Economics and its discontents (2016) by jedrzej malko

That said, one doesn’t have to fall into traps of crude economic reductionism to acknowledge the role economics plays in modern systems of power.. This imaginary money was used to settle

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E conomics and Its Dis contents

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I am grateful to many for their invaluable discussions, insights, and VXSSRUW , ZRXOG OLNH WR WKDQN 0LNRáDM Borucki, Prof Vivienne Brown, Prof David Hawkes, Prof Jerzy Jedlicki, Jakub Krzeski, Dr Bartosz XĨQLDU] Prof Germano Maifreda, Krzysztof Pacewicz, Tadeusz 7HOHĪ\ĔVNL and to Aleksandra Piejka, my love, for taking their time to read the early manuscript of this book and help me refine the argument I

am also very grateful to Elena Rozbicka for proof-reading the manuscript DQGWR$GDP%RURZVNLIRUWKHFRYHUDUWZRUNDQGWR3DZHá0DONRIRUWKHcover idea

I would like to express my gratitude to the internet communities of anonymous pirates and intellectual property thiefs who break copyright laws and let academic books and articles into circulation Without you I would never have been able to do my research

Finally, I would like to thank my family and my dear friends for the support they gave me while I was working on these pages Also, apologies are in place for all those times I lost myself in the library and didn’t show up when I should have I owe you one!

In we recognize the institutional character of private property and visit time when it was

of secondary importance to constellations of power.

A short but important chapter which shows how economics is blind to the political nature

of money and its disciplining effects Also, a chapter in which the worthlessness of the radical notion of value is outlined

In which the purpos e of this s tudy is outlined.

Already too many spectres have haunted the people, and for too long the people have unreflectively worshipped various spectres Countless manifestos have fruitlessly promised to lead the people on the road from serfdom, out of the dark tunnel of necessity, and into the daylight of abundance And yet, few people have asked: what is this spectre? And how is it possible that the more unwaveringly it promises to unchain the people, the heavier are the shackles which ultimately bind them?

There is an urgent need for a narrative on economics that will allow

us to grasp the role it has been playing in the constellations of power throughout the ages An attempt at such an analysis is the main purpose

of this study It should be noted that at no point is it postulated that all historical power struggles could or should be reduced to the realm of economy The cognitive value of bringing all dimensions of social reality under one common denominator is negative The search for any one prime mover, the true and hidden structure, or some general logic of history is always harmful The attraction of simple answers lies not in what they reveal about the world, but in how much they hide from us, making life less complicated than it should be That said, one doesn’t have to fall into traps of crude economic reductionism to acknowledge the role economics plays in modern systems of power On the contrary, it is hardly possible to analyse the economics of power without appreciation for the power of economics

Political struggles that shape worldwide economic infrastructures are largely informed by economic discourses, and the legitimacy of the decisions that affect the lives and livelihoods of billions of people and, ultimately, the natural environment of this planet are often derived from this or that economic doctrine What’s more, in the course of this study it will be shown that today economistic narratives, figures, and modes of thinking have contaminated areas of life whose economic nature until recently had not been considered self-evident Economics has burst its banks and spilled over a terrain so vast that today we don’t even speak about society, culture, and people, but rather about social capital, cultural capital, and human capital Resources to be invested with hope for a nice rate of return.

To challenge the status quo one has to first understand it Without untangling the relationship between economics and other discourses, cultural formations, and institutions, there can be no meaningful response

to problems arising at the multiple tangent points between politics, economy, and economics Hopefully, this study will productively contribute to a debate on such a response, providing some insight into the basic dynamics of mainstream economics and its pivotal motifs This historical perspective is meant to provide a much needed context for the most present issues Only if we really grasp the fact that there has never been a critical difference between the main schools of economics, if we appreciate how much they are alike and recognize the synthesizing logic with which they operate, will we be able to cut through the threadbare and barren debates between left and right and work out a truly fruitful understanding of political economy

In which the analytical approach

of discoursive materialism in explained

In the past two or three decades, it has been often claimed that the discussion on economics is changing The rigorous modernist claim that economics is a positive, norm-free science has been challenged numerous times Klamer argued in 1990 that “seeing economy as a discourse and exploring its rhetorical dimensions, to which their works inspire, seems to bring new life to the conversation about economics.”1And indeed, some discoursive analysis of the economic genre has been applied Economists are not completely unaware of what poststructuralist theory has to offer, and they occasionally employ the devices of (a kind of) literary deconstruction or (a rudimentary) genealogical analysis To name a few examples, there were attempts to apply poststructuralist critique to Marxist thought,2 to treat neoliberalism with Gramsci,3 to show foundationalism of liberal doctrines4 and to apply rhetorical analysis to Friedman5 or Keynes.6 Henderson pointed to the potential benefits of conceptualising economics in literary terms,7 while Klamer made a case for appreciating the discursive and rhetorical dimensions of economics.8McCloskey published several interesting books on the latter subject All

in all, economics is supposed to enter a “tempestuous season.”9

Yet, this tempest seems to be ultimately a sort of dry thunderstorm, both in economic discourse and discourse on economics Possibly it shouldn’t be surprising that mainstream economists couldn’t care less for some philosophical, epistemological quibbles But not only the

“interpretive turn” hasn’t reached mainstream economics,10 but the challenges formulated on the margins of the discourse usually utilizepoststructuralist arguments only as a way to establish themselves as the

new orthodoxy It seems that the trench warfare between different economic schools continues, while all sides slowly learn to use new stylistic armaments And as will be shown later, it is hardly a new thing in the history of economics.

No comprehensive critique of economic genre has been formed yet I would argue, that without providing a more general framework for thinking about economics, the cognitive value of discoursive analysis will

be lost and will deteriorate into the very blind instruments of power it seeks to dismantle Whilst deconstructing economic knowledge is certainly indispensible to understanding it, it needs to be a part of a much bigger project Otherwise it may be that studying rhetorical devices used

to established legitimacy for this or that theorem will end up just another way to publish an academic paper The sole claim that “economists have become to some extent prisoners of their tools”11is as much true as it is analytically barren

Such comprehensive critique of economics must be based on a study

of its history Without proper historical context, it is simply impossible to grasp the dynamic of power struggles on a systemic level Debord warns that:

The precious advantage that the spectacle has drawn from the outlawing of history, from having condemned the recent past to clandestinity, and from having made everyone forget the spirit of history within society, is above all the ability to cover its own history of the movement of its recent world conquest Its power already seems familiar, as if it had always been there All usurpers have wanted to make us forget that they have only just arrived 12

The analytical value of the idea of the spectacle will be discussed later (Chapter 27), but for now let us concur that oblivion of the past ensures that the present remains unchallenged Even if one tries to do so, without the knowledge of the past he or she is stuck in the vicious circle of

repeating the same age-old arguments in the same age-old debates and making the same “groundbreaking” discoveries as had been made countless times before

Therefore, to a significant extent this is a historical study However, it is neither a history of ideas nor is it purely a materialistic history of economic practices As hopefully will be illustrated by this thesis, a proper examination of social phenomena needs to abandon the timeworn methodological dichotomy between spirit and body (which has typically expressed itself in the Christian preference for the former or the materialist for the latter) As Schmitt argues, constructing a contrast between these two spheres only to dissolve it by reducing one into the other must result in a caricature.13 Thus, I will be looking for interdependencies between economic discourses, institutions, and practices, trying not to privilege any one of them Study of discourse that disregards study of practice is rootless and toothless Study of practice that doesn’t see its discoursive underpinnings is no study at all

Vries rightly complains that “historians are prone to labour under the misapprehension that one can answer fundamental questions about a phenomenon by seeking its origins There one hopes to observe naked, innocent acts that reveal the true character of what is later shrouded in mystery.”14 The search for such original sin is futile Thus, instead of giving way to such archaic methodology and looking for points of rupture that put in motion successive historical periods, I propose to analyze history as a story about a multitude of discourses, institutions, and practices that dynamically change their configuration, forming various power structures Perhaps it could be described not by a genealogical metaphor, which suggests themes of evolution, generational succession and family resemblances, but, if you forgive me this high-flown metaphor, as a history of constellations Hardly ever does a really new

star appear on the night sky or an old one vanish from it, but each of the myriad stars pulsates with varying brightness, and time after time we decide to look at a chosen few of them as if they were somehow meaningfully connected And, after all, on some level they really are interconnected, influencing each other constantly by their gravitationaland electromagnetic forces

For some decades now, social theory has been growing in the climate

of, to use Lyotard’s clichéd expression, incredulity toward metanarratives.15It is accepted to study localized politics of resistance, explore “the lonely struggle of the prisoner in his cell,”16to give voice to groups previously silenced and expelled to the margins Narratives that are scaled to a more general level of analysis stink of sorcery, of crude Marxism, of Enlightenment hubris But while distrust towards totalizing,

or homogenizing narratives is understandable, it too often becomes an excuse not to think on a more global and general level The justified hostility towards the way of thinking associated with grand narratives istoo easily extended to the object of such analysis Rejection of structuralist approaches too often leads to refusal to analyze global structures I would argue that this is the equivalent of throwing the baby out with the bathwater

Today, to find our feet in the world, we desperately need narratives that are big, even grand, along with those that are small and localized As long as we remember that they all have their blind spots and limitations,

as long as we resist the temptations of reductionism, they can serve us well What’s indispensable in this endeavor is a sort of intellectual humility that allows for no more than just pointing to some impermanent tendencies, shaky patterns, and a few cautious generalizations As little as this A much as this

This discussion is not to be enclosed within one subdivision of academic field It will bring in diverse issues, ranging from the military conquests of Alexander the Great to Elizabethan theater, from the scholastic stance on probability to the birth of modern consumer credit However, it would be imprecise to say that the approach will be multidisciplinary Rather, one can expect from this work an attempt at anunidisciplinary approach It is not about bringing together various perspectives on one subject but proposing an analytical framework that could be used to further our understanding of various subjects

The book is structured around 50 short chapters, each of them tackling a specific topic and presenting yet another side of the problems

at issue The chapters are organized more or less chronologically, although that rule is sometimes bent I recommend that they are read consecutively, however, the narrative is not strictly linear and at times a topic touched on in one chapter is picked up in another one Such links are usually indicated by the number of the chapter put in brackets The argument will proceed in a somewhat discontinuous way precisely because the broadness of the subject at issue renders linear narratives useless Perhaps it cannot be cut open with a one-dimensional, however sharp, argument, but must be entwined by a net-like one Hopefully, the insights we are fishing for will not slip through

Finally, I must acknowledge that the decision to operate on a level of general analysis in search of systemic interdependencies comes at a cost Tackling a wide range of issues means that none of them is fathomed completely, and many are certainly treated with less attention than they deserve This is also partly due to an attempt to make this work as succinct and to the point as possible Writing lengthy papers is a threefold sin: of smugness, style, and lack of consideration for the reader

Although I stand by my research and have put a lot of effort into ensuring that no factual mistakes were made, I accept that in many fields

I remain an amateur I therefore welcome all possible corrections and criticisms

My only hope is that these criticisms will not bring the discussion back to the level of particulars Succumbing to the terror of details bars us from any chance of understanding the world we live in To say that things are more complicated is always true, but only at times does it contribute

to our understanding of the issues at stake

Thus, demolish my arguments all you want, but please, do it in order

to go beyond them and not to step back

In which the myth of barter is debunked.

Barter (verb) mid-15c., apparently from Old French barater, to cheat, deceive, haggle

Online Etymology DictionaryFew concepts are more central to modern economics than that of barter After Adam Smith proclaimed that “the propensity to truck, barter, and exchange one thing for another”17is inherent in human nature, this claim has been repeated countless times, becoming “the great founding myth of the discipline of economics.”18The existence of barter has been often presented as a historical fact, usually in narratives telling stories of the gradual progress of humanity: once upon a time there was barter, which was natural, but very inconvenient, so people came up with money

to supplant it “It needed conscious reasoning power of Man to make the step from simple barter to money-accounting” tells Crowther, who was editor of The Economist from 1938 to 1956, in his Outline of Money.19This story has become a sort of common sense understanding

One can notice that in modern economic textbooks, barter is no longer presented as a stage in economic history, but rather as a imaginary figure Graber collected several instances of this: “To see that benefits from a medium of exchange imagine a barter economy,” write Begg, Fisher and Dornbuch “Imagine the difficulty you would have today, if you had to exchange your labor directly for the fruits of someone else’s labor,” propose Maunder, Myers, Wall and Miller “Imagine,” suggest Parkin and King, “you have roosters, but you want roses.”20

This move from grounding argument in historical narrative to abstract theorizing surely is linked with the general concession to abstract reasoning (see chapter 44), but it has another quality as well Being solely

an abstract figure in a thought experiment, it cannot be falsified with

historical evidence This is priceless, because the fact is that there is no historical evidence that an economy sustained by barter has ever existed Anthropologists have “discovered an almost endless variety of economic systems But to this day, no one has been able to locate a part of the world where the ordinary mode of economic transaction between neighbors takes the form of ‘I’ll give you twenty chickens for that cow’.”21In thewords of one Cambridge anthropologist: “No example of barter economy, pure and simple, has ever been described […] all available ethnography suggests that there never has been such thing.”22

Of course, there are specific cases in which barter exchange occurs, and does so on a significant scale It is a legitimate form of settling accounts in all capitalist markets In the 1980s around 40 percent of East-West trade involved some degree of barter.23Inmates in many prisons use various barter systems to exchange items on a black market However, it has never been employed as a regular way of handling economic interactions between fellow villagers Abundant data on various exchange systems that could be labeled as barter shows that it only “takes place between strangers, even enemies,”24and “all such cases of trade through barter have in common that they are meetings with strangers who will, likely as not, never meet again, and with whom one certainly will not enter into any ongoing relations […] each side makes their trade and walks away.”25

Confusion about the pervasiveness of barter amongst humans may have arisen from the fact that many regimes of exchange may appear to the unaided eye like barter systems, although in fact they are nothing of the sort The prevailing system of settling accounts within European societies, a system that predated capitalist and even feudal modes of exchange and for a long time co-existed with them, was the system of

account money, which was “an ideal unit of measure that allows the evaluation of goods that are exchanged.”26

It existed only in the mind and in writing It was a measure of value used for accounting purposes, and the value of other commodities, including actual coinage, would be measured against this standard The system of money of account most common in medieval Europe was that of pounds, shillings, and pence, which was based on multiples of twelve (the duodecimal system), as opposed to ten (the decimal system) It was introduced possibly as early as the seventh century, but given prominence

by the financial reforms of the Emperor Charlemagne in the late eighth century 27

- writes Wood, but account money and object money (see chapter 5) have been used long before the seventh century It was used in ancient Egypt, where the unit was grain, whose value was subjected to careful regulation

by administrative authorities.28One can also see in the Homeric epics that

we all know from school that people measured the value of ships and armor in oxen, but of course they never actually paid for anything in oxen.29 Davies argues that because the taming of animals preceded agriculture, cattle preceded the use of grain as the unit of account money30 and have occupied a role so central in it’s evolution that etymologically the term “capital” is a derivative from cattle.31

In early Germanic law codes, a monetary value was assigned not only to property but to people as well (“wergild”), detailing compensations due for various degrees of bodily harm, murder, and manslaughter, somewhat prefiguring modern insurance calculations that evaluate people’s health in terms of percentages of bodily damage Everything and everybody quite literally had a price For example, from the earliest known Anglo-Saxon laws, the dooms of Aethelberht of Kent (602–3) we read that “If anyone lies with a maiden belonging to the king,

he is to pay 50 shillings compensation.” But of course 50 shillings would not have been paid, not just because the economy was largely non- monetary at that stage, but because neither the shilling, nor even the penny, was then in circulation 32

This imaginary money was used to settle accounts even in seventeenth century Europe, providing a matrix for economic exchange that had nothing to do with the direct exchange of goods for other goods and everything to do with communal debt regimes, which are the subject of the next chapter

In which the concept of debt regime is introduced.

The debt shall be paid, said Crito;

is there anything else?

PlatoMany readers may remember that in the Homeric epics, which are set in a pre-monetary context, the exchange of gifts plays an important role in establishing relationships between the protagonists.33 Another well-known, or perhaps even the best known, instance of gift exchange is the one between the Queen of Sheba and Solomon.34Although the figure

of barter is so well-rooted in economic discourse that sometimes gift exchanges are presented as a yet another form of barter,35 ever since Malinowski’s studies of the Kula ring in the Trobriand Islands and Mauss’s conceptualization of gift economies, there has been enoughresearch on the structures of reciprocity that it is generally recognized as

a separate institution, with its own specificities Modern mainstream economists may still struggle with the very concept of giving gifts and consider it a wasteful ritual, hence “any transfer of resources which was not chosen by the recipient through the market will generally be inefficient.”36However, few would argue that gift economies didn’t exist,

or that elaborate gift exchange systems didn’t play important social functions both within communities and in diplomatic encounters between them

For that reason, some radical thinkers look to “gift economies”

as a potential site of resistance to capitalist ordering of the economy However, gift systems have never constituted the primary regime of economic life They are interesting institutions, certainly worth exploring, but all things considered, they should be rather treated as phenomena that

were historically of secondary importance to the distribution of power Leaving aside the instances of Mesopotamian kingdoms and ancient Egypt where circulation of wealth was centrally managed with only an embryonic market system functioning on the sidelines of a highly regulated temple economy,37for a very long time, the majority of day-to-day dealings were not subject to administrative decrees or to the monetary market economy, but were part of a social debt regime

Debt regime can be understood as a system of recognizing mutual obligations within a given group that ensuries stability and the continuity

of economic exchange by disciplining the parties engaged in it to abide

by their agreements And the fact is, that long before the establishment of monetary economy, through the Middle Ages and even far into the eighteenth century, a majority of everyday transactions operated on the basis of personal credit, through the use of imaginary account money as well as with the aid of various tallies, tokens, and ledgers.38 The commonly repeated narrative of the credit system being a late development in the history of economic exchange, which supposedly moved from the most concrete forms (barter) to the most fictitious ones (financial derivatives), a story about the victory of abstract over concrete,39is simply not true Credit was central to everyday communal life constituting “a complex and intricate network of personal ties, […]based on personal agreements, many of which were struck verbally in face-to-face interactions.”40 And it was central to wholesale trade and manufacturing as well; “wholesale trade in wool, cloth, wine, tin and so

on […] all stages in the woolen clothing industry […] sales of land and of rents […] were commonly conducted through extending credit.”41

English merchants, shopkeepers, farmers, manufacturers, and consumers had developed an elaborate credit network based on personal agreements One historian estimates that by the first half of the seventeenth century, the

ratio of personal credit to coin transactions was 11:1 This statistic is further substantiated by Craig Muldrew’s study of how people in sixteenth-century King’s Lynn, a then-vibrant coastal town north of Cambridge, used a wide array of credit contracts, such as sales credit, bills, bonds, and pledges, to mediate their commercial interactions The successful employment of such instruments generated an extensive web of credit that connected people throughout the community, sometimes as creditors and sometimes as debtors 42

Discipline was ensured mainly by means of informal social control, and for a long time operated without appealing to the mechanisms of state violence such as police or bailiffs That was especially the case in the Middle East, where after converting to Islam commercial classes largely dispensed with the state structures.43

The livelihood of the masses depended in the first instance on such informal credit regimes and on the commons The commons can be understood as an inseparable combination of a social practice and a resource that was both its condition of possibility and the object of this practice It was an institution that forwent the regime of property rights,

in which, for instance, a village cooperative communally used land on which (individually owned) cattle was herded Collective management of the commons ensured that no “tragedy of the commons” (i.e., no depletion of the common resources caused by unrestrained individual usage) would occur, deciding on the rules and fines for breaking them, e.g “when the increasing number of cattle raised the risk of overgrazing the pasture, the cooperative issued an ordinance for the pasture […] It limited the number of cattle, impounding them if necessary and levied fines and enforced their collection.”44

The regime of debt was enforced from within but was also influenced from above The most important regulations were ones designed to counter the tendency to accumulate wealth in the hands of a small elite

and to protect debtors Sumerian and Babylonian kings typically on assuming power and sometimes later over the course of their reigns issued declarations of “clean slates,” voiding all outstanding consumer credit, returning land to its original owners and freeing the debt-peons.45

As Graeber notes, “the Sumerian word amargi, the first recorded word for

‘freedom’ in any known human language, literally means ‘return to mother’ – since this is what freed debt-peons were finally allowed to do.”46The Old Testament rule on the jubilee years served a similar role:every 7 years debt-induced slavery was to be annulled, and every 49 years all debts were forgone and land returned to its owners.47 The deeply political dimension of debt regime was also appreciated by Solon, whose famous reforms laid foundations placing the political sphere above the most immediate financial interests of the lenders.48As Reddy writes:[Solon] set that society on the road to democracy by decreeing that debts could no longer be secured against the persons of Athenian citizens Defaulting debtors who had been sold into slavery were immediately freed; others liable to the same fate were declared free of their debts From this reform arose that stark distinction between citizen and slave in Athens upon which civil equality and popular sovereignty were later built 49

Both in the case of communal debt regimes and the practice of the commons, there was some room for motives, practices and discourses that were not strictly economic

[C]ivic organization in the ancient world gave first place to non-economic relations, even in the case of commercial enterprises connected to the political-administrative sphere This gave rise to a sort of personal relationship between authorities and citizens, due to a “civic sense” in the Greek polis, to ambition and patronage in the Roman Republic, and finally, in the Roman Empire, to the “benevolence/beneficence” of the emperors, who, whatever they did, were called benefactors 50

In Attic tradition “the city, although being a community, is treated ‘as

a friend’, or, the benefited partner of the euergetic [characterized by generosity – JM] relationship between two individuals.”51These themes

of friendship and solidarity were an important part of this discourse of

benevolence However, perhaps to the disappointment of those leftist theoreticians who like to point to the commons as a new utopian project

of social organization that could replace the discredited project of communism, we have to remember that the commons, as all institutions, were open to power struggles and practices of violent domination Vesting power over one’s access to economic resources in the hands of the local community made for a very efficient disciplining tool that ensured one’s compliance with local social, cultural, and religious hierarchies Neither social debt regimes nor the commons should be cast

in the role of a horn of plenty that automatically brings about some version of an utopian future

Also, some neo-Keynesians utilize this history to claim that debt is aprimordial mode of social being, its essence even, and that granting government the power to create money means simply reconciling the political sphere with the underlying economic structure.52This is perhaps

an interesting, but ultimately a marginal approach For our discussion, amore important stance on debt is that taken by mainstream liberal economists And it is an approach marked by a hard-line hostility towards debt and a utopian vision of a society of individuals free from any obligations to each other and at liberty to settle all their accounts in cash (see chapter 34) It is, perhaps, precisely due to this hostility that the history of social debt regimes has been generally consigned to oblivion,since if it was remembered, it would certainly give the lie to liberal economic mythology

In which the violent beginnings

of the institution of money are recalled

Money, it’s a crime.

Pink FloydAlthough there is nothing universal about money – out of six

“grand civilizations” in human history, the Sumerian, Egyptian, Minoan, Chinese, Mayan, and Andean, the last two developed highly sophisticated social structures without any use of coinage53 – today money is instrumental to the modern debt regime and thus to all economic power struggles, so it is worth exploring its history

The first Lydian coins were struck out of electrum – a gold-silver alloy – during the 7th century, BCE In Greece, as in India and China, coinage was probably invented and first manufactured by jewellers, but soon thereafter it was monopolized by the state It is often argued that the biggest force behind the spread of coinage was warfare.54The invention

of money correlates in time with changes in the techniques of warfare and the replacement of old armies made up of aristocratic warriors and their servants with trained professionals This new class of mercenaries was paid salaries, not only the plunder and spoils of war But plunder and pillage contributed to the development of coinage as well, as during wars, large amounts of precious metals, previously stockpiled in temples, were dethesaurized, as the economic historians like to say; [they were] removed from the temples and houses of the rich and placed in the hands of ordinary people, […] broken into tinier pieces, and began to be used in everyday transactions […] How? Israeli Classicist David Schaps provides the most plausible suggestion: most of it was stolen This was a period of generalized warfare, and it is in the nature of war that precious things are plundered 55

It is telling that the Phoenicians, the greatest merchants and bankers

of antiquity, didn’t strike coins until they were “forced to do so to pay

Sicilian mercenaries.”56Business could be and had been conducted using ingots and promissory notes But warfare demanded coinage.

Probably the single most influential event for the popularization

of the institution of coinage was the military campaign of Alexander the Great, whose conquests led to “the most rapid extension of any single monetary system in world history – until the advent of euro in 2002.”57Not only had Alexander destroyed the ancient Mesopotamian debt regimes and dethesaurized gold held in their temples, but he also ensured that his coins were the only legal tender in his empire meaning that all taxes had to be paid in Macedonian drachmae.58This meant that civilians

in the conquered lands found themselves in a position in which they had

to accept payments in the currency of the conquerors When Alexander’s army was fully engaged in Asia Minor, the total cost of his campaign reached daily payments of some half a ton of silver.59This meant around 120,000 drachmae transferred every day into a multitude of private, often armed, hands Unsurprisingly, the coinage soon became accepted both as

a concrete instrument of exchange and its abstract structure As Davies writes:

Coins followed – indeed accompanied – the sword; payment for troops and for their large armies of camp-followers was generally the initial cause of minting Only the best was good enough for an all-conquering army, and what was good enough for the army, even if at first accepted through compulsion, was soon universally accepted by everyone with alacrity Although armies could always take, or “requisition”, whatever they wanted, payment in good coinage was a better way of getting eager co- operation 60

From that time, control over coinage became one of the first priorities to

be assumed by any conquering army, even until this day, with the British Authority money in the Second World War or dinars issued by the Coalition Provisional Authority after the Second Gulf War

Issuing money always performed not only an economic role, but apolitical one as well Austin and Vidal-Naquet show that “in the history

of Greek cities coinage was always first and foremost a civic emblem To strike coins with the badge of the city was to proclaim one’s political independence.”61 Emblems and symbols struck on coins were arguably

“by far the best propaganda weapon available for advertising Greek, Roman or any other civilization in the days before mechanical printing was invented.”62 And today, quite a bit of political energy is stillmobilized around issues of currency sovereignty, for instance in European countries in which adoption of euro is debated, or in Central and Southern American countries which adopted the US dollar as their official currency

Wherever state coinage was imposed, it had to prevail over previously existing systems of exchange consisting of the abstract account money, social debt regimes, and finally, object money (sometimes described as “primitive money”) Davies gives us a whole alphabet of items used as object money:

amber, beads, cowries, drums, eggs, feathers, gongs, hoes, ivory, jade, kettles, leather, mats, nails, oxen, pigs, quartz, rice, salt, thimbles, umiaks, vodka, wampum, yarns and zappozats, which are decorated axes – to name but a minute proportion of the enormous variety of primitive moneys 63

Setting aside the issue of gold being also a kind of object money used successfully (and without calling it “primitive”) by leading capitalist countries up until the twentieth century, it should be noted that the most successful object monies such as manillas – which were metal bracelets used as currency in West Africa – were in circulation even after theSecond World War, and it took a long and painful struggle to displace them with British pounds.64In fact, an indispensable part of the European colonial enterprise was always a long and painful struggle to enforce new forms of discipline by drawing people into the cash-nexus and supplanting local exchange systems with state-money It usually involved some sort of poll tax that had to be paid in cash,65and penalization of the

traditional rituals of gift exchange and conspicuous consumption For instance, the 1927 Revised Statuses of Canada stipulated a penalty of no less than two months in prison for engaging in “any Indian festival, dance

or other ceremony of which the giving away or paying or giving back of money, goods or articles of any sort forms a part.”66

However, it always takes power to establish a monetary regime, and sometimes invaders found it impossible to achieve At times shortages of coinage and other problems with establishing a generally accepted monetary system led colonists to officially recognize as currency object money of the conquered peoples For an instance, in the seventeenth century, wampum was made legal tender in several American colonies, making strings of beads both a currency in dealings with indigenous communities and among the colonists themselves.67

As monetary regimes are so closely interconnected with the political powers upholding these regimes, an essential part of a great number of modern revolutionary movements was the creation of revolutionary money Two great revolutions of the late eighteenth century, the French and the American, were financed by experiments in creating inconvertiblepaper money:

The first action of the second Continental Congress [a convention of delegates from the Thirteen Colonies that started in 1775, soon after breakout of the American Revolutionary War – JM] was to create an army Armies have to be paid for and the Congress had no taxing powers It therefore arranged for the issue of $2 million of Bills of Credit in June, and another $1 million in July […] Needless to say the Bills of Credit were not “as good as gold” but moral persuasion was used to induce people to accept them:

Any person who shall hereafter be so lost to all virtue and regard for his country as to refuse the Bills or obstruct and discourage their currency or circulation shall be deemed published and treated as an enemy of the country and precluded from all trade and intercourse with its inhabitants (Resolution of 11 January 1776) 68

Eventually, there was a complete default [of the revolutionary money] Thomas Jefferson said that the public feared that this would shake the Confederacy to its very centre, but instead:

Their annihilation was not only unattended by tumult but was everywhere

a matter of rejoicing and congratulation Their great services as a support

of the War were known and felt by all and all knew and felt their destruction was a certain public good… In Rhode Island—an obstreperous little commonwealth—some Continental bills were buried with the honours of war They were enclosed in a special repository, and over this a eulogy was pronounced as over the remains of a departed friend and benefactor 69

The close relationships between war, debt, and money will be studied later on (chapter 33), but for now, let us note that exposing the bloody origins of coinage shouldn’t be taken as a proof that it is an essentially violent, oppressive institution It seems to me that this is the mistake David Graeber makes in his otherwise captivating account of the social history of debt The narrative on money that dominates economic discourse today is one that sees money as a sort of atemporal, natural, and neutral thing Liberalism sees it often as primary to political institutions, while mainstream economics doesn’t see it at all (chapter 34).70Therefore, the challenge lies not so much in condemning money for its gory genesis, but rather in putting it in a historical context, seeing it as an institution and exploring the functions it played in the power struggles through the centuries Economic reflection shouldn’t be concerned simply with the politics of distribution of money in a given society, but muat rather recognise the political dimension of the institution of money as such and study the various effects different exchange systems have

In which it is shown how Greek economic discourse was shaped by opposing political factions.

economy (noun) from Greek οἰκονομία, literally; management of the house, law of the house

Etymology Online DictionaryThe first Greek text on economy is Hesiod’s poem Works and Days, in which he argued against the admiration for war and martial

virtues and praised the new ideal of peaceful husbandry.71 The most important principle of Hesiod’s household economic teaching is the traditional, timeless order which:

shows itself in the careful division of work according to the season [e.g.] Wood must be brought from the mountains in winter, and even the age of people and animals is taken into account in the division of labor—the 40– year-old is the youngest able to dig a straight trench and not just look around 72

Other themes of his teaching were care, which should be applied at all times, and neighborly reciprocity He warned that profit can confuse the senses and bring out aggressive behavior in people Nonetheless, he recommended that one should seek to increase household profit and engage in sea trade on a limited scale.73Hesiod also advised that since sea trade is hazardous, a man’s entire property should never be risked on a single ship’s excursion,74thus voicing around 700 BCE the intuition for whose mathematical formulation Harry Markowitz earned a Nobel prize

in 1990

After Hesiod, bits and pieces of economic reflection can be found in philosophers such as Heraclitus and Democritus, but certainly the fullest and also most successful Greek economist was Xenophon His

Oikonomikos became a best-seller for generations, not only in Ancient

Greece, but also in the Roman empire and long afterwards

In the 15thcentury, it was streamlined into a separate Italian economic discourse,75 but was influential on its own as late as 1652 (date of publication of Blith’s Dedication to the Nobility and Gentry)76or even

1727 (Bradley’s translation of Oikonomikos under the title of The Science

of Good Husbandry).77 Xenophon emphasized the same principles as Hesiod, praising order (“nothing is useful or fine for human beings as order”78) and diligence.79

In both Works and Days and Oikonomikos the household was conceived as a private sphere that was understood without reference tothe local or national economy However, this doesn’t mean that the Greeks were not capable of a more macroeconomic analysis For instance, Isocrates’ Trapeziticus treats the specific situation of the

Athenian economy, with its fiscal and monetary problems.80 And Xenophon’s less known work, Ways and Means, also shows a general

orientation to the economy of the whole polis and proposes a series of policies to promote trade, strengthen manufacturing, and attract capital from abroad.81In a proposal that could be called proto-Keynesian, if we were interested in such retrospective readings of history, he argues for a proactive stance of the polis in promoting industrial entrepreneurship and tries to calm objections that public initiative will have adverse effects on private business.82 In his other work, Cyropaedia, he describes the

division of labor, linking it (as Adam Smith would do later) to the size of the market.83And Aristotle’s abstract conceptualization of the geometric exchange matrix proved essential for scholastic economic theories (Chapter 15)

There is a general tendency in economic historiography to exclude analyses critical of a given economic order from its body and focus solely

on theories that accept it either openly or implicitly, by assuming that it is

morally neutral Thus, the bulk of Greek economic theorizing is disregarded as moral philosophy and not strictly economic theory.84But,

of course, all economic theories are, explicitly or not, moral and political philosophies as well And the fact that the elite of Greek philosophy shared a distrust of economic motives and were wary of commerce does not mean that they didn’t theorize about them

Probably the most hostile attitude towards commercial society was Plato’s He conceived economic activities as morally degrading and the profit motive as unacceptable He especially held retail trade, which in his eyes was an unproductive speculation on goods, in contempt He argued that politics must be purified from the polluting effects of the commercial mentality or otherwise, when “the desire for more growth has reached its technical limits, the feverish mentality of the opulent city sets loose the spirit of war with other city-states.”85 Therefore, in The Republic he

envisioned a society whose economic activities are regulated in great detail by a cast of ascetic philosopher-kings If trade is left to be determined by hedonistic demand it will lead to a new ordering of the world, based on a “calculation, that could be handled mathematically and that [would] replace the traditional ordering of life forms according to various dimensions, with a one-dimensional measurement,”86 alienating people from moral ideals and destroying the natural environment in the process.87

Similarly, Aristotle goes into great lengths to describe development of the polis into a commercial society animated by the

mis-“chrematistic spirit”:

For him [Aristotle], the development of a monied market economy that prospers on commercial exchange between socially unrelated individuals and that is moved by a chrematistic mentality, would adversely affect the traditional values of the community and gradually undermine the public spirit of the polis and of its citizenry 88

However, Aristotle was slightly less hostile to commerce than Plato Indeed, he married Pythias, a daughter of Hermias, the powerful banker who ruled the polis of Atarneus and a close friend of Aristotle.89Philosophically, as always, he recommended the golden mean as the answer to economic problems In his eyes both poverty and excessive wealth can be equally corrupting, and the possession of wealth as such is not something negative However, as the gain motive theoretically can be infinite (and in practice often is), it cannot be treated with the golden mean solution, and thus is inherently harmful.90

Also, Isocrates and Gorgias, Sophists who are usually treated as technocratic pragmatics, considered the commercial spirit it to be the source of injustice and corruption.91

There has been a long-lasting dispute on whether the Greeks employed the notion of linear time at all (or perhaps it was a Judaic invention, and the Greeks followed a “more natural,” cyclical vision of time?), and if so, whether it told a story of advancement or maybe of progressive decadence There are numerous examples in support of all three options,92 and arguably this debate can be only resolved by discarding the idea of the homogenous “Greeks” to whom one or another world-view could be ascribed and acknowledging that there were numerous tensions in Greek culture, one of which concerned the issue of progress

The aforementioned authors (apart from Hesiod) all wrote in arapidly changing social environment in which two political prospects contended for primacy: a commercially growing society based on trade against a traditional and static society based on agriculture – merchant classes supported by democratic structures against an aristocratic culture supported by the elites – the nouveau riches against the traditional

establishment.93The lines of demarcation, as always, were not clear, but one can see these two tendencies in the political discourse of Classical Athens.

In Ancient Greece, this tension between “perfect gentlemanship” and the commercial spirit, between “love of honor” and “love of gain”, was perhaps overcome only in Sparta, where citizens were forbidden to have anything to do with money-making, leaving economy in the hands of enslaved helots.94 In The Human Condition, Hannah Arendt liked to

romanticize Ancient Greece as a place where public life was free from lowly economic concerns, which rightly belonged to the private realm I would argue that she misreads some of the philopohical writings that constituted a conservative defense of the power held by the elites for the general climate of the era For all Arendt’s originality, this mistake is surely of the most trite in the historiography of ideas, it almost falls in the realm of cliché