Urbanization and Land Ownership in the Ancient Near East – Summary

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Fun Facts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Labor in the Ancient World – Summary

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Economy of the Iroquois (Wikipedia)

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

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

Wikipedia adds:

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

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

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

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

Which leads to the next point:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Which leads to the next conclusion:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Trump Appoints Bane to National Security Council

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

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

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

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

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

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

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

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

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

Shocked, I asked him what he meant.

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

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

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

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

The New Double Movement

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

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

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

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

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

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

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

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

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

Will globalisation take away your job? (BBC)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“The End of Employees” (Naked Capitalism)

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

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

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

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

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

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

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

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

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

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

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

Summary of “The Great Transformation” by Karl Polanyi

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conclusion

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

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

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

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

Sources

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

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

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

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

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

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

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

Further Reading

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

The Philosophy of Debt

I thought I’d take the time to transcribe some of one of the more interesting podcasts I listened to last year, Tom O’Brien’s interview with Alexander Douglas, the author of The Philosophy of Debt. It covers a lot of things from a perspective you don’t hear anywhere else:

ON HOW HE GOT INTERESTED IN MONETARY THEORY

“I suppose I was interested philosophically when I read an article in the Economist…on heterodox economics. And it was talking about how the [2008 financial] crisis had revived heterodox economics to a certain extent. And it mentioned this guy called Warren Mosler. It painted quite a complimentary picture, but left open the possibility that he was just a crank.”

“I was intrigued, so I thought I would check it out. I watched him on FOX News, because…the first thing that came up was a video of him being interviewed on FOX News. And he started off to me sounding like a crank until he said something like, “Well, remember that government bonds are just saving accounts at the Fed.” And that made me jump out of my seat. I had just never thought of it like that. And it was this very simple philosophical point that, even as somebody who likes to think about these things philosophically…it had just never occurred to me to think, ‘Well, what is the difference between a bond issued by the treasury and a savings account which is just the liability of the central bank’…That’s probably when I started thinking about the concepts like debt and what and like what an asset is and what it means to hold an asset…”

“Following on from this point about bonds, I guess the question that I asked myself was, why does that seem plausible, and why does it seem weird at the same time?”

ON MONEY AND BONDS AS DEBT MARKERS

“If you’re educated in the mainstream of economics, or even in a lot of heterodox traditions…a bond is a debt marker. It’s a certificate of a debt from the government to you. It is something completely different from the thing that’s actually owed. It specifies that you’re owed a certain amount of currency, but it isn’t the currency…

We think about debt intuitively…we think of simple cases like I borrow your lawnmower, and there’s no debt marker at all there, but maybe I could write out a debt marker for you. I could say ‘I owe you a lawnmower.’ And it’s very obvious there that there’s one object in the world that I owe you. And then you have this debt marker that is just your claim on that one object. That’s nice and simple.”

“You have to build up a very long way before you get to a government bond…Suppose your lawnmower is destroyed somehow in an accident. You might say, now I owe you *a* lawnmower. But the, what I call using a bit of medieval logic, the suppisitio of the term, …it has now changed. The thing that I owe you used to refer to one particular object; now it is a distributive term. There’s some lawnmower out there that I owe you. It’s got to be one of a class of certain lawnmowers which are equivalent in value or something like that. But that is now looking like a very different sort of relationship…

What if the class of objects you could present to extinguish the liability [included] the debt marker itself? That seems to be what’s happening with the government bond. So a government bond says you have a claim on any risk-free financial asset worth this amount. But of course that bond itself is a risk free financial asset worth that amount. Both are liquid financial assets that serve the same purpose. And that’s when I realized that was Mosler was doing was not just economics, he was making this interesting philosophical intervention.”

Tom O’Brien (TO’B): “That’s quite a tricky concept…a government bond is not a debt, it represents something that’s equivalent to a debt.”

Alexander Douglas (AD): “Well, the weird thing about it is, it’s a debt and also something that extinguishes a debt…In principle, with a fiat currency, the only thing that the state can use to extinguish any of its debts is other liabilities. You can use Bank of England notes to repay the debt that’s supposedly embodied in the government bond. The Bank of England notes are liabilities of the Bank of England, which are in turn backed by government debt, at least nominally. So the government seems to be extinguishing the debt with its own debt. That’s why we have so much trouble making sense out of it.”

“And there are two dimensions to that. One is the financial accounting which you can just learn. The other is how we should morally think about this. The morals of the lawnmower case seem so benignly intelligible by comparison…It’s pretty clear that if I just walk away with the lawnmower and never return it to you, I’m doing something wrong; I’m harming you. But when we get to these cases where the relation between the thing owed and the marker of the debt, and the two agents involved, is just so completely loopy, it’s no longer possible to apply our moral intuitions in a straightforward way.”

TO’B: “The way I personally like to think about the government debt or the government currency…is [that] it’s the same thing…one is like an interest-bearing currency and one is like a bog-standard currency….”

ON WHAT MONEY REALLY IS

“The question that we need to start with is, what is it that makes something money? Warren [Mosler] says that we should just avoid the term money because it’s so vexed and so complicated.

I find it very interesting that in economics textbooks you’ll sometimes just introduce this concept [of] money which is given these various roles: it’s a medium of exchange, etc. None of them seem necessary or sufficient to define something as money.

Joan Robinson pointed out a long time ago, in a barter society, if someone barters one object for another object which they don’t actually want but they just keep—so I might be a blacksmith; I’ll barter you a hammer to you for some corn. I just hold onto the corn not because I want to eat it, but because I know that somebody else will probably give up something that I do want for it. That shouldn’t be sufficient to make corn into money, because people do that with objects all the time. In a barter society you might be constantly swapping for things you just want to hang onto. So you need something else. And all these other conditions—store of value, etc.—they don’t seem to work either because the same argument can just be applied.”

“So in economics textbooks you’re then given this sort of pyramid. Well, there are these different “money things” which variously approximate to the condition of money. So cash, that’s definitely money. And then you have these different sorts of financial assets-you’ve got corporate paper, and government bonds fit somewhere in there. This strikes me as just a useless way of trying to throw any light on the important issues…Of course what we’re interested in is the sorts of social relations you can create, the sort of relations of power that you can create. Surely that’s got to be the relevant feature of defining something as money.”

ON THE RELATION OF POWER AND MONEY

TO’B: “That’s a very deep point; that the nature of money is intrinsically tied to the social relations of society…It sounds a bit too Marxist to be in an economics textbook.”

AD: “Well, I guess that’s right. It’s interesting if you look at the history of discussion of money, to most of the medieval tradition, this was just an obvious point. That of course money is a sort of political contract as some level. Because otherwise it’s impossible to see what could distinguish it from mere commodity…it’s…the point that almost anyone will arrive at if they think of money in any degree of philosophical depth rather than just wanting to have something to stick in as the value of a viable in an economic model.”

“The MMT way of thinking about money…is that anyone can create money, the problem is getting it accepted. So [economist Randall Wray’s] point is, I can issue IOU’s, I could issue my own bonds and see if I can get them to circulate; see if I can purchase things by issuing debt certificates, and if people circulate them around, then why aren’t they money? The tricky philosophical point there [is]…is it ‘the thing is money and then you have to get it accepted,’ or does it become money when you have the power to get it accepted? I think that’s the crucial point here…”

“But with government money, with currency, the story is quite simple. You impose a tax liability first, and then you can choose what that tax liability is denominated in, and then people will have to give up things, at least to you, to get the thing that extinguishes that tax liability, otherwise you’ll subject them to punishments. So in that case it’s obvious what makes something money. So if that’s what we mean by money, if we’re taking currency as the paradigm of money, then the only question you have to ask is…‘how much coercive power backs the asset that you’re circulating?‘ The answer to that question will determine how much we should classify that asset as money.”

TO’B: “It seems that power and money and debt seem to be inextricably linked. Would you go so far as to say that power is the root [of money]?”

AD: “I’m not sure there’s a coherent account of what a commodity is either…The idea of a commodity is something that’s desired for…what [Adam] Smith would call its ‘value in use.’ And so the idea of a commodity money is, in addition to the value in use, it has to develop some value in exchange which isn’t just reducible to somebody else’s desire to use it; to just extract utility from it. And I can’t see what that could be except for power. So if I start telling everybody that they have to turn over green flowers to me or I’ll subject them to punishments, well then green flowers will start to circulate and they’ll stop being commodities. The problem with that distinction is that the whole exchange economy is infected with these relations of power. There is no hard line between a voluntary exchange and a coerced exchange, so that’s where the issue becomes tricky. Maybe that’s why Marxists don’t distinguish between commodities and money in the way MMT would.”

HOW UNEMPLOYMENT IS CREATED BY THE GOVERNMENT

“…It all stems from the question of what a currency is. The mainstream view is that currency is just this medium of exchange. It reduces transaction costs and the government supplies the currency, or the central bank supplies the currency just kind of as a public service, and people now have this medium of exchange.”

“The thing that weird about that is, if we need a media of exchange, why can’t we just create them ourselves? There’s a tension here…which is also what mainstream economists say when they do tell the historical story—that we just sort of developed this medium of exchange. Okay, well then, why do we need the government to come and issue them?”

“The MMT story is, the creation of a state currency doesn’t begin with the printing…and circulating of an asset; it begins with the creation of a liability that wasn’t there before. So what you do is, you just impose this tax liability, and for MMT that’s the source of unemployment.”

“Their model is the hut tax…The idea there is you go from a village that has zero unemployment. Whether or not you want to call it ‘fully employed’…is tricky because you might want to say that unemployment is very specifically not just deprivation. A person who is starving on a desert island, it would be weird to call that person unemployed. Unemployment is a power relation. It’s a situation in which people need to offer their labor in order to acquire a particular sort of asset—in order to acquire currency.

So you go into a village where it’s perfectly self-sufficient. And then you impose a tax liability on all the huts which can only be paid in something that only you have, which is shillings. It goes from zero unemployment to max unemployment overnight. As soon as you’ve done that you’ve created a currency. You don’t even need to print the shillings. You have unemployment there because you have people who are offering their labor because they have no choice [but] to try and earn these shillings to keep themselves out of prison. You already have the currency there. Whether or not you print the shillings just depends on how sadistic you want to be.”

“And so the job guarantee is just a way of saying, ‘since you’ve created all this unemployment, the least you could do is now provide a means of extinguishing it’…people should at least have the chance to earn the shillings that you created the demand for simply by imposing this tax.”

“The difference between full employment as recommended by mainstream economists, and full employment as recommended by MMT, is that mainstream economists tend to think that unemployment is this naturally occurring phenomenon, and the government can try and do something about this naturally occurring phenomenon. Whereas the MMT view is [that] the government created all the unemployment, so the job guarantee is simply reversing the imposition that it’s placed upon society.”

TO’B: “Its a very counterintuitive way of looking at it–that unemployment is created by the government.”

AD: “Yeah it is. There’s a talk that [Warren] Mosler gives where he starts off by saying ‘what’s the purpose of taxation?’ And of course everybody gets is wrong; they think it’s to bring in revenue for government. He deals with that easily, he says, ‘the government is the only issuer of the currency so how could it possibly need revenue paid in that currency?’ And the answer that he ends up with is [that] the purpose of taxation is to create unemployment. That’s the primary purpose; that’s what taxation is for.”

ON HOW MONEY STRUCTURES LABOR MARKETS

TO’B: “So taxation, in effect, forces people into work that’s deemed meaningful socially…It’s coercive when you think about its root nature.”

AD: “Its fundamentally coercive, yeah. And its not just about coercing labor, its about creating a certain structure of labor…The problem is, you don’t want to compare our society with its coercive apparatus to some idealized version of our society where you just take the coercive apparatus away. That’s where the myth of barter comes from. Just take a society like ours and take the money away. Well then, you’re taking away the entire coercive apparatus of our society. Whether you’re left with anything that would even be logically conceivable shouldn’t be something you can assume.

But imagine some other sort of society where you don’t have money; where you don’t have a state currency like this. People will still work to produce what they need. They’ll still work for each other, maybe, but it won’t all have to be channeled through this single medium.”

“What I mean is, if I’m hungry and I go down to Sainsbury’s, I can only give them money. I can’t give them anything else. I can’t use my labor in any other way to procure what I need from Sainsbury’s. So first of all, I have to find somebody who will exchange my labor for currency. So there’s a whole structuring of labor relations that occurs.”

“People say that currency is a way of overcoming the inconveniences of barter. But in a way you could say it adds all these inconveniences. It might be the case that otherwise I would have been able to go to Sainsbury’s and say, ‘Look, I’ll stack your shelves for an hour, and let me take home a couple of burgers,’ or something. But I can’t do that because…currency’s is in the way.”

ON SOCIALIZED LABOR MARKETS UNDER MMT

“You’re looking directly at the coercive element of unemployment; that unemployment has to be something you impose on a society by coercion. Then you can recognize the thing that Michał Kalecki was trying to talk about in his 1943 article, The Political Aspects of Full Employment. What happens is, you have socialized the power to coerce labor. That’s effectively what you’ve done.”

“The easiest way to think about it is to go back to the hut tax. If you go [back] to the hut tax, and every hut has this tax liability, and then I give the shillings to maybe three or four guys—okay, now I’ve outsourced my power to coerce labor. I’ve deputized it. Now these guys get to decide how they want to use all the labor that there is. Whereas if I have a standing offer that anybody who doesn’t like the terms that those three guys offer can come directly to me—now I’m the government in this example—then you’ve got a socialized system of labor. So [the Job Guarantee] is very significant.”

ON THE “NOBLE LIE”

TO’B: “It seems to me that the people in power—say politicians, and probably the central bankers—I think they know all of this stuff personally, because If you go back to something like, say, World War Two and you look at what America or Britain did; they didn’t say, ‘Oh, Germany’s attacking me, we don’t have enough money to build planes,’ or whatever. They just expanded the monetary base up until everybody was employed to defend the nation and create all the tanks and planes and everything that they needed. They didn’t give a damn about the debt.”

AD: “Insiders are cagey about admitting how much they actually do or don’t agree with this understanding of the issue. I’m sure you know there’s a famous interview with [Paul] Samuelson where, what he says about the deficit is, well, it’s just a ‘noble lie,’ basically. That you want to act as if the government overspend[ing] is some sort of borrowing operation, because otherwise it’s completely unconstrained in what it can spend from year to year. Once people realize that issuing bonds is really just the same as issuing currency, the government can just do whatever it likes. And so somehow this false perception serves some important political purpose by reining in the government. But as you say, does it?”

“You’ve given the clear example there. Britain is running a deficit in 1941. Germany’s on the verge of invading. Does Churchill surrender because he can’t afford to pay for the soldiers? This ‘noble lie’ seems to come and go as it pleases the governing authorities to be subject to it. So who is it constraining? It clearly doesn’t seem to be constraining the decision makers, since they can give up on it whenever they like. It only constrains the population. But why do we need to constrain the population? I mean, we already have the legal system and the police to do that.”

ON THE USEFULNESS OF UNEMPLOYMENT

TO’B: “So this seems to really tie into a thing of class and power. What are the problems that [Kalecki] envisions with trying to introduce this guarantee of full employment?”

AD: “Kalecki’s idea is that capitalism has evolved into a system where unemployment is a crucial disciplinary measure in the relation between labor and capital. You can sort of speculate on what would happen if that were no longer there the same way you can speculate about what would happen if prison sentences were abolished. We just don’t know. To not be able to implicitly threaten workers at the bottom–the workers who are as really close as you can get to the threat of unemployment– would change the whole nature of the factory. It’s just unclear that it would be able to be run in anything like way it’s currently run. That was his main concern.”

“He said [that] said the reason why fascism had no problem implementing full employment in Germany is because it did just completely change the nature of the power structure of society. It didn’t have to worry about how things would play out now that these power imbalances had been completely reversed because it sought to do that in the first place; that was the point.”

TO’B: “…The Nazis essentially introduced MMT to get them out of the Great Depression. I think it was called Chartalism back in the day. But they used it to guarantee full employment. They brought their unemployment rates down from like thirty percent down to two percent in a matter of 5 or 6 years.”

AD: “Mind you, any nation that goes to war brings its unemployment rate down to basically full employment levels. So yeah, it’s certainly possible.”

ON A POSSIBLE RESURGENCE OF MMT AND THE JOB GUARANTEE

“…the full employment policies that were pursued in the Sixties and Seventies were aggregate demand management polices. So you would just pump as much money into the economy as you could, in the hope that at some point the economic opportunity cost of not hiring any available labor would fall so low as to make it irrational for a capitalist not to do that.”

“Kalecki’s point is that, ‘well, that’s assuming that they’re motivated by purely pecuniary concerns.’ But of course what the capitalist realizes is that unemployment is a useful disciplinary possibility. So the capitalist might be willing to pay for it. In other words, it doesn’t matter how low the opportunity costs, no matter how low their opportunity cost goes, there’s just a certain amount that they’re allocating to pay, or to not maximize their profits, in order to maintain that power which might be vital to the function of, at least at that point, industrial capitalism.”

“So in the U.K. there are bad associations with full employment policy because many people—to some extent rightly—blame it for all the industrial conflict that emerged after that period. You basically had this attempt to subvert an existing power balance that didn’t quite work out. You end up with these pitched battles between representatives of different industrial interests.”

“The job guarantee idea is, well, okay fine, so don’t work within the market. You just circumvent the market entirely. Instead of trying to incentivize capitalists to hire all the available labor, we the government would…just hire them ourselves. Of course that’s even more radical.”

“There are two possibilities One way is to kind of smuggle it in as not that great a departure from the current way of operating, which is how a lot of MMT activists are presenting it: ‘Look this is just the logical extension of Keynesian demand management.’ The other is to show it for what it really is, in which case it takes on a pretty revolutionary character, I think.”

“As a person who only has your labor power to offer, you’re a mendicant, and who are you a mendicant to? The job guarantee just means you no longer possibly can be a mendicant to private interests, because if you don’t like the terms any of them offer you, you can always get these guaranteed fixed terms – a fixed living wage by working for the state. I mean, this is a philosophical question. Its not obvious that that’s better. There’s all the debates about state socialism that need to be had to promote the policy in that way, which is why people are trying to say, ‘look, it really just more expansionary sort of fiscal policy; it’s really just a way of extending things we already have’…but I think it’s not, it inevitably has to be more radical.”

ON HOW THE GOVERNMENT ENGINEERED THE HOUSING CRISIS

“So you have to go back to the point that the state sets the price of its currency. It sets the price of its currency by determining how much of the currency you need which ultimately comes down to the tax liabilities, and what you have to do to get the currency. During the Seventies, arguably, you had labor governments who were willing to accommodate the increasing wage bargains of unionized labor. So in that sense they were just looking after their interests.”

“And the idea is that in the 1980s you had this move toward ‘free markets.’ But in what sense? I mean, a bank is just a deputized issuer of state currency. And when the Bank of England places certain loans to buy certain sorts of assets on it eligible collateral list, it’s guaranteeing the prices of those assets. And so it does that with housing. And so you get this increase in house prices which is completely state engineered in no less a sense than the increase in wages of unionized labor was state engineered. You just have a different government looking after the interests of a different class, but the technique is exactly the same.”

TO’B: “This idea of the ‘free market’ is very far from what people think. People think that a rise in house prices is just some strange occurrence, but it’s a planned class relation, they re trying to redistribute a certain percentage of the social production to certain classes.”

AD: “Yeah. And it goes directly through the financial system which is a public institution. It might not look that way but it is. Because the Sterling framework is a government instituted framework. ‘Unelected central bankers,’ but it’s still a state institution. And the Sterling framework just determines which assets are going to move where. It puts some on its collateral list and it doesn’t put others on. There are very few people in the UK who are thinking of politics like that. Anybody’s starting assumption is that, of course the 80s were the ‘free market’ years, and before that was the ‘state socialist’ years. To get any traction on this debate you have to first disabuse people of that.”

ON THE TENDENCY OF THE RATE OF PROFIT TO FALL

“It depends on how we’re measuring profit. If you take a Neoclassical view–forget about money, I mean, money if anything is a useful numéraire, but that’s not what we’re reckoning any of our quantities in terms of. Then you might be able to argue that there’s an inevitable tendency for the rate of profit to fall if the government pursues at least a consistent policy. But if you’re doing something like [Andrew] Kliman does, and you’re actually measuring the rate of profit in terms of currency, well he himself says that, look, the rate of profit–the decline can be obscured by financial leverage–buying companies [and] gett[ing] these temporary record profits based on valuations based on loans which are never going to be paid off, impossible loans. Of course the government can just make this impossible loan to itself indefinitely. It can roll over forever. So you can’t say that there’s some tendency of the rate of profit measured in money terms to fall when you’ve got a state that has complete control over its fiscal policy.”

Luddism and Economic Ideology

Smithsonian Magazine has a very good feature on the Luddites, well worth a read. There are many elements you just don’t read in many economic histories; for example, the 40-hour work week was not brought down from the mountaintop by Moses and inscribed in stone tablets, despite what you may have heard elsewhere:

At the turn of 1800, the textile industry in the United Kingdom was an economic juggernaut that employed the vast majority of workers in the North. Working from home, weavers produced stockings using frames, while cotton-spinners created yarn. “Croppers” would take large sheets of woven wool fabric and trim the rough surface off, making it smooth to the touch.

These workers had great control over when and how they worked—and plenty of leisure. “The year was chequered with holidays, wakes, and fairs; it was not one dull round of labor,” as the stocking-maker William Gardiner noted gaily at the time. Indeed, some “seldom worked more than three days a week.” Not only was the weekend a holiday, but they took Monday off too, celebrating it as a drunken “St. Monday.”

Croppers in particular were a force to be reckoned with. They were well-off—their pay was three times that of stocking-makers—and their work required them to pass heavy cropping tools across the wool, making them muscular, brawny men who were fiercely independent. In the textile world, the croppers were, as one observer noted at the time, “notoriously the least manageable of any persons employed.”

The introduction of machinery in cloth manufacture did not make these people’s lives better. In fact, it made them a lot worse:

“They [the merchant class] were obsessed with keeping their factories going, so they were introducing machines wherever they might help,” says Jenny Uglow, a historian and author of In These Times: Living in Britain Through Napoleon’s Wars, 1793-1815.

The workers were livid. Factory work was miserable, with brutal 14-hour days that left workers—as one doctor noted—“stunted, enfeebled, and depraved.” Stocking-weavers were particularly incensed at the move toward cut-ups. It produced stockings of such low quality that they were “pregnant with the seeds of its own destruction,” as one hosier put it: Pretty soon people wouldn’t buy any stockings if they were this shoddy. Poverty rose as wages plummeted.

Yes, you read that right- the introduction of “labor-saving” technology made the amount these people worked increase dramatically. It also made their work much, much more unpleasant. It transferred control to a smaller circle of wealthy people and took it away from the workers themselves. It made the rich richer, increased poverty, and tore society apart.

But more technology is always good, right?

And since history is written by the victors, “Luddite” is a term now inextricably wound up with the knee-jerk rejection of new technology. But the Luddites weren’t opposed to new technology at all! What they were fighting against was the economic conditions that took away their autonomy and turned them into mendicants in their own country:

The workers tried bargaining. They weren’t opposed to machinery, they said, if the profits from increased productivity were shared. The croppers suggested taxing cloth to make a fund for those unemployed by machines. Others argued that industrialists should introduce machinery more gradually, to allow workers more time to adapt to new trades.

The plight of the unemployed workers even attracted the attention of Charlotte Brontë, who wrote them into her novel Shirley. “The throes of a sort of moral earthquake,” she noted, “were felt heaving under the hills of the northern counties.”

[…]

At heart, the fight was not really about technology. The Luddites were happy to use machinery—indeed, weavers had used smaller frames for decades. What galled them was the new logic of industrial capitalism, where the productivity gains from new technology enriched only the machines’ owners and weren’t shared with the workers.

In fact, the Luddites actually spared the machines that were used by employers who treated workers fairly. Funny how you never hear that in most popular descriptions of the Luddite revolt:

The Luddites were often careful to spare employers who they felt dealt fairly. During one attack, Luddites broke into a house and destroyed four frames—but left two intact after determining that their owner hadn’t lowered wages for his weavers. (Some masters began posting signs on their machines, hoping to avoid destruction: “This Frame Is Making Full Fashioned Work, at the Full Price.”)

Unlike today, labor actually fought back against these attempts to destroy their way of life:

As a form of economic protest, machine-breaking wasn’t new. There were probably 35 examples of it in the previous 100 years, as the author Kirkpatrick Sale found in his seminal history Rebels Against the Future. But the Luddites, well-organized and tactical, brought a ruthless efficiency to the technique: Barely a few days went by without another attack, and they were soon breaking at least 175 machines per month. Within months they had destroyed probably 800, worth £25,000—the equivalent of $1.97 million, today.

Rather than the “natural course” of free-market economics, once again it was government intervention, including brutal state violence, that made modern capitalism possible:

Parliament was now fully awakened, and began a ferocious crackdown. In March 1812, politicians passed a law that handed out the death penalty for anyone “destroying or injuring any Stocking or Lace Frames, or other Machines or Engines used in the Framework knitted Manufactory.” Meanwhile, London flooded the Luddite counties with 14,000 soldiers.

By winter of 1812, the government was winning. Informants and sleuthing finally tracked down the identities of a few dozen Luddites. Over a span of 15 months, 24 Luddites were hanged publicly, often after hasty trials, including a 16-year-old who cried out to his mother on the gallows, “thinking that she had the power to save him.” Another two dozen were sent to prison and 51 were sentenced to be shipped off to Australia.

But wait, isn’t capitalism all about “freedom and liberty?” Freedom and liberty for some, I guess.

The problem, then as now, was not technology itself, but the economic relations that it unfolded against. What I found most interesting is that even back then, the emerging pseudoscience of economics was used to justify the harsh treatment of the workers and the bottomless greed of capitalists, in particular the “sacred text” of modern Neoclassical economics, Adam Smith’s The Wealth of Nations:

For the Luddites, “there was the concept of a ‘fair profit,’” says Adrian Randall, the author of Before the Luddites. In the past, the master would take a fair profit, but now he adds, “the industrial capitalist is someone who is seeking more and more of their share of the profit that they’re making.” Workers thought wages should be protected with minimum-wage laws. Industrialists didn’t: They’d been reading up on laissez-faire economic theory in Adam Smith’s The Wealth of Nations, published a few decades earlier.

“The writings of Dr. Adam Smith have altered the opinion, of the polished part of society,” as the author of a minimum wage proposal at the time noted. Now, the wealthy believed that attempting to regulate wages “would be as absurd as an attempt to regulate the winds.”

It seems as though nothing’s really changed. Using economic “science” to justify social inequality and private ownership goes back to the very beginnings of the Market.

When Robots Take All of Our Jobs, Remember the Luddites (Smithsonian Magazine). Smithsonian wrote about this before, see also: What the Luddites Really Fought Against

As the above history shows, there is nothing “natural” or normal about extreme busyness and brutally long working hours. It is entirely an artificial creation:

A nice post at the HBR blog…describes how being busy is now celebrated as a symbol of high status. This is not natural. Marshall Sahlins has shown that in hunter-gather societies (which were the human condition for nine-tenths of our existence) people typically worked for only around 20 hours a week. In pre-industrial societies, work was task-oriented; people did as much as necessary and then stopped. Max Weber wrote:

“Man does not “by nature” wish to earn more and more money, but simply to live as he is accustomed to live and to earn as much as is necessary for that purpose. Wherever modern capitalism has begun its work of increasing the productivity of human labour by increasing its intensity, it has encountered the immensely stubborn resistance of this leading trait of pre-capitalistic labour. (The Protestant Ethic and the Spirit of Capitalism, p24”

The backward-bending supply curve of labour was normal.

E.P. Thompson has described how pre-industrial working hours were irregular, with Mondays usually taken as holidays. He, and writers such as Sidney Pollard and Stephen Marglin, have shown how the working day as we know it was imposed by ruthless discipline, reinforced by Christian moralists. (There’s a clue in the title of Weber’s book). Marglin quotes Andrew Ure, author of The Philosophy of Manufacturers in 1835:

The main difficulty [faced by Richard Arkwright] did not, to my apprehension, lie so much in the invention of a proper mechanism for drawing out and twisting cotton into a continuous thread, as in…training human beings to renounce their desultory habits of work and to identify themselves with the unvarying regularity of the complex automation. To devise and administer a successful code of factory discipline, suited to the necessities of factory diligence, was the Herculean enterprise, the noble achievement of Arkwright…It required, in fact, a man of a Napoleon nerve and ambition to subdue the refractory tempers of workpeople accustomed to irregular paroxysms of diligence.”

Today, though, such external discipline is no longer so necessary because many of us – more so in the UK and US than elsewhere – have internalized the capitalist imperative that we work long hours, …Which just vindicates a point made by Bertrand Russell back in 1932:

“The conception of duty, speaking historically, has been a means used by the holders of power to induce others to live for the interests of their masters rather than for their own.”

Against busyness (Stumbling and Mumbling)

Honestly, the five-day workweek is outmoded and ridiculous. It’s more of a babysitting operation for adults than anything else. It’s a silly as arguing that we need over two decades of formal education in order to do our jobs.

I was reminded of this over the holidays. In the U.S. we get virtually no time off from our jobs, unlike most other countries (East Asia might be an exception). But Christmas/New Year’s is a rare exception, and we have several four-day weeks in a row (without pay for some of us, of course). Those weeks are so much more pleasant, and I would even say productive, than the rest of the year. Every year at this time I think to myself, “Why isn’t every week a four-day workweek?” Some places do have such an arrangement, but they justify it by four long, ten-hour days. I don’t know about you, but towards the end of ten hours in a row of “work” I doubt anyone’s accomplishing much of anything. Is 32 hours a week really not enough to keep society functioning in the twenty-first century?

Not only that, but many people use whatever little vacation they do have in order to take the whole time period at the end of the year off. This is typical in Europe, but rarer here. In any case, while going to work I noticed that there was hardly any traffic. The roads were empty. There were plenty of seats on the bus. The streets and sidewalks were empty. There was no waiting in the restaurants and cafes. There was plenty of room for everything. There was a laid-back feeling everywhere. It was so pleasant. I couldn’t help but think to myself, “why isn’t every week like this?” If more people could stay home and work less, it very well could be. Instead we’re trapped on a treadmill. Working less would actually pay dividends in terms of reduced traffic, less crowding, less pollution, and better health outcomes due to less stress and more time to exercise.

There’s also a simple logic problem at work here. If we say the 40-hour week is inviolable and set-in-stone for the rest of time, and we do not wish to increase the problem of unemployment, then literally no labor-saving technology will ever save labor! We might as well dispense with the creation of any labor-saving technology, since by the above logic, it cannot save labor. You could equivocate and say that it frees us from doing “lower” level work and allows us to do “higher” level work, as when ditch diggers become factory workers, or something. That may have been a valid argument a hundred years ago, but in an age when most of us are low-paid service workers or useless paper-pushers, it’s pretty hard to make that case with any seriousness anymore.

***

I often refer to economics as a religion, with its practitioners as priests. So it’s interesting to read that in other contexts. This is from Chris Dillow’s blog, where the above passage about work was taken:

The social power, i.e. the multiplied productive force”, wrote Marx, appears to people “not as their own united power but as an alien force existing outside them, of the origin and end of which they are ignorant, which they thus cannot control.”

I was reminded of this by a fine passage in The Econocracy in which the authors show that “the economy” in the sense we now know it is a relatively recent invention and that economists claim to be experts capable of understanding this alien force:

“As increasing areas of political and social life are colonized by economic language and logic, the vast majority of citizens face the struggle of making informed democratic choices in a language they have never been taught. (p19)”

This leads to the sort of alienation which Marx described. This is summed up by respondents to a You Gov survey cited by Earle, Moran and Ward-Perkins, who said; “Economics is out of my hands so there is no point discussing it.”

In one important sense such an attitude is absurd. Every time you decide what to buy, or how much to save, or what job to do or how long to work, economics is in your hands and you are making an economic decision.

This suggests to me two different conceptions of what economics is. In one conception – that of Earle, Moran and Ward-Perkins – economists claim to be a priestly elite who understand “the economy”. As Alasdair MacIntyre said, such a claim functions as a demand for power and wealth:

“Civil servants and managers alike [he might have added economists-CD] justify themselves and their claims to authority, power and money by invoking their own competence as scientific managers (After Virtue, p 86).”

There is, though, a second conception of what economists should do. Rather than exploit alienation for their own advantage, we should help people mitigate it…

Economists in an alienated society (Stumbling and Mumbling)

This makes a point I often refer to – this depiction of “The Economy” as some of “natural” force that we have no control over, subject to its own inexorable logic. We saw above how the writings of Adam Smith provided the ideological justification for the wealthy merchants to screw over the workers. It cemented the perception that the economy was just a natural force with its own internal logic that could no more be regulated than could the wind or the tides. And over the course of several hundred years, we have intentionally designed our politcal institutions such that government cannot “interfere” in the “natural workings” of the economy. Doing so would only make all of us worse off, or so goes the argument.

There is a telling passage in this column by Noah Smith:

…Even now, when economic models have become far more complex than anything in [Milton] Friedman’s time, economists still go back to Friedman’s theory as a mental touchstone — a fundamental intuition that guides the way they make their models. My first macroeconomics professor believed in it deeply and instinctively, and would even bring it up in department seminars.

Unfortunately, intuition based on incorrect theories can lead us astray. Economists have known for a while that this theory doesn’t fit the facts. When people get a windfall, they tend to spend some of it immediately. So economists have tried to patch up Friedman’s theory, using a couple of plausible fixes….

Milton Friedman’s Cherished Theory Is Laid to Rest (Bloomberg)

Yes, you read that right, economists knew for a long time that a particular theory did not accord with the observed facts, but they didn’t discard it because it was necessary for the complex mathematical models that they use to supposedly describe reality. Rather, instead of discarding it, they tried to “patch it up,” because it told them what they wanted to hear. Note how his economics professor “believed deeply” in the theory, much as how people believe in the Good Book.

Nice “science” you got there.

That methodology ought to tell you everything you need to know about economic “science.” One wonders how many other approaches economists take that such thinking applies to.

Friedman was, of course, the author of “Capitalism and Freedom,” which as we saw above, is quite an ironic title. Friedman’s skill was coming up with ideas that the rich wanted hear, and then coming up with the requisite economic “logic” to justify them, from deregulation, to privatization, to globalization, to the elimination of minimum wages and suppression of unions. His most famous idea was that the sole purpose of a firm is to make money for its shareholders, and all other responsibilities were ‘unethical.’ The resulting “libertarian” economics was promoted tirelessly, including a series on PBS, by wealthy organizations and right-wing think-tanks with bottomless funding, as it still is today (along with its even more extreme cousin, “Austrian” economics). One thing the Luddites did not have to contend with was the power of the media to shape society, one reason why such revolts would be unthinkable today (along with the panopticon police states constructed by capitalist regimes beginning with Great Britain— “freedom” indeed!).

Smith himself has written about what he calls 101-ism:

We all know basically what 101ism says. Markets are efficient. Firms are competitive. Partial-equilibrium supply and demand describes most things. Demand curves slope down and supply curves slope up. Only one curve shifts at a time. No curve is particularly inelastic or elastic; all are somewhere in the middle (straight lines with slopes of 1 and -1 on a blackboard). Etc.

Note that 101 classes don’t necessarily teach that these things are true! I would guess that most do not. Almost all 101 classes teach about elasticity, and give examples with perfectly elastic and perfectly inelastic supply and demand curves. Most teach about market failures and monopolies. Most at least mention general equilibrium.

But for some reason, people seem to come away from 101 classes thinking that the cases that are the easiest to draw on the board are – God only knows why – the benchmark cases.

101ism (Noahpinion)

But the best criticism I’ve read lately is from James Kwak who has written an entire book on the subject: Economism: Bad Economics and the Rise of Inequality. He’s written several posts on the topic, but this post is a good introduction to the concept. Basically, he argues that modern economics allows policies that benefit the rich at the expense of the rest of society to masquerade as objective “scientific” truths thanks to the misapplication of economic ideology. As we saw above ,that goes back to very beginnings of “free market” economics in the nineteenth century:

In policy debates and public relations campaigns…what you are … likely to hear is that a minimum wage must increase unemployment—because that’s what the model says. This conviction that the world must behave the way it does on the blackboard is what I call economism. This style of thinking is influential because it is clear and logical, reducing complex issues to simple, pseudo-mathematical axioms. But it is not simply an innocent mistake made by inattentive undergraduates. Economism is Economics 101 transformed into an ideology—an ideology that is particularly persuasive because it poses as a neutral means of understanding the world.

In the case of low-skilled labor, it’s clear who benefits from a low minimum wage: the restaurant and hotel industries. In their PR campaigns, however, these corporations can hardly come out and say they like their labor as cheap as possible. Instead, armed with the logic of supply and demand, they argue that raising the minimum wage will only increase unemployment and poverty. Similarly, megabanks argue that regulating derivatives will starve the real economy of capital; multinational manufacturing companies argue that new trade agreements will benefit everyone; and the wealthy argue that lower taxes will increase savings and investment, unleashing economic growth.

In each case, economism allows a private interest to pretend that its preferred policies will really benefit society as a whole.The usual result is to increase inequality or to legitimize the widening gulf between rich and poor in contemporary society.

Economics 101, Economism, and Our New Gilded Age (The Baseline Scenario). See also The Curse of Econ 101 (The Atlantic)

All of the above reinforces a couple of points I often like to make:

1.) Capitalism was a creation of government from day one. There is nothing “natural” or “free” about markets.

2.) It is sustained by a particular ideology which poses as a science but is anything but.

These is no fundamental reason we need to work 40 hours a week. There is no reason we have to go into debt just to get a job. There is no benefit to the extreme wealth inequality; it’s not due to any sort of “merit.” And on and on. Economic “logic” is destroying society along with the natural world and preventing any adaptive response to these crises. But its power over the hearts and minds of society seems to be unassailable, at least until it all falls apart.

I’d also like to send a shout out to this excellent blog, Whistling in the Wind, which has a large number of posts on economics (and other things) that are well worth-reading. There are a lot of clear and well-written refutations of “101-ism,” “economism,” and general libertarian economic theories:

https://whistlinginthewind.org/category/economics/

I apologize on being late responding to some of your comments. Hopefully, I’ll have some time soon.

American Media Bullshit

There a few things I constantly see in discussions of pressing issues in the media that really piss me off, and I’d like to get them off my chest:

1. Trade

One is on the topic of trade. If you think of the word trade, you think of something very specific. I have something you want; you have something I want, and a mutual exchange would be in both of our interests. The classic example I always think of is trading baseball cards. We each have a different set of players. You have a player I desire, and I have players I’m not interested in. However, the players I’m not interested in DO interest you. And so we trade baseball cards.

In the past, trade was often of natural items that could not be grown or made locally. For example, wine that comes from grapes that only grow in a specific region due to soils, rainfall, and so on. Or a special kind of cheese. Or tropical foods like bananas, coffee and chocolate. Or of items that are unequally distributed around the earth’s crust. Some places naturally have gold, silver, tin, copper, and so on. Or sometimes one country’s workers may have special skills, like Swiss watchmakers. This is trade as it is described in all of the textbooks.

Economists generally refer to these “mutually beneficial exchanges” as trading, and it forms the core of their theories. One early economist (Ricardo) famously used the example of English wool and Portuguese wine–two items that each country was famous for producing where the quality was much higher than what the other country could produce, or that the other country could not produce for reasons of geography, climate, skills, etc. This should be what we mean when we talk about trade.

The dictionary definition of the verb trade is:

Exchange (something) for something else, typically as a commercial transaction; and Buy and sell goods and services.

However, think about the debates on trade. They have nothing to do with trade!!! I don’t know why this is never, ever brought up. The word simply does not apply.

The classic example is Apple. Apple is an American company which designs and markets electronic products. It is headquartered in America. It sells many of its products to Americans. Yet when we talk about “trade” with China, much of the debate centers around Apple, and not the products of any Chinese companies. Why?

Because Apple creates, designs, markets and programs all their products in America, but has them assembled in China. Those products are then shipped back to the U.S. to be purchased by American consumers. So the definition of “trade” becomes “American products made by American companies sold to American consumers, but assembled by foreign workers.” And it’s the same with any wealthy corporation – the owners, designers, managers, and marketers are all in wealthy countries, but the product is assembled in poor countries and then shipped back to the countries that designed them to be purchased (this is oversimplified, of course, but the point is valid).

HOW IS THAT TRADE??? You can use a number of terms for that activity, but “trade” is not one of them. How does any of that square with the above definitions/descriptions?

I thought of this while reading an article in some economics blog talking about how potential tariffs would harm American businesses. Their example, if I recall correctly, was an orchard owner in Washington state who ships his apples to China (the specifics do not matter). This article about “trade” was pointing out how much tariffs would hurt his business and others like him if they didn’t have access to the distant export markets they now have access to. The subtext was obvious–“look how businesses would be hurt by restricting ‘trade.'”

But this is, ahem, an apples-to-oranges comparison! These economic activities are as different as sleeping and skydiving! Why, then do we use the exact same term–trade–for both of them?

After all, the creation of an actual apple is done in America by American workers on American soil. The product is then shipped to China. In return, we may get, I don’t know, rice or pork. That is genuinely trade as we commonly use the term-an exchange of surplus goods produced by specialists in different countries.

But what Apple does is nothing like that. Nothing whatsoever. And most of the debate about “trade” is about what Apple does—American corporations using foreign labor to construct American products sold to American consumers, whether cars or computers or air conditioners. Yet we insist on using the term “trade” indiscriminately to refer to both these activities! It’s insane! No wonder we can’t have a rational debate about these things.

The only way these would be analogous would be if the American apple grower shipped his seeds to China, they grew the tree, picked the apples, put them in bushels, and then shipped them back to the U.S. Clearly that is not done. But often times that is exactly what is going on when we have these discussions about so-called “free trade.”

The counter analogy would be if America made iPods, and China made, I don’t know, DVD players, and we both decided to “trade” these items between our two countries. That is truly an exchange. But there is no national exchange in modern style free trade. Rather, it is wealthy, globalized, Western corporations using Chinese and other inexpensive Third-World labor to make their products. THAT’S NOT TRADE! We don’t buy “Chinese” products; we buy American products designed and marketed by American companies which are just assembled elsewhere. Yet we refer to this activity as “trade!” WTF???

The “English wool for Portuguese wine” analogy commonly deployed by economists has nothing to do with this so-called “trading” in the real world. What we see in the real world outside of economics textbooks is American companies using foreign labor in place of domestic labor. Why, then, do economists, who theoretically should know better, use the exact same words, the exact same terminology, the exact same theoretical framework, and the exact same arguments to justify it? This seems to be deception and charlatanism of the highest order! How can anybody else not notice this? Maybe the reason we can’t have a serious discussion about this  is the fact we indiscriminately use the word trade for very different activities that have nothing to do with each other. Perhaps it’s a fundamental flaw in the English language, or something, I don’t know.

I wish we would stop playing into the economists’ and politicians’ hands by referring to all this stuff as “trade” irrespective of what it actually is. That allows them to perennially recast trade as something always and inherently good when we are really talking about  fundamentally different activities. Trade–true trade (i.e. not the stuff Trump ran on) is usually good. The other stuff that gets called trade BUT IS NOT TRADE (outsourcing, global wage arbitrage, the race to the bottom, etc.) is not. It’s something else. Let’s stop pretending these things are in any way the same.

2. Move to Where the Jobs Are

One thing you constantly hear in the media is that the inhabitants of “depressed” areas of the country – the decaying post-apocalyptic hellholes that most of Middle America has become in the age of globalization- should just move to the booming bi-coastal cities. Once they hit the bright lights of the big city where jobs are growing, the thinking goes, the former coal miners and shelf-stockers will get one of the new exciting “jobs of the future” (programming!), and this will solve the problems of unemployment without any nasty “government intervention” (which is always bad).

It’s part and parcel of a consistent theme I detect in the American media. Specifically, the fault is never with the economy or its organization, or the changing economic conditions—it’s always solely and squarely the fault of American workers themselves. I’m sure you’ve heard these all before—not enough education, living in the wrong place, having too many kids, “immoral” behavior, “frivolous” spending, etc.

The idea is that once these modern-day Tom Joads make their way to Boston or Seattle from Coalton, West Virginia, the American dream is theirs for the taking. My question is this:

How can anybody take this seriously?

I mean, how can the economics commentators in the media, most of whom live cosseted lives in Manhattan and Washington D.C., constantly spew this drivel and not be ridiculed on a daily basis? I suspect this might be one reason why a good portion of America—both people who self-identify on the Left and the Right—regard most of the mainstream media as a joke.

What would happen if all the people from the small towns of the Rust Belt and Appalachia actually did what the commentators are telling them to do? Let’s say they packed their families into the rusty pickup and made their way Boston or Seattle or Palo Alto or Boulder. Would they just be handed a job on arriving? If you listen to the commentators in the American media, apparently so. That must be hard to rectify with the fact that these same cities are already full of low-paid service workers who can barely make ends meet, and have increasingly dire  problems with housing affordability and burgeoning homelessness.

No, what would actually happen is this: assuming they could somehow pay to keep food on the table and a roof over their head in a country with effectively no social safety net—a dubious proposition at best—they would simply be competing with the people already there for the limited amount of low-wage service jobs. This would make the already dire situations of low wages and lack of housing even worse than they already are.

Yet if you listen to the vacuous propaganda spewed by the American media, all you have to do is follow the Yellow Brick Road, like Dorothy, to the magical Emerald Cities of the coasts, and the Wizard will pin a nice, shiny “job of the future” onto your chest. Um, I don’t think so. Anyone who actually knows what it’s like to be poor in America (like I do) knows this is total horseshit.

Rather, such people would just be even more low-paid workers struggling for the limited pool of jobs and housing. That’s all that would happen. Poor people moving to rich areas does not magically cause new jobs to appear, despite what the media tells you. It seems the real purpose of this argument is to assuage the guilty consciences of the “winners” and tell them that there is no fundamental problem with the economy. The “losers” are just too darn stubborn and hidebound to save themselves, hence they deserve what they get! It’s all their fault!!!

I propose we use the presence of this argument as way of determining what media outlets are even worth listening to anymore.

3. Skills

Another thing that pisses me off in the media is the constant refrain that “skilled” workers have literally never had it better!

Who, then, are “skilled” workers? Why, those with a college degree, of course! Especially a degree from an expensive, elite college. After all, the more expensive and elite the college, the more highly “skilled” the worker must be, right? Just like the richer you are the smarter you must be, right? After all, it can’t have anything to do with social connections and affiliation, right??? No, it’s clearly “da skillz.”

And, of course, the greatest “skills” of all belong to those financial professionals and clever bankers in those same bi-coastal cities. By contrast, the people who have seen their wages stagnate for the past couple of decades—truck drivers, nurses, welders, salesmen, managers, teachers, well, I guess they just don’t have enough “skills” to compete in the “new” globalized economy.

Once again, the subtext is clear—all one has to do is pony up and pay the crushing toll to the college cartel to get the “skills” you need, and you will be richer than you parents ever dreamed of! After all, rewards to “skills” have never, ever, been greater, right? What that means is that the people who are falling behind have only themselves to blame for not getting enough “skills.” Again, it’s not the fault of the economy, everything is fine—it is just the “lazy” individuals who refuse to take the proper actions.

Why don’t these commentators just admit the truth–how well you do in American society is based on how much college you can afford to purchase, and do away with this “skills” bullshit? Every time I hear some vacuous, overcompensated media blowhard talk about “skills” or the lack thereof, I want to punch them in the face. By their argument, someone filling out Excel spreadsheets in a cubicle all day is “skilled,” whereas someone who can frame out an entire house in a day is “unskilled” because the former paid $70,000 for a piece of paper from the college cartel. It’s an insult to the very word in the English language, perpetrated by “highly skilled” economists who probably couldn’t boil water or pump their own gas.

Yes, there are highly skilled people in the economy like surgeons and engineers. Yes, they make a good living. They always have. But the idea that it’s somehow entirely “skills” or the lack thereof that is causing much of the country to spiral into poverty and destitution is asinine in the extreme. The biggest factors are where you are born and who your parents are. Can we just dispense with this insulting nonsense about “skills” please?

Conclusion

The common theme of all of the above, besides the violence done to pure common sense, is to obscure or deflect attention from very real problems to phony solutions/issues. With the American media reliably doing its job of, as the X-Files once put it, “Deceive, Inveigle, Obfuscate” it seems unlikely we will ever be able to come to grips with the ongoing deterioration and mounting decay of our society. You can’t take hardly anything seriously anymore. How are we supposed to come to terms with our mounting problems with this constant barrage of bullshit?

So I’m Writing a Book?

This past year was one of trials for me. I spent the majority of it unemployed. That could be the subject of it’s own post. Let’s just say that if I could not have to sell my life away one hour at a time, I would be a much, much, happier person. Sadly, that’s not possible, as I came up with 3 lemons in the family slot machine.

During my involuntary time outside of the labor market, I figured I could–nay should–spend time on doing what I really want to do–write for a living. I began to read extensively and work on a book.

What I wanted to do was write a history book – a book of “Big History” which told not just a fragment of the human story, but all of it. I guess I’m not lacking in ambition! But it went nowhere. All too often I got bogged down in way too many details and essentially being a stenographer of other people’s work. After all, I’m relying on other people’s work for most of the information, as I am not a professional anthropologist or historian. What I was really after was the immediacy and colloquialism(?) of a blog post or Reddit comment.

I wanted it to be something “separate” from the blog. Yet, while I could crank out blog posts easily, the book just was not coming together. I abandoned it multiple times, and probably wasted a lot of time I should have spent doing something else (although I’m not exactly sure what).

But what really changed my perspective is an anecdote I head from Tim Ferriss. Ferris, for those of you who don’t know, is the wildly popular huckster whose “Four Hour” brand began with the book “The Four Hour Work Week.” He’s since become a wealthy mulitmedia celebrity with his own blog, a podcast, series of best-selling books, and numerous other projects. He’s managed to become sort of the Tony Robbins of the Silicon Valley crowd.

When he was writing The Four-Hour Workweek, he too just couldn’t bring it together. It sounded like the exact same problem I was having. Then, someone told him to write the book as if he were writing an email to someone. His technique then became to open an email program (Outlook? Gmail? Not sure which one), and compose his thoughts as if he were writing an email to someone.

That did the trick. The lesson here was obvious—I need to write this book as blog posts. It’s the only way I can get it done. And that has been the genesis of many of the posts this past couple of months.

The other inspiration was sitting right under my nose the whole time. I’ve extensively referred to Marvin Harris’s books as an inspiration. his books are written in an accessible, essay style, without a linear narrative. For example, Cannibals and Kings contains chapters such as “The Origins of Agriculture,” “The Origin of the War,” “The Origin of Pristine States,” and “The Cannibal Kingdom,” to name a few. I feel it’s time to update some of those ideas.

So, you, dear reader, are the beneficiary of this, as these posts will be put up here over the course of, well, however long it takes me to write this stuff despite having a job now :/ . I’m not sure what the ultimate resolution will be – I know the Archdruid manages to wrap up his blog posts in a book and sell it, but I have not decided if I will leave all the posts up when (if) the book is published. Heck I have no idea how to publish a book, or if I will self-publish, or what.

Which is to say I know nothing. Feel free to give any advice and or encouragement (discouragement?) you feel would be helpful in the comments below. So you can look forward to more overly-long posts in the vein of this Quixotic book project, along with my usual ramblings on economics, politics, automation, our failing society, architecture, and whatever else I feel like. Whether that’s good or bad I leave to you.

The tentative outline is as follows:

1. The Earth in Space/The Earth in Time: Borrowed from H.G Wells’ An Outline of History, this will deal with the big picture of our place in the universe and concepts of “deep time.” The usual description of time as a film reel or football stadium. A lot of Big History books start with the beginning of the universe (e.g. David Christian’s Maps of Time), but that leads to a ton of chapters on astrophysics, astronomy, geology, etc. before you even get to the arrival of humans, and history is about humans, after all. Of course everything is relevant (where did that oil come from anyway?), but you’ve got to draw the line somewhere. More setting the stage than anything else.

2. The Origin of People: Human evolution for the hurried. Emphasis on recent discoveries. The “bushy” as opposed to “linear” origins of of humanity. The running-man hypothesis. The Catching Fire hypothesis. Neoteny. Tools. Fire. Baby Slings. The Stone Age. 99% chimp. Domestication of man’s best friend. What happened to the Neanderthals?

3. After the Ice: A brief look at humanity after we became the “Last Ape Standing” until end of the Pleistocene. Migration, bottlenecks and founder populations. The Pleistocene overkill presents humanity’s first experience of scarcity.

4. The Origin of Inequality: largely the Feasting Theory posts.

5. How Feasting Led to Famine: Intensification was a big leap backward for humanity!

6. The Origin of Cities: The most recent series of posts.

7. The Origin of States: Mostly an expanded part 4 of the feasting series of posts.

8. The Origin of Money: The real story from an archaeological perspective rather than the libertarian fantasy. Debt comes first. Money is not metal, etc. Working on this one now-difficult! Material from this post and this post.

9. Why History Happens: Mostly the Fates of Nations series of posts from last year.

10. The Bronze Age Collapse: The rise and fall of the first global economy. Environmental devastation, erosion, non-renewable resources, etc.

11. The Cycles of History: also taken from some of the the Fates of nations series of posts, a description of Peter Turchin’s structural-demographic cycle theories, diminishing returns, Malthusianism, Craig Dilworth’s Vicious Circle Principle.

12. The Origin of the Market: largely  a retread of Karl Polanyi’s work. There is nothing “natural” about markets, globalism was always an elite project.

13. The Origin of the Corporation: Tells us a lot about today’s world.

14. The Origin of capitalism: It’s the fossil fuels (and control of them) stupid! May combine this with above.

15. The Future: the moral of the story, and what the future looks like if we don’t change course.

It will, of course, be a summation of many of the themes of this blog – that intensification always leads to diminishing standards of living for the majority in the long run, that technology leads to more work not less, that letting aggrandizers run the show is a recipe for disaster, that grain-based annual agriculture is bad for people and the environment, that economics is a secular religion that is preventing us from solving our mounting social problems, that we are experiencing diminishing returns to technology and population growth, that more people prevent us from solving our problems, that Markets are not natural or perfect, but quite fallible and just one way among many to organize societies, that our current living standards come from the liberation of a billion years’ stored sunlight in the form of fossil fuels, that thinking otherwise is a cargo-cult, and that industrial civilization is utterly dependent on non-renewable finite resources and cannot continue indefinitely, and that we probably aren’t going to Mars.

I’ll also present an ideal situation centered around Permaculture, renewable energy, and socially embedded, non-market based, yet decentralized, economies. Think Bill Mollison’s Permaculture, Leopold Kohr’s The Breakdown of Nations, E.F. Schumacher’s Small is Beautiful, Christopher Alexander’s A Pattern Language, with a little Barry Commoner and Buckminster Fuller thrown in. Do I expect anyone to follow this blueprint? No. but that’s not the point. I want to at least demonstrate that a better world is entirely comprehensible and possible, even if we won’t choose it. Don’t worry, it won’t be the usual hopium.

So that’s it. Will it happen? Who knows. But it’ll be fun to try. Thanks for coming along for the ride! Should be a fun year.