Federal spending is not funded by taxes, the US Treasury will never 'dry up', and the US will never default on its debts or entitlements. It may fail to pay, however that is not a default, it is a refusal or repudiation of an obligation.
It's more precise to say that private assets are public sector liabilites, in other words, they are outstanding taxes. It's money the government hasn't bothered to collect yet. When you look at the tax code you will notice very quickly that letting money sit and do nothing is not taxed, hence a tax minimizer can always avoid non-demurrage taxation, which means the upper bound on government debt is infinite.
It's simply not mathematically possible to pay the debt off without demurrage.
...so paying taxes is just there to control people and expropriate their money? Please let Newsom in on this discovery. He says he's for the common man and woman. He's gotta do something.
But sure, Weimar had more money than god --it just had no purchasing power.
There are (at least) two different ways of viewing this equation.
One view is that the government has a stockpile of money and can give out money as long as it has some and has to get more to refill its stockpile lest it run out. Taxes refill the stockpile. Bonds are borrowing money to keep the pile fuller for a fixed term.
Another view is to notice that the government stockpile is connected to the money printer, so it's not really a stockpile but actually has infinite capacity and can't run out. The cons of spending too much are not running out, but rather they are the cons of overprinting money - inflation. Infinity plus anything is still infinity, so taxes don't refill the stockpile (it's infinite) but they do unprint money to prevent excessive inflation. Bonds are paying people to unprint their money for a fixed term, at the end of which it is reprinted.
These are isomorphic models of the same system, which provide different insights.
Note that only governments that can print money can use your second model. So in the USA, only the Federal govt. California only has access to the first model, and could go bankrupt and/or default on bonds.
US states are sovereigns and so they can't literally go bankrupt. But they can become insolvent and cease paying on their obligations. Based on current credit ratings, if any state is going to become insolvent it's more likely to be Illinois than California.
Taxes provide the fundamental value of money: taxes must be paid in the state’s currency, making that currency inherently valuable to avoid punishment. They also provide a way to prevent the existence of individuals powerful enough to corrupt the regulatory state, as has occurred in many of the most powerful neoliberal jurisdictions.
Yes, inflation is a constraint, and a powerful one - but avoiding inflation by treating a sovereign currency system like a household or corporation that do not have powers of money creation or taxation, and therefore must balance their budgets, is absurdity. The strongest constraint on state spending is an economy’s production capacity, not an arbitrary budget.
Regarding Newsom, US states are far more constrained in their spending bc they cannot create money, and must account for their expenditures more like a household or corporation. Social benefit programs, entitlements, etc. must therefore by managed and paid for at the Federal level, just like all of the goods and services that we, as a society, deem it necessary to produce regardless of whether it makes a profit or not - like most of the core transportation infrastructure, the global military empire, fundamental science, engineering, medical research and services, etc.
“Enshittification” updates for the modern era the concept of enclosure, where a common resource that was formerly open and free to contributors is progressively controlled, restricted, or diminished to increase private profits.
Homelessness serves as excellent motivation for us to sacrifice our bodies and minds on the behalf of our employers’ profit. Poverty isn’t an unfortunate side effect of resource mis-allocation at the margins of society, but a necessary feature of the institutional mechanisms that burn out generations, keeping the bread and circuses going.
Corporations can fund research in ways that allow them to suppress results that threaten their profits. If science is conducted in these ways, corporations can fund science (for which they receive tax benefits) and if the results are positive, it gets published and the corporation wins because the research supports their business model (tails, I win). If the research results does not support their business model, they can decline to publish it (tails, you lose).
There are ways to do science that avoid this kind of corruption.
Name three academic institutions that would sign a contract that prevented them from publishing adverse results. You are at least fifty years out of date on this argument.
A) They don't have to have that in writing, it's very implicity understood that you don't bite the hand that feeds. B) Even if they do find adverse results, depending on what they are (e.g. actively harmful versus negative results) you may have a hard time publishing them since journals don't care much for negative results.
I’m going to assume that you’re basing your opinion of Graeber on Brad DeLong’s unhinged attacks on his work and character. There are no factual mistakes in “Debt” that impact the solidity of Graeber’s conclusions or historical narratives, most inaccuracies were minor and corrected in subsequent editions without changing the character of the book or the arguments within. Many if not most of DeLong’s attacks of inaccuracies are matters of interpretation, and in such cases it’s generally better to give the words of more accomplished and respected academics more weight than less accomplished or respected peers. As to where Graeber stands in relation to DeLong, I quote Graeber from a post here on HN:
“I hate to be seeming to blow my own horn, but when there's a crazy person out there using dishonest methods to try to destroy your intellectual reputation, and where there are honest people like you apparently taking the bait, some things have to be pointed out. The best measure of the accuracy and relevance of scholar's work is what other scholars in the field think of it. If you want to measure my standing as a scholar in anthropology, you might want to consider the fact that the most eminent scholar in the field, Marshall Sahlins, co-wrote a book with me. If you want to assess the merit of Debt, you might wish to consider the fact that there have now been two different scholarly conferences specifically dedicated to engaging with the book, attended by Classicists, Assyriologists, Medievalists, Economic Historians, Anthropologists, and other specialists in the fields addressed in the book. Do you think that would have happened if it was a "intellectually bankrupt" work full of obvious mistakes? For instance, Brad DeLong has been an economic historian for decades now. Has anyone even thought to hold conference to discuss the implications of any of DeLong's writings or ideas? Finally, if the argument is that I'm clueless when it comes to economics, I might ask why you think it is that on Tuesday I will be presenting a macroeconomic seminar at the Bank of England.
Sorry, but you've been suckered by a liar and a con man. I've honestly tried to just ignore the guy, hoping he'll eventually go away, but since he won't, I guess I have to explain what's really going on.”
To name just one of Graeber's essential lies: he makes the claim that Federal Reserve issuing American debt is privately controlled and weaves an extensive chapter based in fundamental ways on this misapprehension. This is a lie that's not "minor" nor "a matter of interpretation" nor unrelated to the "character of the book or arguments within": it's a fundamental misapprehension of the most important debt instrument in modern history (perhaps all history). In a book about debt in history.
I don't really care too much for Graeber's self-important response. If the answer is, yes, Graeber's entitled to say what he wants because people celebrate and have conferences about him, and those who disagree are implied to be beneath him... well, the brazen self-importance is so astonishing that I can't rightly understand how one can agree with that degree of self-importance so directly presented, especially when it comes paired with no actual defense of his statements -- not even a link.
Statements of the form "I'm right because I'm important, and that's all I need to say" are not usually tolerated from almost anyone as a substitute for basic, bare truths. That they are accepted here is not only a comment on the character of Graeber but on the character of his followers.
> To name just one of Graeber's essential lies: he makes the claim that Federal Reserve issuing American debt is privately controlled
From a short piece of writing from the St. Louis Fed itself, linked to in another comment below:
>The Federal Reserve Banks are not a part of the federal government, but they exist because of an act of Congress.
Now, we could quote the next few lines too, for a bit more context:
> So is the Fed private or public? The answer is both. While the Board of Governors is an independent government agency, the Federal Reserve Banks are set up like private corporations.
Clearly, it's a rather unique institution that makes arguments that it is privately controlled or not rather harder to resolve.
But that also means that this is not "an essential lie" by Graeber. He has elided some of the complexity in favor of what he sees as a more important truth, without saying something that it categorically false.
American debt is issued entirely by Congress and the Treasury, and its monetization controlled by the Fed's Board of Governors, which is appointed by the government and independently operated. There's no means of control over these two things outside the U.S. government. There's also the FOMC, but this is relatively unessential such that it's unlikely to be related to whatever "essential truth" Graeber has in mind. In particular, they don't set monetary policy but do whatever the Board of Governors orders in that regard.
I wasn't making an argument about the behavior of the Fed.
You stated that Graeber had told "an essential lie" in claiming that the Fed was privately controlled. I quoted from the St. Louis Fed. their own text which (a) confirms that it is not part of the government (b) it's complicated.
I don't really give a damn about the argument on whether the Fed is or is not part of the government; what I care about is people claiming that someone is lying when they are not.
The point is issuance of American debt, and the Fed's role in it, is not privately controlled, neither in fact or in essence. Saying otherwise is an obvious lie in both senses.
This dispute might originate deeper into Graeber's other work on debt in "Debt: The first 5000 years." In common parlance, Treasury Bonds are the debt. But, in Graeber's theory of debt, the currency itself is also debt.
I haven't read Debt yet but one can look at the index and jump right to p365 (Federal Reserve Bank - loans to government by, 365-366). It characterizes the Federal Reserve as "a peculiar sort of public-private hybrid" (this is certainly true, and it's a deliberate design feature) and gives an accurate but highly abbreviated description of fractional reserve banking and the Fed's purchase of government bonds.
Nothing on this page tells me that he doesn't understand the system or is attempting to deceive. I don't understand where your objection is coming from. Have you branded Graeber the great deceiver because of a line like "while technically, the Fed cannot lend money directly to the government by buying Treasury Bonds, everyone knows that doing so indirectly is one of its primary reasons for being"? That statement is a lot less controversial than you perhaps believe it is.
Everything on this page seems pretty innocuous, and while I'm sure the whole book is a lot more daring... this doesn't jive with your criticism at all.
> To name just one of Graeber's essential lies: he makes the claim that Federal Reserve issuing American debt is privately controlled and weaves an extensive chapter based in fundamental ways on this misapprehension.
No, he does not. This is the only passage I can find where Graeber comes close to what you claim he wrote:
“The Federal Reserve—despite the name—is technically not part of the government at all, but a peculiar sort of public-private hybrid, a consortium of privately owned banks whose chairman is appointed by the United States president, with Congressional approval, but which otherwise operates without public oversight.”
As has been pointed out to you at least twice in the other comments, this is how the Federal Reserve describes itself. You’ve misremembered Graeber (here I will be charitable to you and not claim that you’ve lied) as saying the Fed is “privately controlled”, and your repeated assertions, as you’re backed into a corner in other threads, depends on this precise misremembering of what he actually wrote.
And furthermore, he does not “weave an entire chapter based in fundamental ways on this misapprehension”. The chapter is primarily about the role of the US military, its global domination, and ability to wage war in support of its economic interests, in the proliferation of the USD and its economic power. The paragraphs about the Fed and it’s precise association with the government is basically a sidebar.
> Statements of the form "I'm right because I'm important, and that's all I need to say" are not usually tolerated from almost anyone as a substitute for basic, bare truths. That they are accepted here is not only a comment on the character of Graeber but on the character of his followers.
I thought you were more acquainted with the long running dispute between Graeber, Delong, and a host of neoliberal/libertarian/Austrian economists. Apparently, you do not realize that the passage I quoted was from the final response that Graeber offered in their long running dispute, a dispute that included answers, in detail, of DeLong’s specious claims.
“I’m right because I am important” was not Graeber’s argument, his argument was along the lines of “if “Debt” was so riddled with obvious and crippling flaws, why as it been so influential in economics and anthropology? Why has it led to conferences and it’s own influential body of work that cites it? Why did it lead to a professorship at the London School of Economics? Collaborations with prominent economists?”
Given your attack on Graeber is riddled with errors, depends upon a misremembered quote, demonstrates ignorance of the content of his own long-running defense of his book, how are we now to judge your character as you have seen fit to judge me and his other supporters?
I actually followed the Graeber-DeLong argument when it broke, and found Graeber to be quite unhinged. In one tweet I found memorable, he accuses DeLong of "war crimes" -- presumably for supporting free trade or neoliberal economics or something[1]. At other points he threatened legal action.
But it doesn't matter, really. Graeber knew the target audience on HN wasn't aware of the debate--why would most of them be aware? He expected the audience to simply accept his greatness without evidence.
Just search for "de-legitimization". Again, he doesn't bother to respond to any actual points raised and just exercises a whole lot of ad-hominem - and unlike with Brad, someone like henry Farrel is much more of a fellow traveller.
If you read the critiques that Graeber discusses, you’ll see they’re exactly as he describes: instead of addressing Graeber’s arguments, they instead insinuate that his ideas are not worth addressing (after using the silly Apple error to dismiss Graeber’s entire body of work).
Notably, he does respond to their actual points, at length and to such an extent that copying and pasting an example which includes both Farrel’s critique and Graeber’s response would dwarf my words in this reply. are we even reading the same article?
HN readers would be aware of the long running debate because he mentions the debate, summarizes several elements of it, points readers to where it can be found, IN THE VERY HN POST FROM WHICH I QUOTED!!
Perhaps Graeber believed that HN readers were capable of using search engines to familiarize themselves with the debate, and verify his claims. Apparently, not all HN users are capable of this, as demonstrated by your posts throughout this discussion.
And, we have further evidence of either your incuriosity or obfuscation. No, Graeber did not accuse DeLong of war crimes in that tweet because of DeLong’s mere support of neoliberal economics. If you’d read further that Twitter thread, Graeber provides context, mentioning the ELZN and NAFTA.
Plug those into your favorite search engine, and you’ll get references to the Zapatista’s revolt against NAFTA, and their reasons for their actions. From The Nation[1]:
“We are a product of 500 years of struggle,” began the Declaration of War read out from the city-hall balcony to the people gathered in the main square, or Zócalo. Then came the phrase that would become iconic the world over: “But today we say ¡Ya Basta! (Enough is Enough!).” Named after the equally iconic revolutionary leader Emiliano Zapata, the Zapatistas planned the rebellion to coincide with the enactment of the North American Free Trade Agreement (NAFTA).
Their prediction, which history has subsequently borne out, was that NAFTA would hasten the dispossession of indigenous people both by opening up the region to large-scale ranching and by driving down the prices small farmers received for their corn, beans, and coffee. Today, Mexico imports nearly half of the corn and beans it consumes, and is equally dependent on staple products such as American-produced pork, chicken, wheat, and powdered milk.
Researcher and activist Diana Itzú Gutiérrez Luna, who has worked extensively with Zapatista communities, considers the economic warfare inaugurated by NAFTA part of a larger geopolítica del despojo, or geopolitics of plunder. There are currently 77 military bases in Chiapas, most of them located in the autonomous regions controlled by the Zapatistas and/or in areas rich in natural resources: water, uranium, and the barite used for fracking and the drilling of oil wells. “Basically, what they’re attempting is a territorial advance that implies the extermination of these worlds of indigenous life,” she says. The advance, she notes, has assumed a number of different disguises, from the “Puebla-Panama” development plan pushed by former president Vicente Fox to the “Special Economic Zones” designed to extend Mexico’s border model of tax breaks and low-wage maquiladora labor into the deep south.“
So, there you go. An ongoing war in Mexico between ELZN anarchists and the Mexican and US governments over NAFTA and the myriad other destructive neoliberal policies that have wreaked havoc upon indigenous people from which the Zapatistas originate and defend.
Why does Graeber speficially point to DeLong here, claiming that a war crimes tribunal exists that would try him? Just because DeLong merely supports these policies? Another search would have revealed to you that DeLong, in his role of deputy assistant secretary for economic policy in Clinton administration, wrote the economic impact estimates justifying and defending NAFTA. In other words, he was a core member of the team that architected the very trade deal that launched a war between the Zapatistas and the Mexican government.
Knowing now these key facts of which you were previously apparently ignorant, who in this twitter exchange was more justified in their (mutually hyperbolic) statements: DeLong, claiming that that Graeber does not know the power relationship between creditors or debtors - the subject of the Debt book - or Graeber, claiming that the Zapatistas would accuse and try DeLong for war crimes in Chiapas? I think the answer is quite obvious, but judging from the deliberately obtuse arguments that you’ve made, I suspect that you’ll be able to rationalize to yourself that none of what I pointed out here matters.
> There are no factual mistakes in “Debt” that impact the solidity of Graeber’s conclusions or historical narratives, most inaccuracies were minor and corrected in subsequent editions without changing the character of the book or the arguments within.
It's been a while since I read Debt but I distinctly remember Graber's disingenuous take on Adam Smith's famous "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest." Graber argues that this is wrong because English (Or was it Scottish?) shopkeepers of the time mostly sold goods on credit and thus the customers were in fact depending on their benevolence.
I don't know about you but to me that is complete batshit.
The book also makes a way too big of deal about The Myth of Barter. While that is interesting from an anthropological perspective, Graber makes it sound like the bulk of modern economics is somehow based on this myth.
I get why the book is popular. It posits to tackle big questions and contains the usual tropes against the state, big business, banks etc. that a left leaning audience will be more than willing to eat up. But I don't think it provides any new perspectives on economics that bear any resemblance to the real world.
I don't think your summary of why Debt was/is popular will hold up to scrutiny. If you investigate with an open mind why people appreciate the book, it won't be merely because it plays up anti-state and anti-biz, anti-bank tropes. There's tons of other books that do that which people do not find comparable insightful.
The emphasis of the myth of barter and the rest of the stuff about how debt works is interesting especially because it doesn't set out to make the story simpler. He makes the story far more complex and intriguing. It leaves people with the capacity to hold more lightly to our assumptions about the nature of money and power and the economy. None of these things should be taken as inevitable laws of society or something. We recognize that there are many different ways to think about these things. And the simple part is to stop thinking that we all know some supposedly obvious idea like "we must pay our debts" and to start wondering a lot more about all the complexity and presumptions that go into how debt fits into our relationships and situations.
I doubt you'll find readers of Debt who come away extra confident that they now know the answer to how things "really" work. Most readers probably feel more that they have a view of how much there might be out there to understand, and they are willing to be less overconfident and more questioning about it all.
Actually I don't completely disagree with your comment.
"The book asks big questions" would be a better discription than what I originally wrote. The book makes for excellent dinner table conversation.
But I stand by my assertion that it does not provide any new perspectives on economics that bear any resemblance to the real world. And if anything, it makes it difficult for the reader to understand the financial system because of its factual inaccuracies.
Given that a decently large portion of the book discusses the anthropology of money and debt in a wide array of diverse cultures, the idea of lacking "resemblance to the real world" seems wrong to me. The real world includes all those different situations that are starkly different from the current dominant economic case.
The core of the book in my reading is not a description of the dominant financial system. I read it as a discussion of multiple factors that influence how debt can be used in a wide variety of ways in societies. And the parts that discussed our current financial arrangements might not be precise in all regards, but they were still more accurate by my understanding than the wrong-but-common concepts that are asserted by most naive citizens and used in most political rhetoric.
> Given that a decently large portion of the book discusses the anthropology of money and debt in a wide array of diverse cultures, the idea of lacking "resemblance to the real world" seems wrong to me. The real world includes all those different situations that are starkly different from the current dominant economic case.
Ignoring the quaint cultural practices of remote tribes does not diminish one's ability to understand the economics of the real world that they live in. Having an inaccurate picture of they actual system they live in on the other hand is far more damaging.
> but they were still more accurate by my understanding than the wrong-but-common concepts that are asserted by most naive citizens and used in most political rhetoric.
That is a rather low bar. But the book still has quite a few howlers:
- US treasury bonds are literally the safest securities on the planet. Graber calls them a debt that will never be paid.
- Graber claims that the global status of the dollar is maintained in large part by the fact that it is, again since 1971, the only currency used to buy and sell petroleum, glossing over the fact that the US dollar was the reserve currency since Bretton Woods. He then follows up with what can only be called a conspiracy theory, suggesting that the US invasion of Iraq was possibly motivated by Saddam Hussein's switch to the Euro.
- Graber likens the large holdings of US treasures by Western Europe, Japan and Korea to a tribute system which siphons wealth from these supposed client states to the American Empire. But when it comes to China holding vast quantities of the very same treasuries, he says from China's point of view, this is the first stage of a very long process of reducing the United States to something like a traditional Chinese client state.
On your point about US treasury bonds… I don’t have the book in front of me but this is a common, colloquial saying among many of my peers in finance. No one wants the U.S. to pay all of its debt, the structure of the global economy today requires these debts to function. They’re basically cash equivalents.
Grabers comments on the dollar as an oil currency… I disagree with that. Still, many investors I know around his age would have said something similar 10-15 years ago. The U.S dollar as a reserve currency is America's greatest strength (maybe not greatest but it’s up there) and weakness. Anything that impedes the dollar as a global reserve currency is a significant risk to the U.S.
Grabers comments on Europe, Korea, China, etc. you mention- again not an unusual thing to say in my view. Debatable certainly, but not obviously wrong.
> No one wants the U.S. to pay all of its debt, the structure of the global economy today requires these debts to function. They’re basically cash equivalents.
That is an entirely valid point. But that is not what Graber is alluding to:
> American imperial power is based on a debt that will never-can never-be repaid. Its national debt has become a promise, not just to its own people, but to the nations of the entire world, that everyone knows will not be kept.
They are cash equivalents exactly because nobody believes the US will default. Basically, the exact opposite of what Graber is saying.
> The U.S dollar as a reserve currency is America's greatest strength (maybe not greatest but it’s up there) and weakness.
People keep saying that but I am yet to hear a compelling explanation of the tangible benefits the US actually derives from this arrangement. Graber points to seigniorage or tribute as he likes to call it. Ben Bernanke, obviously not a neutral source, claimed in 2016 that this is on the order of $20 billion a year[0]. The highest, albeit unsourced claim I could find puts it around $100 billion[1]. Either way, in the larger scheme of things, it is chump change.
> Anything that impedes the dollar as a global reserve currency is a significant risk to the U.S.
Even assuming that is true, it's hard to link it to the invasion of Iraq. Iraq started selling oil for Euros in 2000. This wasn't some rouge act of defiance, the switch happened under the aegis of the UN's food-for-oil program. If it actually was a significant risk, the US could have simply vetoed it at the Security Council.
> Grabers comments on Europe, Korea, China, etc. you mention- again not an unusual thing to say in my view. Debatable certainly, but not obviously wrong.
So, is a foreign county holding huge reserves of US treasuries a) The act of a vassal paying tribute to the US or b) The machination of a rival intended to turn the US into a client state? Certainly, they both can't be true.
I haven't read Debt yet but I have a copy in front of me. Yours is the second critique here that seems to be based on a misreading or misunderstanding of the work.
You've not fully quoted Adam Smith:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
Graeber's refutation, in part:
The bizarre thing here is that, at the time Smith was writing, this simply wasn't true. Most English shopkeepers were still carrying out the main part of their business on credit, which means that customers appealed to their benevolence all the time.
There's nothing disingenuous here. Benevolence (mutual trust and an interest in both one's well being and the well being of the other party in the relationship, informed by some knowledge of one's own needs and the needs of the other party, if you'd prefer to unpack it) is needed to establish a credit relationship.
None of this seems like "complete batshit." Some of the stuff that comes later might be, I haven't read it. (have you read it?)
I've looked at that section of Debt again and it's even worse than I remember.
> You've not fully quoted Adam Smith
That's a strange objection because neither did Graber. The lines appear in the middle of a long and dense paragraph from the chapter Of the Principle Which Gives Occasion to the Division of Labour[0]. I don't understand why you feel the second line in anyway changes the point about rational self interest driving specialisation. Have you read the Wealth of Nations?
> Benevolence (mutual trust and an interest in both one's well being and the well being of the other party in the relationship, informed by some knowledge of one's own needs and the needs of the other party, if you'd prefer to unpack it) is needed to establish a credit relationship.
Sure, it makes sense if you redefine benevolence. FWIW, the dictionary definition[1] is inclination or tendency to help or do good to others; charity. Conflating credit to charity is disingenuous on it's own but Graber doesn't stop there, he says Adam Smith
> wants to imagine a world in, which everyone used cash, in part because he agreed with the emerging middle-class opinion that the world would be a better place if everyone really did conduct themselves this way, and avoid confusing and potentially corrupting ongoing entanglements. We should all just pay the money, say "please" and "thank you," and leave the store.
Except that this is unfounded speculation by Graber. Or to use Graber's favourite turn of phrase, an attempt at de-legitimization. There is nothing in the actual text where Smith suggests anything of the sort.
Further, Graber claims Smith
> created the vision of an imaginary world almost entirely free of debt and credit, and therefore, free of guilt and sin
Again, there is nothing in the text to support the idea that Smith saw debt as sin. The only kind of debt Smith took exception to is public debt[2] and that was for entirely different reasons.
Thanks for elaborating. At first blush my only disagreement is that I don’t think I (or Graeber) “redefined” benevolence at all, and it seems to me a not terrible word to describe the reciprocal trust relationship needed to facilitate the use of debt. I don’t think the larger point you’re making about his take on Smith turns on his use of that word.
As I said, I haven’t read the book, and so I’ll hold off on saying much more. I really expect this to be a book where the author is wrong in some interesting ways, rather than batshit crazy. So many mainstream people get Adam Smith wrong, so the anarchist anthropologist getting it wrong isn’t a complete dealbreaker.
> I don’t think I (or Graeber) “redefined” benevolence at all, and it seems to me a not terrible word to describe the reciprocal trust relationship needed to facilitate the use of debt.
That probably makes banks the most benevolent entities on the planet.
It would be interesting to read a review of Debt by some other economist. I don’t think this can be settled by quoting DeLong or Graeber, considering the bitterness of this feud.
I work at a large institutional investment firm and have read David’s book. He adds to the conversation around debt in unique and thought provoking ways. For me, that’s what matters about the book.
Unfortunately most academic economists are not going to touch it. It's a sprawling, highly polemic work by a marxist anthropologist. Much of the book focuses on various moral issues portraying history as a sequence of just and unjust acts, oppressors and oppressed, and finally there are some call for coordinated debt forgiveness.
That's not really inviting for academic economists that need to focus on quantitative or experimental research and would get nothing by wading into these debates.
So those with economic training who do touch it will be outside Academia or on the margins. Here are some:
The general consensus of these reviews is "man, he gets a lot of stuff wrong, and I don't agree with the central thesis, but boy what rich examples, and interesting insights are in this book."
The reason deLong waded in is that he has a very promiscuous mind and likes to think about Soviet tank strategy in World War 2, financial markets, and public policy. And he shares all those ruminations on his blog. So he'll pick it up, but he has tenure and (apparently) lots of leisure time. There aren't many others in the same position.
Graeber was certainly not Marxist. And the whole nature of his new book and the rest of his work is the opposite of the idea of portraying history as a "sequence" of acts at all let alone defining them in some just/unjust binary.
Government, at least in nation-states that are sovereign currency producers, does indeed have first dibs on what people earn. Income taxes are usually withdrawn from salaries before employees are paid, and in the case of independent contractors, business owners, and capital gains taxes, individuals are on the hook retroactively for taxes.
The only perspective from which your statement makes sense is from the libertarian fantasy of government-as-parasite and individual-as-independent-producer.
It's qualitative energy, not quantitative energy. The same energy one feels when one experiences love, feels lifted up by a favorite song, or feels exuberance when one's team wins the superbowl.
I don't mean it as "qualitative energy" in the sense you are using, though there are qualities to it. It affects conciousness, and is in turn affected by consciousness. The consciousness can be trained to influence, even direct or focus the it.
So yes, people experience love, fill inspired, or feel exuberance, and those are subtle energy in different forms. But it also has substance. Someone skilled in its use can intensify it, purify it, project it, and influence someone else's mood with it.
Barter is a spot transfer. 'time offset barter' or 'delayed barter' isn't barter, and I've only seen this weird term used in libertarian/ancap/Austrian economists attempting to come to grips with the rather strong evidence against the myth of barter from which they derive their theories of money.
This article makes the same mistakes that the OP's article does - assumes the truth of the myth of barter. It even uses the odd term 'time-offset barter', which I have never seen outside of libertarian/ancap analyses. Barter is a spot transfer, 'time offset barter' isn't barter but something else.
Barter requires a coincidence of interests. Alice grows some pecans and wants some apples; Bob grows apples and want some pecans. They just happen to have their orchards near each other, and Alice just happens to trust Bob enough to wait between pecan harvest time and apple harvest time. Assuming all these conditions are met, barter works pretty well. But if Alice was growing oranges, even if Bob wanted oranges as well as pecans, they'd be out of luck -- oranges and apples don 't both grow well in the same climate. If Alice and Bob didn't trust each other, and couldn't find a third party to be a middleman [L94] or enforce a contract, they'd also be out of luck.
This is the canonical Myth of Barter, where some society is assumed to have existed that was so inconvenienced by the double coincidence of interests/wants/needs that it invented money. This never happened as there exists no evidence that a society existed that used barter as its main method of exchange; barter was used on the edges of society, spot transfers made between people who did not have the trust necessary to support debts.
Here's the passage where he refers to 'time-lagged barter':
Local but extremely valuable trade was, this essay argues, made possible among many cultures by the advent of collectibles, by the time of the Upper Paleolithic. Collectibles substituted for otherwise necessary but non-existent trusting long term relationships. If there had existed a high degree of sustained interaction and trust between tribes, or individuals of different tribes, so that they gave each other unsecured credit, this would have stimulated time-lagged barter trade.
I did read the article. In fact, I read this article years ago shortly after it was published as back then I was an anarcho-capitalist, very interested in non-state solutions to money.
That's just a straightforward description of what barter is. Barter exists, it has the indicated limitations.
Szabo's argument is that collectibles predate history by tens of thousands of years, that rather than replacing some mythical bartering system, that a system of exchanged collectibles co-evolved with the entire concept of trade.
substituted for otherwise necessary but non-existent trusting long term relationships, as in, allowed them to exist in the first place, not replacing some barter-only system. Nick isn't crediting the Austrian origin mythos here, he's providing a cogent alternative to it.
What I'm seeing no evidence for, and don't expect to, is the claim that debt precedes collectible money. This is quite unlikely, as it seems to be a feature of sedentary agrarian cultures; it's difficult to picture it arising in a milieu of traveling bands of hunter-gatherers, who are mutually suspicious, often rivalrous, and may not speak the same language.
The 'double coincidence of wants' problem of barter exists. What is a myth is the assumption that any culture used barter as a primary means of exchange. Barter was used on the edges of tribes, clans, etc. between groups of people who do not share the kind of trust that exists between members of groups, who will likely live out the entirety of their lives around each other.
