Occupy, debt and the historical limits of capitalism
It is unavoidable to pay the debts contracted… isn’t it? David Graeber, an anthropologist and leading figure in the Occupy movement, believes it is time to question the validity of this moral claim. Graeber proposes a new perspective on debt and recovers the concept of the debt jubilee.
By Laura San Mamés
Originally posted on guerrillamedia.coop
Known – to his regret – as an “anarchist anthropologist”, David Graeber was one of the first participants in Occupy Wall Street, where he created the Strike Debt project, described by Shareable magazine as “the first P2P financial rescue ”. Since then he has joined the anthropology faculty at the London School of Economics. Have you heard of “useless gigs”? Graeber coined the term in an article that has gone viral in recent weeks, and has been translated into more than 14 languages.
In his book “In Debt: An Alternative History of Economics,” Graeber examines the basics of today’s debt-and-credit economic system, presenting an analysis as disturbing as it is influential online. Like Charles Eisenstein , Graeber is redefining our notions of capitalism, debt, and money, and proposing alternatives for a better system.
Most economists believe that ancient economic systems were based on barter. You, however, argue otherwise.
Exactly! Everyone knows the story of the primitive barter. The first person to disclose it was Adam Smith. Nor can we blame him, since at that time he did not have any reliable ethnographic information on the social and monetary dynamics of these societies. His theories on barter and direct exchange were based on his own deductions: people would knock on the neighbor’s door and say: “I’ll give you twenty chickens in exchange for that cow, ten arrowheads for that plow…” . Obviously, in an economy like the one Smith describes, you’d soon run into a big problem: what if no one wants your chickens? Thus, transaction after transaction, money gradually emerged to solve this problem of illiquidity.
It is a very beautiful story but it has a problem: it is totally false! It assumes that communities tend to trade in what economists have called “snap deals” and between strangers. There is no type of credit. Examining it closely we will see that it is absurd: let’s say that your neighbor has a cow that you need for a feast while you have nothing to offer him… at that moment. But well, since he is your neighbor, the most logical thing is that sooner or later you have something that is useful to him. Now we all know that you owe her something, and she may come back a year later to claim a cow from you, or even ask you to marry her son. In fact, he could ask you for anything and there are many reasons why it is in the neighbor’s interest that you are in debt to him. What we find in these small communities are series of informal debts. Different types of debt and hierarchies of favors. The only thing you won’t find is an exact mathematical equivalent, and the latter is what characterizes money.
Bartering usually arises when money runs out in communities accustomed to using cash.
In conclusion, the problem has nothing to do with the fact that the money comes from bartering, since bartering usually takes place between people who will never see each other again. The crux of the matter is: by what kind of process do these series of informal debts begin to be quantified? In what context do people begin to perform mathematical calculations to obtain perfect equivalences? In potentially violent situations. Imagine a bar fight where someone’s ear is cut off. The codes of conduct of pre-state societies often had very detailed terms and conditions for paying fines for breaking a nose, cutting off an ear, wounding a leg, etc. In these cases, the fines prevent other violent acts from being committed. It is a context in which people demand exactly what is owed to them. If someone kills your brother and you don’t really want to forgive him, the legal code says that he owes you twenty-five cows, but it may be the case that he doesn’t have enough cows to pay you. At this point, you are going to demand an exact equivalent with which to start making calculations.
Historically speaking, this is how we believe money emerged. The traditional myth is false: in fact, in the earliest historical accounts of complex monetary systems in ancient Mesopotamia, what we find is a credit system. The Sumerians did not have scales accurate enough to weigh small amounts of money; no one came to market with metal nuggets. Credit was the most common in normal transactions. Bartering usually arises when money runs out in communities accustomed to using cash. The Russia of the nineties is a good example of this.
In your book you also say that all the revolutions and social movements in history arise from debt. The first thing they would do was destroy any record of the debt. Do you think we are in a similar situation right now?
The truth is that if. Moses Finley says that, since ancient times, there has been a constant revolutionary demand: cancel the debt and redistribute the land. The We are the 99% page carried out a study and those were the most widespread demands. It is no longer so much about radical demands for self-management or labor dignity, but about the cancellation of debts and the return of basic livelihood mechanisms. It is as if the debt served as a moral focus for a rebellion, a focus with radical implications and capable of mobilizing coalitions that would not exist in other circumstances.
On the one hand, the ideology of debt is one of the most powerful tools ever created to justify situations of exorbitant inequality, and not only does it give them a morally acceptable sieve, but they also make believe that the victim is to blame. But when it all blows up, it will blow up big. It has happened over and over again in human history, and I think this is one of the most extraordinary aspects of Occupy Wall Street.
On the one hand, the ideology of debt is one of the most powerful tools ever created to justify situations of exorbitant inequality, and not only does it give them a morally acceptable sieve, but they also make believe that the victim is to blame.
The students are one of the largest groups within the movement and what they come to say is: “we are the good children, we ask for a loan and we study hard to enter the university. We have followed the rules. And here we are. But we have not been rescued. Instead, the bankers – the ones who have betrayed and lied to us, as well as destroyed the world economy – have benefited from a government bailout, while we are going to spend the rest of our lives hearing that we are a bunch of irresponsible bums because they we owe money. That doesn’t make any sense!”
Even more interesting is that 40 years ago neither a worker nor a public transport official would have echoed the problems of an indebted university student. But two years ago we verified that the working class supported Occupy in a massive way. That can only be understood by understanding the power that debt wields and the kind of outrage it is capable of arousing. It facilitates class alliances that would not otherwise have existed. After 2008, American citizens did their best to get out of debt, but there are two categories of debt that are inextricable: student loans and subprime mortgages. Both the students and the working-class poor found themselves in a relatively similar situation, and thus formed these ties within the movement. That’s how powerful debt is!
In ancient times, if you couldn’t repay a debt, you could be forced to sell your sons and daughters into slavery. Is this related to your article on “useless gigs”?
If someone hired you to throw a stone over a wall to then go to the opposite side to throw it back, and so on throughout the day, it would seem absurd to us. Well, it turns out that almost all our jobs are just as useless. When I wrote the article about “useless gigs” I was speaking hypothetically. I don’t work in the corporate sector but when I talk to people in that sector I see them very overwhelmed and in a very specific way. Ask any corporate lawyer about their contribution to society! It seems like there’s a very specific type of moral trauma that comes from having a job that deep down you know shouldn’t even exist. There are millions and millions of people trapped in this situation. Interestingly, it reminds me a bit of the kind of compulsory and useless jobs that were invented in the Soviet Union – just what, in theory, should never happen under capitalism. But still, all these jobs have been invented that shouldn’t even exist, and the people who do them are fully aware of it.
Your hypothesis has been criticized in The Economist . According to them, these jobs only exist to manage the increasing complexity of the global economy. How do you respond to that?
My answer is very simple. There is a perfect example to contradict his argument: the universities. They are adding more and more administrative fees. More assistant deans, more advertising consultants, et cetera. If we compare it to how things were 40 years ago, we now have four times as many administrative positions. Is teaching four times more complicated than before? Production hasn’t gotten any more complicated, we’ve just added more layers to spread out the loot. These useless jobs are, in essence, a type of rent: we distribute part of the benefits of financial extraction to a social group that receives a salary in exchange for appearing to be very busy.
One of the solutions you propose is the organization of a debt jubilee. How to achieve it in practical terms? How to build a new system without making the same mistakes?
When I talk about a debt jubilee, I see it more as a conceptual cleansing, not a practical solution. If we realize that money is nothing more than a social agreement, we can make it disappear or recreate it, do whatever we want with it. Of course, no one completely eliminates all debt. There are always mechanisms that must remain active. But I have no doubt that there are professional economists capable of proposing workable strategies: people like Michael Hudson and Steve Keen have already proposed concrete models.
Obviously, we would have to maintain pensions. One of the most perfidious aspects of neoliberalism is that it coerces people into being complicit in the system by privatizing pension funds. We have to return to the public pension system. But those are technical details that I think we can solve if we have the right people working on it. Economic problems are not that difficult to solve, although the same cannot be said for political ones.
If you talk to honest people in the ruling class, you’ll see that they know full well that sooner or later there will be some kind of debt cancellation. There is no way to avoid it.
If you talk to honest people in the ruling class, you’ll see that they know full well that sooner or later there will be some kind of debt cancellation. There is no way to avoid it. The question is: how is it going to be done? Will it be honest, where the rulers admit that they are going to cancel the debts, or are they going to find some way to manage to deceive us again? Throughout history we have seen examples of both. In ancient Mesopotamia, debt cancellations were often used to prevent social outbreaks and preserve basic structures of authority. But let’s not forget that Greek democracy and the Roman Republic were also the result of debt relief. It is crucial that instead of arguing about whether or not there is going to be a debt cancellation, we talk about how it is going to happen.
In my opinion, there is no way to maintain the existing financial system without undermining the basic principles of capitalism. I believe that capitalism has reached the limits of its historical potential. The only thing that worries me is that the next system will be even worse.
Do you think decentralizing the money creation process would be a good starting point?
There are already a lot of people experimenting with social and complementary currencies and I see a lot of potential in it. It is clear that it is not the only solution, but it seems to me an essential element within any solution. Before discarding money completely, I think one should experiment with new types of money. We will never get rid of it completely. But if money, in essence, is nothing more than a ration coupon, I think it is preferable to ration as little as possible and, at the very least, eliminate money in certain aspects of life.
But money is so ingrained in our brains…
People adopt different forms of money when they have to: if the existing monetary system collapses, something must be done. In times of economic bankruptcy, anything can happen.
Given all this, what do you think of the idea of a universal and unconditional basic income for all citizens?
The essential idea behind basic income is that since we are all constantly producing value, it becomes necessary to de-link the concept of productivity from the workplace. If you provide a basic income, you send out a very powerful message: nobody wants to sit there without giving a stick to the water; we trust that you will seek a profitable activity. This concept of work as something morally untouchable is one of the most detestable tools wielded by power, and it only aggravates the phenomenon of useless gigs.
The truth is that capitalism no longer even justifies itself. It is supposed to be a system that improves the quality of life of the poor, making inequalities acceptable. But not anymore. It is supposed to produce more security. But it’s not like that either. It is supposed to promote democracy. But this no longer happens. All the classic positive justifications are no longer relevant. Now only the moral arguments remain: that working is good and that debts must be paid, there is no alternative. We have reached a point where these arguments only lead to the self-destruction of the system. The ship is sinking due to overwork and debt.
You have been very active in Occupy Wall Street since its inception. In his recent book ‘Swarmwise’, Rick Falkvinge compares the [Swedish] Pirate Party to Occupy. One of the biggest differences that he points out is that you have neither leaders nor specific demands. How to get substantial results with fully decentralized leadership?
But if in Occupy we had a lot of leaders: more than 100,000! The truth is that everything depends on the strategy. We have a long-term strategy: we are trying to transform the political culture. To achieve this, it is necessary to create new institutions, new habits and new sensibilities. This is an already ambitious goal in itself. But it also means ceasing to focus on concrete and immediate results (although this does not exclude that we will not achieve them along the way). In fact, we bet on a strategy based on delegitimizing.
I like to use the analogy of Argentina: what ended the reign of the IMF in Latin America was the Argentine default. Before the Kirchner government came to power, there were three different governments, each overthrown by popular uprisings. Kirchner himself was not a radical either, but rather a placated social democrat. But he had to do something radical because the social movement completely delegitimized the entire political class. People began to organize and create their own alternative economy. It’s a perfect example of not needing the political class at all but still getting political results.
It got to a point where politicians were so hated by everyone that they couldn’t even go to a restaurant. They had to go in disguise or people would throw food at them. Arrived here, the political class had no choice but to face the very idea that political institutions no longer had any relevance in the life of the people. They had to make a radical decision that they would not have made under other circumstances. This is the basic strategy that we are following with Occupy: instead of promoting candidates and making demands, we are creating our own political system that can function without politicians and that politicians show us that they still have some kind of utility.
Instead of promoting candidates and making demands, we are creating our own political system capable of functioning without politicians and that politicians show us that they still have some kind of utility.
America has reached a tipping point with Occupy. In the United States we have a long history of suppressing social movements, but historically the movements that have been most violently suppressed have been those of the working class or of people of color, not those of white middle class… Or not without provocation some kind of scandal on the part of the moderate left and the progressive (think of the McCarthy era, the student protests of the 60s etc.). Occupy was clearly a very diverse movement, but there were also a lot of middle-class whites and they took their beatings just like everyone else.
But this time it seems that nobody cared: the regional alliances between the liberals and the radicals are broken. On the other hand, I think we have achieved more in two years than any other social movement I can think of in the same amount of time: the idea of social class and class-based power has returned to the agenda – this is what the slogan “We are the 99%” – and have denounced the corruption inherent in the American political system. We have changed the political arena: remember that when planning his campaign, Mitt Romney viewed his Wall Street financial record as a positive… In New York we are already beginning to see the political fallout: Bill de Blasio, who is likely to be the next mayor, support Occupy. It seems our strategy is working after all.