david: we managed to almost completely destroy the IMF
david: the IMF are the world’s debt enforcers; high-finance equivalent of the guys who come to break your legs
So Citibank and Chase sent agents persuading Third World dictators to take out loans (“go-go banking”)
This led to Third World debt crisis
IMF stepped in, insisted that poor countries had to abandon price supports on food, etc for refinancing
DG: abolish the IMF and Third World debt. Debt amnesty, like the biblial Jubilee. 30 years of money flowing from poorest countries to richest was quite enough
Her: but they borrowed the money! Surely one has to pay one’s debts
DG: hoo boy
contemplate the justice of insisting that the lenders be repaid not by the dictator or his cronies, but by literally taking food from the mouths of hungry children
That’s the situation the IMF created at a global level
- consumer debt is lifeblood of economy
- all modern nation-states built on deficit spending
- debt is central issue of international politics
Yet nobody seems to know exactly what it is, or how to think about it
Mafiosi, conquerors and violent men: you owe me
Iraq is still paying Kuwait for Saddam’s 1990 invasion
But... Third World debt works the other way around. These are countries that were attacked and conquered by European countries, and then owe their conquerors money
In the 1980s, the US, which insisted on strict terms for the repayment of Third World debt, itself accrued debts that easily dwarfed the entire Third World combined, mainly fueled by military spending.”
Moses Finley: all revolutionaries have the same agenda: cancel the debts and redistribute the land
Most people everywhere hold the following beliefs:
1- paying back money one has borrowed is a simple matter of morality
2- anyone in the habit of lending money is evil
Opinions on the latter do shift back and forth
The low-ranking castes were referred to as the “vanquished ones” – thought to be descended from a population conquered by the current landlord caste many centuries before – lived in permanent debt
Basically a tedious and elaborate form of slavery
Neither was there much concern voiced among local Brahmins, who were the ultimate arbiters in matters of morality... and the most prominent moneylenders
1 - shunt off responsibility onto some third party (medieval European lords employing Jews as surrogates, denying them all other means of making a living)
2 - insist that the borrower is even worse
The moment we ask the question, we have begin to adopt the creditor’s language. Unreasonable creditors too will “repay”.
Even karmic justice can thus be reduced to the language of a business deal
Debt, unlike any other form of obligation, can be precisely quantified.
This allows debts to become simple, cold and impersonal – which allows them to be *transferable*.
But if you owe $40,000 at 12% interest, it doesn’t really matter *who* the creditor is.
Neither party has to think about what the other party needs, wants, or is capable of.
One does not need to calculate the human effects
all have been shaped by a history of war, conquest and slavery
in ways we’re no longer capable of even perceiving
because we can no longer imagine things any other way
Now on to...
CHAPTER TWO: THE MYTH OF BARTER
Some of the first written documents are Mesopotamian tablets recording credits, debits, temple rations, money owned, the value of each precisely specified grain and silver
History of debt is necessarily a history of money. Wanna understand debt, gotta follow the money
Books on the history of money tend to focus on coins, and rarely mention credit arrangements at all
But deeper than that, “the existence of credit and debt has always been something of a scandal for economists...”
So Econs 101 pretends money predates credit and debt!!
“Imagine a barter economy”
“Imagine the difficulty you would have today if you had to exchange your labor directly for the fruits of someone else’s labor”
“Imagine you hate roosters but you want roses”
... is that there’s no evidence for it, and lots of evidence suggested that it did not.
The main economic institution among the Iroquois nations were longhouses where most goods were stockpiled and then allocated by women’s councils. No one ever traded arrowheads for meat
These divisions are made possible by very specific institutional arrangements: lawyers, prisons, police...
Bartering would’ve been rude, impolite, calculative, selfish. People tended to each other
But why has this persisted?
Economists have jettisoned other elements of The Wealth of Nations – eg Smith’s labor theory of value, and disapproval of joint-stock corporations...
To a Credit Theorist, you can no more touch a dollar than an hour or a cubic centimeter.
If money is a yardstick, what does it measure? Debt! A coin is an IOU. A banknote is simply the promise to pay *something*.
So... the value of a unit of currency is really a measure of one’s trust in other human beings!
It makes perfect sense once you realize that money and markets do NOT emerge spontaneously.
Distributing gold is how you *bring markets into being*.
- Sassanian “circle of sovereignty”
- Chinese “Discourses on Salt and Iron”
^ most ancient rulers spent a great deal of their time thinking about the relation between mines, soldiers, taxes and food
Historically, states *create* markets
Economists sometimes point out exasperatedly that they’re telling the same story because anthropologists haven’t given them a better one yet.
(Reminds me of Taleb & predictions)
Core argument: any attempt to separate monetary policy from social policy is ultimately wrong
Primordial-debt theorists: we start by calculating the price of small sins: fines, fees, penalties