The debt crisis

[robbo203]

An interesting presentation from the “renegade economist” on the problem of debt  – particularly the historical angle.  Any observations or comments? How does it link up with David Graeber’s recent book on debt?

 

http://www.youtube.com/watch?feature=player_embedded&v=ORUEjGaqeV8

[ALB]

Interesting I agree, but Fred Harrison is a prominent follower of Henry George and his land tax proposal. I heard him speak at a meeting organised by Occupy at the Bank of Ideas a month or so ago. He lost the sympathy of the audience by refusing to condemn “capitalism” (on the grounds that you can’t have production without capital!).Michael Hudson is a radical, non-Marxist economist who in this article “From Marx to Goldman Sachs” makes out Marx to be some sort of crank who sees banks lending imaginary money.I’ve only read some articles by Graeber (not his book, though Hudson probably has) but he seems to be lending credence (or perhaps reflecting) the widespread view today that the problem is not production for profit but lending at interest. And that, therefore, as Hudson concludes, all that is required is action against finance capital rather than capitalism as such (as Graeber is some sort of anarchist I don’t suppose this is his position even if his arguments lend credence to it).

[stuartw2112]

Yes, interesting video, making many of the same arguments as Graeber, even if coming from different political perspectives.Graeber is not only some sort of anarchist, but some sort of Marxist, in the sense that he is well read in, and sympathetic to, Marx. He argues that wage slavery is just a transformation of the usual kind, and we need to abolish the wages system (he is a member of the IWW). As an anarchist and normal human being, he also argues that’s there’s all kinds of other things we can do to make this a better world to live in while we’re organising and arguing for more radical change.I discuss Graeber’s book chapter by chapter (currently reading chapter 3) at myblog below.Cheers

[ALB]

I know Graeber is against the wages system. We said so in the February Socialist Standard here:http://www.worldsocialism.org/spgb/socialist-standard/2010s/2012/no-1290-february-2012/cooking-books-after-revolutionI’m not sure this is enough to say he’s also a sort of Marxist. After all, isn’t he putting forward a quite different theory of the origin and nature on money (as debt) to that of Marx (as a commodity)?

[stuartw2112]

You’re right, he’s not really a Marxist I suppose. I meant he’s a “sort of” Marxist in the only way it is sensible to be, ie, he is influenced by Marx, but makes his own mind up, based on the evidence.You’ll have to follow my blog and find out when I do, but I’m not sure you’re right that he has a “quite different” theory of money. At one point, if I remember rightly, when I read (most of) the book before, he says something like “So is money a commodity or debt? The answer, of course, is both.” Marx’s account of money (in Capital) is abstract, and based on the speculations of the political economists. Graeber acknowledges the genius of this. But then, he says, you have to ask: are these speculations reasonable, do they have any basis in history or anthropology? His answer is, No.Relatedly, what do you make of this, specifically the claim that money did not exist in the Soviet Union?http://www.cpgb.org.uk/article.php?article_id=1004736Cheers

[ALB]

stuartw2112 wrote:

Relatedly, what do you make of this, specifically the claim that money did not exist in the Soviet Union? http://www.cpgb.org.uk/article.php?article_id=1004736

Ah (or should that  be aagh) Hillel Ticktin! All his arguments start from the basic premise  (shared by Trotsky) that capitalism is essentially private enterprise capitalism and that state intervention is a negation of “capitalism”. This means that for him (as for Trotsky, if not for all trotskyists) “state capitalism” is a contradiction in terms. So, for him, the USSR couldn’t have been capitalist and the notes and coins that circulated there were not money in the sense analysed by Marx. In fact, he seems to be saying that money in Britain, etc isn’t really money either because it is now managed by the state.Apart from that, most of what he claims in the latter part of his article (presumably the transcript of a talk) are facts as wrong. For instance, Marx did not call money lent at interest “fictitious capital”. For him, this was a notional capital sum arrived at by notionally converting a future regular income stream into a sum that if invested would produce the income in question as interest; what accountants and actuaries called “capitalization”. Such sums of money can be bought and sold.  Of course such fictitious capital (and a variation of it called “securitization”) did play a part in the financial bubble that collapsed in 2007-8 — when the stream of future income on which they were based didn’t happen the capital sum calculated on the basis of it was reduced to zero. putting some financial institutions in serious trouble.Basically, I don’t think Ticktin needs to be taken seriously here (though he does seem to be the permanent flavour of the month with the Weekly Worker people).

[stuartw2112]

Interesting, thanks, perhaps send your comments in as a letter? I’m not sure Ticktin can be quite so easily dismissed, but only because people I know, like and respect (non-trotskyists, genuine communists) take him seriously. But I’ve not investigated enough to comment. To be fair to him, he does say, doesn’t he, that the USSR was not capitalist, only to say that it was much worse than that, ie, didn’t reach the level of progress of capitalism?

[stuartw2112]

ALB wrote:

I know Graeber is against the wages system. We said so in the February Socialist Standard here:http://www.worldsocialism.org/spgb/socialist-standard/2010s/2012/no-1290-february-2012/cooking-books-after-revolutionI’m not sure this is enough to say he’s also a sort of Marxist. After all, isn’t he putting forward a quite different theory of the origin and nature on money (as debt) to that of Marx (as a commodity)?

I’ve read a bit more and am in a slightly better position to offer an answer. The economists have a theory of the origin of money, and anthropologists have been telling them for years that it’s definitely wrong, says Graeber. For years, the economists have retorted: well, what’s your alternative? Graeber says there isn’t a single, coherent alternative to offer for the good reason that money was not an invention as such and so did not have a single origin. Money, in its broadest sense, is a way of comparing the value of two things, and so has existed as long as the need to compare the value of two things has existed – ever since humans engaged in social activity (were “indebted” to each other in some way), ever since human life arose. In the narrower sense of money, ie, money as a commodity (coinage) that facilitates trade, it is as much a myth that it arises naturally out of exchange (barter) as is the idea that markets arise naturally as a result of our tendency to “truck and barter”. (There is no evidence that money or markets ever arose in this way, plenty of evidence to contradict the idea) The truth is that money in this sense, like markets, has to be imposed by the state. Why impose markets and money? To raise armies and impose social control, basically.At least, I think that’s the gist of the argument, as far as I’ve understood it.Cheers

[jondwhite]

There is a discussion of Ticktin on revleft at the moment at http://www.revleft.com/vb/showthread.php?p=2391399#post2391399

[ALB]

stuartw2112 wrote:

In the narrower sense of money, ie, money as a commodity (coinage) that facilitates trade, it is as much a myth that it arises naturally out of exchange (barter) as is the idea that markets arise naturally as a result of our tendency to “truck and barter”. (There is no evidence that money or markets ever arose in this way, plenty of evidence to contradict the idea)

Whatever Adam Smith and those who followed him might have thought about money (coinage) emerging out of barter which itself emerged out of some supposed human nature to “truck and barter”, Marx for one was well aware that barter originally arose, not within societies, but between them. He says so explicitly in this passage in one of his published works A Contribution to the Critique of Political Economy (1859):

Quote:

The exchange of commodities evolves originally not within primitive communities, but on their margins, on their borders, the few points where they come into contact with other communities. This is where barter begins and moves thence into the interior of the community, exerting a disintegrating influence upon it. The particular use-values which, as a result of barter between different communities, become commodities, e.g., slaves, cattle, metals, usually serve also as the first money within these communities.

While the State obviously had a role in coinage, surely Graeber can’t be saying that the emergence of money as a “general equivalent” (i.e. a commodity that can be exchanged for all other commodities) had nothing to do with facilitating trade (the exchange of commodities)?

[stuartw2112]

@ALB: You’re right on all counts. I remember that Marx said that (and Graeber says that barter does indeed take place between communities rather than in them, though not in the way imagined by economists), and of course Graeber does not imply that the emergence of money as a commodity had nothing to do with exchange (of course it did, what else?!). What I’m saying is that I don’t think Graeber and Marx’s accounts compete or need compete. Marx’s account takes its place within Graeber’s broader account.And anyway, as I pointed out before, they’re doing different things. Marx is saying, OK, let’s accept that the political economists are basically right, and that their utopia is to be implemented. What are the consequences of such a view? Graeber is saying, let’s not accept that the political economists are right: let’s look at their assumptions (accepted by Marx, not because he accepted them, but for the sake of his argument) and ask whether those assumptions are based on science or myth (answer: myth, with political consequences).I may be wrong, I’ll email Graeber and ask him. He’s normally generous at replying to emails.Cheers

[stuartw2112]

From David Graeber:Yes in that last comment you have it exactly right. Marx is writing “as if” those he’s critiquing are empirically correct. To say a Marxist must adopt the account of the origins of money in Capital strikes me as totally misunderstanding “critique”.

[Hud955]

I’m working from memory here and haven’t had time to check this out but as far as I recall Marx is not proposing a theory of the origins of money in Capital; he is only proposing a theory of the origins of the Value form of money.  His principal analysis only relates therefore to the development of money within capitalism, since only with the capitalist market does the Value form emerge.  Marx’s adoption of theories by earlier economists into his framework analysis has therefore very little consequence for his larger argument, whether or not  those theories are correct.  None of his argument seems to be contradicted by anything I’ve read so far in Debt – though I’m only 1/3 the way through it.    Graeber discusses in great detail the various ways that  goods change hands within any ‘moral economy’ – namely: ‘communism’, ‘exchange’ and ‘hierarchy’ to use his terminology, though he does this ahistorically and without distinguishing between very different kinds of relationship.  He says, for example, “we are all… Feudal lords when dealing with small children”.  His purpose is to show that these are both examples of what he calls ‘hierarchical’ (as opposed to ‘exchange’ or ‘communist’) relationships; as a result, he seems unconcerned that we wouldn’t normally expect small children to labour three days a week in the fields to keep us fed.   His conceptual apparatus is so baggy that it allows him to make sometimes bizarre claims like this.  Maybe he goes on to dig down later in the book but so far I’m unconvinced that it really explains very much.And so far, he has nothing to say about how these ‘moral economies’ come into existence or about the kind of  relationships formed to carry out social production within them.  It is as though he regards these kinds of relationship as peripheral and as having no bearing on specific methods of distribution.  (At one point, he seems to dismiss the whole notion of ‘relationships of production’ – though he does it rather magisterially and without offering any real argument.)All this seems to highlight that Marx was absolutely right to focus on historical systems of production (not distribution) as the material drivers and determiners of any economy. I’m really enjoying Debt: there’s a lot of really interesting and enlightening stuff in it, but so far it is presented within a resolutely idealist framework and as a result it fails to provide a solid foundation for its arguments.  I need to finish it and read it again more closely, but so far I can’t really see where it is going and it is leaving me with lots of yes buts…My big disappointment is his habit, alreadly mentioned, of brushing aside opposing (usually socialist) ideas in a few short sentences without offering either argument or evidence to back his claims.  In a work which is otherwise so full of argument and evidence that looks very suspicious, and at crucial points pushes his arguments into the realm of personal opinion.  I’m hoping to find something more meaty as I continue reading.

[stuartw2112]

A very good review of David Graeber’s book here:http://www.lrb.co.uk/v34/n09/benjamin-kunkel/forgive-us-our-debtsIt about covers everything.All the best

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