Michael Pollak wrote:
> Graeber's story of the origins of money in the state and imperialism (rather than the dynamics of generalized commodity exchange) doesn't illuminate what's new in capitalist credit markets.
Yes, I think this is his anarchist bias showing. The state becomes the villain, and a lot of historical specificity gets lost. He's also into cycles - commodity money, fiat money - which becomes a kind of eternal recurrence. If you point to the uniqueness of capitalism, it apparently makes you a dogmatic Marxist.
^^^^^ CB: Am liking y'all's critique of Graebner.
Certainly credit is integral in function and historical origin to _capitalist_ commodity exchange ( see Marx on its role in the primitive accumulation of capital, below) What does it matter for our purposes of ending capitalism whether it was in Mesopotamia or not in Egypt or not in the New Stone Age, before the origin of agriculture but with horticulture ? "Credit" in Mesopotamia 7,000 years ago is not the same thing as "credit" on Wall Street. Any anthropologist should know this. My senior anthropology thesis was on " 'Marriage' in American and New Guinea are not the same thing " from a scientific idea of "thing"
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> I agree with you, Doug and Julio that in that department, capitalism takes what comes before and gives it utterly new dynamics. After generalized commodity production arises, finance is connected to it at the heart, and the fact that it once existed separately doesn't mean it can be treated as independent and separable now or in the future. States might once have been omnipotent Leviathans who could dictate their currency, but they aren't now.
^^ CB: Capitalism gives slavery utterly new dynamics as compared with those in Greece and Rome, but the bourgeoisie consciously make and take it as their legacy from "classical" Western societies.
As far as Marx's thinking on credit, isn't the following important:
Today industrial supremacy implies commercial supremacy. In the period of manufacture properly so called, it is, on the other hand, the commercial supremacy that gives industrial predominance. Hence the preponderant rôle that the colonial system plays at that time. It was “the strange God” who perched himself on the altar cheek by jowl with the old Gods of Europe, and one fine day with a shove and a kick chucked them all of a heap. It proclaimed surplus-value making as the sole end and aim of humanity.
The system of public credit, i.e., of national debts, whose origin we discover in Genoa and Venice as early as the Middle Ages, took possession of Europe generally during the manufacturing period. The colonial system with its maritime trade and commercial wars served as a forcing-house for it. Thus it first took root in Holland. National debts, i.e., the alienation of the state – whether despotic, constitutional or republican – marked with its stamp the capitalistic era. The only part of the so-called national wealth that actually enters into the collective possessions of modern peoples is their national debt. [7] Hence, as a necessary consequence, the modern doctrine that a nation becomes the richer the more deeply it is in debt. Public credit becomes the credo of capital. And with the rise of national debt-making, want of faith in the national debt takes the place of the blasphemy against the Holy Ghost, which may not be forgiven.
The public debt becomes one of the most powerful levers of primitive accumulation. As with the stroke of an enchanter’s wand, it endows barren money with the power of breeding and thus turns it into capital (so guess what Ron Paul. it didn't start with the Fed -CB), without the necessity of its exposing itself to the troubles and risks inseparable from its employment in industry or even in usury. The state creditors actually give nothing away, for the sum lent is transformed into public bonds, easily negotiable, which go on functioning in their hands just as so much hard cash would. But further, apart from the class of lazy annuitants thus created, and from the improvised wealth of the financiers, middlemen between the government and the nation – as also apart from the tax-farmers, merchants, private manufacturers, to whom a good part of every national loan renders the service of a capital fallen from heaven – the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to agiotage, in a word to stock-exchange gambling and the modern bankocracy
At their birth the great banks (birth of big banks - CB), decorated with national titles, were only associations of private speculators, who placed themselves by the side of governments, and, thanks to the privileges they received, were in a position to advance money to the State. Hence the accumulation of the national debt has no more infallible measure than the successive rise in the stock of these banks, whose full development dates from the founding of the Bank of England in 1694. The Bank of England began with lending its money to the Government at 8%; at the same time it was empowered by Parliament to coin money out of the same capital, by lending it again to the public in the form of banknotes. It was allowed to use these notes for discounting bills, making advances on commodities, and for buying the precious metals. It was not long ere this credit-money, made by the bank itself, became. the coin in which the Bank of England made its loans to the State, and paid, on account of the State, the interest on the public debt. It was not enough that the bank gave with one hand and took back more with the other; it remained, even whilst receiving, the eternal creditor of the nation down to the last shilling advanced. Gradually it became inevitably the receptacle of the metallic hoard of the country, and the centre of gravity of all commercial credit. What effect was produced on their contemporaries by the sudden uprising of this brood of bankocrats, financiers, rentiers, brokers, stock-jobbers, &c., is proved by the writings of that time, e.g., by Bolingbroke’s. [8]
With the national debt arose an international credit system, which often conceals one of the sources of primitive accumulation in this or that people. Thus the villainies of the Venetian thieving system formed one of the secret bases of the capital-wealth of Holland to whom Venice in her decadence lent large sums of money. So also was it with Holland and England. By the beginning of the 18th century the Dutch manufactures were far outstripped. Holland had ceased to be the nation preponderant in commerce and industry. One of its main lines of business, therefore, from 1701-1776, is the lending out of enormous amounts of capital, especially to its great rival England. The same thing is going on today between England and the United States. A great deal of capital, which appears today in the United States without any certificate of birth, was yesterday, in England, the capitalised blood of children.
As the national debt finds its support in the public revenue, which must cover the yearly payments for interest, &c., the modern system of taxation was the necessary complement of the system of national loans. The loans enable the government to meet extraordinary expenses, without the tax-payers feeling it immediately, but they necessitate, as a consequence, increased taxes. On the other hand, the raising of taxation caused by the accumulation of debts contracted one after another, compels the government always to have recourse to new loans for new extraordinary expenses. Modern fiscality, whose pivot is formed by taxes on the most necessary means of subsistence (thereby increasing their price), thus contains within itself the germ of automatic progression. Overtaxation is not an incident, but rather a principle. In Holland, therefore, where this system was first inaugurated, the great patriot, DeWitt, has in his “Maxims” extolled it as the best system for making the wage labourer submissive, frugal, industrious, and overburdened with labour. The destructive influence that it exercises on the condition of the wage labourer concerns us less however, here, than the forcible expropriation, resulting from it, of peasants, artisans, and in a word, all elements of the lower middle class. On this there are not two opinions, even among the bourgeois economists. Its expropriating efficacy is still further heightened by the system of protection, which forms one of its integral parts.
The great part that the public debt, and the fiscal system corresponding with it, has played in the capitalisation of wealth and the expropriation of the masses, has led many writers, like Cobbett, Doubleday and others, to seek in this, incorrectly, the fundamental cause of the misery of the modern peoples.
The system of protection was an artificial means of manufacturing manufacturers, of expropriating independent labourers, of capitalising the national means of production and subsistence, of forcibly abbreviating the transition from the medieval to the modern mode of production. The European states tore one another to pieces about the patent of this invention, and, once entered into the service of the surplus-value makers, did not merely lay under contribution in the pursuit of this purpose their own people, indirectly through protective duties, directly through export premiums. They also forcibly rooted out, in their dependent countries, all industry, as, e.g., England did. with the Irish woollen manufacture. On the continent of Europe, after Colbert’s example, the process was much simplified. The primitive industrial capital, here, came in part directly out of the state treasury. “Why,” cries Mirabeau, “why go so far to seek the cause of the manufacturing glory of Saxony before the war? 180,000,000 of debts contracted by the sovereigns!” [9]
Colonial system, public debts, heavy taxes, protection, commercial wars, &c., these children of the true manufacturing period, increase gigantically during the infancy of Modem Industry. The birth of the latter is heralded by a great slaughter of the innocents.....
http://www.marxists.org/archive/marx/works/1867-c1/ch31.htm
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> But IMHO (and to repeat, I haven't finished the book either -- although like most of the rest of you have supplemented it with the excellent interviews with Graeber by Doug and Sasha Lilley) the dynamics Graeber has unearthed seem to provide a frame for understanding several hugely central things that economics has never been very good at explaining (unless I've missed it?): the importance of the reserve currency and it's relation to the military power of a hegemon.
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> Mainstream economics is simply flately baffled by why anyone would care about a reserve currency. Krugman drags out his argument once every couple years to show that all that matters is earnings on seignorage, and they are a risibly small percentage of GDP, and when you add in the costs of being a hegemon, it's a wash or a loss. And certainly nothing to worry about.
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> And of course absolutely no one in the world believes that.
Actually the Fed seems to. I can't find the references now, but as I recall they basically think US reserve currency status is nice but not crucial.
Doug
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