The relationship between markets and government coercion may be felt most keenly when it comes to the institution of debt. Graeber points out the inextricable historical link between debt, violence, and enslavement. In eighth-century Germanic law, the concept of wergild replaced the older, biblical idea of “an eye for an eye.” Wergild translates as “man” (wer, as in werewolf) plus “gold” (gild). Wergild was the substitution of a fixed sum of money or some other substance of value to compensate for a death, whether murder or accidental. On one hand, the payment of blood money was a moral advance because it stopped a cycle of violence. On the other hand, it was a step down the path of reducing a human life to a sum of money and an exchange delineated and enforced by courts and governments. Besides blood debts, some of the earliest debts were also calculated as terms of indentured servitude. And everywhere and always debt has tended to be wielded by the rich and powerful over the poor and powerless, from the “company store” at a mining camp on America’s frontier, to the payday lending and pawnshops that fill low-income neighborhoods today, to the massive debts imposed as “aid” on the world’s poorest countries by the International Monetary Fund.
It’s no coincidence that the enormous increase in debt, the most coercive and oppressive of market institutions, caused the recent financial crisis. The amount of consumer debt doubled between 1997 and 2007. For those who wanted to participate in the so-called American dream—a house, a car, a college education for one’s children, and an ever-increasing array of material comforts—the ubiquitous result was a pile of student loan, credit card, and mortgage debt. This house of cards collapsed when people who had higher and higher debt and flat incomes could no longer keep up the payments.
Indebted people tend to be submissive and restricted in their choices, not strong and free citizens. Soon after the 2008 financial crisis, Graeber wrote: “What is debt, after all, but imaginary money whose value can only be realized in the future: future profits, the proceeds of the exploitation of workers not yet born. Finance capital in turn is the buying and selling of these imaginary future profits.… Freedom has become the right to share in the proceeds of one’s own permanent enslavement.” But I believe freedom is not so fragile or limited as all that. The state, like the market, is nothing more than a human creation. And as human creations, they ought to be within our collective power to transform. The bursting of the debt bubble has provided a once-in-a-lifetime opening to begin.
Consider the ongoing interventions by the Federal Reserve and the Treasury Department to keep interest rates low and try to encourage recovery. By what mechanism is the U.S. government able to set interest rates and control the money supply? Because it issues Treasury bonds backed with the “full faith and credit” of the U.S. government. What backs that full faith and credit? To put it another way, why do buyers of Treasury bonds believe that they’ll get their money back within ten, twenty, or fifty years? Because of the long-term social stability of our nation, as partially guaranteed by our powerful military. And who’s to say that our military will remain powerful and our nation stable? To the extent that we do believe it, this is ensured in turn by the continuing faithful contributions of the U.S. taxpayer—generations of average people working for a living and cooperating with their obligations. Our time, the connections holding together the American community—it is not an exaggeration to say our love—is what ultimately backs up the greenback.
Over the long term, human relationships ultimately control the market, and over the short term, human emotions do the same thing. In early 2009, a college friend of mine was in town for business, so we invited her to stop by for dinner. She revealed that since I had last seen her almost a year ago, she had gone from doing international aid work in Afghanistan to working as the special assistant to Treasury Secretary Tim Geithner. She told us that as she sat in meetings with the Nobel Prize winners and the financial mandarins, the foremost factor in the minds of the elite group managing America’s way out of the financial crisis is nothing less than the esoteric phenomenon of collective consciousness. “The most important thing is to avoid a market panic,” she said. “It’s all about the state of people’s minds—captured in phrases like ‘consumer confidence.’ ”
So, even in the world’s most developed and sophisticated market economy, it is ultimately human emotions and relationships that hold sway, not some abstract coercive power of the state. Markets exist because of people, not the other way around; the economy exists to fulfill human needs and serve human desires. This may be a truism, but we don’t act as if we really believe it. When we put the sanctity of the “free market” ahead of human freedom and social relations, as we can see everywhere we look, we’re falling prey to a fallacy. The same failing happens in our personal lives when we act more directly and more often as consumers or producers than as citizens and family members, or when like the woman on the dating “market,” we submit ourselves and others to commodification.
So now that the abject and pathetic nature of the commodification fallacy has been conclusively demonstrated, it is up to us as the participants in, fools of, and creators of this ongoing illusion to carefully examine our words and our actions for signs of error, to try to make whole what has been broken, and to embark on a new way of living.
Here are three contemporary models for how to do that:
In Judaism, this process is prescribed annually and is called teshuvah—translated as repentance, it literally means return, as to a native state of wholeness and holiness.
In the addiction recovery movement, four of the famous twelve steps consist in performing a “searching and fearless moral inventory” and in making amends to those we have wronged.
And for nations that have undergone a severe collective trauma such as civil war, apartheid, or genocide, a truth and reconciliation commission attempts to accomplish a similar task by drawing testimony from the oppressors and the oppressed.
What would truth, reconciliation, repentance, and amends look like for the market system? First of all, it is incumbent upon each of us to look within our own words and actions. I can’t blame an outside force such as “the corporations” or “the bankers” when I act greedy or when I objectify another human being with a glance or a word. We have to hold each other and ourselves accountable.
Second, it is appropriate for us all to engage in mourning and symbolic expressions of regret for the degree to which we have allowed the market to usurp our humanity. The Homo economicus model of human behavior is false and limited. Whether we are working, borrowing, buying, or selling, we are also thinking, breathing, loving, and hating. When we do things just for the money, we feel sick and greedy and fake because we are contributing to the oppressive ubiquity of the market.
Finally, now that we have been forced to recognize that the economy is a human creation, we should be re-empowered and freed to imagine an alternative to the oppression of market fundamentalism—to remake a system that serves humanity.
To do so, we could look outside mainstream Western culture at the way other societies and subcultures are organized. In Toward an Anthropological Theory of Value, Graeber writes, “In most societies, [market] institutions did not exist.… one has to … examine the actual process through which the society provides itself with food, shelter, and other material goods, bearing in mind that this process is entirely embedded in society and not a sphere of activity that can be distinguished from, say, politics, kinship, or religion.”
A famous example of a society without a market is the potlatch cultures of the Native Americans of the Pacific Northwest. To simplify, say there are two clans. One fishes on the seashore and one hunts inland. When the fish are running, the first clan catches more than it can eat, and feasts the second. When the buffalo are running, the second clan returns the favor. In this way, both clans eat year-round, strengthen their social ties, celebrate, worship, and make peace. Redistribution of resources happens across time and across social hierarchies as well. For chieftains, skil
led hunters, and anyone who manages to accumulate excess, the best way to raise their social standing in a potlatch society is to share their wealth and display generosity. This way, everyone shares and everyone eats without the need for a formal market or redistributive taxation.
If you need a less exoticized example of an alternative economy than a Native American tribe, consider the “reputation economies” of the internet. Wikipedia, YouTube, and open-source software projects like Mozilla are valuable common resources. The platform—servers for storage and networks for transmission—must be subsidized by advertising or donations. But the highly valuable content is created, sustained, and used by people for free. Why do we do it? The phrase “reputation economy” suggests that we do it to raise our social standing, but really it’s more than that. I do it and I think other people do too because it feels good to create, to connect, to make the world a better place, and to be recognized for doing so.
So to make amends in the wake of the financial crisis, the path is toward healing the separation between our “economics” and our politics, our morality, our friendships, our earth, our family, and our spirituality. Rather than attempt to destroy or abolish the formal market, we can enrich it by bringing more of ourselves to it. We can think in terms of creating alternative forms of exchange and integrating our other human values along with economic value—putting our money where our heart is. For example, you can look for work that expresses your creativity or makes the world a better place. Even if our jobs are less than ideal, most people can still find opportunities to express their highest values at work like honesty, integrity, and kindness. You can consume mindfully—buy well-crafted, meaningful objects that connect you to other people, to the earth, and to your local community. You can reduce your consumption in order to avoid the perpetuation of enslavement in the form of debt. You can invest your money in socially responsible businesses and projects that help society. You can attempt to fulfill more of your material needs outside the formal market and thus reduce its impact on your life by salvaging, thrifting, creating, swapping, or otherwise reducing waste, improving creativity, and strengthening social ties. Like the potlatch societies, you can practice giving away money, goods, and time to those more needy, in order to demonstrate and manifest abundance.
And, we all can take political action to transform some of the government rules of the market game. The current world recession won’t lift by resuming the path of endless growth and mounting debt. A profound global reorganization has to take place so that we put a fair value on the natural resources that underlie our unprecedented prosperity. The leap toward a sustainable economy will be realized when each of us wakes up to the reality that you are the economy, and the economy is you.
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THE ARITHMETIC OF COMPASSION
DAVID ULANSEY
Ever since I was a child, I have been searching for a certain number: namely, the figure for the annual Gross World Product (GWP). The GWP is the value of all goods and services produced each year by the entire human species, and the reason I was searching for this number as a child is that I wanted to take it and divide it by the number of people in the world, so that I would know what each human being was actually entitled to if the world’s resources were divided fairly and equitably.
I finally ran into this number recently, and I have now performed the simple arithmetic of compassion. It turns out that the Gross World Product is now roughly $70 trillion. It is important to note that this figure of $70 trillion—arrived at independently by the World Bank, the International Monetary Fund, and the CIA—has been adjusted in advance to take into account what is called “purchasing power parity” (PPP): which means that the figure is 70 trillion units, each unit of which (sometimes called an “international dollar”) represents what one U.S. dollar will currently buy in the United States. (The PPP adjustment eliminates from the very start any strategies of denial such as, “Oh, that doesn’t mean anything—you can live like a king in India for $5,000 a year.” No. Wrong. You can’t live like a king on what 5,000 U.S. dollars will currently buy in the United States.)1
Now to the arithmetic of compassion:
Since the GWP is roughly 70 trillion U.S. dollars, if we divide that figure by the number of people in the world—approximately 7 billion—we get a rough estimate of the maximum annual income that anyone in the world is morally entitled to (assuming that it is moral to strive for an equitable distribution of the world’s resources to all of humanity).
So, dividing $70 trillion by 7 billion we get about $10,000 per year (again, that’s already adjusted for purchasing power parity: it’s 10,000 units, each unit of which is what one U.S. dollar will currently buy in the United States). That’s what each of us is actually entitled to—$10,000 a year—and any more than that represents institutionalized and socially sanctioned armed robbery: indeed, every additional increment of $10,000 (beyond the maximum moral income of $10,000 a year) represents one slave somewhere in the world whose entire life, birth to death, is completely devoted to getting us our “stuff.”
And unfortunately we can’t “grow” our way beyond this $10,000 a year figure, since at the current level of $70 trillion GWP we have already overshot by 50 percent what the earth actually produces.2 That is, it now requires one year and six months for the earth to replenish what humans consume in a year. This unsustainable 50 percent “overshoot,” in which we are temporarily consuming 150 percent of what the earth produces, is only possible because we are metaphorically “liquidating” the earth—i.e., spending its capital rather than living on its interest.
The fact that the human species is already in 50 percent overshoot means that not only can we not “grow” our way beyond the $10,000 maximum moral income level, we actually need to shrink that by one-third (50 percent is one-third of 150 percent)—down to below $7,000—just to come back to a level where humanity is merely using 100 percent of everything the earth produces (rather than using 150 percent of what the earth produces, as we are very temporarily doing). This is especially the case since the world population is due to increase by almost 50 percent—to more than nine billion people—by 2050.
Of course a $7,000 a year income may sound rather frightening to those of us who have become accustomed to the “American standard of living.”
However, to place this figure in its proper perspective, it is helpful to keep in mind that according to the World Bank, at this very moment almost half of the people in the world (3 billion people) live on less than $2.50 (PPP) a day—$912 a year—and a quarter of the world’s population (1.4 billion people) live below the official world poverty level of $1.25 a day—$456 a year.3
In fact, in 2005 the World Bank chief economist Nicholas Stern estimated that on average each European cow receives $2.50 a day in government livestock and dairy subsidies, while 75 percent of African people live on less than $2 a day.4
So although $7,000 a year may sound disturbing to us, for the majority of the people in the world it would literally constitute wealth beyond their wildest dreams.
Finally, it is crucial to realize that $7,000 a year per person is actually still far too high to be sustainable, even if there were no population growth ahead at all. This is because at the level of $7,000 a year per person for 7 billion people, we would still be consuming 100 percent of what the earth can produce, and would thus be doing absolutely nothing to prevent the two greatest threats facing us in our own lifetimes: (1) a mass extinction of the earth’s biodiversity resulting from habitat destruction, pollution, invasive species, and overharvesting, and (2) catastrophic climate change that could render the earth uninhabitable for much of higher life including our own species.
The solution is clear: we must immediately and drastically reduce our levels of consumption. Something like $5,000 a year per person (PPP) is probably in the right ballpark for what is ecologically possible and morally justifiable. Again, that may be difficult for many of us to hear, but remember that $5,000 a year is more than five ti
mes the amount that half of the people in the world live on (or below) at this very moment ($2.50 a day = $912 a year). In fact, according to the World Bank, 95 percent of all people in developing countries, which means almost 80 percent of all human beings, are living at this very moment on less than $10 a day—which, of course, is well below $5,000 a year.5
Of course then the question is: how can we in the “developed” world accomplish such a reduction? One common answer to this question—namely, “It’s impossible!”—is obviously absurd, since right now 80 percent of the people in the world are living below the necessary level of reduction. Whenever I find that answer spontaneously rearing its ugly head in my own imagination, I like to remind myself that Eskimos live in houses made of ice, but their lives are filled with just as much love and beauty, and their children laugh and play with just as much joy—perhaps more!—as our own.
Beyond all its other characteristics, Homo sapiens is a species capable of extreme adaptability. The time has at last arrived for us to become actual human beings, and to allow compassion—and celebration—to guide us into a radically new world: a world where we experience “quality of life” for ourselves as being indistinguishable from “equality of life” for all.
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PROGRAM YOUR OWN MONEY
What Comes After Money Page 4