders.) As usual, there are exceptions, mostly among societies whose food supply permits groups hundreds strong to live together; although some archaeologists claim that even these groups were in reality less hierarchical than they appear.

Foragers almost everywhere would probably have understood the answer that the anthropologist Richard Lee received when he asked a !Kung’ San forager in the Kalahari Desert about the apparent absence of chiefs: “Of course we have headmen! In fact, we’re all headmen. Each one of us is headman over himself!” It is, in fact, closely paralleled by what a forager half a world away in Tierra del Fuego told another anthropologist: “Yes, senor, we, the Dna, have many chiefs. The men are all captains and the women are sailors.”

Foraging groups sometimes have to make important collective decisions, particularly about where to move next in the endless quest for food, but most groups have developed methods that make it difficult for one person or even one small group to seize control of the decision-making process. The most popular solution is to discuss every decision over and over again in subgroups, until a consensus begins to take shape, and at that point, even the strongest-willed dissenters tend to tum into yes-men and get on board with majority opinion. p. 34

In their article, Graeber and Wengrow argue that prehistoric hierarchy was fluid--this is, it came and went depending upon factors like the location and season. That is, there was no fixed level of inequality, and furthermore, hierarchy was not directly correlated with scale. They take issue with the “directional” determinism version of history promulgated by people like Morris, Jared Diamond, Walter Scheidel and many others:

…Most of the Palaeolithic sites…are associated with evidence for annual or biennial periods of aggregation, linked to the migrations of game herds – whether woolly mammoth, steppe bison, reindeer or (in the case of Göbekli Tepe) gazelle – as well as cyclical fish-runs and nut harvests. At less favourable times of year, at least some of our Ice Age ancestors no doubt really did live and forage in tiny bands. But there is overwhelming evidence to show that at others they congregated en masse within …‘micro-cities’ … feasting on a super-abundance of wild resources, engaging in complex rituals, ambitious artistic enterprises, and trading minerals, marine shells, and animal pelts over striking distances.

Western European equivalents of these seasonal aggregation sites would be the great rock shelters of the French Périgord and the Cantabrian coast, with their famous paintings and carvings, which similarly formed part of an annual round of congregation and dispersal…alternations of this kind may be key to understanding the famous Neolithic monuments of Salisbury Plain, and not just in terms of calendric symbolism. Stonehenge…was only the latest in a very long sequence of ritual structures, erected in timber as well as stone, as people converged on the plain from remote corners of the British Isles, at significant times of year…Keeping their herds of cattle, on which they feasted seasonally at nearby Durrington Walls, the builders of Stonehenge seem likely to have been neither foragers nor farmers, but something in between. And if anything like a royal court did hold sway in the festive season, when they gathered in great numbers, then it could only have dissolved away for most of the year, when the same people scattered back out across the island.

Why are these seasonal variations important? Because they reveal that from the very beginning, human beings were self-consciously experimenting with different social possibilities. Anthropologists describe societies of this sort as possessing a ‘double morphology’. Marcel Mauss, writing in the early twentieth century, observed that the circumpolar Inuit, ‘and likewise many other societies . . . have two social structures, one in summer and one in winter, and that in parallel they have two systems of law and religion’. In the summer months, Inuit dispersed into small patriarchal bands in pursuit of freshwater fish, caribou, and reindeer, each under the authority of a single male elder. Property was possessively marked and patriarchs exercised coercive, sometimes even tyrannical power over their kin. But in the long winter months, when seals and walrus flocked to the Arctic shore, another social structure entirely took over as Inuit gathered together to build great meeting houses of wood, whale-rib, and stone. Within them, the virtues of equality, altruism, and collective life prevailed; wealth was shared; husbands and wives exchanged partners under the aegis of Sedna, the Goddess of the Seals.

Another example were the indigenous hunter-gatherers of Canada’s Northwest Coast, for whom winter – not summer – was the time when society crystallised into its most unequal form, and spectacularly so. Plank-built palaces sprang to life along the coastlines of British Columbia, with hereditary nobles holding court over commoners and slaves, and hosting the great banquets known as potlatch. Yet these aristocratic courts broke apart for the summer work of the fishing season, reverting to smaller clan formations, still ranked, but with an entirely different and less formal structure. In this case, people actually adopted different names in summer and winter, literally becoming someone else, depending on the time of year.

Perhaps most striking, in terms of political reversals, were the seasonal practices of 19th-century tribal confederacies on the American Great Plains – sometime, or one-time farmers who had adopted a nomadic hunting life. In the late summer, small and highly mobile bands of Cheyenne and Lakota would congregate in large settlements to make logistical preparations for the buffalo hunt. At this most sensitive time of year they appointed a police force that exercised full coercive powers, including the right to imprison, whip, or fine any offender who endangered the proceedings. Yet as the anthropologist Robert Lowie observed, this ‘unequivocal authoritarianism’ operated on a strictly seasonal and temporary basis, giving way to more ‘anarchic’ forms of organisation once the hunting season – and the collective rituals that followed – were complete.

Scholarship does not always advance. Sometimes it slides backwards. A hundred years ago, most anthropologists understood that those who live mainly from wild resources were not, normally, restricted to tiny ‘bands.’ That idea is really a product of the 1960s, when Kalahari Bushmen and Mbuti Pygmies became the preferred image of primordial humanity for TV audiences and researchers alike. As a result we’ve seen a return of evolutionary stages…By this logic…the Cheyenne or Lakota would have had to be ‘evolving’ from bands directly to states roughly every November, and then ‘devolving’ back again come spring. Most anthropologists now recognise that these categories are hopelessly inadequate, yet nobody has proposed an alternative way of thinking about world history in the broadest terms…

‘Large populations’, [Jared] Diamond opines, ‘can’t function without leaders who make the decisions, executives who carry out the decisions, and bureaucrats who administer the decisions and laws. Alas for all of you readers who are anarchists and dream of living without any state government, those are the reasons why your dream is unrealistic: you’ll have to find some tiny band or tribe willing to accept you, where no one is a stranger, and where kings, presidents, and bureaucrats are unnecessary’. A dismal conclusion, not just for anarchists, but for anybody who ever wondered if there might be some viable alternative to the status quo. But the remarkable thing is that, despite the smug tone, such pronouncements are not actually based on any kind of scientific evidence. There is no reason to believe that small-scale groups are especially likely to be egalitarian, or that large ones must necessarily have kings, presidents, or bureaucracies. These are just prejudices stated as facts.

How to Change the Course of Human History (Eurozine)

As a aside, the calendrical nature of these rituals necessitated some sort of ritual timekeeping function, and this was probably undertaken by certain chiefs who likely used notches in bones to do so, forming the very first “managerial class” that would eventually develop writing and standardization as societies became more complex. The first cities likely evolved out of the ritual meeting sites Graeber and Wengrow describe above, with permanent temples coming to be situated in such favorable locations,as Michael Hudson describes:

The physical orientation and cosmological symbolism of archaic cities, their streets, gates, and the architectural character of their public structures reflect their role as sanctified commercial and ritual meeting places and temple areas long before centralized warmaking, political control and taxation developed. As commercial entrepots they functioned as havens both in the sense of ports (German Hafen, as in what Karl Polanyi called “ports of trade”) and as asylums, literally havens from the surrounding land.

The localization of specialized meeting areas for ritual and exchange may be found as early as the Ice Age, and later in sacred groves and seasonal gathering spots. These sites were occasional rather than year‑round settlements. It therefore is appropriate to view them as social constructs independent of their scale, performing urban functions long before they came to grow substantially in size and attract year-round settled populations…

From Sacred Enclave to Temple City (Michael Hudson)

However, gender equality is not much in evidence among foragers–men and women are not considered to be equals. In every society, men control the political decisions, and the duties of men and women are clearly differentiated and demarcated. Often they are spatially segregated as well (e.g, men’s houses, exclusion of menstruating women, etc.). They had no notion that men and women are, or should be “equal” as we do in our Western, industrial societies (note: “equal” does not mean biologically identical).

Social scientists continue to argue over why men normally hold the upper hand in forager societies. After all, evolutionists point out, biology seems to have dealt women better cards. Sperm and eggs are both essential to reproduction, but sperm are abundant (the typical young man produces about one thousand per second) and therefore cheap, while eggs are scarce (the typical young woman makes one per month) and therefore expensive. Women ought to be able to demand all kinds of services from men in return for access to their eggs. To some extent, this does happen, and male foragers contribute substantially more to childrearing than male chimpanzees, bonobos, gorillas, or orangutans (our genetic nearest neighbors).

However, some anthropologists speculate, the reason that the price women can demand almost never includes political or economic authority is that semen is not the only thing male foragers are selling. Because men are also the main providers of violence, women need to bargain for protection; because men are the main hunters, women need to bargain for meat; and because hunting together often trains men to cooperate and trust one another, individual women often find themselves negotiating with cartels of men. pp. 39-40

Whatever the details, though, the outcome is clear enough: forager bands are male-dominated, but rarely have steep gender hierarchies. Abused wives regularly just walk away from their husbands without much fuss or criticism, and attitudes toward marital fidelity and premarital female virginity tend to be quite relaxed. As Nisa saw it, “When you are a woman, you don’t just sit still and do nothing-you have lovers.” Promiscuity certainly does cause problems, and can lead to wifebeating and fighting between male rivals for a woman’s affections, but people who are seen as overreacting to infidelity will be mocked, and sexual escapades rarely lead to permanent stigma.

The shallowness of gender hierarchies and the weakness of marital ties, like the shallowness and weakness of economic and political hierarchies, seem to be a direct consequence of the nature of foraging as a method of energy extraction. The food that women gather is vitally important, especially near the equator, where plants make up such a large proportion of most foragers’ diets. But the ethos of sharing normally means that all members of a group will have access to this. The main reason that male foragers generally care less than male farmers about controlling women-and particularly about controlling women’s s reproduction-is that foragers have much less to inherit than farmers. For most foraging societies, wild foods are equally available to all, regardless of who their parents are. Consequently, material success depends much more on skill at hunting, gathering, and coalition-building than on physical property that can be passed down between generations, which in rum means mat questions about the legitimacy of children matter a lot less than they do when only legitimate offspring will inherit land and capital.pp. 40-41

Because there is no monopoly on violence, overall rates of interpersonal violence tend to be higher than in larger, more complex societies, despite not having anything to fight over (some might take issue with this). Because population densities are so low, anthropologists mistakenly thought levels of violence were low too, since they did not record many violent incidents. But as Morris notes, just one homicide every fifteen years in such small bands is enough to give you a homicide rate higher than the most crime-ridden ghettos today! While there is no large-scale warfare or conscription as we know it, there are interpersonal conflicts. These tend to revolve, more often than not, around reproductive access:

That said, arguments between men over women do seem more likely to end violently among foragers than among farmers (and much more likely than among fossil-fuel users). Some anthropologists do dispute this, arguing that when male foragers fight over women they are “really’ arguing about access to food or territory, with women just providing flashpoints and a convenient language for talking about more profound rivalries. No doubt there are cases in which that is true, but on the whole, foragers are so consistent in blaming violence on men’s arguments over women that it is hard not to suspect that they know what they are talking about. Among the Yanomami and Waorani (who both live in the Upper Amazon and combine horticulture and foraging), there is even evidence that men who are more violent have more sexual partners and children than men who are less violent. p. 41

To me, this issue of scale makes homicide statistics rather meaningless, but scholars such as Steven Pinker make a great deal of such facts in their writings celebrating modern industrial society and denigrating earlier forms of social arrangements. This quote is from Christine M. Korsgaard’s essay echoes some of my objections:

My other thought is that there are now, among us, people who design designer drugs, people who spend their time devising advertisements aimed at luring young people into smoking, people who try to save themselves a little money by using risky inferior ingredients in products on which people’s lives depend, and many other people who lure others to their deaths, or put them at grave risk of death, from motives of profit, without ever wrapping their own hands around a gun or a knife. My guess is that when social scientists tally up the number of people who die by violence, the victims of these people are not included. Yet the people who kill these victims are surely just as much killers as those who take the gun or the knife in hand. This makes me wonder just how useful “violence” is as a morally significant category. In the modem world, we do a lot of things less directly by hand, including injuring and killing. p. 197

2. Farmers

Here, Morris gets a bit more controversial. He argues that farming societies were generally very accepting of extreme inequality, viewing it as necessary all along the social spectrum, from the leaders all the way down to the serfs. That is, “some were born to command, and others to obey.” Because work had to be performed by muscle-power—either human or animal—slavery and many other forms of coerced labor—and their inverse, despotic leadership—were simply a necessary fact of life in farming societies.

Morris calls this the “Old Deal” and says that it came into existence wherever large-scale farming civilizations developed. Despite their surface differences, the underlying moral logic was basically the same: inequality and hierarchy were divinely ordained and good. Morris terms this type of society Agraria, and uses the work of Ernest Gellner as a reference. The diagram I reproduced in the previous posts was Gellner’s map of Agraria’s social structure. Here it is again:

Disparities of wealth are, of course, much more pronounced in agrarian societies than foraging ones. Large investments in land, buildings and infrastructure are are able to be passed down, leading to the origin of dynastic wealth–and hence steep wealth and income disparities. But, Morris argues, this was simply necessary to get such societies to function adequately. Without a clear chain of command, he says, there was no way to do the sorts of things that agrarian societies needed to do (grow and harvest crops, make tools, build infrastructure, field armies, etc.).

Morris’ argument is basically Darwinian: societies that adopted these core values persevered, while the ones that rejected them died out or were assimilated. Societies which were broadly accepting of despotism and inequality–including hereditary inequality– were able to capture more energy, and hence accomplish more things, from building monuments to fielding large armies. The societies around the world who held on to their old values in the face of these changes were unable to resist and were either killed off or assimilated from the most productive parts of the globe. Some evidence has emerged recently that they were, in fact, killed off (with only the women assimilated).

“Farming society” is a huge category, embracing almost the whole of recorded history, but we can nevertheless identify a broadly shared set of moral values within it. At their heart is the idea that hierarchy is good. Hierarchy reflects the natural/divine order, in which some were put on this earth to command, and most to obey. Violence is valued according to the same principle: when legitimate rulers demand it, it is a force for good; otherwise, it is not.

In the earliest farming societies for which we have written evidence–third-millennium BC Mesopotamia and Egypt, late second-millennium BC China, and early first-millennium AD Mesoamerica–the chief anchor of the Old Deal seems to have been the king’s divinity, and even in early complex societies for which we have no useful texts, such as the third-millennium BC Indus Valley or first-millennium BC Andes, the artistic and architectural evidence seems consistent with the same principles. A great chain of being linked the humblest peasant to the supreme beings, via the intercession of priests, nobles, and godlike kings, guaranteeing the fundamental justice of the political and economic hierarchy. There was probably constant conflict between kings and priests to define and control this idea, and on occasions–particularly following the collapse of the Akkadian Empire in Mesopotamia and the Old Kingdom in Egypt around 2200 BC–it seems to have broken down altogether. Not until the first millennium BC, however, and even then only in Eurasia, did new ideas seriously challenge divine kingship as the basis of moral order. p. 79

Farmers’ values were very different from foragers’ because farmers and foragers lived in different worlds. Capturing energy from domesticated sources imposed different constraints and created different opportunities than capturing energy from wild resources. Farmers could survive only in a hierarchical, somewhat pacified world, and they therefore came to value hierarchy and peace. p.92

Did people in these societies embrace grotesque wealth disparities and hereditary leadership roles, or were they just tolerant of them? It’s a good question, and this is a point of contention between Morris and some of his respondents. Some of them seem to veer toward the latter, but Morris argues strongly for the former. He cites examples that demonstrate that peasants–to the the extent that we hear from them in the historical record–were generally okay with inequality and incorporated it into their core value system. In some anecdotes, he notes the behaviors of peasants who were very much concerned with various levels of status, and the behavior engendered by them. They didn’t like corruption, however, and when they complained it was about violation of the “old Deal” and not inequality per se.

People now lived in close contact, and due to investments in their environment could no longer move away when disputes arose. To deal with this, legitimate violence was centralized in the person of the ruler; blood-feuds and vendettas were replaced with laws enforced by the chief or priest-king. Retributive justice was replaced by restorative justice in the form of fees and fines determined by the ruling class (which as we’ve seen, likely led to the development of money and markets as opposed to random barter). Most ancient law was based on the Lex Talionis principle.

But if farming turned high rates of violence into a problem, it also provided the solution. Foragers living in a relatively empty landscape always had the option of running away from aggression and hunting and gathering in a new place, but farmers, trapped in increasingly crowded landscapes, did not. As a result, farmers who won wars against their neighbors sometimes ended up incorporating the losers into a larger society. This was a brutal process, usually involving rape, pillage, and enslavement, but over time, it created bigger societies, whose rulers-as Gellner said of Agraria- “are interested in extracting taxes, maintaining the peace, and not much else.” Rulers had strong incentives to pacify their subjects, persuading them to work hard, render unto Caesar what was Caesar’s, and not to kill one another or destroy each other’s productive assets. Rulers who succeeded in pacification tended to flourish at the expense of those who did not, and, over the course of ten thousand years, the net effect was that rulers gradually drove down rates of violent death.

To accomplish these goals, rulers needed to convince their subjects that government alone had the right to use violence-that, as Weber put it, “only certain political communities, viz, the ‘states:,’ are considered to be capable of ‘ legitimizing,’ by virtue of mandate or permission, the exercise of physical coercion by any other community.” The main tool available to a government trying to persuade its subjects that it is the only group permitted to act violently is law, but the legitimacy of law itself ultimately rests on the government’s comparative advantage in force:

For the purpose of threatening and exercising such coercion, the fully matured political community has developed a system of casuistic rules to which that particular “legitimacy is imputed. This system of rules constitutes the “legal order; and the political community is regarded as its sole normal creator, since that community has, in modem times, normally usurped the power to compel by physical coercion respect for chose rules. pp. 89-91

The historian Martin Ceadel suggests that “fatalism” is a good description of worldwide attitudes toward violence before the eighteenth century AD. Many people (especially Axial Age religious leaders) preached against violence, and most civilizations developed subtle and often self-serving distinctions between just and unjust wars, but there was broad agreement that the use of force by legitimate authorities was necessary, and could even be admirable. Not until the eighteenth century, and even then only in Europe and its North American colonies, do we see a real break with this pattern of values. New ideas–that war is unnatural, that man in his natural state was peaceful–bubbled up just as the broader critiques of political, economic, and gender hierarchies were beginning, and in the 1790s, a Peace Society in industrializing Britain publicly and noisily opposed war against France on principle. pp. 131-132

Just as the affluent foragers in riverine and other environments provided an exception to the general forager pattern, so, too, did Agraria have it’s major exception: city-states. Morris, a classical archaeologist, has some interesting things to say about Classical city-states (which deserve a post of their own). In brief, he says that due to their trading patterns, they were able to capture and utilize more energy than farming societies, and thus achieve much higher degrees of material wealth and cultural development, in some cases rivaling (and prefiguring) later Industrial societies. These city states existed at many places and times throughout history, with Athens being probably the best-known. Rome started out this way as well in the beginning—it may have even been a refuge for fugitives from other parts of Italy and beyond:

The miraculous exceptions…were mostly city-states. In the farming societies of later prehistory, networks of such city-stares were probably common: in Egypt, Mesopotamia, the Indus and Ganges Valleys, the Yellow River Valley, Peru, Yucatan, and the Valley of Mexico, city-state networks seem to have flourished until one city-state outgrew the others, conquered them, and swallowed them up into a larger Agraria. In some cases, though, particularly in Europe and the Mediterranean (ancient Phoenicia, and Italy; medieval Italy, Flanders, and the Baltic) and the oases of central Asia and the Sahara, city-state systems survived and even flourished into historically documented periods around the edges of the great empires.

Nearly all these textually documented city-states shared one important feature: a commercial, and usually maritime, orientation. This eased some of the constraints imposed on other societies by the limits of agricultural energy capture. Athens, for instance, imported most of its food in the fourth century BC, using its position at the center of extensive trade networks to increase dramatically the energy available per person. This not only made possible the high population densities mentioned earlier in this chapter, but also sustained economic growth (per capita consumption may have doubled between 800 and 300 BC), leading to real wages that would rarely be matched until the age of fossil fuels. Literacy rates were also extraordinarily high, and Athens enjoyed a cultural explosion that earned it the label “classical.” In many ways, classical Athens, medieval Venice, and several other city-states can seem more modern than agrarian. ..

…we should perhaps see Athens and other city-states as a historically important exception to the larger agrarian pattern…much as the sedentary, affluent, and complex hunter-gatherer societies found in the Pacific Northwest and prehistoric Baltic and Sea of Japan qualify without falsifying the model of forager society… On the one hand, the Kwakiutl and the Athenians both found ways to raise energy capture well above the norm and moved toward unusual social systems that capitalized on this. But on the other hand, sedentary foragers and commercial city-states could flourish only in very specific ecological zones–for the former, coastal zones rich in marine food sources, such as the prehistoric Baltic and Sea of Japan or the historic west coast of North America; for the latter, positions astride trade routes (usually maritime, sometimes riverine, and occasionally overland) supplying bigger empires.

In the final analysis, sedentary foragers could not escape the constraints imposed by hunting and gathering, and commercial city-states were equally confined by those imposed by tilling the earth. Although the size and density of sedentary foraging populations went well beyond what was normal in more mobile foraging groups, none ever broke through to the kind of levels normal in farming societies., and although commercial city-states also supported populations that were large and dense by the standards of farming societies, none ever broke through to the kind of levels common in fossil-fuel societies. pp. 70-71

Not only were they wealthier on average, but city-states were also far more egalitarian than most Agrarias (despite the slaves)—a point Scheidel makes as well. Scheidel attributes this to mass-mobilization warfare where every free male citizen had a duty to defend the city-state from its enemies. Surprisingly, neither of them mention Victor Davis Hanson’s attribution of this egalitarianism to Greek farming practices, which favored small farms and tended to prevent large-scale land consolidation, unlike in later Roman Italy and North Africa. Do they disagree, or are they simply unaware of it? Compare, for example, to the large-scale collaborative labor of Chinese rice farming and their very top-down imperial bureaucracy and god-like emperors.

Tangentially, one of the other factors that may have also contributed was the nature of Greek weaponry. Greek body armor was actually made not from metal, but, remarkably, from cloth! The Greeks had a technique that made linen into tough cuirasses that could resist metal weapons thrusts. I ran across this interesting discussion by accident.

How to Make Your Own Greek Armor (New Yorker)

But, if true, it explains why so many could afford to participate in warfare if effective types of armor could be manufactured by anyone. It might also explain the high effectiveness of Greek warriors if they were more likely to have been armored (and thus less likely to be killed in battle). I think this remains an understudied phenomenon.

I’d also note that city-states later became the major source of financial innovations as well. These financial innovations lay at the heart of the modern world order. As I wrote earlier this year, the concepts of municipal borrowing (i.e. bonds), double-entry bookkeeping, and state banking were all developed in the medieval city-states of Northern Italy. These were all commercial societies which traded far and wide, particularly in the Mediterranean. Later (1500’s), the Dutch Republics combined the mercantilism of city-states with the political power of a larger confederacy. They took the crucial next steps such as a secondary market for trading government debt, a municipal bank and mint, joint-stock corporations, and a stock exchange. These were exported to England just in time for the Industrial Revolution to start, which we’ll take a look at next.

I’ll have more to say about all this in a seperate post. For now, back to the book.

3. Fossil Fuels

Agraria captured much more energy than foraging societies (Anarchies? Utopias?) did. Nonetheless, it ran up against hard ceilings several times in history and failed to break through; Malthusian constraints always pulled them back down (with city-states reaching the pinnacles of social development). When they did break through, eventually, it was the societies of Northwestern Europe that had turned the North Atlantic–a ‘Goldilocks ocean’ (neither to big or too small)–into something like the Mediterranean had been centuries earlier–a commercial superhighway. Hence, these North Atlantic cultures achieved a high degree of material wealth and cultural development through trade relative to the rest of the world.

The industrial revolution began in the English Midlands where coal was extensivly mined and harnessed in the first heat engines used to pump water from the coal mine shafts. Eventually the heat engines were made far more efficient by adding an adiabatic stroke and separating the steam condensing chamber from the piston. It should also be noted that the increasing production of iron thanks to the invention of coke smelting by Abraham Darby (first developed by the Chinese centuries earlier) also made this revolution possible. With efficient steam engines, plentiful steel, and cheap coal, England was poised to turn the North Atlantic into a “triangular trade” economy. In other words, England became kind of a city-state on the scale of a nation-state, with the New World’s vast plundered resources as the catalyst. England’s “tinkering culture” and high degree of literacy allowed many individuals to take these innovations and run with them, while a sympathetic merchant oligarchy increasingly controlled the state apparatus and made sure that any pushback against these changes was dealt with, by force if necessary (a point conspicuously omitted by Morris). Compare that to China where the upstart merchant oligarchy was typically “dealt with” by the Imperial Confucian bureaucracy if it got too uppity or out of hand, and hence “petty household manufacturing” remained the default mode of production rather than factories.

Agraria withered away and was replaced by Industria, where a new set of values would prevail. In this world, there were no hard-and-fast class divisions (in theory). Citizens are not ranked by birth, and become interchangeable. To emphasize this point, Morris cheekily redraws Gellner’s Agrarian diagram as an empty box to depict the idealized society of Industria:

Of course, Morris admits this is an idealized diagram, and reality often fails to live up to the theory. But the basic idea–that there are no rigidly defined caste systems by virtue of birth–is true in liberal Industrial societies. As the old saying went in Agraria, “You don’t get to be pharaoh by working on the pyramids.” Class distinctions were hard, fast and immutable. In Industria, by contrast, the saying is that “Anyone can be president (or prime minister).” And it’s technically true—if you’re a citizen over age 35, regardless of your race, gender, or access to inherited wealth, there are no legal barriers to you becoming the president of the United States, and most industrial nations are similar (even if they preserve symbolic monarchy as in Britain). Again, in reality, this does not play out so seamlessly and various “political dynasties” tend to form, along with oligarchy and plutocracy. But these are perceived by the public as something “wrong” with the system rather than the natural order of things, which proves Morris’s point.

I would quibble with one thing however. Despite basically restating Marx’s materialist doctrine from a century ago, Morris wants to be a good capitalist. I would argue that Industria has at least one hard-and-fast distinction: between those who own the means of production, and those who sell their labor to them. In capitalist societies, the owners of companies and stocks are in charge; in Communist societies it was the central planners, party leaders and government apparatchiks. But there’s still at least one major class distinction that cannot be erased. However, the border between these two classes is much more “permeable,” and many people sit within multiple classes at the same time—surviving on wages, yet earning some sort of rental and investment income.

As for values, Morris argues that social and political inequality is considered generally bad, unlike in Agraria. Sure, it exists, but is seen as something that is undesirable and must be at least somewhat mitigated. While hierarchies exist, hierarchies by accident of birth are seen as undesirable and illegitimate. Everyone is to be dealt with equally under the law, and at the very least lip-service is paid to this idea.

He describes attitudes toward economic inequality as ‘ambivalent’ (I might say conflicted). There is no desire for total leveling, and outsized rewards are considered a “motivator” for pro-social behaviors, as Mandeville famously stated in the Fable of the Bees. At the same time, extreme inequality is considered bad.

Industria seems to call for a wealth hierarchy that is low (by the standards of Agraria, anyway) but not too low. On the one hand, Industria can flourish only if it has affluent middle and working classes that create effective demand for all the goods and services that fossil-fuel economies generate, but on the other, it also needs a dynamic entrepreneurial class that expects material rewards for providing leadership and management. In response, fossil-fuel values have evolved across the last two hundred years to favor government intervention to reduce wealth equality-but not too much.p. 124

One way to make sense of the intellectual and cultural ferment over economic hierarchy across the last two centuries is to see it as an argument over what “equality” actually means when it comes to wealth. Some people emphasize equality of opportunity, making everyone equally free to truck and barter in the marketplace without too much concern over the resulting distribution of spoils, while others emphasize equality of outcome, favoring regulation of market behavior so that no one can pull too far ahead of the rest. Broadly speaking, classical liberals and libertarians champion equality of opportunity and worry that regulation stifles liberty (and with it economic growth); new liberals and socialists generally champion equality of outcome and worry more that malefactors of great wealth will undermine liberty (and with it economic growth). p. 125

Partisan Divide on Benefit of Having Rich People Expands (Gallup)

Of course, I would quibble that regulation of markets can’t stifle liberty because markets themselves are a form of behavioral regulation. It’s only a question of who the markets are regulated in favor of (which is why there is no such thing as “free trade”). In a society of perfect liberty, all you would have rights to would be what you could secure by force of arms.

Nevertheless, the necessity of having a consuming middle class to buy all the stuff that’s produced causes incomes to more broadly distributed than in peasant farming societies. Older ideas such as hunger making people work harder have been downgraded (with the exception of some quarters of the United States).

Violence as a means of problem solving is drastically curtailed in Industria. Extraordinary powerful centralized states claim a strict monopoly on the use of legitimate force and enforce it ruthlessly. While this was more-or-less true of Agraria, the extraordinary reach and power of the modern state backs it up much more effectively. Here Morris basically regurgiates the basic points and statistics of Pinker’s Better Angels of Our Nature. The drawbacks of an all-seeing police state remain unexplored, however.

Just as the complex division of labor and long-distance trade that made Agraria possible could not have functioned if farmers had been as violent as foragers, so too Industria’s open space of interchangeable citizens could not function if people still settled their disputes as violently as they did in the farming age. Fossil-fuel society depends on extreme pacification, enforced by Leviathans vastly stronger than anything Hobbes ever imagined (it is no coincidence that the first modern police force was created in early-industrial London in 1828). As so often in the past, people adjusted their values to reflect the new reality they lived in. Farming societies reduced the scope for legitimate use of violence to settle disputes, and fossil-fuel groups have reduced it much further. p. 131

Genders are viewed as more-or-less equal. Over the past century, it has been asserted that women should have all the same rights and opportunities as men and never be treated differently, unlike in Foraging and Farming societies. In fact, much of the conflicts today seems to be between people who favor either agrarian values (hierarchy, deference, strict gender roles, nepotism, moral absolutism, identitarianism) or industrial ones (egalitarianism, cosmopolitanism, gender parity, inclusiveness, moral relativism, skepticism). Forced and coerced labor is considered bad. Chattel slavery has been universally abolished and driven underground, replaced by “fossil slaves.”

Industria spread throughout Northwest Europe, and from there through colonialism, took over much of the planet (one needs to sell one’s goods somewhere, after all). Societies which resisted the values of Industria fell behind (most notably the Middle East), and societies which embraced them expanded and prospered (such as parts of East Asia).

Morris claims that there were two major paths to Industria: liberal and illiberal:

Fossil-fuel societies found two main ways to get from Agraria to Industria, one liberal and the other illiberal. Both paths proceeded by sweeping away the lines in figure 3.6 [Agraria], but they did so in very different ways. The Liberal approach involved declaring Agraria’s boundaries irrelevant and giving everyone, no matter what category they would have belonged to in a farming society, equal freedom and equal rights before the law. If traditional rules about how people should worship, whom they could marry, and what jobs they might do interfered with the growth of the markets that were needed to absorb and exploit the energy released by fossil fuels, then those traditions had to go. The illiberal path, by contrast, aimed not at ignoring difference but at eliminating it, by force if necessary. Consequently, illiberal methods tended to be much more backwardlooking than liberal versions and regularly relied on violence, forced labor, and even updated versions of godlike kingship. The two paths were mutually exclusive, and attempts to combine them were disastrous…pp. 107-108

The first indications of the liberal path appeared around the shores of the North Atlantic in the late seventeenth century, as the intercontinental expansion of markets began pushing up the amount of energy in the system. It was only around 1800, though, as the industrial revolution began in England, that the liberal path really became established…nineteenth-century liberals (or “classical liberals;” as they are often called, to distinguish them from their twentieth-century namesakes) tended to see small government as the best path toward Industria. The basic principle–mocked by the German socialist Ferdinand Lassalle as the “night-watchman state”–was that governments should do as little as possible, enforcing property rights and protecting the nation against attack, but leaving the promotion of the general welfare to free markets. The sheer complexity of fossil-fuel society, however, made it difficult to stick to this principle rigidly. As early as the 1830s, Britain’s government felt compelled to legislate on workplace conditions, and by the 1870s most liberal regimes had legalized trade unions and introduced free compulsory primary education. Some governments even offered saving plans for retirement, public health programs, and unemployment insurance. By the end of the nineteenth century, many Europeans spoke of a “new liberalism;…relying as much on the invisible fist of the state as on the invisible hand of the market to promote the greater good… pp. 110-111

The communist and fascist paths toward Agraria were deeply paradoxical, subjecting their citizens to harsh discipline in the name of creating homogeneous classless societies, deploying huge slave labor forces in the name of economic progress, and even swinging back toward godlike rulers in the name of the people. Despite these contradictions, though, there were several points in the twentieth century-especially the 1930s and 1970s-when the illiberal path toward Industria seemed to be faster than the liberal one, and since the 1980s, China’s post-Maoist reinvention of illiberal development has also produced faster economic growth than the liberal versions (albeit from a lower starting point, and also generating the negative externalities of environmental disaster, massive corruption, and violent protests).

In the end, the liberal path decisively did outperform its major twentieth-century illiberal rivals, Nazi Germany and Soviet Russia; and since the Soviet Empire collapsed in 1989-91, representative democracy, rule of law, and free speech have spread rapidly. p. 112

One consequence of the half-century of struggle between liberal and illiberal regimes was a massive expansion of state power in both kinds of societies, as governments tried to mobilize national will and resources. This trend ran directly against the nineteenth-century night-watchman tradition, but did mesh with the “new liberal” tendency to use activist big government to dissolve the distinctions left behind by Agraria. The outcome was the forging of liberal New Deals that replaced the last vestiges of Agraria’s Old Deal in the mid-twentieth century. p. 113

For five thousand years, governments had managed defense, law and order, property rights, and worship, but in the mid- and late twentieth century most New Deal regimes also took responsibility (to greater or lesser degrees) for education, health, employment, and the environment. Some instituted wage and price policies, replacing markets with civil servants; others nationalized vital industries, from coalmining to banking. Bureaucracies and tax rolls ballooned, and steeply progressive income taxes drove income inequality back into a range not seen since the age of foragers…Since the late 1970s, however-for reasons that remain controversial, many fossil-fuel national income distributions have decompressed… p.113-114

The more that fossil-fuel societies have moved toward peace, democracy, open markets, gender equality, and equal treatment before the law, the more they have prospered. Consequently, over the astonishingly short period of two centuries, large parts of the world have moved far from Agraria toward Industria. There is still, of course, a long way to go to reach the truly open social space of figure 4.7 [Industria]; economic elites and organized business groups continue to have much more influence on social policies than ordinary citizens, and a recent study of the prevalence of family names in high-status occupations suggests that Industria still has dearly definable elites of birth. But even so, never before in the course of human history has so much changed so quickly for so many. p. 118

Here, I would quibble as well: strictly speaking, both paths were liberal, just different forms of it.

In an important new book, Why Liberalism Failed, political scientist Patrick Deneen argues that Liberalism-Proper is at the heart of all Industrial Societies, both left and right, yet we don’t notice it, because we’ve implicitly internalized its concepts as just the “normal” order of things. It’s the water in which we swim. But there are increasing signs that it is breaking down and that the center cannot hold.

At the core of Liberalism, as stated above, is the solitary individual who has no inherent distinction or obligations. Deneen argues that the “solitary, lone individual” posited by liberal philosophers (most notably Hobbes and Locke) does not exist in nature—we all come into the world on day one within the context of families, cultures, classes, nationalities, religions and so forth.

And this leads to Deneen’s most important insight: the creation of the completely solitary atomized individual necessary for Industria—interchangeable with every other citizen and free from all social obligations aside from those established by contract—requires a vast expansion of state power! It cannot be otherwise. The lone individual does not exist in nature; it must be created by the state. This is why state and market expand in tandem rather than being antagonistic. For markets to work you need commodities, and you cannot commodify everything under the sun unless you establish ownership claims and prevent the spontaneous formation of other more organic forms of social solidarity which undermine commodification and market exchange.

Northwest European intellectuals quickly moved on to extending the mechanical model from the natural to the social order, looking at politics as a mechanism and asking which kinds of machines would work best. As late as 1700, though, the new thinking’s challenge to the Old Deal remained very limited. Not even John Locke’s famous claim in his Second Treatise of Government–that because man is “by nature all free, equal and independent, no one can be put out of this estate, and subjected to the political power of another, without his own consent”–necessarily required rejection of kingship, aristocracy, or the established church, and in 1688 the English elite brought half a century of conflict to a close not by abandoning the Old Deal but by compromises that enmeshed monarchy in a constitutional web.p. 119

Not until the second half of the eighteenth century did the Old Deal itself come under real pressure. In 1762, when Rousseau announced in The Social Contract that the only source of political legitimacy was the “general will” of the people, he was still very much an eccentric (albeit a literary celebrity), in exile not only from his native Geneva but also from France and the city-state of Berne. Just a quarter of a century later, however, the Founding Fathers of the United States–men deeply enmeshed in the new Atlantic economy–had moved far enough away from the values of Agraria to feel that they could write their new constitution in the name of “We the People,” rather than in the name of God or a king. Just two years after that, the bourgeois gentlemen who gave France a Declaration of the Rights of Man and the Citizen baldly stated that “Law is the expression of the general will.” p. 120

By the 1780s, French and American revolutionaries had become every bit as radical as the men who created democracies in classical Greece, but when fossil fuels began flooding the North Atlantic world with energy, the challenges to the Old Deal really took off. By the mid-nineteenth century, societies that had reorganized themselves co look like figure 4.7 were reaping huge rewards, and values that fitted with this boundary-free structure flourished. By the 1860s, a century after The Social Contract, political values had shifted in most industrializing societies. Elites had come to recognize that grounding political power on the general will rather than tradition or claims to divinity would not bring on anarchy. In fact, they saw, in a community of interchangeable citizens the general will really was the only secure basis for legitimate political authority. pp. 120-121

The problem Deneen identifies is that this philosophy requires intentionally breaking up all social bonds and turning us all into stark competitors which in turn undermines the social capital and collective bonds that all societies need to function properly. Not having orders assigned at birth leads to a vicious arms race for social status, which undermines cooperation necessary to form any kind of human society at all. This leads paradoxically to the Hobbesian “war of all against all.”

Thus liberalism sorts societiy into an ever-smaller circle of “winners” and an ever larger pile of “losers” who are understandably upset at being excluded. As Deneen argues, Liberalism, despite its claim to remove all forms of distinction by birth, has seen the formation of a brand new aristocracy, only this time supposedly based wholly on merit. Yet this new aristocracy is increasingly seen by the majority as being as illegitimate and aloof as the one it replaced.

This article from the Atlantic: The 9.9 Percent are the New Aristocracy, makes a convincing case that the divisions under globalized Neoliberalism are between a 0.01 percent Superclass that can buy and sell politicians; a prosperous cosmopolitan bourgeoisie located in expensive urban and suburban enclaves comprising another 9.9 of affluent citizens, and the 90 percent of “left behinds” in post-industrial, post-Fordist “sacrifice zones” scattered across the world which are increasingly feral and ungovernable.

With the coming of globalism, automation, and AI, it remains an open question as to whether Industria will morph yet again into something else. Here Morris displays a total ignorance of Peak Oil and falls flat on his face.

Morris considers only two scenarios: that his numerical indices will continue to increase at they rate they did for the last couple of centuries leading to the “Singularity” as promoted by Ray Kurzweil. Here Morris embraces the transhumanism promoted by people like Yuval Noah Hariri in his book Homo Deus, where humans become some sort of post-human cyborg and all previous human-centered values will be rendered moot. The only other possibility he considers is a nuclear exchange that ends civilization.

Despite his understanding that energy capture determines the social structure and values, he fails to account for the most likley possiblity–an exhaustion of fossil fuels and a long, slow catabolic collapse back to Agraria as the high energy carbon-based fuels are exhausted due to the fundamental laws of thermodynamics.

I readily concede, though, that no one can foresee how–or whether–we will break through the hard ceiling that limits what is possible for a fossil-fuel economy, just as no one in the past could foresee how or whether foragers would break through the hard ceiling over their economy or farmers that over theirs. In many ways, these three great energy transitions are very similar, and yet–as Margaret Atwood observes in her sparkling commentary–this time really is different. Ten thousand years ago, hundreds of separate societies were experimenting with farming. Most failed to shatter the hard ceiling, bringing on Malthusian tragedies for the people involved, but a few succeeded. Over the last two thousand years, at least five societies have pressed against the upper limits of farming economies; four failed to break through, but the experiments kept going, until in the late eighteenth century Northwest Europeans unleashed a fossil-fuel economy. Today, however, we have a single global experiment, and failure threatens everyone with disaster. p. 261

No one in the past could foresee the future energy brekthroughs because they did not have physics, engineering, and the laws of thermodynamics. If they did, they would have been in Industria already. Today, we have all those things, and we can foresee the future thanks to them.

The literature here is vast, and has been available for years. Everything from the works of M. King Hubbert back in the 1970s, to more recent books by petroleum geologists have made the case that Peak Oil will limit energy extraction. Just because the economy did not revert to the Dark Ages after 2008 does not invalidate the long-term prediction. Why does Morris not examine any of this literature, if only to dismiss it?

I’m guessing its the environment at Stanford University where Morris teaches that informs his transhumanist views. It’s the classic Sinclair Principle: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” For a historian so immersed in quantifiable outcomes, his intransigence is puzzling. I have in my library a slim volume by a professor of engineering at another major California university—the California Institute of Technology (CalTech) called Out of Gas. It’s certainly not the most exhaustive work on Peak Oil, but it does have one of the briefest and clearest descriptions of the issue. In that book, the author, Daniel Goodstein, writes:

Until only two hundred years ago-the blink of an eye on the scale of our history-the human race was able to live almost entirely on light as it arrived from the Sun. The Sun nourished plants, which provided food and warmth for us and our animals. It illuminated the day and (in most places) left the night sky, sparkling with stars, to comfort us in our repose. Back then, a few people in the civilized world traveled widely, even sailing across the oceans, but most people probably never strayed very far from their birthplaces. For the rich, there were beautiful paintings, sophisticated orchestral music, elegant fabrics, and gleaming porcelain. For the common folk, there were more homespun versions of art, music, textiles, and pottery. Merchant sailing ships ventured to sea carrying exotic and expensive cargoes including spices, slaves, and, in summer, ice. At the end of the eighteenth century, no more than a few hundred million people populated the planet. A bit of coal was burned, especially since trees had started becoming scarce in Europe (they soon would begin to disappear in the New World), and small amounts of oil that seeped to the surface found some application, but by and large Earth’s legacy of fossil fuels was left untouched.

Today we who live in the developed world expect illumination at night and air conditioning in summer. We may work every day up to a hundred miles from where we live, depending on multi-ton individual vehicles to transport us back and forth on demand, on roads paved with asphalt (another by-product of the age of oil). Thousands of airline flights per day can take us to virtually any destination on Earth in a matter of hours. When we get there, we can still chat with our friends and family back home, or conduct business as if we had never left the office. Amenities that were once reserved for the rich are available to most people, refrigeration rather than spices preserves food, and machines do much of our hard labor. Ships, planes, trains, and trucks transport goods of every description all around the world. Earth’s population exceeds six billion people. We don’t see the stars so dearly anymore, but on most counts few of us would choose to return to the eighteenth century.

This revolutionary change in our standard of living did not come about by design. If you asked an eighteenth-century sage like Benjamin Franklin what the world really needed, he would probably not have described those things we have wound up with-except perhaps for the dramatic improvement in public health that has also taken place since then. Instead of design or desire, our present standard of living has resulted from a series of inventions and discoveries that altered our expectations. What we got was not what we wanted or needed but rather what nature and human ingenuity made possible for us. One consequence of those inventions and changed expectations is that we no longer live on light as it arrives from the Sun. Instead we are using up the fuels made from sunlight that Earth stored up for us over those many hundreds of millions of years. Obviously we have unintentionally created a trap for ourselves. We will, so to speak, run out of gas. There is no question about that. There’s only a finite amount left in the tank. When will it happen?

David Goodstein; Out of Gas, pp. 24-26

When will it happen? Morris does not even consider the possibility. It’s clear that there will be no new energy breakthrough. Instead, we are keeping Industria going on increasingly low-grade sources of fuel and far-flung sources of energy–something that apparently can continue for quite a while, even as the climate is disrupted. New methods of extracting and producing energy exist, but they cannot sustain the exponential growth that capitalism requires. That is, they cannot scale. Thus we are already seeing the beginnings of profound transformations in social values, with continuing disruptive technological progress adding a further element of change.

As automation and AI erode the economic need for human labor, how will social values evolve? Already we see the outlines of the new ethos as promoted by members of movements like the Alt-right and the “Intellectual Dark Web.” Their arguments are that although the elite class is not endowed with superiority by virtue of their birth, they are endowed with it due to their genetics. Furthermore, they contend, genetics are passed down through generations much like aristocratic titles of old. Hereditarianism and genetic determinism replace divine rights, yet serve the same function—it is used as a justification  and an apology for an increasingly “winner take all” approach to wealth distribution. This “meritocracy” will be invoked whenever these outsize rewards are questioned; in other words–“just desserts” is the order of he day. In “free and open” markets, any resentment on the part of “losers” will be chalked up to jealousy and envy towards their betters.

Since genetics are not amenable to tinkering with social policy, safety nets will be seen not as a social good, but rather as impediments to social progress by preventing the necessary culling of the herd. Ruthless competition in the Market will be the end-all and be-all determinant of social value rather than previous concepts such as equal rights and the inherent dignity and worth of every man created in the image of God. Instead of promoting concepts such as leisure and virtue, the new elites will be depicted as hard-working and ultra-productive, with the mass of citizenry depicted as feckless parasites who contribute little (that is, the “chosen few” and the “trivial many”). They will even be depicted as more morally virtuous. Social provisions are already being dismantled all around the world because of Neoliberal austerity policies, leaving citizens increasingly left to fend for themselves in a sort of Neofeudal arrangement.

As we saw above, there is already an emergence of a new tech/financial aristocracy as out-of-touch and intransigent as the old aristocratic elite (“let them eat cell phones”). Institutions such as staggeringly expensive university education and unpaid internships ensure that admission to elite circles is reserved for the already wealthy and well-connected. A new servile class has emerged enabled by digital platforms. Instead of the noblesse oblige of the Old Deal, the new elites have embraced an ethos of pure Objectivism and Social Darwinism. Compassion is seen as a weakness, and competition as the ultimate virtue. The winners of these tournaments are seen as advancing the human race, with the losers as “inferior stock” that must be culled in the name of “progress.” Democracy will be seen as vulgar “mob rule” which interferes with the natural workings of the Market by elites, and it will be stealthily dismantled by transferring decision-making authority to transnational institutions beyond the reach of parochial voters.

Extreme inequality will once again be seen as the natural order of things—something that is just impossible to resolve or even mitigate without the wholesale destruction of society. As for violence, high-tech surveillance technology and the digitization of everything will ensure that violence is ever-more monopolized in the hands of the elites making resistance to the new order effectively impossible.Increasingly, violence will be “passive” rather than active (the disappearance of jobs, withdrawal of health care, ostracism through social media, etc.). Thus, elites can feel like their hands are clean, and will blame the victims’ lack of virtue for their own suffering.

In the long run, as net energy can no longer be sustained and capitalist growth recedes, will we transform into a more fair socialist distribution or regress to Agraria? The popularity of reactionary moments and authoritarianism around the world does not bode well for us. Some Peak Oil writers have argued (notably James Howard Kunstler) that a return to Agraria is inevitable. They argue that Science will be discarded in favor of religion and superstition, and social values will once again revolve around the necessity of coercive labor arrangements and folk tradition. Slavery, indentured servitude, and debtor’s prisons will all make a comeback (as indeed they already have in the U.S.). Social mobility will disappear with a sclerosis of existing caste systems. Even chattel slavery—one of our oldest and most durable institutions—-may yet emerge from its underground tomb. It would have behooved Morris to at least explore these possibilities a little more.

On thing is for sure: our values are not done evolving. Obviously, I don’t think much of Morris’ predictions. However, in another very important book, How Will Capitalism End?, the German sociologist Wolfgang Streeck presents a much more realistic and coherent picture of capitalism in its death throws as it decays from its own internal contradictions and an exhaustion of the human and natural resources on which it depends:

Even before 2008 it was generally taken for granted that the fiscal crisis of the post-war state had to be resolved by lowering spending instead of raising taxes, especially on the rich. Consolidation of public finances by way of austerity was and is being imposed on societies even though it is likely to depress growth. This would seem to be another indication that the economy of the oligarchs has been decoupled from that of ordinary people, as the rich no longer expect to pay a price for maximizing their income at the expense of the non-rich, or for pursuing their interests at the expense of the economy as a whole. What may be surfacing here is the fundamental tension described by Marx between, on the one hand, the increasingly social nature of production in an advanced economy and society, and private ownership of the means of production on the other. As productivity growth requires more public provision, it tends to become incompatible with private accumulation of profits, forcing capitalist elites to choose between the two. The result is what we are seeing already today: economic stagnation combined with oligarchic redistribution.

…In his attempt to rehabilitate [Capitalism] by reclaiming its ethical foundations, Max Weber drew a sharp line between capitalism and greed, pointing to what he believed were its origins in the religious tradition of Protestantism. According to Weber, greed had existed everywhere and at all times; not only was it not distinctive of capitalism, it was even apt to subvert it. Capitalism was based not on a desire to get rich, but on self-discipline, methodical effort, responsible stewardship, sober devotion to a calling and to a rational organization of life. Weber did expect the cultural values of capitalism to fade as it matured and turned into an “iron cage” where bureaucratic regulation and the constraints of competition would take the place of the cultural ideas that had originally served to disconnect capital accumulation from both hedonistic-materialistic consumption and primitive hoarding instincts. What he could not anticipate, however, was the neoliberal revolution in the last third of the twentieth century and the unprecedented opportunities it provided to get very rich.

Pace Weber, fraud and corruption have forever been companions of capitalism. But there are good reasons to believe that with the rise of the financial sector to economic dominance, they have become so pervasive that Weber’s ethical vindication of capitalism now seems to apply to an altogether different world. Finance is an ‘industry’ where innovation is hard to distinguish from rule-bending or rule-breaking; where the pay-offs from semi-legal and illegal activities are particularly high; where the gradient in expertise and pay between firms and regulatory authorities is extreme; where revolving doors between the two offer unending possibilities for subtle and not-so-subtle corruption; where the largest firms are not just too big to fail, but also too big to jail, given their importance for national economic policy and tax revenue; and where the borderline between private companies and the state is more blurred than anywhere else, as indicated by the 2008 bailout or by the huge number of former and future employees of financial firms in the American government.

After Enron and WorldCom, it was observed that fraud and corruption bad reached all-time highs in the US economy. But what came to light after 2008 beat everything: rating agencies being paid by the producers of toxic securities to award them top grades; offshore shadow banking, money laundering and assistance in large-scale tax evasion as the normal business of the biggest banks with the best addresses; the sale to unsuspecting customers of securities constructed so that other customers could bet against them; the leading banks worldwide fraudulently fixing interest rates and the gold price, and so on…

Capitalism’s moral decline may have to do with its economic decline, the struggle for the last remaining profit opportunities becoming uglier by the day and turning into asset-stripping on a truly gigantic scale. However that may be, public perceptions of capitalism are now deeply cynical, the whole system commonly perceived as a world of dirty tricks for ensuring the further enrichment of the already rich. Nobody believes any more in a moral revival of capitalism. The Weberian attempt to prevent it from being confounded with greed has finally failed, as it has more than ever become synonymous with corruption.

Wolfgang Streeck; How Will Capitalism End?, pp. 69-71

The Great Leveler: Review (Part 3)

“It is better to know some of the questions than all of the answers.” – James Thurber

Part One
Part Two

I’ve spent the most time focusing on the first two chapters of the book, which take a look at the history of inequality. I did that for a few reasons: 1.) I have not seen this material discussed in detail in other reviews, 2.) How inequality formed has been a significant focus of this blog, and 3.) I posed the question a while back of where private property came from, and I think it’s an important question. I think the book offers good answers here, and those answers are hardly complimentary to the specious libertarian arguments about “justice,” “fairness,” and lack of coercion.

I’m not going to really spend much time on the rest of the book, as it’s thesis is well-known by now: That only violent shocks have had any real, lasting impact on the overall levels of inequality in the historical record. Here’s Scheidel himself writing in The Atlantic:

The Only Thing, Historically, That’s Curbed Inequality: Catastrophe (Atlantic)

And you can see some of his lectures on YouTube:

LSE Events | The Great Leveler: violence and the history of inequality (YouTube)

Dr. Walter Scheidel — The Great Leveler (Science Salon # 13) (YouTube)

He couches these in the imagery of the “Four Horsemen of the Apocalypse”: mass-mobilization warfare, transformative revolutions, state breakdowns, and disease pandemics. Instead of chronological order, he discusses these in order of historical importance, beginning with the time period in which these phenomena were most in evidence–for example, transformative revolution in the early Twentieth century and disease pandemics in late antiquity and medieval Europe. I have just a few notes:

1.) Mass-mobilization warfare. This is by-and-large a fairly recent phenomenon. The only historical precedents are places like the ancient Greek city-states, and those were islands of relative equality (and cultural flourishing) in the sea of poverty and despotism (despite the slaves). The modern history of mass conscription really begins in the aftermath of the French Revolution. Prior to that, armies relied on conscription and did not have the manpower to staff large professional armies for long periods of time. The big armies, he says, were products of large underlying populations and not mass-mobilization. Even these only featured maybe 2 percent of the population at any one time. For mass-mobilization, he uses the criteria of over 10 percent of the adult male population of a country. This only exists under industrialism, as less people are needed to produce food than in agrarian societies:

Military mass mobilization has largely been a modern phenomenon, at least in a sense in which this concept has been defined in the present pages: at least a tenth of the entire population had served in the military…Considering the prominent role of infectious disease as a source of attrition in premodern armies, prolonged mobilization even at this threshold level would gradually have claimed a very large share of the total effectively eligible population of able-bodied men. For that reason alone—not to mention economic, fiscal and organizational constraints—traditional agrarian societies were unlikely to sustain this kind of effort for any significant amount time.

That some imperial polities were capable of fielding very large armies was simply a function of their size and not a sign of mass mobilization. For instance, in the eleventh century CE, the Northern Song Dynasty maintained huge military forces to contain the threat posed by the Jin to the north. Reported troop totals of up to 1.25 million may reflect disbursement of stipends, some of which were pocketed by corrupt officers, rather than actual strength, but even an army of 1 million would not have exceeded 1 percent of a population of at least 100 million at the time. The mature Mughal Empire controlled well more than 100 million subjects and never mobilized even 1 percent of them. The mature Roman Empire kept maybe 400,000 men under arms out of a population of 60 million to 70 million, a rate of well less than 1 percent. Ottoman mobilization levels were even lower. pp. 181-182

Large periods of warfare do not always have a leveling effect, however. He mentions that warfare can be potentially associated with more inequality, not less. During the U.S. Civil War, for example, the freeing of slaves and destruction of assets made Dixie more equal, but the profits amassed from the conflict made the victorious Union more unequal.

One interesting fact I didn’t know was that Japan was once one of the most unequal societies on earth prior to the Second World War. This contradicts the commonly-held idea that ethnically homogeneous, collectivist societies will always be “naturally” more equal than others. This is a common reactionary argument. This fact contradicts this: political decisions and institutions matter, even in ethnically homogeneous societies like Japan:

Japan was once one of the most unequal countries on earth. In 1938, the country’s “1 percent” received 19.9 percent of all reported income before taxes and transfers. Within the next seven years, their share dropped by two-thirds, all the way down to 6.4 percent. More than half of this loss was incurred by me richest tenth of that top bracket: their income share collapsed from 9.2 percent to 1.9 percent in the same period, a decline by almost four-fifths… p. 115

Mass-mobilization “total wars” have had a leveling effect during the Twentieth Century. The “all hands on deck” nature of such wars, Scheidel contends, was what underpinned the welfare state and relative equality of the first three decades after the Second World War, which, he concludes (along with Thomas Piketty), was an aberration in the historical trend towards greater inequality.

2.) Transformative Revolution. Of course, the poster children for this are the Communist revolutions, particularly in Russia and China, but which happened in other countries as well. One conclusion that people may find disturbing is the relative ineffectiveness of prior revolts against the elites throughout history. There were plenty of revolts and uprisings in agrarian societies, but they seem to have had little lasting effect on the overall social structure or level of inequality:

In Europe, reports of peasant uprisings begin to flow freely in the late Middle Ages. Complemented by numerous urban revolts, they continued well into the early modern period. One study counts no fewer than around sixty peasant rebellions and some 200 urban risings in late medieval Germany alone, and a broader survey of medieval Italy, Flanders, and France gathers a much larger number of instances. The Flemish peasant revolt of 1323 to 1328 was the biggest rural movement prior to the German Peasants” War of 1524 and 1525 and stands out for the unusual scale of its initial success.
Peasant armies, at first allied to urban constituencies, drove off nobles and knights; they also exiled aristocrats and officials. By the time the rebellious citizen of Bruges captured the Flemish ruler, Count Louis, in 1323 and had him locked up for five months, the rebels were in control of much of Flanders. Conflicting interests of the urban and rural elements of the movement and the threat of French military intervention subsequently led to a peace in 1326 that would have severely limited peasant autonomy and imposed fines and payment of arrears.

Because peasant leaders, chosen by popular assemblies, were excluded from the negotiations, these terms were immediately rejected by rural rebels, who proceeded to re-establish authority over most of the country until they were defeated in battle by the French in 1328. Just how much leveling occurred under peasant control remains an open question. They seized and redistributed some of the land of the exiles and set up their own governance with taxation and courts. p. 245

However violent they may have been in practice, local risings of this sort stood no chance of addressing entrenched inequalities. Even partial exceptions were relatively few in number. The English Peasants’ Revolt of 1381, for instance, was ostensibly a failure. Triggered by the imposition of new taxes to fund the war in France, at a more fundamental level it was driven by the peoples’ desire to protect gains from the rising cost of labor triggered by the Black Death-gains the elite sought to contain with the help of labor statutes and feudal constrictions.

The movement was quickly put down, although not before rebels had taken the Tower of London, ransacked palaces and mansions in the capital, personally confronted King Richard II, and executed the Archbishop of Canterbury and the Lord Chief Justice, among other luminaries—and not before risings had occurred across much of the country, though mostly in the east. p.248

Just like their late medieval antecedents, early modern peasant revolts rarely had any discernible effect on the distribution of income and wealth. The German Peasants’ War brought the south German peasantry concessions that proved beneficial in the long run by constraining the spread of what is known as the “second serfdom”—protections that were to set them apart from rural populations to the north and east which had not joined the risings. The Swiss peasant war of 1653 more immediately resulted in lower taxes and debt relief. Although examples such as these suggest that violent resistance could on occasion make a difference, the general picture is nonetheless clear: more significant leveling was beyond the scope of premodern rural revolts. p. 250

This may be partly due to the nature of the revolts. Most of these revolts were not looking to overthrow the social order, but rather to address specific grievances. Peasant farming societies were broadly accepting of inequality. All strata of society would have more or less accepted the social order memorably depicted by the Anglican hymn “All Things Bright and Beautiful”: “The rich man in his castle,The poor man at his gate, God made them high and lowly, And ordered their estate.” Ian Morris refers to this order as the “Old Deal”:

The Old Deal was at heart a circular argument, tying political and economic inequality together and justifying both. Virtue and power followed each other: because the gods loved the rulers, the rulers were rich, and the fact that the rulers were rich showed that the gods loved them.

Hesiod, as usual, was explicit. “Virtue and reputation attend upon wealth; shame accompanies poverty and confidence comes with riches.” In the fifth century AD, more than a millennium after Hesiod, St. Augustine took it for granted that the poor in what is now Tunisia did not want to abolish inequality; they just wanted to join the ranks of the rich. “When the poor catch sight” of the upper classes, he said, “they murmur, they groan, they praise, and they envy, wanting to be their equals, grieving that they cannot make it. In between the praises of the rich, they say: ‘These are the only ones who matter; these are the only ones who know how to live.'”

…economic inequality…seems to have struck most people as natural. When French peasants were given the opportunity to send cahiers de doléance outlining their grievances to the crown in 1789, remarkably few complained about wealth inequality; nor, when reformers went into peasant villages, did they hear many demands for the redistribution of property. Rather, to their evident surprise, they found that most peasants felt that the masses had to be poor while the few were rich.

Examples could easily be multiplied, and much of the time, the very language that people spoke reinforced the Old Deal. The rich and powerful were aristocrats, noblemen, and gentlemen; the poor and weak were base, vulgar, and villeins. In the twentieth century, when anthropologists were able to talk to members of farming societies, they regularly found that having a healthy respect for authority—knowing your place—was a key part of their informants’ sense of themselves as good people… Ian Morris; Foragers, Farmers and Fossil Fuels, pp. 73-74

Peasant revolts were in this context, according to Morris. They did not seek to alter or abolish the underlying social relations, as the Communist revolutions did. Rather they merely sought to unseat corrupt local officials or redress specific grievances. The social logic of farming society was taken for granted:

…The most remarkable thing about the waves of leveling rage that periodically swept through farming societies, though, is how rarely the target of the protests was inequality as such: most of the time, it was limited to specific individuals among those who currently held power, whose wicked actions violated the Old Deal.

When protests and threats failed to change elite behavior, farmers sometimes took direct action, but when they did do this, they regularly insisted that they were attacking only the local authorities rather than the ultimate authority, be he king, emperor, or pope. The distant ruler, they asserted, remained virtuous, but his underlings were betraying him (“The tsar is good, but the boyars are bad” went a Russian saying). By attacking these wicked minions, the logic of peasant resistance said, rebels were actually helping the king maintain the Old Deal. Ian Morris; Foragers, Farmers and Fossil Fuels, p. 76

The first two “horsemen” are largely post-Enlightenment phenomena brought forth by what Marx would call “increasing productive capacity,” i.e. industrialism. Indeed, mass-production was invented for making pulley blocks for the Royal Navy, and interchangeable parts were invented for supplying muskets for the French army. Transformative revolutions and mass-mobilization warfare are not attested to in the historical record; they are products of the Industrial Revolution and fossil-fuel-powered civilization. In contrast, the latter two “horsemen” Scheidel covers—pandemic diseases and state collapse—have the longest historical tradition of leveling in traditional agrarian societies based on solar power. There are many examples.

3.) State collapse. Fans of collapse literature will enjoy this part of the book the most. It reads much like the “classics” of collapse literature–Joseph Tainter, Jared Diamond, William Orphuls, Thomas Homer-Dixon, Ronald Wright, Spengler, Gibbon, et. al.

Because the wealthy simply have more to lose, the loss of state capacity and its attendant trade flows affects them disproportionately. Instability also is bad news for them, as large fortunes rely on political stability. So leveling is effected more by the loss of elite income than by raising the living standards of the poor, which often fall as well, just not as much relative to where they started.

State failure was a powerful means of leveling because of the multiple ways it interfered with the enrichment of the ruling class…in premodern societies, elite wealth was primarily derived from two sources-the accumulation of resources through investment in productive assets or activities such as land, trade, and finance and predatory accumulation via State service, graft, and plunder. Both income streams critically depended on the stability of the state: the former because state power provided a measure of protection for economic activity and the latter even more so for the simple reason that scare institutions served as a vehicle for generating and allocating gains. State failure might lower returns on capital and completely erase profits derived from the exercise of or from proximity to political power.

As a result, established elites stood to lose on a grand scale. Political turmoil not only deprived them of opportunities for continuing enrichment but also threatened their existing property holdings. Significant reductions in elite income and wealth were likely to curtail inequality: although everybody’s assets and livelihoods were at risk in times of state failure or systems collapse, the rich simply had vastly more to lose than the poor did. A subsistence peasant household could afford to lose only a relatively modest fraction of its income and still get by…The wealthy, on the other hand, were able to survive even after having lost most of their income or property. Those among the formerly rich and powerful who weathered the storm, and those who replaced them in whatever diminished positions of leadership remained, were likely to end up far less wealthy not only in absolute but also in relative terms.

The compression of material disparities in the wake of state failure or systems collapse was a function of different scales of impoverishment: even if these events left most or all people worse off than before, the rich had farmer to fall. Moreover, we have to allow for the possibility that to the extent that political unraveling interfered with predatory surplus extraction, commoners may even on occasion have experienced an improvement in their living standards. In that case, leveling would not merely have been the result of a race to the bottom conducted at different speeds but might also have been reinforced by gains among the working population. However, owing to the nature of the evidence, it is generally easier-or at least somewhat less desperately difficult-to document the decline of elites than to identify concurrent improvements among poorer groups…

Scheidel takes a look at the following historical collapses: Tang Dynasty China, the Western Roman Empire, the Bronze Age collapse in the eastern Mediterranean, the Late Classic Maya in Pre-Colombian America, the ancient kingdoms of the Near East, and modern-day Somalia.

The fall of the western half of the Roman Empire and the resultant ruin of its wealth elite is a less bloody but no less revealing case of leveling through state collapse [than the Tang Dynasty]. By the early fifth century CE, enormous material resources had ended up in the hands of a small ruling class with intimate ties to political power. Very large fortunes are documented in the western half of the Mediterranean basin, which comprised the empire’s original Italian core and its extensive Iberian, Gallic (now French), and North African territories. The senate in Rome, according to long-standing tradition populated by the richest and politically best-connected Romans, had come to be dominated by a very few grand and closely interconnected families that were based in the city of Rome itself. Those super-rich aristocrats were said to have “possessed estates scattered across almost the whole Roman world.”…The result of marriage and inheritance as well as officeholding, transregional landed wealth was sustained not only by the basic security provided by a unified imperial State but also by the state-sponsored movement of goods for fiscal purposes that allowed estate owners to benefit from reliable trade networks. As in Tang China, senators’ immunity from surtaxes and service obligations that weighed heavily on lower elite strata further boosted their fortunes. In the end, the very richest families supposedly commanded annual incomes comparable to the revenue the state expected to draw from entire provinces and maintained palatial dwellings in the city of Rome and elsewhere…

…Between the 430s and 470s CE the Roman state lost control first over North Africa and then over Gaul, Spain, Sicily, and finally even Italy itself as Germanic kings took over. The eastern Roman Empire’s attempt to regain Italy in the second quarter of the sixth century caused major turmoil and soon failed due to renewed Germanic incursions. This dramatic breakdown of Mediterranean unity dismantled the extensive networks of estates owned by a Rome-based top elite that was no longer capable of holding on to possessions outside Italy and eventually in large parts of Italy itself.

Intensifying political decentralization effectively wiped out the uppermost tier of western Roman high society. A process that had begun in the hinterlands of the Mediterranean basin in the fifth century reached the Italian peninsula in the sixth and seventh. Holdings of landlords residing in the city of Rome largely came to be confined to the surrounding region of Latium, and even the popes were deprived of Church estates in southern Italy and Sicily…Aristocracies became much more localized in scope and far less wealthy than they had once been. Decline manifested itself in various ways, from the downgrading or abandonment of fancy country villas to the unceremonious disappearance of the venerable senate from the record and the fact that no senatorial families can be traced beyond the early seventh century. The writings of pope Gregory offer what is perhaps the most striking illustration of the depths to which formerly wealthy families had fallen. The Church’s leader repeatedly mentions destitute aristocrats whom he helped keep afloat with small acts of charity …

The demise of Rome’s super-rich could hardly have been more spectacular, and it foreshadowed the fall of the Tang aristocracy: the main difference was that murderous endings, albeit not unknown, appear to have been far less common in the Roman case. Violence had nonetheless been central to this process, generously applied in the carving up of the empire…pp. 264-266

4.) Epidemic disease. The Black Death is the poster child here, carrying off as much as a third or more of the European population. Unlike wars, plagues leave the productive infrastructure intact, so they are associated with periods of greater wealth; but also nutrition, mobility, less social stratification, greater economic development (e.g the end of feudalism in Western Europe), and so on, for the majority of people. This conclusion is pretty robust.

In premodern, agrarian societies, plagues leveled by changing the ratio of land to labor, lowering the value of the former (as documented by land prices and rents and the price of agricultural products) and raising that of the latter (in the form of higher real wages and lower tenancy rents). This served to make landowners and employers less rich, and workers better off, than before, lowering inequality in both income and wealth. At the same time, demographic change interacted with institutions in determining actual shifts in prices and incomes. Depending on workers’ ability to bargain with employers, epidemics produced different outcomes: the existence of price-setting markets for land and especially labor was a fundamental precondition for successful leveling. Microbes and markets had to operate in tandem to compress inequality. Finally, as we shall see, any leveling that did occur tended not to last and, except in rare circumstances, was ultimately undone by demographic recovery that resulted in renewed population pressure. pp. 292-293

I’ve argued on numerous occasions that this fact is what lies behind the natalist philosophy of many reactionaries. A lot of times people are confused by the fact that such people are simultaneously opposed to birth-control, abortion, and aid to poor families. This position seems contradictory, or even nonsensical, until one realizes that a large, desperate, and starving population keeps wages at rock bottom. Those riding in the litter always want more litter-bearers. A smaller population means less wealth to extract and more competition for jobs, which raises wages–something the elites who own the means of production, whether in land or businesses, regard as bad. From that standpoint, a lower birth rate is a scare for elites, which is why they’ve taken to importing massive populations from all around the globe. The problem is that this has caused unintended consequences for them, which is why Trump, and the rise of populism more generally, has caused so much consternation among reactionaries.

Scheidel dimly concludes that most of the Great Levelers are no longer present at this point in history. Medical technology (especially antibiotics) have dulled the effects of pandemic deceases. Indeed, the Spanish Flu outbreak coincided with the greatest period of inequality in history (just prior to World War One) and killed more people in sheer numbers than any disease before it. Yet it failed to even make a dent in inequality.

Mass-mobilization warfare, at this moment, seems equally unlikely. There have been no massive world wars since the nuclear umbrella came into existence post-1945; only civil wars and skirmishes. Today’s high-tech armies rely less on manpower than technology. Indeed, in the modern-day U.S. with its all-volunteer force, poverty is actually the prime driver of people into the armed forces!

Centralized states are more resilient than in the past, dulling the potential for state breakdown. Indeed, the capacity of states to “print money” has gone exclusively to help the elites maintain their fortunes and position, while “austerity” for everyone else has helped them to privatize even more of the commons than they already had. Here, the peaceful secession of nations into smaller, more adaptable autonomous units holds more promise (e.g Scotland, Catalonia, etc.)

Thanks to modern economic growth and fiscal expansion, state institutions in high-income countries have generally become too powerful and too deeply entrenched in society for a wholesale collapse of governmental structures and concurrent leveling to occur.  And even in the most disadvantaged societies, state failure has often been associated with civil war, a type of violent shock that does not normally produce equalizing outcomes. p. 440

And transformative revolution seems pretty unlikely in the aftermath of Communism’s demise. Indeed, “divide and rule” tactics have been honed to such a fine degree and deployed with such effectiveness thanks to corporate mass media and cybernetic control systems that it seems difficult to imagine any consensus ever forming on “what is to be done.”  Hot-button social and “wedge” issues keep the electorate perennially at each other’s throats as the elites watch from above the fray in their gated country clubs and penthouse apartments. Both political parties are funded by the same transnational elite donor class. Both defenders *and* opponents of the status quo get their checks signed by the same people drawn from the same banks, much like a pro-wrestling tournament. Real alternatives are few in number, divided, underfunded, and lack cohesion and power. The media megaphone is denied to them. They can easily be co-opted and arranged into circular firing squads. The failure of things like Occupy, the Arab Spring, and the Syriza government in Greece, among others, reinforce this impulse to defeatism and cynicism.

Conclusion: The Rhetoric of Reaction

So is it hopeless? Is Nuclear War the Only Cure for Inequality? (Scientific American)

One fact that matters is that mass-literate industrial societies have only been with us for a few hundred years. Thus, I’m not sure that history is as much of a guide as we might think. Even the questioning of inequality does not have a deep history, as we saw from the Ian Morris quote above. Ancient societies seemed broadly accepting of it. Modern industrial and post-industrial societies, however, are less so. The very presence of books like The Great Leveler as well as Thomas Piketty’s best-seller Capital in the Twenty-First Century point to the fact that modern inequality is indeed seen as a problem in need of a solution, or at least close examination, by a large segment of the population. Much ink has been spilled in papers and online about the “problem” of inequality, even by people who we would think might not care otherwise. If nobody cared, we would not be discussing books like this one, and you would not be reading this blog!

Any discussion of The Great Leveler raises the following question: is the historical record of inequality a justification for inequality? Rather than coming up with philosophical justifications for grotesque inequality, reactionaries are increasingly turning to a variant of the futility thesis: “nothing will work, so why bother trying?” Extreme inequality simply a “law” of history (just like the supposed inviolable “laws” of economics which somehow always benefit the One Percent).

As I mentioned, this view appears to be a staple of the new “Intellectual Dark Web” that’s forming—the brain trust the reactionary movement. I’ve already mentioned Jordan Peterson’s constant appeal to it, but he’s not the only one. Here’s Robin Hanson mentioning it in a discussion on the Waking Up podcast with Sam Harris (after Harris makes an eloquent case for more intervention in the economy):

[ 01:55:14] Robin Hanson: “I want to recommend a book called ‘The Great Leveler’, which is about the history of inequality. And the summary point is that inequality basically consistently always increases except with big wars, famines, or civilization collapses. Hardly anything else matters for it. It’s one of those ropes that everybody is pulling on so it’s really hard to make much of a difference. Given that history, you kinda should hope that inequality increases, because the alternative is worse.”

Sam Harris: “It could also increase but the floor could keep rising as well.”

Robin Hanson: Yeah, absolutely.

Which makes me wonder to what extent this idea is intended by its boosters to become a self-fulfilling prophecy.

…It is 20th-century sociologist Robert K. Merton who is credited with coining the expression “self-fulfilling prophecy” and formalizing its structure and consequences. In his 1948 article Self-Fulfilling Prophecy, Merton defines it in the following terms:

“The self-fulfilling prophecy is, in the beginning, a false definition of the situation evoking a new behavior which makes the original false conception come true. This specious validity of the self-fulfilling prophecy perpetuates a reign of error. For the prophet will cite the actual course of events as proof that he was right from the very beginning.”

In other words, a positive or negative prophecy, strongly held belief, or delusion—declared as truth when it is actually false—may sufficiently influence people so that their reactions ultimately fulfill the once-false prophecy.

Self-fulfilling prophecy are effects in behavioral confirmation effect, in which behavior, influenced by expectations, causes those expectations to come true. It is complementary to the self-defeating prophecy.

Self-fulfilling prophecy (Wikipedia)

I wonder to what extent the constant echoing of “inequality has always been with us,” and “only massive violence ever solves it,” is a gambit to cow opponents of inequality. Interestingly, the deployment of such views seems to be directly correlated to the actual levels of inequality in the society at large. Hanson’s statement feels vaguely like a threat—it’s as if the rich are holding us hostage and we’re all strapped to a bomb that they will detonate at the slightest threat to their privilege. “Nice society you have here. Sure would be a shame if something happened to it…”

A useful book here was written a number of years ago. It’s called The Logic of Rhetoric and Reaction by Albert O. Hirschman. Hirschman sorts reactionary rhetoric into three broad but useful categories (based on the Wikipedia article):

The perversity thesis: any purposeful action to improve some feature of the political, social, or economic order only serves to exacerbate the conditions one wishes to remedy. In other words, “The law of unintended consequences.” Indeed, the popular libertarian tract “Economics in One Lesson” is a book length exposition of this idea.

The futility thesis: attempts at social transformation will be unavailing or ineffective. That is, “They will simply fail to “make a dent.” In regards to inequality, this presents a classic fallacy of the excluded middle—since a society of complete equality is not achievable or even desirable, any attempts to mitigate or temper extreme inequality are futile. Peterson himself commonly deploys this thesis.

The jeopardy thesis: The cost of the proposed change or reform is too high as it endangers some previous, precious and important accomplishment. That is, “The cure is worse than the disease.” I note that this is the most common subtext when The Great Leveler is brought up in one of these conversations.

When we oppose proposals for change, we can argue from three basic positions: 1) the proposal will exacerbate the very problem it is designed to solve; 2) the proposal will have no effect on the problem; and 3) the proposal will put some other value or benefit of the status quo at risk.

Review by Michael P. Thompson; Social Science Quarterly, July 1, 1992

You’ll notice that nearly all of the rhetoric deployed by reactionaries like Peterson or Hanson or other YouTube stars like are simply variations on these themes. Hirschman argues that they are “rhetorics of intransigence”, which are expressly designed to shut down rather than to further debate:

In nineteenth-century England, for example, many members of Parliament argued that proposed legislation to extend voting rights to men outside the gentry would put individual freedom in jeopardy. In 1832, the reformers introduced the Reform Bill, which would grant about 10 percent of the male population the right to vote, based on demonstrated possession of at least ten pounds sterling. Opponents have argued that the involvement of the commercial and industrial classes in the political process would upset the delicate balance of “Royalty, Aristocracy, and Democracy.” (pp. 90-91) The costs would be too great. The specific arguments were that “democratization” of England would halt economic expansion by slowing industrial innovation; that the masses who held the vote would compromise the integrity of the nation’s judiciary; and that pressure created by mass opinion would squelch the creative and courageous energy of the enlightened minority, a minority which had triggered England’s greatest political, religious, and social reforms. Such arguments now seem rather strange, which is precisely the point Hirschman wishes to make.

…He [also] argues…that the perversity thesis and the futility thesis, when used to oppose the same proposal, often undermine each other. Some critics of welfare reform have traditionally argued that efforts to provide broader social benefits for the poor or disadvantaged would be impotent; other critics have argued that such efforts would, in fact, be overwhelming.

Review by Michael P. Thompson; Social Science Quarterly, July 1, 1992

Along with the above, here are some other commonly deployed arguments by reactionaries in defense of extreme inequality:

1) A desire for greater equality is really just a manifestation of *envy*, and not anything “wrong” with the current system per se. That is, the poor are “just jealous,” and irrationally resentful of people richer and more successful than they are.

Resentment of Crazy-Rich Americans Isn’t Just Envy (Bloomberg)

On this note, I had originally intended to review The Great Leveler alongside The Spirit Level, since both books deal with the theme of inequality. But there is nothing much to say about the Spirit Level aside from pointing out its overwhelming conclusion: that extreme inequality is profoundly corrosive of societies. It makes everyone worse off, even the people on top of the wealth pyramid. That is, even the rich have worse living standards in highly unequal societies, let alone the poor. A more diamond-shaped social structure just works better. This fact can be robustly measured across countries across time.  As Peterson might argue, “This is robust a conclusion as you can find anywhere in social science. The evidence for it is overwhelming!”

Life expectancy, crime, health, social cohesion, educational scores, economic growth, you name it—every single social variable is worse in unequal societies. Even ardent capitalist cheerleaders are increasingly realizing that as ownership concentrates, capitalism will no longer be viable, and can only be replaced with some form of feudalism (which for many reactionaries is a feature, not a bug, as they see themselves as the new overlords rather than the new peasants).

2.) Extreme inequality is an absolute necessity for economic development. You hear this one all the time.

It ignores the counterfactual: can we increase living standards without extreme inequality? If not, why not? I have never seen a convincing argument as to why we need extreme inequality for economic growth. Sure, there needs to be some motivation. But an aristocracy surrounded by moats as we see forming today in globalized capitalism has the opposite effect; is a demotivator. Rather than motivation, it fuels anger, despair, and resentment. If you have no way of bettering your situation, why try? And if there are no consequences for elite failure, if even the possibility is not there, then what motivation is there for competent management and pro-social behavior rather than incompetence, graft and looting at the highest levels of society?

Again, there is a classic false dilemma here: either we have widespread poverty or grotesque inequality. Broadly shared prosperity is not possible according to this line of thinking. The presence of societies like Denmark, for example, belies this. It’s clearly possible to have both. Reactionaries just don’t want you to think about this.

3.) We should instead focus on lifting up the poor and ignore the burgeoning rich. In other words, “it’s not a zero-sum game.”

Except for the fact that it is a zero-sum game. Statistics show that the engorged fortunes of the 0.01 percent have been accompanied by an almost identical decline in prosperity for the bottom 90 percent. Expenditure cascades have caused rising prices for the non-rich, especially for housing and education. Clearly the gains of the rich have come at the expense of the majority. To pretend otherwise is delusional.

You’re not imagining it: the rich really are hoarding economic growth (Vox)

Besides, even if we wanted to raise up the living standards bottom 90 percent, we’re currently doing the exact opposite: taking away stable employment in favor of contract and “gig” labor, effectively reducing the minimum wage; permitting unpredictable working hours and unpaid internships, requiring burdensome education, shredding the social safety net and making it ever more punitive, and not mandating vacation time or even basic health care (in the U.S.). Extreme inequality is not producing a society that’s lifting the lowest strata up, it’s producing a divided society of lords and serfs, a return to the Old Deal, with reactionaries coming up with new ideas to justify it like hereditarianism and meritocracy.

Final thoughts

One thing that is on our side is that we know what brings down inequality. This directly contradicts Jordan Peterson’s oft-repeated assertion that “we simply don’t know what to do” about inequality. For example, here he is on the Russell Brand podcast:

102:07: Jordan Peterson: “If we could come up with a way to reliably flatten inequality, that would be a good thing. But the empirical evidence suggests [that] if you look at the attempts to alleviate inequality over the last 200 years, whether there were left-wing governments in power or right-wing governments in power made absolutely no difference whatsoever to the degree of inequality. The only things that have been reliably demonstrated to flatten out inequality are catastrophes: wars, revolutions, epidemics…there’s one other…the price of radical redistribution seems to be tremendous death, and no one has come up with a solution…”

105:38: Jordan Peterson: “I don’t think the Left-wingers are pessimistic *enough* about the problem. They say inequality is a problem. Inequality *is* a problem. It’s a terrible problem. But then they say it’s probably a function of our political and economic systems and we can fix those. No, it’s not a function of our political and economic systems. Or if it is, it’s at such a deep level that we don’t know what drives it and we certainly don’t know how to control it.”

Russell Brand: “But does that not mean, Jordan, that would you then reject attempts to alter systems in favor of fairness? Because it seems to me that the focus is, as it would be for a clinical psychologist, individual change. That’s been a part of my personal experience. Without individual change, social change is sort of irrelevant, and many great gurus would say…”

JP: “Well, you answered it right then and there. Because I am concerned with inequality and social instability. And I’ve thought about it for a long time. I knew the Left-wing approaches tended to fail catastrophically. And the Right-wing, of course, isn’t particularly concerned with inequality.”

RB: “The left wing fails, and the right wing don’t care.”

JP: Yeah, that’s right. They also don’t see the dangers sufficiently. And the Right wing also tends to think that *the spoils go to who deserves them.* That’s *kind of* true, but it’s not *completely* true. So that’s part of that classification.

RB: Because from a Leftist perspective, the Leftist perspective would be that were not starting with a level playing field.

JP: And the system isn’t perfect at selecting…107:04

108:19 I don’t think the solution to the problem of inequity is sociological. I think it’s psychological…I think the temptation towards resentment and destruction that’s associated with sociological approaches to inequality is too great, and that as a consequence those movements tend to inexorably become corrupt and destructive. I think Orwell put his finger on it when he said that middle-class socialists don’t like the poor, they just hate the rich. And I think that hatred gets the upper hand in sociological movements. I think the best approach to ameliorating inequality is to strengthen the individual. And that’s what I’ve concentrated on doing. 109:12

This is clearly wrong. If we simply “didn’t know what to do” about inequality, then how do we explain the three decades after World War Two–as an “accident”? They may be an aberration, but those decades clearly provide all the data we need. Peterson is lying through his teeth here. There is a difference between things that are politically difficult, and things that are impossible or unknown. It is reactionary rhetoric disguised as self-help, something Peterson excels at. As Hirschman observes in his book: “The perverse effect sees the social world as remarkably volatile, with every move leading immediately to a variety of unsuspected countermoves; the futility advocates, to the contrary, view the world as highly structured as evolving according to immanent laws, which human actions are laughably impotent to modify.” (p. 72).

In fact, some of today’s best economic minds have thought about the extreme inequality problem, and have come up with various ways to reduce it. To name just a few:

– Unions.
– Highly progressive taxation, especially of unearned wealth.
– Steep inheritance taxes.
– Regulations against financial speculation.
– Redistribution of financial assets.
– Breaking up monopolies.
– Decommodification of socially necessary goods and services.
– Better worker protections.

And that’s just for a start.

How 12 experts would end inequality if they ran America (WaPo via Reddit)

A Nobel Prize-winning economist thinks we’re asking all the wrong questions about inequality (Quartz)

To once again quote Peterson from the FOX News interview I referred to at the beginning of this series of posts:

“I’m a traditionalist partly because of my social science training. One of the things I’ve learned as an active clinician and a social scientist is that most feel-good large-scale interventions end badly. It’s really hard to take a system that’s working reasonably well and make it better, but it’s easy to take a system that’s working reasonably well and make it worse.”

“And so, knowing that, and we know that’s the case, that should encourage you to scale back your ambitions, and if you want to make things better you could start by taking care of things that are within your control and also doing it in a way that’s least likely to cause harm to other people.”

The caution against large-scale interventions in society is advised. It might even be relevant except for these inconvenient facts:

1.) The system isn’t working well as it is. In fact, it’s measurably  and dramatically breaking down, and some sort of intervention is clearly needed. More and more people of various political persuasions are coming to this realization.

2.) No one on the current mainstream Left is advocating for radical reform or violent overthrow of the existing system. In fact, the left is proposing common-sense incremental changes which work within the existing system such as higher minimum wages and universal health care. The “Radical Left” that Peterson constantly uses as a piñata is marginal and largely a figment of his own reactionary paranoia. The Left isn’t advocating seizing all the property of the rich, after all. We just want things like white-collar criminals who gamed the system and wrecked the economy to be put in jail. I think not doing that is the more radical thing, don’t you? Which brings up the point that:

3.) The costs of not reforming the system increasingly outweigh the dangers of change. In fact, Leftist interventions have a proven track record of success—the Liberal Reforms, the New Deal, Social Security etc. None of these interventions in democratic political systems have resulted in repression. So, the idea that “neither the Left nor the Right” have moved the needle on inequality is patently wrong. Leftist administrations have indeed reduced inequality historically. Peterson is either deliberately lying or obfuscating here.

4.) And besides, the changes that have actually passed by so-called “conservatives” over the last half century actually have been radical social interventions in the system. Where was the concern when Reagan lowered tax rates for the rich from over 50 percent down to 25 percent? Where was the concern when the inheritance tax was repealed? What about things like charter schools and privatizing the Post Office? Who are the real radicals here? Let’s stop pretending conservatives are “conservative.” And besides, they also have most of the real legislative power in the country right now.

5.) The changes proposed by Progressives are explicitly designed to stave off the types of radical “solutions” that Peterson warns against and that Scheidel depicts in his book—wars, revolutions, collapses etc., which is why Peterson’s opposition is so puzzling given his stated beliefs. For example, the New Deal actually prevented revolution and a potential dictatorship. It rescued—not ruined—capitalism. The reason Communism got a foothold where it did was that there were no constructive avenues for reform. The reason it was so bloody is because there were large amounts of poor and desperate people who were pushed too far and had nothing left to lose. As President Kennedy famously said: “Those who make peaceful revolution impossible make violent revolution inevitable.”

I don’t want to believe that inequality just heads upward in perpetuity forever, and that we are condemned to be more and more miserable forever. I mean, I can’t dismiss it entirely. But I think acceptance is a sort of passive acquiescence. I think there’s a lot of room to maneuver. But I could be wrong. After all, one Progressive rhetorical tactic that Hirschman criticizes is the oft-quoted Leftist bromide that “history Is on our side.” Except maybe this time it isn’t. Maybe, as grim as it sounds, the arc of the moral universe bends not toward justice, but towards oligarchy. A boot stamping on the human face forever. But I certainly hope not.

Of course, pandemics, transformative revolutions, state collapse and world wars are just as unpredictable. And perhaps, in the greater scheme of it all, just as inevitable. Only time will tell if history will be written differently next time.

The Great Leveler: Review (Part 2)

The Rise of the “Original One Percent”

Part One

With the rise of more complex protostates with hereditary leaders, bureaucratic institutions and a monopoly of violence out of sedentary, kinship-based societies, inequality took a major step up. No longer did customary kinship, rights, duties, debts, obligations, affinity and social ties bind people together, but rather things like class, occupation, place of residence, assets, and so on. No longer was the extended clan (gens) the basic unit of society, but households under the organs of a state. What had started out as voluntary redistributive authority soon became compelled and confiscatory, as the newly formed managerial class asserted their rights over what once been held in common. New laws permitted this. Inheritance rights allowed wealth to be passed down through the generations. Reciprocity, redistribution and corvée labor were replaced by taxation, slavery, usury, and wages.

Protostates first formed in the great river valleys of the world where some form of domesticated grain was the primary foodstuff. This led to the “cereal hypothesis”–that cereal cultivation, especially under irrigation, was the most conductive to state formation (all quotes from the book unless noted otherwise).

A new global survey suggests that the cultivation of cereals played a critical role in the development of more complex social hierarchies. Unlike perennial roots, which are continuously available but rot quickly, grain crops are gathered en masse only at specific harvest times and are suitable for longer-term storage. Both of these features made it easier for elites to appropriate and hold on to surplus food resources. States first arose in those parts of the world that had first developed agriculture: once plants–and above all cereals–and animals had been domesticated, sooner or later humans shared their fate, and inequality escalated to previously unimaginable heights. p. 42

Not all early states were alike, and centralized polities coexisted with more “heterarchical” or corporate forms of political organization. Even so, centralized authoritarian states commonly outcompeted differently structured rivals. They appeared independently around the world wherever ecological preconditions allowed, in the Old World as well as the Americas and across a wide range of environments from the alluvial floodplains of Egypt and Mesopotamia to the highlands of the Andes. Defying this considerable diversity of context, the best-known among them developed into strikingly similar entities. All of them witnessed the expansion of hierarchies in different domains, from the political sphere to the family and religious belief systems–an autocatalytic process whereby “the hierarchical structure itself feeds back on all societal factors to make them more closely into an overall system that supports the authority structure.” Pressure in favor of increasing stratification had an enormous effect on moral values, for the residue of ancestral egalitarianism was replaced by the belief in the merits of inequality and acceptance of hierarchy as an integral element of the natural and cosmic order. p. 44

Irrigation works have also been associated with state formation, as observed long ago by Wittfogel:

During the four thousand years before Christ, in the great river valleys of Egypt, Mesopotamia, India, and China, the state took on the function of building grand hydraulic works, which in turn required centralized managerial bureaucracies to operate. Whoever controlled those means of production–in such cases it was a group of agromanagerial experts–became perforce the effective ruling class. The common techno-environmental basis in all those ancient Oriental civilizations, giving rise to similar social structures in them, was water control, mainly a program of irrigation made necessary by inadequate or unseasonal or undependable rainfall…

WigWams, Wittfogel, and Joan Didion: All in One Post (The Atlantic)

Another critical factor is writing, or at least some form of permanent recordkeeping. Ran Prieur comments: “It’s suspicious that we have no written record of a non-repressive large scale society. Did the world get fucked up by writing?” More than likely, the answer to that question is “yes”. Ownership and debt could now be preserved, far beyond the limits of human memory (where generalized reciprocity is based), and those who did the preserving–the literate cultural elite–became the rulers of society.

it would not be too strong to assert that it is virtually impossible to conceive of even the earliest states without a systematic technology of numerical record keeping, even if it took the Inka form of strings of knots (quipu). The first condition of state appropriation (for whatever purpose) must be an inventory of available resources—population, land, crop yields, livestock, storehouse stocks… As appropriation proceeds, continuous record keeping is required—of grain deliveries, corvée labor performed, requisitions, receipts, and so on. Once a polity comprises even a few thousand subjects, some form of notation and documentation beyond memory and oral tradition is required. The earliest administrative tablets from Uruk (Level IV), circa 3,300–3,100 BCE, are lists, lists, and lists—mostly of grain, manpower, and taxes… James C. Scott; Against The Grain, pp. 121-122

In addition to the servile class at the bottom, a literate managerial class formed at the top. Everywhere slavery, laws and writing come into place, the kinship-based society is weakened in favor of the chiefdoms. Now class, occupation, and place of residence take precedence old ties of kinship. The new state coalesces under some sort of priest-king.

Almost always, one member of the new elite made himself a king over all the others, but to hang onto his throne, he invariably had to form broader coalitions, turning would-be rivals into supporters. To coopt these near-peers, the ruler normally confirmed them as aristocrats with legal title to huge estates, and to make themselves indispensable to the ruler, his noblemen normally repackaged themselves as useful specialists in religion, law, letters, or war. Working together, these different kinds of elites could coordinate the larger society’s activities by raising taxes, enforcing laws, performing rituals, fighting neighbors, suppressing uprisings, and all of the other government activities that fill the annals of ancient and medieval history. Ian Morris; Foragers, Farmers and Fossil Fuels, pp. 65-66.

What is the state? Fukuyama defines it with these characteristics: (1) There is a centralized source of authority, whether in the form of a king, president or prime minister. (2) That source of authority is backed by a monopoly on the legitimate means of coercion, in the form of an army and/or police. (3) The authority of the state is territorial rather than kin-based, (4) States are more stratified and unequal than tribal societies, and (5) States are legitimized by much more elaborate forms of religious belief, with a separate priestly caste as its guardian. The form this state takes varies: “Sometimes [the] priestly caste takes power directly, in which case the state is a theocracy, sometimes it is controlled by the secular ruler, in which case it is labeled caesaropapist, and sometimes it coexists with secular rule under some form of power sharing.” (Origins of Political Order, p. 81). As Napoleon noted, “I do not see in religion the mystery of the incarnation so much as the mystery of the social order. It introduces into the thought of heaven an idea of equalization, which saves the rich from being massacred by the poor.” (i.e. Religion keeps the poor from killing the rich.)

Scheidel describes it thus:

Modern scholars have come up with a wide variety of definitions that seek to capture the quintessential features of statehood. Borrowing elements of several of them, the state can be said to represent a political organization that claims authority over a territory and its population and resources and that is endowed with a set of institutions and personnel that perform governmental functions by issuing binding orders and rules and backing them up with the threat or exercise of legitimized coercive measures, including physical violence.

There is no shortage of theories to explain the emergence of the earliest states. The putative driving forces are all in some way predicated on economic development and its social and demographic consequences: gains that the well-positioned reaped from the control of trade flows, the need to empower leaders to manage the problems arising from growing population densities and more complex relations of production and exchange, class conflict over access to the means of production, and the pressures created by military conflict over scarce resources that favored scaling up, hierarchy, and centralized command structures p. 43

Whatever the fundamental cause of state formation, everywhere it happened the effect was the same: “Premodern state formation separated a small ruling class from the mass of primary producers.” (p. 46):

Unequal access to income and wealth preceded the formation of the state and contributed to its development. Yet once established, governmental institutions in turn exacerbated existing inequalities and created new ones. Premodern states generated unprecedented opportunities for the accumulation and concentration of material resources in the hands of the few, both by providing a measure of protection for commercial activity and by opening up new sources of personal gain for those most closely associated with the exercise of political power. In the long run, political and material inequality evolved in tandem…p. 43

In principle, institutions could have flattened emerging disparities through interventions designed to rebalance the distribution of material resources and the fruits from labor, as some premodern societies are indeed reputed to have done. In practice, however, social evolution commonly had the opposite effect… p. 5… Very broadly speaking, after our species had embraced domesticated food production and its common corollaries, sedentism and state formation, and had acknowledged some form of hereditary property rights, upward pressure on material inequality became a given–a fundamental feature of human social existence…p. 10

Everywhere they occurred, centralized states led to greater and greater inequality over time. The managerial class set themselves apart and diverted large portions of their society’s surplus to themselves. If there is one overriding theme throughout the book, it is that early elites converted political power into private wealth. Very generally, in modern society, wealth leads to status, which leads to power. In ancient societies, status led to power, which led to wealth. There was no merchant or producer class that was able amass huge fortunes before mercantilism and mass-production industrialism:

In smaller and less hierarchical polities such as tribes or Big Man collectivities [sic], the status of leaders depended in no small measure on their ability and willingness to share their bounty with the entire community. The ruling classes of agrarian states and empires generally enjoyed greater autonomy.

Notwithstanding occasional and well-publicized displays of largess, the flow of redistribution tended to be reversed, further enriching the few at the expense of the many. The elite’s collective capacity to extract surplus from primary producers determined the proportion of overall resources that was available for appropriation, and the balance of power between state rulers and various elite groups decided how these gains were apportioned among state coffers, the private accounts of state agents, and the estates of the landed and commercial wealth elite. p. 49-50

For a book that has often been touted by right-wingers, Scheidel is not sympathetic at all to the original one percent, portraying them as rank opportunists misusing their power to fleece society through means such as rent-seeking, graft and corruption. At times his analysis is almost Marxist in tone. In some of the more memorable passages of chapter one, he writes:

Reduced to essentials, history has known only two ideal typical modes of wealth acquisition: making and taking…The advent of surplus-production, domestication, and hereditary property rights paved the way for the creation and preservation of personal fortunes… p. 48

Political integration not only helped expand markets and lowered at least some transaction and information costs: the pervasive power asymmetries that commonly characterized premodern polities all but ensured an uneven playing field for economic actors. Fragile property rights, inadequate rule enforcement, arbitrary exercise of justice, the venality of state agents, and the paramount importance of personal relationships and proximity to sources of coercive power were among the factors likely to skew outcomes in favor of those in the upper reaches of the status pyramid and those profitably connected to them. This would have been true in even greater measure of various forms of “taking” that were available to members of the ruling class and their associates. p 48

Rents from access to political power are not exclusive to low levels of development. A recent study of dozens of super-rich entrepreneurs in Western countries shows how they benefited from political connections, exploited loopholes in regulation, and took advantage of market imperfections. In this respect, the difference between advanced democratic market economies and other types of states is a matter of degree…In the most general terms, there can be little doubt that personalized political connections and favors made a much larger contribution to elite wealth than they do in developed countries today…Russian credit card tycoon Oleg Tinkov’s description of his peers–“temporary managers of their assets–they are not real owners”–applies in equal measure to the precarious standing of many of their predecessors from ancient Rome and China to the monarchies of early modern Europe . p. 51

With the rise of the managerial state, Schiedel determines one critical source of income inequality: Rents from access to political power. Wikipedia describes rent-seeking activities this way:

…Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. The classic example of rent-seeking…is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is not adding value in any way, directly or indirectly, except for himself. All he is doing is finding a way to make money from something that used to be free.

In agrarian societies a pattern emerges. Asymmetries in wealth and property become institutionalized. This goes hand-in-hand with political office. Based on Schiedel’s account, those who ascended to positions of political power and influence were able to appropriate the society’s productive surplus. That is, elites were able to use their authority and rule-making powers to allocate wealth and property to themselves. Most of this was not due to inventiveness or increased productivity, or even through “hard work” (that was done by the farmers), but through some form of rent-seeking activity. As he notes:

The more that personal fortunes depended on access to political rents, the more income from labor–at least if we can define corruption, embezzlement, extortion, military plunder, vying for benefactions, and taking over the assets of rivals as forms of labor–would have mattered than it did for entrepreneurial or renter investors of capital in more orderly and pacified societies …income of this nature could be a major, and at times perhaps even the principal, determinant of elite standing. This was true in particular of early, archaic states whose upper classes relied more on state-sponsored claims to rents in goods and labor services than on returns on private assets. These entitlements qualify the conventional distinction between income from capital and income from labor and once again underline the critical importance of political power relations in creating the original “1 percent.” p. 52-53

Based on Scheidel’s descriptions throughout the book, I would categorize the the major means by which “the original one percent” was created this way:

1. Privatization, Appropriation/Expropriation and Enclosure/Dispossession: As Emil de Laveleye expressed, “There is no doubt that, in primitive societies, the soil was regarded as the collective property of the tribe.” As kinship societies became class-based, however, land gradually became privatized. This was accomplished by a number of ways: seizing common land, acquisition by debt and foreclosure, privatization of ownership rights, or simply taking over rival territories and parceling out the land to politically connected insiders or military veterans. Creeping normality would do the rest.

The terms are quite similar, but there are a few distinctions. Appropriation means to set aside something for a specific use, such as an appropriations bill, which sets aside money for a specific purpose. Temple lands in ancient Sumeria, for example, were appropriated, as was corvée labor. However, appropriation does not necessarily mean changing ownership. For example, I can appropriate someone else’s writing style, but that does not mean the original owner cannot use it anymore.

Expropriation does mean depriving someone of possession of an asset. For example, a government expropriating land to build an airport. Often appropriation is a preliminary step to expropriation.

Privatization is the transfer in ownership of an asset that was formerly publicly held and commonly managed to being owned by a specific individual, family, or corporation. This can be done by expropriation, or through agreement or legislation. Enclosure can be thought of as a specific type of privatization. It is the closing off of formerly public lands by the assertion of individual ownership rights. This process is described in Marxism as “primitive accumulation.” Michael Hudson notes in Urbanization and Land Ownership in the Ancient World:

The irony is that the most archaic urban areas evolved out of gathering sites, which were the prototypical public spaces–public in the sense of not being controlled by any individual, family, or clan (or even “the state” ). Yet by the end of antiquity, urban real estate was well on its way co the modern situation in which it has become the largest privately owned economic asset. pp. 64-65

Growing expropriation is already observed as far back as ancient Sumeria, where the management of temples estates soon led the way to using religious office as a way to accumulate wealth and trap people in debt repayments. Priests ran temples as their personal estates along with their extended family. This transfer of land from public to private is summarized by Scheidel:

Fairly egalitarian modes of land ownership were once common in many of the regions that later came to host large empires. Among the Sumerians in southern Mesopotamia, one of the earliest civilizations known from written sources that date back more than 5,000 years, much farmland used to be controlled by extended patrilineal families of commoners who worked it as communal holdings. This type of ownership was also typical in early China, in the Shang and Western Zhou periods in the second millennium BCE, at a time when private land sales were supposedly inadmissible.

In the Valley of Mexico in the Aztec period, most land was held and cultivated by calpotin, corporate groups whose holdings combined family fields with common land. The former were sometimes periodically reconfigured to take account of changes in family size. The same was true of the ayllukuna in the Peruvian highlands of the Inca period, endogamous groups that assigned parcels at different altitudes to individual member families and regularly adjusted them to ensure an equitable distribution. Arrangements such as these imposed a powerful constraint on the concentration and commercial exploitation of land.

Over time, however, inequality grew as capitalholders acquired land and political leaders superimposed tributary structures on existing holdings. By the time Sumerian documentation expanded in the course of the third millennium BCE, we already encounter temples that held large amounts of land and worked it with their own institutional labor force, and we see nobles who had somehow amassed larger holdings as well.

Privatization of lineage land was possible as long as other group members agreed to it. Debt served as a potent instrument of converting surplus income into additional land: high annual interest rates of up to a third frequently compelled customary owners who had taken out loans to cede their holdings to creditors and might even condemn them to servitude if they had pledged themselves as collateral. This process created both large estates and a landless workforce to cultivate them...Privatization, in turn, reduced traditional social obligations to clients and supporters: the fewer costly social responsibilities were attached to private property, the more attractive it would have become to investors.

A variety of social statuses developed to cater to the labor needs of capital owners, such as sharecroppers and debt bondsmen, with slavery, a more primordial type of subordination, added to the mix. Analogous processes could be observed 4,000 years later, but at a comparable level of socioeconomic development, among the Aztecs, where rural debt and recourse to landless serfs and slaves sustained growing inequality.

The practices of state rulers provided both a model for, and also often the means or, encroachment. Sumerian kings sought to obtain land for themselves and their associates and insinuated themselves into the operation of temple estates to gain control over their assets…p. 54

Land was commonly parceled out by victorious leaders and warlords to their followers as a reward for service (see also, booty capitalism, below), as Schiedel notes:

…Considered the first “true” empire in history if we define empire in terms not merely of size but also of multiethnic heterogeneity, asymmetric core-periphery relations, and abiding local traditions of distinction and hierarchy, [the Akkadian kingdom] exercised power over diverse societies from northern Syria into western Iran… Local citystate kings were replaced by Akkadian governors, and large amounts of land ended up in the hands of the new rulers and their senior agents. Because much of the most productive farmland was held by temples, rulers either had it confiscated or appointed relatives and officials as priests to assume control of these resources. A new imperial ruling class that transcended the internal divisions of this far·flung realm accumulated large estates. Appropriated land, handed over to officials, was used to support them and to reward their own clients and subordinates, some of whom were known as “the select.” Later tradition expressed loathing for “the scribes who parceled out farmland in the steppe,” The beneficiaries of state grants further added to their holdings by purchasing private land…

…State-directed allocation of material resources to members of the political elite and administrative personnel converted political inequality into income and wealth inequality. It directly and immediately reproduced power asymmetries in the economic sphere.

The delegational nature of rule in premodern stares required rulers to share gains with their agents and supporters as well as with preexisting elites…Land grants were an almost universal means of rewarding key associates, being handed out by the chiefs of Hawai’i and the god-kings of Akkad and Cuzco, by Egyptian Pharaohs and Zhou emperors, by the kings of medieval Europe and by Charles V in the New World. Attempts to make these prebendal estates hereditary within the families of the initial beneficiaries and eventually tum them into private property were an almost inevitable consequence. p. 57

On that note, it’s not just land, but labor, too, that was commonly appropriated by various local elites, as Michael Hudson describes:

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 Period” saw central power wane vis-a-vis that of local clan heads, cheiftains and “big-men” …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.” Labor in the Ancient World PP. 654-655

The land ownership pattern in England today dates back to patterns laid down during the Norman conquest:

…when confronted with years of rebellion after his initial victory at Hastings, William the Conqueror switched to a policy of systematic expropriation.The ensuing massive transfers greatly increased the crown’s share of all land and placed fully half of all land in the hands of some 200 nobles, half of it held by ten close associates of the new king. Despite their privileged position, the latter ended up somewhat less extravagantly rich than the previous earls had been, whereas the other barons were on average much better off than most of the previous thanes had been. This violent redistribution reached deep into the ranks of the English elite: by the time of the Domesday Book survey of 1086, landowners who can unambiguously be identified as English held only 6 percent of the land by surface or 4 percent by value, and although their actual share may well have been greater, there is no doubt that Norman nobles had largely taken over…pp. 200-201

2. Graft, bribes, corruption, extortion, and political favors from holding high office: In ancient times, positions were based on one’s personal relationship to the ruler; there was no distinct “office” apart from the individual who held it. Your position in the hierarchy determined how much you could exploit those beneath you:

Participation in governance opened up access to income from formal compensation , benefactions of rulers and other superiors, and the solicitation of bribes, embezzlement, and extortion, and it often also provided shelter from taxation and other obligations. Senior military positions might be rewarded with a share of war booty. What is more, direct service for the state was not even a necessary prerequisite. Ties of kinship, intermarriage, and other alliances with officeholders could yield commensurate benefits. Moreover, considering the often rather limited infrastructural power of the state, personal wealth and local influence made it easier to shield not only one’s own assets from state or community demands but also those of friends and clients–in exchange for other benefits. If necessary, tax quotas could be met by shifting additional burdens onto the powerless. p. 49

Religion has been used as a means to wealth from ancient times. From the money changers of the Hebrew temple, to the indulgences of the Catholic Church to today’s “prosperity gospel” televangelists in the U.S., religion has always been a money-making enterprise. Corruption was endemic in ancient Sumeria, the very first extensively recorded civilization:

Temple administrators intermingled management of institutional assets with their own. Graft, corruption and force were already well-established means of appropriation. Sumerian cuneiform records from the city of Lagash in the twenty-fourth century BCE show that the local kings and queens took over temple land and the workers attached to it; that aristocrats acquired land by foreclosing on high-interest loans; that officials misused state assets such as boats and fishing grounds, overcharged for basic services such as funerals and sheep shearing, withheld wages from workers, and generally filled their pockets through corruption; and that the wealthy stole fish from poor men’s ponds. Whatever the merits of some of these allegations, the overall impression is that of a particular type of governance that encouraged encroachment aided by the exercise of power for personal benefit. p. 54

Similarly, in the Roman Empire:

The richest provincials joined the central imperial ruling class, eager to claim rank and attendant privilege and capitalize on the opportunities for further enrichment they offered. A survey of Roman literature has found that epithets of wealth were almost exclusively applied to senators of consular rank, who enjoyed the most favor and the best access to additional riches. Formal status ordering was grounded in financial capacity, and membership in the three orders of the state class-senators, knights, and decurions-was tied to staggered census thresholds. pp. 75-77

And in Han Dynasty China:

Great wealth accrued from favoritism and corruption: several imperial chancellors and other very senior officials were said to have accumulated wealth on par with the largest recorded fortunes overall. In the later stages of the Eastern Han Dynasty, the lucrative nature of top offices came to be reflected in the prices at which they could be purchased. Legal privilege shielded corrupt officials with growing generosity. Officials above a certain pay grade were not to be arrested without prior approval of the emperor, and similar protections extended to sentencing and punishment. p. 65

3. Military conquest and war profiteering: War for private profit has a long pedigree. Ancient Near Eastern rulers conquered new lands and enslaved the populations. Alexander the Great claimed he invaded Persia for revenge, but in reality, it’s likely he needed the money. Julius Caesar, too, needed to pay off his debts. James Scott desrcibes Max Weber’s theory of “booty capitalism”:

“Booty capitalism” simply means, in the case of war, a military campaign the purpose of which is profit. In one form, a group of warlords might hatch a plan to invade another small realm, with both eyes fixed on the loot in, say, gold, silver, livestock, and prisoners to be seized. It was a “joint-stock company,” the business of which was plunder. Depending on the soldiers, horses, and arms that each of the conspirators contributes to the enterprise, the prospective proceeds might be divided proportionally to each participant’s investment. The enterprise is, of course, fraught, inasmuch as the plotters (unless they are merely financial backers) potentially risk their lives…In many cases—in early Southeast Asia and in imperial Rome—war was seen as a route to wealth and comfort. Everyone from the commanders down to the individual soldier expected to be rewarded with his share of the plunder…James C. Scott; Against the Grain, p. 144

Similarly, in ancient Greece and Rome, conquering foreign lands was a route to wealth:

…Warfare was a similarly, if not more, important source of elite income. Roman commanders enjoyed complete authority over war booty and decided how to divide it among their soldiers, their officers and aides who had been drawn from the elite class, the state treasury, and themselves. Based on the number of military theaters and wars, it has been estimated that in the years between 200 and 30 BCE. at least a third of the 3,000- odd senators who lived in this period had a chance to enrich themselves in this fashion. p. 73

The Pentagon Can’t Account for $21 Trillion (That’s Not a Typo) (TruthDig)

4. Usury, foreclosure and loan-sharking: David Graeber’s Debt: The First 5,000 Years is the definitive book on this topic. In it he wonders how something as amoral as enslaving people with debt is commonly seen by most people as moral“surely one must pay one’s debts,” after all. Perhaps it comes from the hijacking of our innate notions of reciprocity and fairness by elites through a twisting of moral logic. In any case, Graeber writes of the origin of debt:

We don’t know precisely when and how interest-bearing loans originated, since they appear to predate writing. Most likely, Temple administrators invented the idea as a way of financing the caravan trade. This trade was crucial because while the river valley of ancient Mesopotamia was extraordinarily fertile and produced huge surpluses of grain and other foodstuffs, and supported enormous numbers of livestock, which in turn supported a vast wool and leather industry, it was almost completely lacking in anything else. Stone, wood, metal, even the silver used as money, all had to be imported. From quite early times, then, Temple administrators developed the habit of advancing goods to local merchants-some of them private, others themselves Temple functionaries-who would then go off and sell it overseas. Interest was just a way for the Temples to take their share of the resulting profits. However, once established, the principle seems to have quickly spread.

Before long, we find not only commercial loans, but also consumer loans-usury in the classical sense of the term. By c. 2400 BC it already appears to have been common practice on the part of local officials, or wealthy merchants, to advance loans to peasants who were in financial trouble on collateral and begin to appropriate their possessions if they were unable to pay. It usually started with grain, sheep, goats, and furniture, then moved on to fields and houses, or, alternately or ultimately, family members. Servants, if any, went quickly, followed by children, wives, and in some extreme occasions, even the borrower himself. These would be reduced to debt-peons: not quite slaves, but very close to that, forced into perpetual service in the lender’s household-or, sometimes, in the Temples or Palaces themselves. In theory, of course, any of them could be redeemed whenever the borrower repaid the money, but for obvious reasons, the more a peasant’s resources were stripped away from him, the harder that became.
David Graeber; Debt, the first 5,000 Years, pp. 64-65

In fact, the earliest texts make no distinction between servants (who work for pay), bonded labor (who work to pay off a debt, real or imagined), and chattel slaves (who are owned outright). Perhaps there really was no distinction to be made.

5. Tax farming and the holding of high political office: Tax farming was the practice of privatized tax collection in the ancient world that persisted until relatively modern times. This “entrepreneurial” approach to collecting taxes was rife with corruption and entitlement. Scheidel describes the role this played in elite wealth accumulation:

In addition to grants of land and labor, participation in the collection of state revenue was another important pathway to power-based elite enrichment. This process is so well attested that a long book could, and indeed should, be devoted to it. To name just one lesser-known example, in the Oyo empire, a large Yoruba state in West Africa in the early modern period, petty kings and subordinate chiefs gathered at local tribute-taking centers before they converged on an annual festival at the capital. Tribute in the form of cowrie shells, livestock, meat, flour, and construction materials was presented to the king through the intermediation of officials who had been appointed to act as patrons for particular groups of tribute-bearers and who were entitled to a share of the proceeds in exchange for their troubles. Needless to say, formal entitlements frequently accounted for only a modest portion of the personal income that fiscal agents derived from their service. p. 58

Governance was a key route to riches in the highly privatized Roman Empire:

Great wealth accrued from state administration outside Italy, and Roman-style governance was highly conducive to exploitation. Provincial administration was highly lucrative, and rent-seeking behavior was only weakly constrained by laws and courts set up to prosecute extortion: alliance-building and rent-sharing among the powerful provided insurance against indictment.

Moreover, at a time when annual interest rates of 6 percent were common in Rome itself, wealthy Romans imposed rates of up to 48 percent on provincial cities, which were in desperate need of money to satisfy the demands of their governors. Members of the equestrian order benefited from the widespread practice of tax farming, as the right to collect certain taxes in a particular province were auctioned off to consortia that then proceeded to do what they could to turn a profit.

This intimate association of personal wealth and political power was faithfully replicated at the local level. The mature Roman empire consisted of some 2,000 largely self-governing urban or differently organized communities that were loosely overseen–and opportunistically fleeced–by itinerant governors and small cares of elite officials and imperial freedmen and slaves who were mostly concerned wiht fiscal matters. Each city was normally run by a council that represented the local wealth [sic] elite. These bodies, whose members were formally constituted as decurions, were in charge not only of local taxation and expenditure but also of assessing their communities’ wealth for Roman state taxation, and they were responsible for raising funds that were to be handed over to collectors and tax farmers…The net result was an intensely stratified society in which the richest 1 percent or 2 percent absorbed much of the surplus beyond bare subsistence…pp. 75-77

7. Government-awarded monopolies and the sale of offices: Schiedel does not mention this, but I should note that one common form of rent-seeking for archaic governments were national monopolies. The most famous of these was probably to Royal salt monopoly in France, and the Gabelle tax it created:

Government monopolies, such as salt (which was part of the general farms) and recently introduced tobacco, were…farmed out…Indeed, the ability to create monopolies was one of the king’s resources; one of the more outlandish examples being the exclusive right to sell snow and ice in the district of Paris, sold for 10,000L per year in 1701. Francois R. Velde; Government Equity and Money: John Law’s System in 1720 France, p. 4

Another common method used throughout the Middle Ages was the creation and auctioning off of high political offices to aristocrats. They could then use their position to charge fees and nickel-and-dime the populace (the sale of religious offices was called Simony).

An officer was someone who held a government position not on commission or at the king’s leave, but as of right, and enjoyed various privileges attached to the position (in particular the collection of fees related to his activities). Offices were sold, and the king paid interest on the original sale price, which was called the wages of the office (gages). A wage increase was really a forced loan, requiring the officer to put up the additional capital. Officers could not be removed except for misconduct; however, the office itself could be abolished, as long as the king repaid the original sum….From 1689 to 1712 over 3,000 offices were created to supervise the markets of Paris in the minutest details, including “inspectors-gourmets of wines”, inspectors of pig’s tongues, and distinct officers in charge of respectively loading, unloading, and rolling barrels. Francois R. Velde; Government Equity and Money: John Law’s System in 1720 France, p. 6

Another factor not mentioned by Schiedel was seignorage, or profits derived from the government monopoly over the issuance of valid currency.

Medieval sovereigns had few ways of raising revenue apart from the proceeds of their personal domains: levying direct or indirect taxes was far beyond most feudal administrative capabilities. Seigniorage was therefore a uniquely attractive and uniquely feasible source of income-and medieval sovereigns happily indulged in it. Under normal circumstances, when seigniorage’ was levied only on the gradual increase in the coinage supply demanded by a growing monetary economy the revenues were relatively modest. But when the need arose, a sovereign could raise enormous sums by crying down or even demonetising altogether the current issue of the coinage and calling it in for re-minting off a debased footing. In 1299, for example, the total revenues of the French crown amounted to just under £2. million: of this, fully one half had come from the seigniorage profits of the Mint following a debasement and general recoining. Two generations later, the recoinage of 1349 generated nearly three-quarters of all revenues collected that year by the king. When such large sums could be raised, it is hardly surprising that there were no fewer than 123 debasements in France alone between 1285 and 1490. Felix Martin; Money: The Unauthorized Biography, pp. 88-89

9. Offhshore tax havens, tax avoidance and regressive taxation: This is only obliquely referred to by Scheidel, but is deserves more attention. Throughout history there is a pattern of the wealthiest individuals being able to hide their income form the state and avoid paying taxes—something that is usually considered to be a modern phenomenon. Because the wealthy had political power due to their status, they frequently exempted themselves from taxes and shifted the burdens of paying for the state to those less politically powerful. Not only has the so-called “Tytler calumny” promoted by libertarians never happened (where the rich allegedly have their assets confiscated via democratic popular vote), but in fact the exact opposite has been the trend throughout recorded history!

Primarily associated with modern times, Michael Hudson has documented how even in antiquity certain favored “tax havens” and “duty-free zones” existed outside of government juristdiction which allowed for elite accumulation of assets free from paying duties and obligations to the state, a method smaller and more local producers could not take advantage of. He makes an analogy between the Panama Canal Zone and the Greek island of Delos during Roman times:

The last thing the Delian merchant class wanted was a public authority to regulate its entrepot trade in captured cargoes, slaves or, for that matter, honest goods….Delos was for them not their home but their business residence. What they cared for most was not the city or the temple but the harbors, the famous sacred harbor, and especially the three adjoining so‑called basins with their large and spacious storehouses. It is striking that while these storehouses are open to the sea there is almost no access to them from the city. ..This characteristic of Delos’s warehouses being only open outwards, not inland, finds a parallel in modern Panama’s Canal Zone, whose warehouses likewise are bonded and set aside from the local economy (save for the National Guard’s pilfering and shakedowns). Panama’s imports from Asia are destined for other Western Hemisphere countries rather than for local consumption. Drug and arms shipments provide another analogue to Delian contraband. Finally, Panama’s sizeable Oriental and European population working as brokers and bankers recalls the adventurers who made their way to Delos. Both that island and Panama became what are now called “dual economies”: The Delian export trade involved the native population only minimally, much as is the case in Panama and other modern enclaves.

From Sacred Enclave to Temple City (Michael Hudson)

Similarly, it appears that the rich and powerful were disproportionately able to shelter their income and assets from taxation, while shifting the burden onto the debt donkeys of the middle classes and the poor.

It is striking that the wealthiest members of the [Roman] citizenry were not taxed proportionate to the size of their fortunes, let alone in a straightforwardly progressive manner. The scheme placed the heaviest burden on the upper reached on the commoner population instead of on the wealth elite. Even in an acute emergency, Rome’s oligarchic ruling class made as few concessions as it could get away with, in marked contrast to a democratic political system such as that of classical Athens, which…heavily taxed the rich to cover war expenditures. p. 187

Meanwhile, in Imperial China:

State capture of private resources was unlikely to contain a rise in private wealth inequality in the face of intensifying military mass mobilization. The system may even have been effectively quite regressive, considering that it imposed a very heavy double tax –military labor and agricultural products–on those least able to afford it, the farmers, whereas other forms of wealth may have been easier to shield from state demands. Infantry warfare as practiced at the time was relatively low-cost, relying as it did above all on conscription, mass-produced weapons (presumably involving forced labor by convicts and other state workers, as in later centuries), and the food that the farmers themselves produced. p. 185

Privilege derived from holding high state office fueled personal enrichment, a process that was tempered only by interfamilial rivalries and eventually more violent factionalist struggles that checked or reversed the rise of individual families but that failed to undermine their collective grip on the most lucrative positions of public service. Wealth accumulation was greatly aided by the fact that even distant relatives of the imperial family, as well as all families endowed with noble titles and all officials and holders of official rank, were exempt from taxation and labor services, an eminently regressive system that openly favored the powerful and well-connected. Members of the same group engaged in private purchase of public land, a practice repeatedly but unsuccessfully prohibited by their rulers. p. 260

One interesting historical trend is peasants who put themselves under the “protection” of a well-connected member of the elite class in order to shield themselves from increasingly burdensome taxation during the latter stages of state breakdown. The indebtedness that results is thought to be a contributor to the various feudal systems that emerge when centralized power falls apart.

…Instrumental in returning the Han to power, the great landowning families brought more and more land under their control and subordinated its cultivators through debt. Sources of the period refer to the elite practice of falsifying census accounts in order to conceal taxable assets. The decline in the number of registered households from more than 12 million in 2 CE to fewer than 10 million in 140 CE–at a time of expanding settlement in the southern reaches of the empire–thus reflects at least in part worsening noncompliance as landlords converted freeholders into landless tenants and shielded them from state agents. pp. 67-68

As a result, elite landownership expanded at the expense of the state, and attempts to implement land equalization schemes ceased after political instability commenced in the mid-eighth century CE. The growth of large estates sheltered peasants from state taxation, allowing landlords to convert the agricultural surplus into private rent. Linked to long-distance trade, these commercialized estates helped sustain an increasingly rich elite. Those who disposed of sufficient capital to run mills diverted water from peasants, a practice that prompted complaints but only sporadic state intervention. pp. 260-261pp

…In diffferent part of the later Roman Empire, we hear of farmers who sought protection by powerful landlords (as well as officials) who assumed responsibility for their dealings with the outside world, most notably imperial tax collectors. In practice, this interfered with the gathering of state revenue and strengthened landlords’ grip on the agrarian surplus.

This in turn not only weakened the central authorities but also shifted fiscal burdens to less powerful parties, much to the detriment of middling property owners. Once again, further polarization between rich and poor was an almost inevitable outcome, and just as in late Han China, private armies and incipient warlordism were not always far behind…pp. 79-80

Tax evasion and inequality (VoxEU)

10. Slavery and forced resettlement: Chattel slavery is older than recorded history, and in many cultures, including the “freedom-loving” West, slaves were the largest asset the wealthy possessed after land. Slavery, and numerous other forms of compelled labor (corvée, bonded labor, prison labor, migrant labor, indentured servitude, etc.) obviously was a huge factor in inequality in ancient times:

…In many premodern societies, the enslavement or deportation of outsiders …also raised overall inequality. The Neo-Assyrian empire in the Fertile Crescent was notorious for engaging in forcible resettlement on a huge scale, mostly from subjugated peripheries into the imperial heartland in northern Mesopotamia…Over the following century or so, the continuing inflow of deportees allowed Assyrian kings to build, populate, and provision several capital cities… Shorn of their former assets, [the deportees] could typically expect nothing better than an existence at the margins of bare subsistence. Their position may even have deteriorated as the empire reached the leak of its power. For along time, there had been no sign in the record that resettled subjects had been formally differentiated from the indigenous population: they were “counted together with the Assyrians.” This phrase disappeared in the final phase of Assyrian conquests, from about 705 to 627 BCE, when great victories and ongoing expansion fostered a heightened sense of superiority. Deportees were downgraded to the status of forced laborers and employed in large public works projects. Forced migration not only augmented the ranks of the poor but also added to the wealth and income of the upper class…

Slavery produced similar results. The enslavement of outsiders was one of the few mechanisms capable of creating significant levels of inequality in foraging societies of small size and low or moderate complexity, not only among the aquatic foragers of the Pacific Northwest but across a wide range of tribal groups. Yet once again, it took domestication and state formation to boost the use of slave labor to new heights. Under the Roman Republic, several million slaves entered the Italian peninsula, where many of them were bought up by the wealthy to toil in their mansions, workshops, and agricultural estates…pp. 60-61

The capture of slaves was a major reason for military operations, especially by the Romans, where human property was a major way the wealthy made their fortunes:

…Economic development grounded in market relations certainly picked up in the later stages of the Republican period. The use of slaves in cash crop production and manufacturing, as well as rich archaeological evidence for the export of wine and olive oil, points to the success of Roman capital owners. Yet this was only part of the story. Simple estimates of the likely scale of supply and demand suggest that landownership and related commercial activities could not have generated nearly enough income to make the Roman elite as rich as we know it became. And indeed, our sources emphasize the paramount significance of coercion as a source of top incomes and fortunes. p.73

Imperial unification and connectivity facilitated the expansion and concentration of personal wealth. Under Nero, six men were said to have owned “half” of the province of Africa (centered on modem Tunisia), albeit only until he seized their properties. While clearly hyperbolic, this claim need not have been dramatically far from the truth in a region where large estates could be described as rivaling city territories in size. p. 75

11. Assortative marriage, cronyism and nepotism: Wealthy families commonly made ties with other wealthy families in every culture, exacerbating the concentration of wealth. Things like dowries and bride-prices encouraged the trend of wealthy families to intermarry into other wealthy families. Nearly every hierarchical society has had ways to ensure that elites marry one another rather than commoners, from cousin marriage, to cotillions, to arranged marriages to the university system today. Tang Dynasty China offers some of the most extreme examples:

The most extravagant disparities were created at the very top, by families that back in the sixth and seventh centuries had closely cattached themsleves to the imperial court by abandoning their local bases and relocating to the capital cities of Chang’an and Luoyang, where close proximity to the throne ensured the most immediate access to political power and attendant lucre. This spatial clustering helped them secure access to senior government positions and provincial offices. Distinct from a provincial upper class that rarely ascended to state offices, these families formed a closed cultural elite that was increasingly interconnected by marriage. The most detailed study of this group and the numerous tomb epitaphs it left behind finds that by the ninth century CE, at least three-fifths of all known members of the resident imperial elite of Chang’an were linked by ties of kinship and marriage, including the majority of senior officials such as ministers and most top-tier officials in charge of provincial administration. What has been called a “highly restricted marriage and kin network” had thus come to control the Tang state, in no small part for the personal benefit of its members. p. 261

Similarly, during the Han Dynasty:

These dynamics both favored and constrained familial continuity in wealth holding. On the one hand , the sons of high officials were more likely to follow in their footsteps. They and other junior relatives were automatically entitled to enter officialdom and benefited disproportionately from the recommendation system employed to fill governmental positions. We hear of officials whose brothers and some six of seven–in one case, no fewer than thirteen sons–also came to serve as imperial administrators. On the other hand, the same predatory and capricious exercise of political power that turned civil servants into plutocrats also undermined their success…The top tier of the Han elite…did not last for much more than a century and was removed alongside the remnants of the ruling houses of the Warring States period. New favorites took their place… pp. 66-67

12. Wage Suppression and theft: Rather than simple “supply and demand” as promoted by professional economists, a cursory glance at history shows that the wealthy have always gone to great lengths to hold down wages as low as possible since the very first appearance of paid labor by using every legal (and some illegal) means at their disposal. In some cases this succeeded, in other cases it failed, depending on the prevailing sociopolitical conditions:

Elites had a powerful incentive to contain the leveling effects of the Black Death and its recurrences. The success of such measures varied widely between different societies depending on their power structure and even their ecology. Employers lost no time pressuring the authorities to curb the rising cost of labor… The actual effect of these ordinances appears to have been modest. (p. 299)… Within a generation, however, these measures had failed.p. 300

In western Europe, workers benefited because gains from labor scarcity were usually passed on to them. Not only did restrictions on wages and mobility fail, but the demographic shock of the plague also largely killed off the earlier medieval institution of serfdom…peasants asserted their mobility, moving to other manors if they offered better work conditions. This drove down rents and led to the commutation and eventual elimination of labor services that had been a standard feature of the manorial economy. Tenants ended up paying only rent and had the opportunity to work as much land as they could manage. This fostered upward mobility and led to the creation of a yeoman class of prosperous peasants…

On occasion workers resorted to violence in resisting elite attempts to deny them their newfound gains…popular rebellions in the form of peasant uprisings such as the Jacquerie in France (1358) and the Peasants’ Revolt of 1381 in England were the result. In the short term, the uprising was put down by force. But although new restrictive statutes were passed…the movement did deliver concessions to peasants: poll taxes were abandoned, and peasant bargaining expanded over time…By and large workers managed to benefit from labor scarcity, at least while it lasted.

Yet in other regions landlords were more successful in suppressing worker bargaining. In eastern European countries–Poland, Prussia, Hungary–serfdom was introduced after the Black Death.…central and eastern Europe faced the same problems of depopulation, abandoned land, and falling land and grain prices as were experienced farther west. The landed nobility resorted to legal measures to stem a decline in revenue, imposing ceilings on wages and the price of urban goods. Unlike in western Europe, the powerful strove mightily to increase labor obligations instead of reducing them, especially labor dues, cash payments, and restrictions on freedom of movement. In various countries, such as Prussia, Silesia, Bohemia, Moravia, Silesia, Russia, Lithuania, Poland, and Livonia, tenants were prohibited from leaving without permission or without paying a large fee or all arrears, or except at a certain time, or in some cases at all.

Poaching of workers was forbidden by law or lordly agreement; cities could be ordered to reject migrants, and rulers entered treaties for their return to their native countries. Tenant debt was a powerful instrument of retention. Obligations and restrictions continued to expand in the sixteenth century. A number of factors conspired to constrain workers, perhaps most importantly the growing political power of the nobility who held increasing jurisdictional sway” over the peasants on their manors, alongside unfavorable developments in commercialization and urbanism. As nobles expanded their powers at the expense of the state and cities failed to provide a counterweight, workers were trapped in increasingly coercive arrangements. … outcomes for workers differed much from those in western Europe. pp. 310-311

All told, this pattern holds across all ancient and preindustrial societies: Political leadership is channeled to wealth inequality. Or, to take the inverse: Large fortunes were the result of political power and influence. As Scheidel concludes:

Many more cases from around the world could easily be added but the basic point is clear. In premodern societies, very large fortunes regularly owed more to political power than co economic prowess. They differed mostly in terms of their durability, which was critically mediated by state rulers’ ability and willingness to engage in despotic intervention. Intense resource concentration at the very top and high inequality were a given, and although wealth mobility varied, this was of little concern to those outside plutocratic circles. Sketched out in the opening chapter, the structural properties of almost all premodern states strongly favored a particular coercion-rich mode of income and wealth concentration that tended to maximize inequality over time. As a result, these entities were often about as unequal as they could be. p. 84

Underneath their institutional and cultural differences, the empires of China and Rome shared a logic of surplus appropriation and concentration that generated high levels of inequality. Imperial rule mobilized flows of resources that were capable of enriching those at the levers of power on a scale that would have been unimaginable in smaller settings. The degree of inequality was therefore at least in part a function of the sheer scale of imperial state formation. Building on mechanisms of capital investment and exploitation that had first been developed thousands of years earlier, these empires raised the stakes ever higher. Greater profits were to be had from state office; lowered transaction costs for trade and investment over long distances benefited those who had income to spare. In the end, imperial income inequality and wealth polarization could be terminated and reversed only by dismemberment through conquest, state failure, or wholesale systems collapse, all of them intrinsically violent upheavals. The premodern historical record is silent on peaceful ways of combating entrenched imperial inequalities, and it is hard to see how any such strategies could have arisen within these specific political ecologies. p. 80

All of this is to answer the fundamental question I posed a few posts ago: How did private property originate? I guess we now know how. Rather than the happy fairy-tale and just-so stories told by libertarians like Brian Caplan (many of whom are on the payroll of the plutocrats), the above demonstrates in exhaustive detail how elites took control of the political apparatus of ancient states and used them to create vast inequalities of wealth and power.

The story Scheidel tells is quite the opposite of today’s Ayn Rand-inspired model of the mass of “takers” stealing the wealth of the tiny sliver of superhumanly-talented “makers” through government and the welfare state. I’ts pretty clear from this book that rather than wealth being created by a tiny minority and appropriated by the majority, in fact wealth is collectively produced and privately appropriated, and has been throughout history.

In societies that relied exclusively on solar power, there was no way to quickly and dramatically produce larger output, so there was no “economics” which endorsed things like privatization and trickle-down. The reason why these ancient societies did not function as modern societies do is explained by Francis Fukuyama by something he calls “the iron law of latifundia”:

There is something like an iron law of latifundia in agrarian societies that says that the rich will grow richer until they are stopped-either by the state, by peasant rebellions, or by states acting out of fear of peasant rebellions.

In premodern agrarian societies, disparities in wealth do not necessarily reflect natural disparities in abilities or character. Technology is fixed and no one is rewarded for being entrepreneurial or innovative. Before the mechanization of agriculture, there were no particular economies of scale to be had, either, that would explain the growth of large latifundia in terms of efficiency. Even large landowners had their fields worked by individual peasant families farming on small plots. But small initial differences in resources reinforced themselves through the mechanism of debt peonage. A wealthier peasant or landowner would lend money to a poorer one; a single bad season or crop failure would then reduce the debtor to serfdom or slavery, with the forfeiture of his family’s property. Over time, the advantages of greater wealth became self-reinforcing, since larger landowners could then buy influence in the political system to protect and expand their holdings.

This is why the anachronistic application of contemporary property rights theory to historical situations leads to fundamental misunderstandings. Many economists believe that strong property rights promote growth because they protect private returns to investment, thereby stimulating investment and growth. But economic life in Han Dynasty China resembled the world described by Thomas Malthus in his Essay On the Principle of Population much more than the world that has existed since the beginning of the Industrial Revolution of the last two hundred years…In a Malthusian economy where intensive growth is not possible, strong property rights simply reinforce the existing distribution of resources. The actual distribution of wealth is more likely to represent chance starting conditions or the property holders’ access to political power than productivity or hard work. (Even in today’s mobile, entrepreneurial capitalist economy, rigid defenders of property rights often forget that the existing distribution of wealth doesn’t always reflect the superior virtue of the wealthy and that markets aren’t always efficient.)

Left to their own devices, elites tend to increase the size of their latifundia, and in the face of this, rulers have two choices. They can side with the peasantry and use state power to promote land reform and egalitarian land rights, thereby clipping the wings of the aristocracy. This is what happened in Scandinavia, where the Swedish and Danish monarchs made common cause with the peasantry at the end of the eighteenth century against a relatively weak aristocracy. Or the rulers can side with the aristocracy and use state power to reinforce the hold of local oligarchs over their peasants. This happened in Russia, Prussia, and other lands east of the Elbe River from the seventeenth century on, as a generally free peasantry was reduced to serfdom with the collusion of the state. The French monarchy under the Old Regime was too weak to dispossess the aristocracy or remove their tax exemptions, so it ended up placing the burden of new taxes on the peasantry until the whole system exploded in the French Revolution. Which course the monarch chose-to reinforce the existing oligarchy or to lean against it-depended on a host of contextual factors like the cohesiveness of both the aristocracy and the peasantry, the degree of external threat faced by the state, and rivalries within the court. pp. 142-143

However, Schiedel takes a dismal view of the possibilities for non-violent political reform. Sure, they happened from time to time, he says, but mostly they were just a blip on an overall inexorable trend line towards more and more wealth in the hands of a few—small anomalies that did nothing to exacerbate the overall historical trend. As noted above, the French Revolution managed to equalize incomes–largely by executing the aristocracy and expropriating their (and that of the largest landowner–the Catholic Church’s) property.

We’ll take a look at some of Scheidel’s “Great Levelers” next time.

Next

The Great Leveler: Review (Part 1)

The Beginnings of Inequality.

While doing my research into Jordan Peterson and the Alt-Right more generally, one troubling thesis kept coming up again and again: that hierarchies and extreme inequality of wealth and income is inevitable, and that furthermore there is nothing that we can do about this. They are simply a product of basic human social instincts that we inherited from our primate (and lobster) ancestors. Anything we do to restrain these phenomena or rein in inequality will only end up making us worse off (as Communist states allegedly proved); that any cure would be worse than the disease (the ‘perversity thesis’); and that nothing will make a dent (the ‘futility thesis’). Here’s Peterson on FOX News, for example:

“The point that I was trying to make in that chapter which was … the first one among others is, the Radical Leftists have a proclivity to blame hierarchy and inequality on Western culture and Capitalism. And look, inequality can be a real problem because people stack up at the bottom and that can destabilize your entire society. And no one likes poverty. No one’s in favor of poverty. ”

“The problem is that the reasons for inequality are much older than human society itself. And so when the Radical Leftists play their linguistic games, let’s say, and blame all of that on Capitalism, then they’re not treating the problem with its requisite seriousness. We actually don’t know what to do about radical inequality. And demolishing the Western system, well, unless you bring everyone down to zero which is something that’s happened before, is not going to address the issue. And so that is the point I was making.”

One book that kept coming up in discussions was ‘The Great Leveler’ by Walter Schiedel. The thesis of the book has been well documented by now: that only war, revolution, plague, state failure or financial collapse, or some combination of these, has reduced the historical trend towards more and more inequality. Absent one of these conditions present, inequality inevitably trends upward without bound. He writes in the Introduction:

Material inequality requires access to resources beyond the minimum that is needed to keep us all alive. Surpluses already existed tens of thousands of years ago, and so did humans who were prepared to share them unevenly. Back in the last Ice Age, hunter-gatherers found the time and means to bury some individuals much more lavishly than others.

But it was food production-farming and herding-that created wealth on an entirely novel scale. Growing and persistent inequality became a defining feature of the Holocene. The domestication of plants and animals made it possible to accumulate and preserve productive resources. Social norms evolved to define rights to these assets, including the ability to pass them on to future generations.

Under these conditions, the distribution of income and wealth came to be shaped by a variety of experiences: health, marital strategies and reproductive success, consumption and investment choices, bumper harvests, and plagues of locusts and rinderpest determined fortunes from one generation to the next. Adding up over time, the consequences of luck and effort favored unequal outcomes in the long term… p. 5 (Emphasis mine)

Of the Great Levelers, he writes:

“For thousands of years, civilization did not lend itself to peaceful equalization. Across a wide range of societies and different levels of development, stability favored economic inequality. This was as true of Pharaonic Egypt as it was of Victorian England, as true of the Roman Empire as of the United States. Violent shocks were of paramount importance in disrupting the established order, in compressing the distribution of income and wealth, in narrowing the gap between rich and poor.”

“Throughout recorded history, the most powerful leveling invariably resulted from the most powerful shocks. Four different kinds of violent ruptures have flattened inequality: mass mobilization warfare, transformative revolution, state failure, and lethal pandemics. I call these the Four Horsemen of Leveling. .. Sometimes acting individually and sometimes in concert with one anomer, they produced outcomes that to contemporaries often seemed nothing short of apocalyptic. Hundreds of millions perished in their wake. And by the time the dust had settled, the gap between the haves and the have-nots had shrunk, sometimes dramatically.” p.6 (Emphasis mine)

David Graeber summarized Scheidel’s main thesis like this:

…historian Walter Scheidel has taken [Thomas] Piketty-style readings of human history to their ultimate miserable conclusion in his 2017 book The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century, concluding there’s really nothing we can do about inequality. Civilization invariably puts in charge a small elite who grab more and more of the pie. The only thing that has ever been successful in dislodging them is catastrophe: war, plague, mass conscription, wholesale suffering and death. Half measures never work. So, if you don’t want to go back to living in a cave, or die in a nuclear holocaust (which presumably also ends up with the survivors living in caves), you’re going to just have to accept the existence of Warren Buffett and Bill Gates.

This thesis disturbed me greatly. Is there really no hope? Is that what history and social science have decisively proven? I decided to pick up the book and give it a read.

The first part of the book is in many ways the most interesting. It is three chapters in which Scheidel gives a brief history of human inequality. This part is a great historical overview, and I recommend reading it if nothing else. The rest of the book looks at historical examples of the ‘four horsemen’ and attempts to back up his core assertion.

What follows is a review of the book combined with my own previous research and blogging about the history and nature of persistent social inequality. We’ll start with Scheidel’s early history of the rise of inequality.

The First Great Leveling

Scheidel begins his survey with our primate ancestors, who exhibit a very strict hierarchy. Silverback gorillas are at the extreme end, lording over harems of females and dominating subordinate males with displays of aggression and brute force. Sexual dimorphism (how much bigger males are then females) is pronounced.

Chimpanzees live in larger, more cooperative bands, but nonetheless occupy a strict hierarchy based on aggression and bullying. Despite this, lower-status male chimps are unable to leave the group, as a solitary chimp is vulnerable to attack from other bands, meaning they must either compete or submit. Bonobos are less violent and aggressive then their chimp cousins, yet there is still a strict hierarchy where status rank is inherited from the females. Gibbons and orangutans branched off earlier and evolved into more solitary creatures. However, these species are confined to Asia, while all African great ape species live in large social groups exhibiting strict ranking hierarchies, including, Scheidel contends, our own:

Hierarchy is a function of group living…Chimpanzees, especially but not only males, expend tremendous energy on status rivalry. Bullying and aggressive dominance displays are matched by a wide array of submission behaviors by those one the lower rungs of the pecking order. In groups of fifty or a hundred, ranking is a central and stressful fact of life, for each member occupies a specific place in the hierarchy but is always looking to improve it…Across these species, inequality is expressed in unequal access to food sources—the closest approximation to human-style income disparities—and, above all, in terms of reproductive success. Dominance hierarchy, topped by the biggest, strongest, and most aggressive males, which consume the most and have sexual relations with the most females, is the standard pattern… p. 26

Several important changes occurred in the human species (genus Homo) after it branched off from the common ancestor some six million years ago. Protohumans, who walked upright, learned how to fashion stone tools and weapons with their free hands. Some two million years ago, the shoulder evolved to hurl projectile weapons, something no other great ape can do. They harnessed fire perhaps as early as one million years ago. As brain size grew, coalition-building by less dominant males and the use of artificial weapons, such as hand-axes and spears with fire-hardened tips, tamed the power of alphas. No longer could aggression and brute force alone keep and hold onto power. Humans swapped brawn for brains.

Cooperative hunting strategies and raising vulnerable offspring also limited the ability of the few to dominate the many. Intelligence, including social intelligence, became much more important for status than just brute strength, and some have speculated that it is was this need for social intelligence which was the primary driver of rapid brain growth. As our brains grew, we began to evolve culturally instead of just biologically. Sexual dimorphism became less pronounced, indicating greater cooperation between males and females in child rearing. Food provisioning, too, became cooperative, with males hunting and defending territory, and women gathering and tending the children. This allowed us to expand out of Africa, and to survive and outcompete all other Homo species as well as archaic humans:

…a gender- and age-based division of labor, emerging around 40,000-50,000 years ago, resulted in H. sapiens adopting a wider resource base, i.e. the hunting of smaller prey. Thus, a shift from a narrow reliance on large game that continued to characterize Neanderthal subsistence, to a marked increase in the exploitation of small game provided a demographic advantage and an expanded population of H. sapiens throughout Eurasia. In this scenario, males and females, whether Neanderthal or H. sapiens, both were engaged in narrowly focused economies; the labor of men and women, of both hominins, was closely aligned…An emerging reliance on smaller animals, and a greater reliance on vegetal and seed resources, is believed to signal a gendered division of labor. Men hunt large prey; women and children hunt small animals and forage for consumables. This initial division of labor by gender and age in turn contributed to the evolutionary success of H. sapiens. C.C. Lamberg-Karlovsky; Labor, Social Formation and the Neolithic Revolution in Labor in the Ancient World

Humans developed a variety of cultural strategies to keep domineering aggrandizers in line, as Scheidel describes:

Numerous means of enforcing egalitarian values have been documented by anthropologists, graduated by severity. Begging, scrounging and stealing help ensure a more equal distribution of resources. Sanctions against authoritarian behavior and self-aggrandizement range from gossip, criticism, ridicule and disobedience to ostracism and even physical violence, including homicide. Leadership consequently tends to be subtle, dispersed among multiple group members, and transient; the least assertive have the best chance to influence others. This distinctive moral economy has been called “reverse dominance hierarchy”: operative among adult men (who commonly dominate women and children), it represents the ongoing and preemptive neutralization of authority. p. 29

One of the basic building blocks for this was envy as James Suzman notes:

Ju/’hoansi egalitarianism was not born of the ideological dogmatism that we associate with 20th-century Marxism or the starry-eyed idealism of New Age ‘communalism’. There was no manifesto of ‘primitive communism’. Rather, it was the organic outcome of interactions between people acting explicitly in their own self-interest in a highly individualistic society. This was because, among foraging Ju/’hoansi, self-interest was always policed by its shadow, envy – which, in turn, ensured that everyone always got a fair share, and that those with the natural charisma and authority to ‘lead’ exercised it with great circumspection.

Why inequality bothers people more than poverty (Aeon)

For those groups without large-scale top-down hierarchical systems or omnipotent gods, cooperation was instead fostered by shared stories spun by storytellers, who were most likely the ancestors of the first priests and shamans. Instead of organized religions with hereditary priesthoods, the stories held the tribe together, and storytellers were accorded a correspondingly high degree of status:

Storytelling promoted co-operation in hunter-gatherers prior to the advent of organised religion, a new UCL study reveals. The research shows that hunter-gatherer storytellers were essential in promoting co-operative and egalitarian values before comparable mechanisms evolved in larger agricultural societies, such as moralising high-gods. Storytellers were also more popular than even the best foragers, had greater reproductive success, and were more likely to be co-operated with by other members of the camp…

Storytellers promoted cooperation among hunter-gatherers before advent of religion (Phys.org)

The nomadic foraging lifestyle prevented any great accumulation of material goods. Wealth could not be hoarded nor passed down. Land could not be claimed by any specific individual. The main “production” of the economy was big-game hunting, and the best place to store excess meat was in the belly of one’s friends and neighbors. The main social “unit” was not the individual family but the band or tribe, and the maintenance of social ties was crucial. Cooperation was paramount, taming the bullying power of would-be elites. Cultural norms like meat sharing and taboos helped maintain equality and allow humans to cooperate as Peter Turchin explains:

As an example of cooperation, consider meat-sharing, which is the norm in most foraging societies. Meat-sharing has numerous benefits for the group within which it is practiced. First, any particular hunter, no matter how skilled, is not always successful in bringing home game. Sharing ensures that everybody has a moderate amount of meat every day. Not sharing results in long spells of famine, interspersed with feasts (with a portion of the kill spoiling, or being wasted in other ways).

Second, put yourself in the moccasins of a hunter. You have an interest in the well-being of others in your tribe. There is that old-timer who is not as spry as he used to be, and can’t chase the game in the bush. But he is an amazing repository of knowledge that can save the whole tribe when a drought strikes. Or that pregnant woman, whose husband was killed in a hunting accident. When her son grows up, he will stand together with your children against the tribe’s enemies.

Thus, the whole tribe, including you and your descendants, benefits from meat sharing. But when you bring that yummy warthog from a successful hunt, there is a terrible temptation not to share it with others. It’s the Cooperative Dilemma all over again. The benefits of meat sharing are spread thinly over all. Its consequences are often deferred into distant future. Meanwhile, pigging out on the juicy warthog steak is here and now.

This is why you need social norms to help you stick to the straight and narrow. Such “cultural-institutional technologies” make sharing psychologically easier and prevent free-riding. One kind of such a social technology is meat taboos. Among some Kalahari foragers, for example, “the hunter himself could only eat the ribs and a shoulder blade; the rest of the animal was taboo for him. The hunter’s wife received the meat and fat around the animal’s hindquarters, which she had to cook openly and share with other women (only). Taboos prohibited young males from eating anything except abdominal walls, kidneys, and genitals.” These taboos essentially guaranteed that a large carcass would be widely distributed across the whole band.

How Social Norms are Like Chili Peppers (Cliodynamica)

Another technique observed among contemporary hunter-gatherers is the “shaming” or “insulting” of the successful hunter and his kill, as James Suzman describes:

Skilled Ju/’hoansi hunters needed a thick skin. For while a particularly spectacular kill was always cause for celebration, the hunter responsible was insulted rather than flattered. Regardless of the size or condition of the carcass, those due a share of the meat would complain that the kill was trifling, that it was barely worth the effort of carrying it back to camp, or that there wouldn’t be enough meat to go round. For his part, the hunter was expected to be almost apologetic when he presented the carcass. Of course, everyone knew the difference between a scrawny kill and a good one but continued to pass insults even while they were busy filling their bellies. Hunters rarely took the insults to heart, and those dishing them out often did so through broad grins. This was a performance in which everyone played well-rehearsed roles. But it was also a performance with a clear purpose, as beneath the light-hearted insults lay a sharp and potentially vicious edge.

It’s also the expectation in hunter-gatherer societies that even items considered “private property” would be offered up for the good of other people, and not hoarded. All one had to do was simply ask:

Insults and mockery weren’t the only tool that hunter-gatherers had in their bags to maintain egalitarianism. Another that was explicitly linked to the expression of envy was ‘demand sharing’. Where we usually consider it rude for others to ask unashamedly for something that we own or to just expect to receive it, the Ju/’hoansi considered this normal. More so, as far as they were concerned, denying someone’s request ran the risk of being sanctioned for selfishness. Demand sharing did not lead to a free-for-all that ended up undermining any sense of private ownership. Instead, demands for things were usually – though not always – carefully considered. The net result of this was that, while private property was respected – after all, if there is no private property, how could you enjoy giving or receiving a gift? – material inequalities were quickly ironed out. However, the system was challenging for relatively well-resourced outsiders such as myself, which often resulted in a month’s supply of tobacco and food for a field trip being exhausted within a very short period of time.

…how envy functioned in societies such as the Ju/’hoansi suggests that, even if [Adam] Smith’s hidden hand does not apply particularly well to late capitalism, his belief that the sum of individual self-interests can ensure the fairest distribution of the ‘necessaries of life’ was right, albeit in small-scale band societies. For hunter-gatherers, the sum of individual self-interest ultimately ensured the most equitable ‘distribution of the necessaries of life’ because it discouraged profitable exchange, hierarchy, wealth-accumulation and significant material inequality.

Why inequality bothers people more than poverty (Aeon)

Not only was food sharing used to create social bonds, but so was gift-giving. Rather than bartering, negotiation or formal contracts, goods were primarily exchanged reciprocally to create social bonds between individuals and, especially, corporate groups. Exchange was not designed to “profit,” although there were circumstances in some very materially abundant cultures where gifts were expected to be returned “with interest,” to perpetuate what James Carse calls “infinite games” where the goal is not to “win” but to keep playing the game.

As with cultural norms and taboos, norms of reciprocity ensured sharing and prevented hoarding, as Tim Johnson describes:

One of the most famous stories illustrating the role of reciprocal exchange has concerns an anthropologist who after spending some time with bushmen [sic], gave one of them his knife. When visiting the group some years later, anthropologists discovered that the knife had been owned, at some point in time, by every member of the community. The knife had not been communally owned, its ownership had passed from one person to the next and its passage was evidence of a social network in the community, just as the motion of planets is evidence of an, otherwise invisible, gravitational field.

One of the most studied examples of these sorts of systems was that of indigenous people around Vancouver in Canada. A young man would lend five blankets to an older, richer person, for a year and they would be repaid with ten blankets. A similar situation existed in the Southwestern Pacific were strings of shells, whose value was purely ceremonial, were lent by a young man, sometimes to an unwilling borrower, at very high rates of interest. Many cultures had similar systems where by a gift had to be reciprocated by a greater gift in return these systems played a critical role in gluing society together by establishing bonds between the rich and poor, the old and young.

Lady Credit (Magic, Maths and Money)

A similar logic stands behind the idea of religious sacrifice in general. In this idea, a reciprocal relationship is instead established between the tribe and its deities or ancestors. Reciprocity means that the deity will “pay back” the sacrifice. Appeals were made to the ancestors to intercede on your behalf with the gods who presided over nature. Without science, this was the only method early humans saw to exercise any control over the vagaries of life.

I’ll note at this point that food-sharing feasts and reciprocal gift exchange both contribute to what I called the “feasting theory” of inequality’s origins. In superabundant conditions, aggrandizers (those especially attuned to status) promote surplus production through carrots and sticks (mostly carrots), and then use the resulting surpluses during feasts to generate material inequalities using debt and interest, which they then convert into status inequalities. To recap:

Brian Hayden…proposes that through the lure of feasts, with their free meals, delicacies, dances, exciting entertainment, and ambitious organizers, “triple A” personalities draw others into contractual agreements that generate debts and thereby confer social leverage.

In other words, through competitive feasts, surpluses are produced and converted into wealth and power by enterprising individuals, creating social inequalities. He takes a step back in time and proposes that during the Upper Paleolithic and Mesolithic periods in resource-rich environments, triple-A individuals manipulated relationships through competitive feasting in such a way as to dodge the leveling hammer of egalitarian ethos.

This leads him to the proposal, supported by compelling evidence, that the need for certain amounts of rare delicacies for competitive feasts may have been a significant factor in the domestication of certain plants and animals, and thus may have given impetus to early agriculture.

The Feasting Theory

All of these foraging groups can be broadly characterized as immediate return hunter-gatherers. They do not store significant surpluses. They do not have a concept of private property and there is no transmissible wealth to be passed down through the generations. Natural resources cannot be “owned” by individuals, and there is often no concept of “ownership” or “private property,” or very loose and flexible ones at least. Population density is low, so resources are not scarce, and so do not need to be rationed by markets or elites. Such groups invariably have very “flat” (although not totally nonexistent) hierarchies. Scheidel concludes:

A foraging mode of subsistence and an egalitarian moral economy combine into a formidable obstacle to any form of development for the simple reason that economic growth requires some degree of inequality in income and consumption to encourage innovation and surplus production. Without growth there was hardly any surplus to appropriate and pass on. The moral economy prevented growth, and the lack of growth prevented the production and concentration of surplus. p. 30

Taken together, the evidence indicates a long-term reduction in inequality thanks to these developments–what Scheidel calls “The First Great Levelling.”

There is, however, some intriguing evidence that some degree of inequality was present even as far back as the Ice Age. The most famous example comes from Sungir (Sunghir) in Siberia, about 120 miles north of Moscow. Here, archaeologists found the remains of three burials–a man and two children– from the climatically moderate period of the last Ice Age. They were buried about 30-34,000 years ago during the Gravettian period of the Stone Age (named after a tool kit found widely in Eurasia). Similar burials have been found around Eurasia, such as in Dolní Věstonice, in the modern Czech Republic, which indicates cloth and ceramic manufacture on a large scale.

The Sungir society was a group of hunter-foragers who hunted bison, horse, reindeer, antelope, fox, bears, wolf, and especially mammoth. The burials were adorned with extensive decoration, including 10,000 beads carved from mammoth tusks and fox teeth, and prestige items such as art objects and spears made from straightened mammoth tusk were found in the graves. Archaeologists estimated that it would have taken:

…anywhere from fifteen to forty-five minutes to carve a single bead, which translates to a total of 1.6 to 4.7 years of work for one person carving forty hours a week. A minimum of seventy-five arctic foxes needed to be caught to extract the 300 canines attached to the belt and headgear in the children’s grave, and considering the difficulty of extracting them intact, the actual number may well have been higher… p. 31

Similar enigmatic burials are found all over Eurasia from the Ice Age, as David Graeber and David Wengrow point out:

Comparably rich burials are by now attested from Upper Palaeolithic rock shelters and open-air settlements across much of western Eurasia, from the Don to the Dordogne. Among them we find, for example, the 16,000-year-old ‘Lady of Saint-Germain-la-Rivière’, bedecked with ornaments made on the teeth of young stags hunted 300 km away, in the Spanish Basque country; and the burials of the Ligurian coast – as ancient as Sungir – including ‘Il Principe’, a young man whose regalia included a sceptre of exotic flint, elk antler batons, and an ornate headdress of perforated shells and deer teeth. Such findings pose stimulating challenges of interpretation… What, then, are we to make of all of this?

One scholarly response has been to abandon the idea of an egalitarian Golden Age entirely, and conclude that rational self-interest and accumulation of power are the enduring forces behind human social development. But this doesn’t really work either. Evidence for institutional inequality in Ice Age societies, whether in the form of grand burials or monumental buildings, is nothing if not sporadic. Burials appear literally centuries, and often hundreds of kilometres, apart. Even if we put this down to the patchiness of the evidence, we still have to ask why the evidence is so patchy: after all, if any of these Ice Age ‘princes’ had behaved anything like, say, Bronze Age princes, we’d also be finding fortifications, storehouses, palaces – all the usual trappings of emergent states. Instead, over tens of thousands of years, we see monuments and magnificent burials, but little else to indicate the growth of ranked societies. Then there are other, even stranger factors, such as the fact that most of the ‘princely’ burials consist of individuals with striking physical anomalies, who today would be considered giants, hunchbacks, or dwarfs.

How to change the course of human history (Eurozine)

From this, it is reasonable to conclude that as far back as the Ice Age, many societies may have already been transegalitarian societies–defined as societies where some inequality existed, but was not likely institutionalized, probably because of the extreme difficulty of intergenerational wealth transmission. That’s probably why all that wealth was buried in the first place–to prevent it from being passed down.

Anthropologists generally differentiate between achieved status and ascribed status. Achieved status is generally status earned during one’s own lifetime via one’s personal qualities such as being a wise leader, a fierce warrior, a successful hunter, a skilled craftsman, a creative artist or storyteller or some other intrinsic quality. The “Big Men” of Polynesia are an example. Ascribed status comes from occupying a specific niche in the society which is passed down, such as the Egyptian Pharaoh. Since the buried children were too young to have acquired achieved status, their elaborate burial seems to indicate that some level of ascribed status must have been present as early as the Ice Age.

This need not be the case, however. Some have speculated that the children were sacrificial victims. Child sacrifice was surprisingly common in a variety of very ancient cultures. Because the children were giving up their lives for the good of the tribe, they were accordingly ascribed very high status. This may be the reason why they were so elaborately buried. There is some evidence for this–genetic testing has shown the individuals in the grave were not related. The children were buried on ochre pigment, very similar to the child sacrificial victims found in various South American cultures:

Peru child sacrifice discovery may be largest in history (BBC)

The Sunghir Burial Site: Were these Two Children Sacrificed in a Form of Prehistoric Scapegoating? (Ancient Origins)

The ancient Carthaginians practiced child sacrifice. It persisted in the New World until European arrival. It is thought by many religious scholars that the story of Abraham and Isaac in the Bible is an allegorical tale representing the replacement of child sacrifice with animal sacrifice in ancient Hebrew monotheistic cults as animal domestication became commonplace. Scholars also believe that human sacrifice itself contributed to hereditary inequality:

Despite being scarce today, ritualised human sacrifice was performed in early human societies throughout the world. During the First Dynasty of ancient Egypt, the graves of Pharaohs were accompanied by ‘retainers’ or human sacrifices who were believed to provide assistance in the afterlife. In Europe, mutilated bodies are found buried in peat pits, some of which are up to 8,000 years old and are accompanied by religious paraphernalia such as crucibles, idols and sacred plants. Aztec high priests extracted the beating hearts of victims in front of visiting dignitaries from competing communities. Often the victims were themselves captives from one of the competing communities, and the dignitaries returned home trembling in fear.

While it was relatively scarce in egalitarian societies, human sacrifice was practised in the majority of cultures with strictly inherited class systems. This suggests that there is a relationship between social inequality and human sacrifice, but it doesn’t tell us whether human sacrifice leads to social inequality or vice versa. Using a language-based family tree and statistical methods developed by evolutionary biologists, we were able to model how human sacrifice and social inequality evolved in the prehistory of Austronesia…We found strong support for the social control hypothesis: human sacrifice helped to build strictly inherited class systems, and prevented cultures from becoming more egalitarian.

How human sacrifice helped to enforce social inequality (Aeon)

Peter Turchin, however, points out that over a certain level of complexity, human sacrifice becomes maladaptive, which likely led its disappearance among larger, more complex societies, especially in Eurasia:Is Human Sacrifice Functional at the Society Level? (Cliodynamica)

Surveying these, and other Ice Age burials, Scheidel concludes:

It is tempting to interpret these findings as the earliest harbingers of inequalities to come. Evidence of advanced and standardized craft production, time investment in highly repetitive tasks, and the use of raw materials sourced from far away offers us a glimpse of economic activities more advanced than those found among contemporary hunter-gatherers. It also hints at social disparities not normally associated with a foraging existence: lavish graves for children and adolescents point to ascribed and perhaps even inherited status.

The existence of hierarchical relations is more difficult to infer from this material but is at least a plausible option. But there is no sign of durable inequalities. Increases in complexity and status differentiation appear to have been temporary in nature.

Egalitarianism need not be a stable category: social behavior could vary depending on changing circumstances or even recurring seasonal pressures. And although earliest coastal adaptations, cradles of social evolution in which access to maritime food resources such as shellfish encouraged territoriality and more effective leadership, may reach back as far as 100,000 years, there is-at least as yet-no related evidence of emergent hierarchy and consumption disparities. For all we can tell, social or economic inequality in the Paleolithic remained sporadic and transient. p.32

Anthropologists David Graeber and David Wengrow, however, have argued against the view that human history is a linear progression from less to more inequality, which tracks perfectly with the scale of societies. Instead, they argue, the Upper Paleolithic was a time of experimentation with different modes of subsistence, which led to experiments with different modes of living. They argue that even large, complex societies functioned much of the time with a flat, anarchistic structure, often varying at different times of the year. Furthermore, these varying modes persisted far after the agricultural revolution, which was not the “phase change” as often depicted by many historians. The earliest large cities such as Çatal Höyük were quite egalitarian, with no palaces or temples and equally-sized dwelling units. They note that in Mesopotamia and the Indus Valley, “cities with sophisticated civic infrastructures flourished for over half a millennium with no trace of royal burials or monuments, no standing armies or other means of large-scale coercion, nor any hint of direct bureaucratic control over most citizen’s lives.”

Overwhelming evidence from archaeology, anthropology, and kindred disciplines is beginning to give us a fairly clear idea of what the last 40,000 years of human history really looked like, and in almost no way does it resemble the conventional narrative. Our species did not, in fact, spend most of its history in tiny bands; agriculture did not mark an irreversible threshold in social evolution; the first cities were often robustly egalitarian…Quite independently, archaeological evidence suggests that in the highly seasonal environments of the last Ice Age, our remote ancestors were behaving in broadly similar ways: shifting back and forth between alternative social arrangements, permitting the rise of authoritarian structures during certain times of year, on the proviso that they could not last; on the understanding that no particular social order was ever fixed or immutable. Within the same population, one could live sometimes in what looks, from a distance, like a band, sometimes a tribe, and sometimes a society with many of the features we now identify with states. With such institutional flexibility comes the capacity to step outside the boundaries of any given social structure and reflect; to both make and unmake the political worlds we live in. If nothing else, this explains the ‘princes’ and ‘princesses’ of the last Ice Age, who appear to show up, in such magnificent isolation, like characters in some kind of fairy-tale or costume drama. Maybe they were almost literally so. If they reigned at all, then perhaps it was, like the kings and queens of Stonehenge, just for a season.

How to change the course of human history (Eurozine)

The Great Disequalization

As the Ice Age ended and the Holocene dawned, it became possible to ramp up food production, and no doubt inequality became more pronounced due to the surpluses in both food and material goods. The New Stone Age (Neolithic) is characterized by stone tools designed for food processing such as saddle querns, and buildings expressly built for food storage such as granaries (which predate domestication). Early societies still seem to have gotten much of their meat from seasonal hunts, though.

Pretty much all scholars agree that significant equality began with two crucial conditions in place: consistent and reliable surpluses and a sedentary habitation pattern. Both of these factors interplayed with and promoted each other:

Inequality took off only after the last Ice Age had come to an end and climatic conditions entered a period of unusual stability. The Holocene, the first interglacial warm period for more than 100,000 years, created an environment that was more favorable to economic and social development. As these improvements allowed humans to extract more energy and grow in numbers, they also laid the ground for an increasingly unequal distribution of resources.

This led to what I call the ‘Great Disequalization,’ a transition to new modes of subsistence and new forms of social organization that eroded formerly egalitarianism and replaced it with durable hierarchies and disparities in income and wealth. For these developments to occur, there had to be productive assets that could be defended against encroachment and from which owners could draw a surplus in a predictable manner. Food production by means of farming and herding fulfills both requirements and came to be the principal driver of economic, social and political change. p.33 (Emphasis mine)

However, neither surpluses nor sedentism were confined to just societies that relied upon domestication or food production as previously thought. In particular ecological niches such as fishing and riverine cultures of North America, signs of sedentism and hereditary inequality have been found, despite the absence of domestication. In some superabundant natural environments, sedentism could be practiced even without food and animal domestication, because certain foodstuffs—such as smoked meat and tree nuts—could be processed and stored for long periods of time. Anthropologists call these delayed return (or complex) hunter-gatherers.

However, domestication of plants and animals was not an indispensable prerequisite. Under certain conditions, foragers were also able to exploit undomesticated natural resources in an analogous fashion. Territoriality, hierarchy, and inequality could arise where fishing was feasible or particularly productive only in certain locations. This phenomenon, which is known as maritime or riverine adaptation, is well documented in the ethnographic record.

From about 500 CE, pressure on fish stocks as a result of population growth along the West Coast of North America from Alaska to California encouraged foraging populations to establish control over highly localized salmon streams. This was sometimes accompanied by a shift from mostly uniform dwellings to stratified societies that featured large houses for chiefly families, clients and slaves.

From about 400 to 900 CE, the site of Keatley Creek in British Columbia housed a community of a few hundred members near the Fraser River that capitalized on the local salmon runs. Judging from the archaeological remains, salmon consumption declined around 800, and mammalian meat took its place. At this time, signs of in equality appear in the record.

A large share of the fish bone recovered from the pits of the largest houses comes from mature chinook and sockeye salmon, a prize catch rich in fat and calories. Prestige items such as rare types of stone are found there. Two of the smallest houses, by contrast, contained bones of only younger and less nutritious fish. As in many other societies at this level of complexity, Inequality was both celebrated and mitigated by ceremonial redistribution: roasting pits that were large enough to prepare food for sizable crowds suggest chat the rich and powerful organized feasts for the community.

A thousand years later, potlatch rituals in which leaders competed among themselves through displays of generosity were a common feature across the Pacific Northwest. Similar changes cook place at the Bridge River site in the same area: from about 800, as the owners of large buildings began to accumulate prestige goods and abandoned communal food preparation outdoors, poorer residents attached themselves to these households, and inequality became institutionalized. p. 33-34 (Emphasis mine)

These cultures may have existed as far back as Cro-Magnon Europe, as Richard Manning notes in Against the Grain:

Sedentism…requires proximity to water. Particular groups of hunter-gatherers became skilled fishermen and settled in stable communities near river mouths. Their dependence on migratory fish such as the salmon was particularly pronounced, then and to the present.

Salmon show up in Cro-Magnon paintings—and their skeletons in Cro-Magnon sites—throughout Europe. Cro-Magnon peoples stayed in one place and had enough leisure time to paint, and they painted salmon because salmon were important to them. The rise of art much later among Northwest American Indians is unique among North American hunter-gatherers, suggesting something parallel in the two salmon cultures—a correlation between salmon, sedentism, and art. Fishing a migratory species allows all this. You simply stay put at streamside and the salmon come. Throughout the world, sites along rivers, seas, estuaries, and lakes show layers of shellfish and fish bones below (and thus older than) layers containing evidence of agriculture. These early sedentary people did not have to wander seeking game; currents, the habits of their prey, and the enormous productivity of marine systems like estuaries brought the prey to them.

Agriculture did not arise from need so much as it did from relative abundance. People stayed put, had the leisure to experiment with plants, lived in coastal zones where floods gave them the model of and denziens of disturbance, built up permanent settlements that increasingly created disturbance, and were able to support a higher birthrate because of sedentism.
pp. 30- 31 (Emphasis mine)

It’s interesting to note that the Shigir Idol, found in Siberia and over twice as old as the Egyptian pyramids, has been compared to the totem poles of the Pacific Northwest. As one of the archaeologists remarked of the idol‘We can say that in those times, 11,000 years ago, the hunters, fishermen and gatherers of the Urals were no less developed than the farmers of the Middle East.’ However, because this civilization built from perishable materials and had no writing, we cannot say for sure what levels of inequality or complexity it possessed.

In addition to fish, harvesting tree nuts and seeds also contributed to ancient sedentism during the Ice Age, as Brain Fagan notes:

More work to process food–some nuts, such as certain acorns, contain high levels of tannins, which have to be leached out by boiling or soaking, while other compounds make certain grasses and nuts either mildly toxic and less digestible, again requiring endless processing. Parching, grinding, or boiling starchy plant foods required great investments of labor daily before they could be eaten or stored. Such activities tied bands down to one location for longer periods of time…storage in a pit or aboveground means that food can be rationed out through the lean months, but at the price of drastically reduced mobility. Brain Fagan, The Long Summer pp. 70-71

Because these foods took considerable time to harvest and prepare, more work == more wealth. A connection between work and wealth was established. Households became differentiated. Hunter-gatherers were dependent upon nature’s bounty and could not easily increase the food supply. Processed foods, by contrast, could be expanded and stored. A shift to a wider variety of food sources than just big game—plant-foods particularly—has been called the broad spectrum revolution, and was encouraged by a milder, more predictable climate along with the extinctions of megafauna such as aurochs, bison, elk, wild horses, and especially mammoths and mastodons.

In addition, population growth meant that for the first time resources became scarce, so some sort of rationing method was called for. Into that void stepped the Triple-A aggrandizers:

As scarcity transitioned to plenty…aggrandizers were freed to pursue their goals. Their selfish behavior was no longer grounds for excommunication, because everyone was able to get enough to eat—if they were willing to work. Slowly, through a variety of strategies such as bride prices and competitive feasts, aggrandizers consolidated their power. They developed new sorts of relationships based on debt and obligation. Eventually these strategies led to establishment of private property rights over valuable resources, such as the fishing rocks in the Fraser Canyon.

Seeing Fairness Evolve (Pacific Standard)

Once there was something to defend, violence increased because you needed to defend it from others. Investments in fields, granaries, irrigation ditches and so forth, led to investments in walls, forts and weapons to defend them. This brought forth the need for military and managerial elites.

Two basic theories about the establishment of hereditary inequality are common: managerial (functional) and military (conflict) theories. Managerial elites are exemplified by redistributive chiefs and priests who store and distribute surpluses among geographically dispersed populations by fiat.

In groups dispersed over diverse ecosystems with specialized labor and different modes of subsistence, managerial elites ensure the wide distribution of differentiated resources which are not available in all areas, knitting people together in complex relationship webs, often using religion. These elites draw upon their social networks to do this, often using rare ‘prestige goods’ to signify their status and forming long-distance trade networks. Such societies practice two different kinds of feasts: differentiated (which excluded commoners and enforced elite solidarity) and redistributive/communal (which mobilized labor and reinforced overall group solidarity).

…a relatively benign process lay behind the simple class structure—that the wealthier and more powerful attained their rank because they provided valuable services that benefited the community at large. For instance, they might have been adept at organizing the fishing and preservation process to create a bigger salmon pie for everyone in the community. Since everyone’s share is bigger, the community would not begrudge the benefactor a slightly larger slice. Also, the high-status benefactors presumably would come to the aid of the community in times of need—to share their surplus as well as their managerial talents to get everyone through the hard times.

Two paths To Inequality (Pacific Standard)

Functionalist theories (called so because they assume that complex societies arose to fulfill some important function) explain evolution of the state as a solution to organizational and redistributive problems. For example, in an influential book, The Evolution of Human Societies: from Foraging Group to Agrarian State, Allen Johnson and Tim Earle argue that complex societies arise (1) to reduce production risks, (2) to manage resource competition, (3) to allocate resources efficiently and to make capital investments, and (4) to conduct interregional trade. Conflict enters their theory as a relatively unimportant factor, under (2) resource competition.

Evolution of the Egyptian State: the ‘Managerial Model’ (Cliodynamica)

The other model presupposes warfare and conflict. Those best able to organize and lead troops in battle become the new elites. These military warlords became perforce the ruling power. Note that that these two theories are not mutually exclusive. I suspect that warfare became more important with the Bronze Age and horse domestication.

Kings (and Queens) of the Stone Age

Scheidel cites what scholars have found to be the three most crucial determinants of inequality:

    • Ownership rights in land and livestock
    • The ability to transmit wealth from one generation to the next.
    • The transmissibility of material wealth.

Let’s take a look at those one at a time. Different types of wealth are more or less important in various societies. To determine this, researchers divided wealth into three broad categories:

  • Embodied (body strength and reproductive success)
  • Relational (partnerships in labor and trade)
  • Material (household goods, land and livestock)

What they found was that among hunter-gatherers and horticulturalists, embodied endowments were the most important for status, while material goods were the least important. This condition was reversed among herders and farmers: material wealth was the most important, embodied wealth the least:

Physical constraints on embodied wealth are relatively stringent, especially for body size and somewhat less so for strength, hunting returns, and reproductive success. Relational wealth, though more flexible, was also more unevenly distributed among farmers and pastoralists, and measures of inequality in land and livestock in these two groups reached higher levels than those for utensils or boat shares among foragers and horticulturalists. p.37

Transmissibility of wealth was also crucial. Material wealth is much simpler to pass down than either embodied wealth or relational wealth. In farming and herding societies, the degree of intergenerational wealth transmission was twice as high as foraging and horticultural societies, because the prime material assets were more suitable for transmissivity than the assets of foragers and horticulturalists. Social mobility–that is, moving from one quintile to another in the status hierarchy–was correspondingly lower in farming and herding societies than in foraging ones. In other words, it was much easier to pass down achieved status to your lineal descendants in societies with a lot of transmissible wealth, such as fields and herds, especially if the culture recognized some form of private property rights.

It’s important to note that transmissible wealth was primarily passed down within families, and not to specific individuals. Individual property rights and private contracts came much, much later, and is in fact a fairly recent phenomenon. In fact, ancient laws did not even acknowledge the existence of such a creature as the ‘individual’, nor did it permit contracts to valid between lone individuals, only between corporate kinship groups such as families. This was the conclusion of Henry Sumner Maine in his magisterial review of ancient legal codes:

Ancient Law, it must again be repeated, knows next to nothing of Individuals. It is concerned not with Individuals, but with Families, not with single human beings, but groups. Even when the law of the State has succeeded in permeating the small circles of kindred into which it had originally no means of penetrating, the view it takes of Individuals is curiously different from that taken by jurisprudence in its maturest stage. The life of each citizen is not regarded as limited by birth and death; it is but a continuation of the existence of his forefathers, and it will be prolonged in the existence of his descendants. p.152

Scheidel concludes:

According to this analysis, inequality and its persistence over time has been the result of a combination of three factors: the relative importance of different classes of assets, how suitable they are for passing on to others, and actual rates of transmission. Thus groups in which material wealth plays a minor role and does not readily lend itself to transmission and in which inheritance is discouraged are bound to experience lower levels of overall inequality than groups in which material wealth is the dominant asset class, is highly transmissible, and is permitted to be left to the next generation. In the long run, transmissibility is critical: if wealth is passed on between generations, random shocks related to health, parity, and returns on capital and labor that create inequality will be preserved and accumulate over time instead of allowing distributional outcomes to regress to the mean.

In keeping with the observations made in the aforementioned survey of Native American societies, the empirical findings derived from this sample of twenty-one small-scale societies likewise suggest that domestication is not a sufficient precondition for significant disequalization. Reliance on defensible natural resources appears to be a more critical factor, because these can generally be bequeathed to the next generation. The same is true of investments such as plowing, terracing, and irrigation.

The heritability of such productive assets and their improvements fosters inequality in two ways: by enabling it to increase over time and by reducing intergenerational variance and mobility. A much broader survey of more than a thousand societies at different levels of development confirms the central role of transmission. According to this global data set, about a third of simple forager societies have inheritance rules for movable property, but only one in twelve recognizes the transmission of real estate. By contrast, almost all societies that practice intensive forms of agriculture are equipped with rules that cover both. Complex foragers and horticulturalists occupy an intermediate position. Inheritance presupposes the existence of property rights. pp. 38-39 (Emphasis mine)

One speculation is that the idea of private property is the very reason why farming was maintained over foraging, despite all of its apparent disadvantages in both health and nutrition over foraging:

…The first farmers emerged in less than a dozen spots in Asia and South America…they were already living in small villages. They owned their houses and other objects, like jewelry, boats and a range of tools, including fishing gear.

They still hunted and foraged, but they didn’t have to venture far for food: They had picked fertile places to settle down, and so food was abundant. For example, one group in what is present-day Iraq lived close to a gazelle migration route. During migration season, it was easy pickings — they killed more animals than they could eat in one sitting. They also harvested more grain from wild plants than they knew what to do with. And so, they built “pantries” — structures where they could store the extra food.

These societies had seen the value of owning stuff — they were already recognizing “private property rights,” says [Samuel] Bowles [the director of the Behavioral Sciences Program at the Santa Fe Institute in New Mexico]. That’s a big transition from nomadic cultures, which by and large don’t recognize individual property. All resources, even in modern day hunter-gatherers, are shared with everyone in the community.

But the good times didn’t last forever in these prehistoric villages. In some places, the weather changed for the worse. In other places, the animals either changed their migratory route or dwindled in numbers.

At this point, Bowles says these communities had a choice: They could either return to a nomadic lifestyle, or stay put in the villages they had built and “use their knowledge of seeds and how they grow, and the possibility of domesticating animals.”

Stay put, they did. And over time, they also grew in numbers. Why? Because the early farmers had one advantage over their nomadic cousins: Raising kids is much less work when one isn’t constantly on the move. And so, they could and did have more children.

In other words, Bowles thinks early cultures that recognized private property gave people a reason to plant roots in one place and invent farming — and stick with it despite its initial failures.

Bowles admits that this is just an informed theory. But to test it, he and his colleague Jung-Kyoo Choi built a mathematical model that simulated social and environmental conditions among early hunter-gatherers. In this simulation, farming evolved only in groups that recognized private property rights. What’s more, in the simulations, once farming met private property, the two reinforced each other and spread through the world.

Bowles’ theory offers a more nuanced explanation that ties together cultural, environmental and technological realities facing those first farmers, says Ian Kuijt, an anthropologist at the University of Notre Dame who specializes in the origins of agriculture. But, he says, the challenge is to figure out who owned the property back then and how they ran it. “Was it owned by one individual?” Kuijt says. “Was it a mother and father and their children? … Does it represent community or village property?”

Why Humans Took Up Farming: They Like To Own Stuff (NPR)

If this speculation is valid, the very concept of private property is what caused sedentary societies to form in the first place. Most likely those people that remained in such societies were okay with this idea, and the ones that weren’t took off. The ones that remained, although shorter and sicker, produced more offspring, so we are predominantly the descendants of the greedy materialists who remained. No doubt this caused changes to the social order, and possibly genetic changes as well.

Eventually, pantries became attached to specific households instead of being publicly available, indicating that some households were prospering more than others. Specialized resources–such as fishing rocks in Keatley Creek or arable farmland–became the property of certain privileged families, possibly due to their connection with a shared ancestor or a special ability to communicate with the gods and ancestors. Burials also become more elaborate at this time, indicating the emergence of elite individuals. Even before the emergence of protostates in places like China and Mesopotamia, children are buried with signs of inherited rank, such as cylinder seals, indicating transmissibility of status. Some of these may have been priests. Very commonly ancestors are buried under the floors of houses, such as in ancient China and Mesoamerica, indicating a hereditary ownership claim to certain plots of land passed down through generations.

Early elites tended to emphasize their descent from a particularity renowned ancestor, or even a spirit, and the leaders from this favored clan became the paramount leaders of the tribe. Their claims were based on appeals to the supernatural, a concept which does not exist in any other animal besides humans. This is the thesis of The Creation of Inequality by anthropologists James Flannery and Carol Marcus:

The Creation of Inequality [moves] more or less progressively from history’s relatively egalitarian hunter-gatherer groups, such as the Caribou and Netsilik Eskimos and the !Kung of southern Africa, to the multi-level administrative empires of the Aztec and Inca. Along the way, [authors] Flannery and Marcus dedicate lengthy sections to discussion of the various “clues” which reveal how the “social logic” of more equal societies, manifested in practices such as meat-sharing partnerships, gift-exchange, and prestige-based, non-hereditary leadership (i.e., Melanesian “big men”), gave way to the logic of inequality in societies with—among other things—taxes, bureaucracies, separate burial practices for nobles and commoners, and, importantly, hereditary formal power. Key to their analysis is their conception of the unique role of the “sacred” in human societies.

Looking to chimps, who compete and assemble themselves hierarchically into alphas, betas and gammas, Flannery and Marcus observe that even outwardly egalitarian hunter-gatherers preserve hierarchy by making their supernatural beings the alphas, their ancestors the betas, and themselves the undifferentiated gammas. Moving toward institutionalized social inequality has thus often involved certain gammas’ claiming power legitimated by special—and often hereditary—relationships to these sacred alphas and betas. Clearly, European kings were not the only ones who invoked the divine right to rule.

Journal of Sociology & Social Welfare, March 2014, Volume XLI, Number 1, pp. 161-162 (PDF)

Interestingly, many human cultures have arranged themselves into a tripartite hierarchy of nobility, priests and commoners. Sometimes a warrior or a merchant/farming caste is included as well. Examples range from Ancien Régime France just prior to the Revolution to the caste systems of India until British rule (Brahmins, Kshatrys, Vasyas). Indeed, the very word ‘hierarchy’ comes from ‘hiero-‘ meaning sacred and ‘archos’ meaning ruler (as in anarchy, patriarchy, etc.).

…The combination of surplus extraction from defensible resources and personal or familial property claims to these resources that included the right to transfer them to descendants or other kin laid the foundation for growing socioeconomic stratification. New forms of political and military power contributed to and amplified the resultant inequalities in income and wealth.

Much like the shift to food domestication, the evolution of political hierarchies was a slow and gradual process and was highly contingent on ecological conditions, technological progress, and demographic growth. In the long run, the overall direction of change was from the small family-level groups of a few dozen people that were typical of simple forager economies to local groups and collectives whose members typically numbered in the hundreds and on to larger chiefdoms or protostates that controlled thousands or even tens of thousands. This was not always a linear progression, and not all environments supported more complex forms of social organization.

As a result, complex state-level societies based on agriculture eventually came to share the planet with bands, tribes, and chiefdoms of herders, horticulturalists, and what remained of the ancestral population of hunter-gatherers. This diversity has been vital to our understanding of the driving forces behind the emergence of inequality, allowing us to compare the characteristics of different modes of subsistence and their consequences for the accumulation, transmission, and concentration of wealth as already summarized. p. 41 (Emphasis mine)

The documented range of variation in sociopolitical organization around the world has been similarly broad, making it possible to relate inequalities of power and status to inequalities in wealth. From a global perspective, agriculture is closely correlated with social and political stratification. In a sample of more than a thousand communities, more than three-quarters of simple foraging communities do not display signs of social stratification, as opposed to fewer than a third of those practicing intensive forms of farming.

Political hierarchies are even more strongly dependent on sedentary agriculture: elites and class structure are virtually unknown among simple foragers but are attested for the majority of agrarian societies. Once again, however, it was the scale of the economic surplus rather than the mode of subsistence as such that served as the critical variable. p. 42 (Emphasis mine)

Indeed, James C. Scott estimates that up to 60 percent of humans lived outside of state-level societies until as late as 1600 CE. Today, I would estimate that number is probably under 2 percent, despite the human population exceeding seven billion.

With the advent of protostates came hereditary rank—high priests, kings, potentates, generals, taxes, bureaucrats and so forth. We’ll take a look at those new forms of hierarchy stemming from differential access to political and military power—and how they contributed to the next stage of inequality—the emergence of “The Original One Percent”—next time.

Next

Libertarians’ History Problem 3

Part 1
Part 2

The second argument that Caplan rolls out is what Breunig calls the “folk morality” argument. I read this as the idea that one should be entitled to the fruits of one’s own labor. For example, if I build a house with my own two hands, then I “own” the house. If I plant seeds and water and weed a given plot of land, then I “own” the resulting crop. If I build a piece of furniture, or paint a picture, then it’s mine. Seems pretty straightforward, and this was basically the reasoning that John Locke used: “The labour of his body and the work of his hands, we may say, are strictly his. So when he takes something from the state that nature has provided and left it in, he mixes his labour with it, thus joining to it something that is his own: and in that way he makes it his property.” (By the way, Locke also argued that money was a set quantity of precious metal).

Caplan invokes this “folk morality” to justify the initial acquisition of private property. This makes some sense—we know, for example, that primates are hardwired to reject what they perceive as unfairness, such a greater reward for similar work effort.

And no doubt this sort of folk morality about fairness did play some sort of role. After all, why shouldn’t I be able to keep what I produce? And if I produce more than the next guy or gal, then why shouldn’t I have more? For libertarians, this is the cornerstone behind the private property argument, and really behind all of their philosophy. One is wealthy because one’s marginal productivity is higher, or one has highly specialized skills and rare talents. People are unequal in their abilities and disposition, so of course wealth is unequal. Anything else would be unfair.

But does this accurately account for kinds of wealth the disparities we see all around us today? After all, intrinsic qualities are distributed in people along a bell curve, or Normal distribution. Thus, if work equals reward, we would expect to see a pattern of wealth distribution which aligns roughly to that of skill/talent among individuals. How much “harder” can the wealthy work than the rest of us? After all, there are only 24 hours in the day, and a portion of those are spent sleeping.

Instead of the normal variation we see between individuals with, say, intelligence, conscientiousness, or physical strength, we instead see wealth distributed according to a “Power Law” or Pareto distribution.

Many empirical quantities cluster around a typical value…their distributions place a negligible amount of probability far from the typical value, making the typical value representative of most observations. For instance, it is an entirely useful statement to say that an adult male American is about 170cm (about 5 feet 7 inches) tall because not one of the 200 million-odd members of this group deviate very far from this size. Even the largest deviations, which are exceptionally rare, are still only about a factor of two from the mean in either direction and hence the distribution can be well-characterized by quoting just its mean and standard deviation.

…consider a world where the heights of Americans were distributed as a power law, with approximately the same average as the true distribution (which is convincingly Normal when certain exogenous factors are controlled). In this case, we would expect nearly 60,000 individuals to be as tall as the tallest adult male on record, at 2.72 meters. Further, we would expect ridiculous facts such as 10,000 individuals being as tall as an adult male giraffe, one individual as tall as the Empire State Building (381 meters), and 180 million diminutive individuals standing a mere 17 cm tall.

In fact, this same analogy was used in 2006 to describe the counter-intuitive nature of the extreme inequality in the wealth distribution in the United States, whose upper tail is often said to follow a power law.

http://tuvalu.santafe.edu/~aaronc/courses/7000/csci7000-001_2011_L2.pdf

So how, then, could such a distribution of wealth be the result of innate qualities or differences in talent or “hard work?”

It can’t.

In addition, the ability to deprive the community of the necessary resources to survive is quite contrary to the “folk morality” that Caplan invokes above. Any leader or member of a complex foraging tribe or simple agrarian society hoarding or depriving the others of necessary resources would quickly lose their social standing at the very least, and, in many cases, their lives. Thus “folk morality” is hardly consistent with the “sanctity” of private property posited by libertarians as “pure and natural.” As Matt Breunig points out, the “folk morality” invoked by Caplan is decidedly non-libertarian in its outlook:

The problem with the method is that the general folk morality of people, when taken as a whole, is not libertarian. Any assessment of how people generally feel about things in the economic realm would not generate the conclusion that they generally feel like laissez-faire capitalism is correct. We know this because no society ever selects those institutions and because libertarians write books all the time about how democracy is bad precisely because people as a whole are not sympathetic to the libertarian worldview.

An honest assessment of where folk morality is on economics would probably be something like: people have somewhat contradictory ideas about economic morality that roughly sum to the worldview that there should be property rights but also that those rights should give way to fairness and welfare goals to some degree.

I am not saying I agree with that general view or even that you should build your normative views this way. But if you are going to say the proper normative method is folk morality, as Caplan does, then it seems like you should actually take a comprehensive account of what that folk morality is, not just opportunistically pick off one piece of it.

To emphasize that point, it’s notable that traditional societies, even those with considerable surpluses, took extensive steps to keep inequality in check. To keep anyone from lacking the means of subsistence, land was periodically redistributed, and large infrastructure projects (irrigation ditches, walls, etc.) were built communally, often with corvée labor. The product of the land was owned and shared in common by all. Ancient contract law determined rights and responsibilities between families, not individuals as Henry Sumner Maine noted in his book Ancient Law. There was no such thing as “economic” behavior  as we understand the term today as Karl Polanyi concluded from his extensive survey of the anthropological data:

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.

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.

This attitude is reinforced by the frequency of communal activities such as partaking of food from the common catch or sharing in the results of some far-flung and dangerous tribal expedition. The premium set on generosity is so great when measured in terms of social prestige as to make any other behavior than that of utter self-forgetfulness simply not pay. Personal character has little to do with the matter. Man can be as good or evil, as social or asocial, jealous or generous, in respect to one set of values as in respect to another. Not to allow anybody reason for jealousy is, indeed, an accepted principle of ceremonial distribution, just as publicly bestowed praise is the due of the industrious, skillful, or otherwise successful gardener (unless he be too successful, in which case he may deservedly be allowed to wither away under the delusion of being the victim of black magic). The human passions, good or bad, are merely directed toward noneconomic ends. [Polanyi; The Great Transformation, pp. 48-49]

That’s what actually happened. Folk morality, as it has been studied by anthropologists and sociologists, is decidedly communitarian, contra the beliefs of modern-day economists.

In his book Primitive Property, Emile de Layeleye concluded that while movable items, or “chattels” were considered private property from an early period, land and buildings were communally owned and managed. Arable land was periodically redistributed (just as debts were periodically annulled). He noted that such systems still existed in his own time (the late Nineteenth century) in various parts of the world such as Eastern Europe, India and Java. Land rights were usufructuary, and only transferable ceremonially between families if agreed to by the whole community. For example, he notes of ancient Rome: “Agriculture commenced and was developed under the system of common ownership and periodic partition. In the provinces of the Roman empire the soil was only occupied by title of usufruct.” Ancient families were the stewards, not the owners, of the land.

In his historical study he noted a gradual process of transferring ownership from communities to families to individuals unfolding over very long stretches of time, with creeping normality used to justify it after the fact. Of this evolution he writes:

It is only after a series of progressive evolutions and at a comparatively recent period that individual ownership, as applied to land, is constituted.

So long as primitive man lived by the chase, by fishing or gathering wild fruits, he never thought of appropriating the soil; and considered nothing as his own but what he had taken or contrived with his own hands. Under the pastoral system, the notion of property in the soil begins to spring up. It is however always limited to the portion of land, which the herds of each tribe are accustomed to graze on, and frequent quarrels  break out with regard to the limits of these pastures. The idea that a single individual could claim a part of the soil as exclusively his own never yet occurs to any one; the conditions of the pastoral life are in direct opposition to it.

Gradually, a portion of the soil was put temporarily under cultivation, and the agricultural system was established; but the territory, which the clan or tribe occupies, remains its undivided property. The arable, the pasturage and the forest are farmed in common. Subsequently, the cultivated land is divided into parcels which are distributed by lot among the several families, a mere temporary right of occupation being thus allowed to the individual. The soil still remains the collective property of the clan, to whom it returns from time to time, that a new partition may be effected. This is the system still in force in the Russian commune; and was, in the time of Tacitus, that of the German tribe.

By a new step of individualization, the parcels remain in the hands of groups of patriarchal families dwelling in the same house and working together for the benefit of the association, as in Italy or France in the middle ages, and in Serbia at the present time.

Finally individual hereditary property appears. It is, however, still tied down by the thousand fetters of seignorial rights, fideicommissa, retraits-lignagers, hereditary leases, Flurzwang or compulsory system of rotation, etc. It is not till after a last evolution, sometimes very long in taking effect, that it is definitely constituted and becomes the absolute, sovereign, personal right, which is defined by the Civil Code, and which alone is familiar to us in the present day.

The method of cultivation is modified in proportion as property is evolved from community. From being extensive, cultivation becomes intensive, that is to say capital contributes to the production of what was formerly derived from the extent of the territory.

At first, the cultivation is temporary and intermittent. The natural vegetation is burned on the surface, and grain is sown in the ashes; after this the soil rests for eighteen or twenty years…This mode of cultivation is not incompatible with the pastoral system and a nomadic life. Later on, a small portion of the land is successively put into cultivation, according to the triennial rotation, the greater part remaining common pasturage for the herds of the village. This is the system of Russia and Ancient Germany. Afterwards the cattle are better tended, the manure is collected, and the fields are enclosed. Roads and ditches are marked out, and the land is permanently improved by labour. Then the fallow is curtailed, powerful manures are purchased in the towns or devised by industry ; capital is sunk in the soil and increases its productiveness. This is the modern agriculture, the system of Italy and Flanders since the middle ages; never coming into action until the individual ownership of the land is completely established…

These necessities, these ideas, these sentiments, have been very similar and have acted in the same manner in all societies, at a certain period in their development, directing the establishment of institutions everywhere the same. All races have not, however, advanced at the same pace. While some had already passed out of the primitive community at the commencement of their historical existence, others still continue to practise, in our day, a system which dates from the very beginning of civilization…[Laveleye; Primitive Property, pp. 3-5]

As for Caplan’s “folk morality” argument, Laveleye concludes:

A study of the primitive forms of property is essential in order to form a solid foundation for the theory of property. Without understanding the real facts, the majority of jurists and economists have based property on hypotheses which are contradicted by history, or on arguments which load to a conclusion quite opposite to what they wished to establish. They strove to show the justice of quiritary property, such as the Roman law has bequeathed to us; and they succeeded in proving quite another thing — that natural property, such as it was established among primitive nations, was alone in accordance with justice.

To show the necessity of absolute and perpetual property in land, jurists invoked universal custom, “quod ab omnibis, quod ubique, quod semper.” (‘Always everywhere and by everyone.’ Universally accepted, agreed upon, or practiced.) “Universal consent is an infallible sign of the necessity and consequently of the justice of an institution,” says M. Leon Faucher. If this is true, as the universal custom has been the collective ownership of land, we must conclude that such ownership is alone just, or alone conformable to natural law. [Laveleye; Primitive Property, p. 337]

Thus, there is no “natural right” to property, nor are price-fixing markets spontaneous outgrowths of mankind’s supposedly “natural” instincts to “truck, barter and exchange.”  Nor were governments formed by mutual agreement of solitary individuals, but evolved by degrees through basic social instincts such as kin selection and reciprocal altruism. Our theories are based on imaginary scenarios posited by British thinkers of the Enlightenment attempting to justify the extreme inequalities they witnessed in their own day. John Locke, Thomas Hobbes and Adam Smith wrote lengthy philosophical treatises to justify what had been achieved by top-down violence and control over thousands of years on the part of elites before they were born. They did not look at actual history, nor, it seems, did they care to. But isn’t time we set aside their deductivist theories in favor of better ones; ones more accurate and better in line with the actual historical record and the facts as we know them? Won’t that get us further in seeking answers to our social ills?

In contrast to Bryan Caplan’s libertarian fairy tale above, David Harvey tells quite a different story about how private property was initially acquired and the establishment of price-fixing global markets:

…These include the commodification and privatization of land and the forceful expulsion of peasant populations; conversion of various forms of property rights (common, collective, state, etc.) into exclusive private property rights; suppression of rights to the commons; commodification of labour power and the suppression of alternative (indigenous) forms of production and consumption; colonial, neocolonial, and imperial processes of appropriation of assets (including natural resources); monetization of exchange and taxation, particularly of land; the slave trade (which continues particularly in the sex industry); and usury, the national debt and, most devastating of all, the use of the credit system as a radical means of accumulation by dispossession. The state, with its monopoly of violence and definitions of legality, plays a crucial role in both backing and promoting these processes.

David Harvey’s A Brief History of Neoliberalism (Naked Capitalism)

As Emile de Laveleye concludes in his exhaustive study of Primitive Property:

…these juridical antiquities, which seemed as if they could only be of interest to a limited number of savants, are of real, practical interest. Not only do they throw new light on fundamental institutions and on the mode of life of primitive races; but…they raise us above the narrow ideas, which make us regard that which is carried on around us, as the only scheme of social existence. [p. 3]

No wonder libertarians don’t want to talk about it.