Debt: The First 5,000 Years: A Review, of Sorts

In an earlier post on Hope for the 99 Percent (or words to that effect), I argued that today's workers need to focus on accumulating wealth and improving their educations, and not expect any assistance from the state, except in the form of minimal social-insurance payouts. What I did not say, because I hadn't thought to say it at the time, is that it is rather difficult for modern workers to accumulate wealth because they are usually heavily in debt, and difficult for them to educate themselves without accumulating additional debt. Indebtedness, it would seem, is one of the principal factors keeping the 99 Percent down and ensuring that wealth continues to flow upward to our oligarchs. That debt would appear inescapable, unless we make some effort to restructure it (at much lower interest rates) or abolish it. To do so, I think we first need to ask how legitimate modern private debt actually is. Perhaps the best place to start answering this question is David Graeber's Debt: The First 5,000 Years, which I read last year and will now endeavor to review.

The long blog entry that follows is my summary of Graeber's powerful, but rather convoluted, argument. In a future blog post, I will provide some analysis of the book and of Graeber's suggestions for how we can move forward from our current socio-economic mess.

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Graeber, as an anthropologist, avoids approaching the problem of debt with the assumptions of an economist. In the early chapters of his book, he notes that modern debt involves a double fiction: the idea that people who contract a debt are autonomous equals, implying that people who cannot pay their debts brought their problems on themselves, and the idea that a creditor has a feudal right of dominion over a debtor until the debt, plus interest, is paid. Debt also depends on the ability of creditors and debtors to enumerate their obligations precisely, using monetary values; this in turn depends on the invention of money. The double-fiction of equality and absolute dominion, however, could not apply to pre-modern (or “heroic”) societies, like the Celts or the African Lele. These societies were usually hierarchical, and they could readily conceive of social obligations between dependents and lords; indeed, a lord's or patriarch's honor stemmed from his control of the bodies and labor of others. However, they did not accept that lords had absolute control over their dependents: they could not readily sell their bondsmen, female relatives, or children. Heroic societies understood the concept of a medium of exchange, and of placing a monetary value (measured in oxen or precious metals) on people and their labor, but in practice they only allowed elites to exchange people or their labor for other people, and only to strengthen existing human relationships or pay blood debts. 

States interfered with these arrangements when they introduced currency and open markets, which, Graeber provocatively argues, were largely a byproduct of the creation of professional armies in the so-called “Axial Age” (800 BCE – 600 CE). A state could most efficiently supply its armies by taxing its subjects, then stipulating that they had to pay the tax with money, which they could obtain by selling goods or services. Money usually took the form of precious metals because they were portable and easy to steal – Alexander's armies, for example, looted the equivalent of $285 billion from the temples and palaces of Persia. Once currency, taxes, and markets came into being, however, it became possible to convert labor and social obligations into goods and money; it thus became possible for even non-elite persons to buy human beings, either as slaves or debt-peons. (Debt peonage, a modern reader might argue, was voluntary, but in fact people were usually driven to it by hunger, misfortune, or taxes.) Elites found this threatening to their honor, one of the reasons, Graeber unhappily observes, that Greek aristocrats began confining women to the home (to demonstrate that their bodies still belonged to their husbands). Peasants, of course, found this more personally threatening, and would periodically revolt or flee. Early states proved less interested in preserving the honor of elites than in preventing rebellion or defection by debt-ridden peasants. Some did so through periodic debt amnesties, a practice that preceded the Axial Age: the Sumerians, who invented interest-bearing debts, also invented the concept of debt forgiveness; Egyptian monarchs also used debt amnesties, and in fact a piece of one of their second-century stele announcing a general debt amnesty became the Rosetta Stone. Other states, like the Roman Republic and the ksatriya republics of early India, avoided peasant revolts by recruiting peasants into their armies, paying them sufficient wages to avoid indebtedness, and relying on war captives for labor. The latter solution, we should note, merely externalized the problem, and perpetuated the connection between debt, violence, and enslavement.

The Axial Age also gave rise to several religions which opposed usury or offered indebted peasants an otherworldly escape from debt. These religions became pervasive and influential in the Middle Ages (600-1400). Chinese Buddhists argued that the most important debts were those owed to one's parents and to the universe itself, and that these were only payable through temple donations, but also that such donations would permanently cancel existential debt. Muslims, while they honored trade and enabled it through sophisticated credit arrangements, forbade usury and were skeptical of the value of physical money. Medieval Christians were both anti-debt and anti-trade, but they did develop the idea of the merchant adventurer, who was willing to use bravery and violence to open new markets.

In the early modern era (ca. 1450-1971), Europeans' drive to conquer the world was financed by the aforementioned merchant adventurers, whose primary economic pursuits were bullion (most of which they exported to China and India), weapons, slaves, and drugs (coffee, sugar, tobacco, opium). Theologians and scholars came to accept usury, with Protestants leading the way and Catholics following a short distance behind. By the 1700s Europeans argued that humans were motivated primarily by interest, which is etymologically related to the concept that “money [must] never cease to grow.” European states had also come to harness this concept of interest by creating national debts, which yielded regular dividends for the state's wealthy creditors, and national banks, whose notes could circulate as money – an important consideration in an era when elites had come to distrust fiat money and private credit, but could not always obtain the gold and silver they did trust.  From these sources. Graeber argues, came modern capitalism, an ideological structure placing morality, money, and state power at the service of the idea that economic output must always grow, no matter the cost. And “it is the secret scandal of capitalism that at no point has it been organized primarily around free labor” (Ch. 11). European capitalists' incessant need for labor drove the African slave trade, the enserfment of Eastern European peasants, and colonial regimes' use of taxes to draw commoners into debt peonage. Debt and interest forced capitalists to create an economy that would always grow, and in turn they forced free persons into debt or bondage to provide the labor necessary to realize that vision. Only at the very end of the period, during the nineteenth and early twentieth centuries, did European states and capitalists begin to create a limited wage-labor economy wherein workers could accumulate enough money to imagine themselves free of debt.

By the mid-twentieth century, though, the only thing that backed state currency was state debt, which in turn was backed by the state's war-making power. The United States' current economic power is based on its dollar's position as the world's reserve currency; on the inability of countries holding dollars to exchange them for gold; on the ability of the U.S. to project deadly force anywhere in the world; and in the use of dollars to purchase oil. (I highly doubt, incidentally, Graeber's assertion that Saddam Hussein's switch to the Euro to denominate oil sales was a cause of Operation Iraqi Freedom; George W. Bush and his advisers weren't that calculating. Well, maybe Dick Cheney was, and screw him.) Meanwhile, the idea that workers could accumulate enough money and assets to propel themselves into the middle class, never a widespread one beyond a few industrialized countries, was abandoned in the 1980s, as conservative governments smashed labor unions, adopted tight-money monetary policies, and allied themselves with evangelical Christians who endorsed their policies as divinely-inspired. Workers were now offered the opportunity to enrich themselves through speculation (401ks, for instance) and debt (mortgages, credit cards, student loans, microcredit), but that opportunity vanished, probably for good, in 2008, leaving behind only the idea that there were no alternatives to capitalism, that individual debt was a sin, and that a person's worth could be measured in commodities. There is nothing natural, however, about this grim state of affairs; it is instead the product of centuries of violence, which ripped normal human obligations from their social context and transformed them into arithmetical equations of debt and interest.

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Coming soon: Graeber's concluding remarks and my own thoughts.

(Images above are of the cover of Graeber's book, the Rosetta Stone, and an eighteenth-century ceramic painting of European trading factories at Canton, from the collection of San Jose State University.)

Habetis Papam

The election of a new pope, regardless of what the Holy Spirit might think, is a world-historical event. It is a relatively rare occurrence: there have only really been four popes in this blogger's lifetime (if one excludes the short-lived John Paul I), and only seventeen since the independence of the United States. The pope also heads an institution of rare longevity (nearly 2,000 years), is at least the nominal spiritual leader of more than one billion Catholics, and has the power, if he waves at you on parade, to allow sex without sin.

I was a bit disappointed, of course, that the new pope chose not to resume the nomenclatural progression first observed by Eddie Izzard and set aside by Benedict: “First we had Pope John, then Pope Paul, then Pope John Paul. The next pope will be John Paul George...and I think we see where they're going with this.”

(I title this short post “habetis papam” rather than “habemus papam” because I am not a Catholic, so this pope isn't really mine to have. I prefer to say “habemus papadum,”* particularly at the outset of a good Indian dinner.)

* Or "habemus papadas," but that doesn't sound as funny.

The War That Came Early, Drank All the Booze, Fell Asleep under the Coffee Table

Apropos of my recent (I thought well-deserved) trashing of Millard Fillmore, my grad-school friend Chris Paine argued that had Zachary Taylor lived, and Fillmore not succeeded him in 1850, the Civil War would have started ten years early, and the North would have lost. I was prepared to concede the first point, which Mark Stegmeier made pretty persuasively (in Texas, New Mexico, and the Compromise of 1850 [Kent State U. Press, 1996]). Prof. Stegmeier believes the flashpoint of an early American Civil War would have been Santa Fe, capital of the former Mexican province of New Mexico, whose post-Mexican-War ownership was disputed by the state of Texas and the U.S. government. In 1850, as Southern whites threatened secession over California statehood, and Congress deadlocked on a package of compromise bills, President Taylor sent 600 federal soldiers to Santa Fe. Governor Bell of Texas organized his own military expedition, and Southern politicians and newspapers endorsed Texas's claim and threatened war in the event of a clash between Texan and U.S. forces. The final Compromise of 1850, which Fillmore signed, included a peaceful resolution of Texas's boundary dispute with New Mexico. Coupled with some horse-trading about slavery in the Mexican Cession, this quieted Southern hot-heads and prevented a war. Taylor, however, opposed much of the Compromise and would have rejected it if he had lived; he probably also would have started a war with Texas, which several of the more bellicose Southern states would surely have joined.

I was less inclined to believe that the South would have won an early conflict with the Union, because, however underdeveloped the North's factories and railroads were in 1850 compared with their 1860 counterparts, the determinative factor in the war of 1861-65 was not industry but manpower, and in 1850 the free states already had twice as many people as the slave states. Fergus Bordewich's book America's Great Debate (Simon and Schuster, 2012), however, disabused me of the idea that the North's demographic advantage would have been enough to win a war with the South. What would have mattered most of all in such a war, Bordewich argues, was the willingness of large numbers of free-state or slave-state men to fight, and Northerners simply weren't very interested in fighting for the Union in 1850 (pp. 393-394). In 1861, by contrast, thousands of free-state men were eager to stomp Southern whites' guts out, thanks to a decade of "Slave Power" outrages: the vicious over-enforcement of the Fugitive Slave Law, the Kansas-Nebraska Act, the Lecompton Constitution, the Dred Scott decision, and the caning of Senator Charles Sumner. In 1850, martial keenness was all on the southern side of the Mason-Dixon Line: Southern whites had contributed tens of thousands of troops to the Mexican War, and many were threatening violence if California entered the Union as a free state or Texas didn't get to annex most of New Mexico. The North had more people, but not necessarily more willing soldiers, than the South.

If war had broken out between the states in 1850, it would have started in Texas and spread eastward as some of the slave states announced their secession and seized federal forts and arsenals. I suspect the seceding states would be pretty much the same crew that first left the Union in 1860-61: the Deep South states from Texas to Florida, plus Georgia and South Carolina, and possibly including Tennessee (which had strong ties to Texas) and Arkansas. I also suspect there would have been some resistance by federal soldiers to the seizure of their posts, as President Taylor, unlike Buchanan ten years later, would probably have ordered his men to defend their positions. It's hard to determine how the rest of the war would have unfolded, but I think that one could draw an analogy between the Civil War of 1850 and the War of 1812: reluctance on the part of Union men to enlist, several states (chiefly the slave states remaining in the Union) disaffected to the point of mutiny, increasing difficulty passing war-finance measures in the Union Congress, and, on the tactical side of things, a lot of small battles around the borders of the region the U.S. was trying to conquer, but little territory changing hands.

I can't see the secessionists gaining any of the advantages in the 1850s that might have delivered a knock-out blow to the Union in the 1860s war: European recognition or capture of the Union capital. The British government (which had a Liberal plurality in the early '50s) was only mildly interventionist, the French were under the unstable Second Republic until late 1851, most other European governments were uninterested in American affairs, and the Confederates would have found it difficult to take Washington if, as I suspect would have been the case, Virginia had nominally remained in the Union (as a de facto neutral). One particular political event, though, would have helped bring an early end to the conflict, and that was the presidential election of 1852. Absent an early Union victory it is unlikely that a Whig candidate for president could have won election in the U.S., even if (especially if) Whig incumbent Zachary Taylor decided to stand for another term. The new Democratic president would owe much of his political support to Democratic grandees in those slave states still in the Union, few of whom would have wanted the war to drag on, and would be under great pressure to negotiate with the rebels. I suspect the new president would have arranged an armistice with the secessionists in 1853 and a peace treaty in 1853 or '54, granting them their independence (perhaps with an empty clause allowing the seceded states to re-enter the Union in future) with provisions for the repayment of Southerners' debts and for the return of runaway slaves (both of which would have been dead letters, as with their counterparts in the Anglo-American treaty of 1783).

What of the war's aftermath? Here I think Bordewich is right to paint a bleak picture of American prospects. The United States would not go on to become a world power by the early twentieth century, if ever. Even given favorable trade terms with the new Southern confederacy, the Union would not have the same access to cheap Southern raw materials (timber, iron, coal, cotton) that helped fuel the industrial expansion of 1865-1900. The confederacy probably would have been able to conquer and hold New Mexico and make it difficult for the Union to send settlers, administrators, or troops to Oregon and California during the war; I suspect Californians and Oregonians would have considered seceding from the Union themselves, and there's a small chance that Britain would seize California during or after the conflict, using "the protection of British interests" as the pretext. (California had several hundred million dollars in gold to serve as the real motive.) As for the confederacy itself, life would remain much the same there after the war as before for a very large percentage of the population – namely, African-American slaves. Some slaves would have been able to escape during the secession war (as during the Revolution and the War of 1812), but it's unlikely that, given the limited opposition to slavery in the North in 1850, the Union Congress would have passed Confiscation Acts mandating the freeing of runaways, or that many Union generals would have done so on their own. I can, however, see free states in the Union refusing to return runaway slaves to rebels or allow slave-catchers into their territory after the war, and abolitionists maintaining an Underground Railroad into the free states of the Union.

Beyond the borders of the old United States, a secessionist victory would certainly have had significant consequences. The 1850s historically saw a number of American filibustering expeditions against Central America and Spanish Cuba, and while few of these would have occurred during the secession war, there is little reason to assume that citizens of the newly-independent Southern confederacy would not have attempted to expand their nation southward by military conquest. The confederate government might even have quietly backed some of these expeditions, since expanding the domain of American slavery was important to many white Southern leaders; with state backing, private efforts to grab Nicaragua or part of Mexico or might have succeeded. Meanwhile, as the war would have disrupted the domestic American slave trade - the U.S. government would not have allowed those slave states which stayed in the Union to export slaves - the confederates would probably also have tried to reopen the African slave trade, either directly or using Brazil (which continued to import African slaves until 1870) as an intermediary. The Southern confederates' support in Britain, if any, would have shrunk as a result.

Speaking of Britain, it is less likely that the British government would have endorsed dominion status for Canada, at least not as early as 1867, if it had not been worried about the possibility of a powerful United States conquering the Canadian colonies or luring them into the American Union. And it seems equally unlikely that, if Napoleon III had decided (as he did in our continuum) to put Maximilian on the Mexican throne in 1861, he would have been sufficiently intimidated by the weakened United States - or the confederacy - to withdraw his support for a Mexican empire. The Monroe Doctrine might well have been a dead letter in the aftermath of our early Civil War.

On the positive side, there would not have been any re-enactors of this Civil War.  Thank heaven for small favors.