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Debt.1

Last week I finished a book I really liked called Debt by David Graeber, (Melville Press.)  The author is an anthropologist and an activist who has been involved with the “anti-globalization” movement in general, and the Industrial Workers of the World and Occupy Wall Street in particular.  He used to teach at Yale but moved to the University of London when he didn’t get tenure in New Haven – which I would guess had something to do with the political orientation of his work.  (He identifies himself as an anarchist.)

I was a bit put off at first by the subtitle: “the first 5,000 years.”  His book seems to touch on nearly every period in recorded history.  It gives me pause when he outlines certain trends within a particular period by writing, “Everywhere, (X was happening,) … everywhere (Y happened in tandem with X) and everywhere (Z was happening at the same time.)”  The upshot of these broad strokes of historical narrative was, however, remarkable: the chance to read about diverse relationships various societies have had to debt, credit, money and financial arrangements.  The author’s purpose in providing this comparative survey is to challenge the way today’s “economy” is usually presented as a “natural” phenomenon.  In the process of this critique, he even challenges the idea that there is such a thing as “the economy” that can be separated out from other social processes.  He shows that the separation of economics from other aspects of culture and its elevation to the status of “science” has worked in the service of elites that want to remove any limits ethical or moral codes might place on the maximization of profit.  We are all taught to recognize the wisdom of the cliche “Don’t take it personal:  it’s business.”  (I tried to find a You Tube clip of “God Bows to Math” by the Minutemen to insert here, but I couldn’t.)

The main assumption he challenges is the assumption that “the market” means the same thing as “capitalism.”  His comparative historical survey shows many kinds of ways of arranging markets that are almost unrecognizable from today’s vantage point.  None of these alternate arrangements are naively held up as ideals we should go back to.  The book ends without presuming to know what lies ahead, or what should be done next.  The aim is rather to use history to call current assumptions into question in ways that stimulate creative responses to the current crisis in the days to come.

I couldn’t begin to summarize the book.  But I would like to post about it from time to time in fragmentary form.  For today, I’ll reproduce some stuff from a passage meant to challenge the first assumption Graeber tackles in the book:  the ethical precept that all debts must be repaid.  This long excerpt shows that this precept is applied selectively in the global economy, by looking at three examples.  Madagascar and Haiti must repay their debts, while the United States does not.  The reasons for this difference could best be summarized by a phrase once coined by Sonic Youth:  Justice Is Might.

If history shows anything, it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt – above all, because it immediately makes it seem that it’s the victim who’s doing something wrong. Mafiosi understand this. So do conquering armies. For thousands of years, violent men have been able to tell victims that those victims owe them something. If nothing else, they “owe them their lives” (a telling phrase) because they haven’t been killed.

“Nowadays, for example, military aggression is defined as a crime against humanity, and international courts, when they are brought to bear, usually demand that aggressors pay compensation. Germany had to pay massive reparations after World War I, and Iraq is still paying Kuwait for Saddam Hussein’s invasion in 1990. Yet the Third World debt, the debt of countries like Madagascar, Bolivia, and the Philippines, seems to work precisely the other way around. Third World debtor nations are almost exclusively countries that have at one time been attacked and conquered by European countries – often, the very countries to whom they now owe money. In 1895, for example, France invaded Madagascar, disbanded the government of then-Queen Ranavalona III, and declared the country a French colony. One of the first things General Gallieni did after “pacification,” as they liked to call it then, was to impose heavy taxes on the Malagasy population, in part so they could reimburse the costs of having been invaded, but also, since French colonies were supposed to be fiscally self-supporting, to defray the costs of building the railroads, bridges, plantations, and so forth that the French regime wished to build. Malagasy taxpayers were never asked whether they wanted these railroads, highways, bridges and plantations, or allowed much input into where and how they were built. To the contrary, over the next half century, the French army and police slaughtered quite a number of Malagasy who objected too strongly to the arrangement (upwards of half a million, by some reports, during one revolt in 1947). It’s not as if Madagascar has ever done any comparable damage to France. Despite this, from the beginning, the Malagasy people were told they owed France money, and to this day, the Malagasy people are still held to owe France money, and the rest of the world accepts the justice of this arrangement. When the “international community” does perceive a moral issue, it’s usually when the feel the Malagasy government is being slow to pay their debts.

“But debt is not just victor’s justice; it can also be a way of punishing winners who weren’t supposed to win. The most spectacular example of this is the history of the Republic of Haiti – the first poor country to be placed in permanent debt peonage. Haiti was a nation founded by former plantation slaves who had the temerity not only to rise up in rebellion, amidst grand declarations of universal rights and freedoms, but to defeat Napoleon’s armies sent to return them to bondage. France immediately insisted that the new republic owed it 150 million francs in damages for the expropriated plantations, as well as the expenses of outfitting the failed military expeditions, and all other nations, including the United States, agreed to impose and embargo on the country until it was paid. The sum was intentionally impossible (equivalent to about 18 billion dollars), and the resultant embargo ensured that the name “Haiti” has been a synonym for debt, poverty and human misery ever since.”

“Sometimes though, debt seems to mean the very opposite. Starting in the 1980’s the United States, which insisted on strict terms for the repayment of Third World debt, itself accrued debts that easily dwarfed those of the entire Third World combined – mainly fueled by military spending. The US foreign debt, though, takes the form of treasury bonds held by institutional investors in countries (Germany, Japan, South Korea, Taiwan, the Gulf States) that are in most cases, effectively, US military protectorates, most covered in US bases full of arms and equipment paid for with that very deficit spending. This has changed a little now that China has got in the game (China is a special case, for reasons that will be explained later), but not very much – even China finds that the fact that it holds so many US treasury bonds makes it to some degree beholden to US interests, rather than the other way around.

“So what is the status of all this money continually being funneled into the US treasury? Are these loans? Or is it tribute? In the past, military powers that maintained hundreds of military bases outside their own home territory were ordinarily referred to as “empires,” and empires regularly demanded tribute from subject peoples. The US government, of course, insists that it is not an empire – but one could easily make a case that the only reason it insists on treating these payments as “loans” and not as “tribute” is precisely to deny the reality of what’s going on.”

Hey, I know it’s wrong, but that’s all right mama, as Elvis might say.

This entry was published on February 19, 2012 at 9:52 pm and is filed under Anti-Neoliberalism, Book Reviews, Debt, Economics, History, Politics, Series of posts. Bookmark the permalink. Follow any comments here with the RSS feed for this post.

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