the dismal science


This book, by David Graeber, is great.  Provocative, brilliant; also crankish and infuriating.

barter

Graeber is an anthropologist, and the best parts of the book are where he does anthropology. He’s devastating on what he calls the “myth of barter”. Economists love to talk about the invention of money as freeing us from the situation where Fred has arrowheads and Madge has pots, and Fred needs a pot, but they can’t trade because Madge doesn’t need arrowheads right now.

This doesn’t happen.  There was never a “barter stage”; no societies suffer from this hangup.  There’s a number of possibilities, but the basic pre-money mechanism is that Fred goes to Madge and says “That’s a handsome pot.”  Madge gives it to him.  At some later time, if she needs arrowheads, she goes and asks for some.  These may be considered tiny little debts, or they may just be considered the way social life works: people help each other out.

Once money exists, debts tend to be enumerated in units of account– but these are rarely transferred physically, and in fact the system long predates coins and even writing.  For 2500 years, Middle Eastern civilizations had markets, checks, traders, inns, interest, and debt without coinage.  Everything was done on credit.

Coins, according to Graeber, come in with large empires.  This developed out of the existing tradition that strangers are outside the credit economy.  Once you have a large standing army, you need to pay the soldiers, and they need to buy beer and horses and prostitutes.  As they’re rarely natives of the area they’re stationed in, it’s enormously useful to provide small portable bits of currency. It’s only in the last couple hundred years that this marginal coinage-based system took over the whole economy.

And then there’s debt.  As promised, Graeber gives a history of debt from ancient times, and in his telling it’s up to no good.  Debt always gets out of hand.  Ancient societies were plagued by a cycle of debt peonage: peasants would get loans; they were unable to pay the interest; they then sold off implements and furniture, then their fields, then their wives and children, and finally themselves.  Periodically, in the Middle East, kings would decree a vast cancellation of debts– all the records would be destroyed and the debt slaves would return to their restored homes.

In his telling, this process was linked to other bad things– such as slavery and misogyny.  Slavery was once limited largely to war captives, which were a limited resource; debt created a vast and increasing population who were effectively slaves.  Women in early Sumerian society were surprisingly visible and influential, and temple sex was a respected profession; the selling of wives and daughters to repay debts, and the subsequent sexual service, degraded the position of women.  And the fear of such selling-off led to the Middle Eastern focus on honor… meaning a man’s ability to protect his womenfolk, keeping them out of his creditor’s hands– and under his control.

And then there’s the moral effects.  Debt becomes a metaphor for the relationship of children to parents, or humans to gods.  We’re told to pay our debts, and yet most human cultures have despised usurers, and the first act of any peasant rebellion was to destroy the debt records.  Not infrequently kings or religious authorities took the part of the poor against their creditors, going so far as to ban interest or slavery… though these measures didn’t often last.

In the end, Graber suggests, debt– and economic theorists– blind us to how human societies really operate.  There are at least three types of human economy, which he calls communism, exchange, and hierarchy.  ‘Communism’ is the helpful, altruistic systems that underlie all human society– it’s how families work, and entire villages in many cultures, and even how corporations work internally.  Hierarchical exchanges are largely exactions by the rich and powerful, and their salient feature is precedent: a particular tax or tribute, once levied, becomes customary, which is one reason you should be wary of offering a gift to the king.  (On the other hand, it’s rare that an elite simply does nothing but take; usually it needs to attract supporters by giving things away.)

To Graeber, economists go terribly wrong in ignoring or underestimating the non-exchange portions of the world.  The whole attitude of looking at the world in terms of rational, egoistic calculation is a vast misapplication of what was originally a very narrow part of the economy– associated with debt, war, and slavery.

All of this is fascinating and eye-opening, and can be used to deepen (and darken) your view of history, or your conworld.

At the same time… well, for Graeber history is full of villains, and he’s often so busy flinging mud at them that he loses track of who’s worse and who we should be rooting for.  E.g. he talks about the rise of coinage as something of a disaster, destroying the credit economy and ultimately turning the Roman citizens into slaves.  Yet he’s already shown that debt slavery functioned with its full horribleness in pre-coinage societies, and turned the Mesopotamians into slaves.  Later he provocatively suggest that the Dark Ages weren’t so dark, as the Europeans ended slavery, resisted usury, and ended the militarism of the Roman Empire.  But the Middle Ages, as he well knows, replaced slavery with serfdom, and threw out the political and technological advances of the ancients.

The last half of the book is a breezy retelling of history which grows increasingly polemical and tedious.  A particular low point is where he talks about the Iberian traders engaging in the arms trade, the slave trade, and drug trade, and a moment later explains that the “drugs” meant coffee, tea, sugar, and tobacco.  He’s often a bracing cynic and amusing contrarian, but this is just propaganda.

The last chapter, on the world since 1971, is a weird political diatribe of the Everything Is Horrible school.  He’s mostly mad at the US, and throws everything he can at it, no matter how contradictory: the US military is overwhelming, yet is easily resisted; the national debt can’t be eliminated, except it totally could if we didn’t spend so much on the military; the US oppresses everyone economically, but it was forced to grant favorable trading terms to Europe; buying US treasury bonds is a sign of empire, except when the Chinese do it.  Or there’s a bit where the US creates “a vast apparatus of armies, prison, police” to create an atmosphere of fear and jingoistic conformity… er, sorry, Dave, but those two things are pretty much opposites; people celebrating American power are not also afraid of it.  He even inserts charts to show how things are out of control!! with the propagandist’s tool of not correcting for inflation.  Plus his frequent references to “wage slavery” only cheapen his earlier discussion of real slavery.

As an anthropologist, he’s very good at criticizing the fantasy history that economists create; it doesn’t make him an expert on economics.

He’s also an anarchist activist, and was involved with anti-globalization protests, but he’s missed the biggest story of the new century: the fact that the Third World has become far, far better off.  He keeps asserting that capitalism can’t include everyone… and yet it seems to be doing just that.

The problem with a worldview where everything is horrible is that there’s no room for progress at all, including in the future.  A contrarian can point out truthfully enough that living standards stayed the same for most people– that is, on the edge of starvation– until about 1800. But even in that period there were advances, such as the abandonment of absolute monarchy, the rise of science, and the development of a vast array of progressive philosophies.  (The thing about idealisms is that somebody eventually will take them seriously… e.g., you pass a Bill of Rights and then, a couple centuries later, courts start to make it real.)  Plus, even in Graeber’s own telling, not infrequently the authorities found it useful to cancel debts, repress usurers, or free serfs.

And after 1800, it’s hard to deny (though Graeber does his best) that the average American is better off than the average Babylonian.  Knowing more about the world helps; tamping down the claims of kings and priests is valuable; rural villages don’t seem like such paradises to the people who live in them.

Graeber likes to detail how many of our institutions arose in war, debt, and slavery.  And they did!  However, things don’t remain forever tainted because of their bad origins.  He’s fond of pointing out that governments went into debt and issued coins and taxed people largely to finance wars, and that a huge portion of US spending is still military.  But it’s now far from the majority of spending– most government spending is education, roads, social security, health insurance. and so forth.

(The problem with criticizing an Everything Is Horrible person is that some people will get the impression that I’m instead saying that Everything Is Great. It’s not, of course. I understand the impulse to think that the whole system is rotten and has to be thrown out. But sometimes our impulses aren’t so smart. Throwing the whole system out rarely goes well.)

After all that, I should emphasize that I don’t disagree with all of his cynical remarks.  He’s pretty acute, for instance, about the disaster of neoliberalism… the insistence that with every crisis, Third World governments implement “reforms” that favored First World creditors and clawed back social progress for the poor.

He doesn’t say much about what he’d like to do instead; but in his concluding section he does make a practical suggestion: cancel debts!  And he has a point.  High-debt systems generally lead to reforms that do just that; the irony is that under the current plutocratic system, rich debtors get government relief and poor debtors are screwed.  As he points out, we’re trained to say “People should pay their debts!”, and never to ask why people get so far in debt and whether we really want that to be the system we live under.

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Sometimes you have to take a step back from the daily news and look at the long term trends.  This chart, by James Plunkett, does a great job of telling what’s happening in the world today:

global-income-1988-2008

What you’re seeing is what happened over the last 20 years to each percentile of income, worldwide. The two big stories:

  • The developing world has moved ahead massively.  The old picture of the well-off First World contrasted with the miserable Second and Third is out of date.  Literally billions of people are far, far better off than they were… a lot of this is in India and China, but also places like Brazil, Turkey, Malaysia, Gabon, Botswana, Chile.
  • The middle and working classes in the US and Europe have been stiffed.  The old picture of middle class countries where everyone prospers is– in these countries— no longer true.  New wealth is still being created, but it goes only to the top 10%.

To put it another way, you can’t assume any more that we’re inexorably moving toward a future like Star Trek— where prosperity just increases so steadily and broadly that traditional economics and inequality no longer matter– everyone joins the 1960s American middle class.  Instead, we’re heading more toward Snow Crash.

The second part of the story– how the US has moved from liberalism to plutocracy– I’ve addressed in more detail before.

Edit: Alert reader Alon Levy points out that the collapse of this part of the graph is also in part due to post-Soviet decline.

The first part we hear about much less.  A good place to start is this report from the Gates Foundation, which spotlights three huge stories:

  • Global poverty is on the way out.  Extreme poverty– the dollar-a-day type– is now limited to a billion people or so, and could be entirely eliminated.  Age-old diseases are being eradicated.  Even Africa is doing much better.
  • Foreign aid works, and it works better than ever.  Aid agencies concentrate on measurable gains, and they’re no longer held back by wasteful attempts to fight the Cold War with money.
  • When prosperity goes up, overpopulation ceases to be a problem.  We’ve already passed Peak Child; the earth’s population is stabilizing.  When people don’t have to have 12 children to have two survive, and when women are empowered, they no longer have 12 children.

The good news is going to engender some resistance, but I encourage you to read the linked report, which goes into far more detail.  Often people seem to prefer to think that the world is falling apart; we don’t have a place for massive good news.  (And I haven’t even gotten into the other huge secular trends to more democracy and less war.)

But global warming!  you cry.  And I’d reply: the big hangup on addressing global warming is not world development; it’s American political stupidity.  We’re the ones who deny the problem, refuse to do anything about it, and embrace sprawl, automobiles, and oil.  It’d be nice if China did more, given its scale, but we need to lead by example.  The developing world isn’t going to take the lead on this while we continue to spew out carbon.

And, of course, there’s that growing First World inequality.  A bunch of people look at the above chart and say, well of course, what we need is to stamp on the US middle class more, and give more money to the rich.  I wish I could say I don’t understand it, but I do: they’re still living in 1979; their worldview is still full of hippies, welfare, inflation, high taxes, and US domination.  Well, it’s time to update your calendars.

I’ve been reading Bruce Trigger’s Early Civilizations, which is a comparative study of Egypt, early Mesopotamia, Shang China, the Maya, the Aztecs, the Inkas, and the Yoruba. It’s a huge book and rather dry, so unfortunately I can’t say I read it all. But for conworlding purposes I thought I’d list some of the stuff that was new to me.

It's got a great beat, and you can dance to it

Early dancers were half the size of the musicians

He finds a significant difference between city-states (Mesopotamia, Maya, Aztecs, Yoruba) and territorial states (Egypt, China, Inkas). Both were governed by kings, were hierarchical, were divided into an elite and a peasantry with little social mobility. But territorial states are likely to have fewer cities (with peasants living in villages rather than the cities), government road systems, and long-distance trade run largely by the government.

My favorite historical atlases, by Colin McEvedy, are apparently out of date on the subject of early trade. Or to be precise, McEvedy gave an accurate picture of the Egyptian state, which had a command economy; but Mesopotamia had a lively trade economy even if it didn’t have marketplaces or coinage. (The picture of early traders in my story “The multipliers” is more accurate than I thought!)

None of the civilizations really valued traders, and indeed often took steps (e.g. with sumptuary laws) to signal that they were not aristocrats. On the other hand, in some civilizations, lesser members of the aristocracy could supplement their income with trade.

The position of women in all the civilizations was lower than the men, and tended to deteriorate over time. E.g. in earlier Egypt and Shang China we see female bureaucrats (often relatives of the king), later replaced by men. Traders among the Yoruba, and innkeepers in Mesopotamia, were often women.

The idea of a straightforward practical manual on anything seems to have eluded the literate societies– what they wanted to write down was magic and rites. Even practical concerns, like metallurgy in Benin and navigation in China, were conducted with rituals and superstitions.

The Tea Party view of the world– a 1% who cannot be coddled enough, the poor who need to be treated ever more badly– is as old as dirt. The social contract was always a rotten bargain. E.g. in China, there was ‘punishment’ (xing) for the lower classes, ‘etiquette’ (li) for the gentry. It was viewed as just and natural for the elite to live off the labor of the masses– and make sure the masses had no real avenues of improvement. When ordinary coercion wasn’t enough, it was always possible to invent even more pretexts for oppressing the poor, e.g. with accusations of witchcraft. Things like the admirable road system of the Inkas were not built as social services– they were for military movements and for provisioning the elite. About the one service the poor could count on was security: times of anarchy and disunion were even worse.

At the same time, management was a very difficult problem for early states. No ruler could keep an eye on everything, and the elite was both a necessity and a threat. The elite had to be kept relatively happy, and it was the only source of people one could delegate authority to, but it also took all the independence it could get. In practice, totalitarian micromanagement was impossible– even conquered groups of people were generally left to rule themselves so long as they paid their taxes.

The book is organized by topic, so you can compare (e.g.) class organization or cosmology across all seven societies. It’s very thorough, but he doesn’t have a gift for making it vivid (as e.g. Marvin Harris or John Fairbank do).

The choice of civs is just a little odd– the Aztecs and Inka were hardly early; there were the culmination of a thousand years of development. He has some excuses for not including anything from India– I think he says we know too little about early civilization there– but if you’re going to include something as late as the Inka Empire, you could certainly include Asoka’s empire.

Matt Yglesias has a snarky column today about how the printed book is an obsolete technology whose only plus is “a nostalgia-soaked experience”.

He mentions some advantages of e-books (quick access, less bulky), but fails to think about any disadvantages.  Here’s a few:

  • Low resolution.  I read a lot on my computer, but it’s still a fraction of the resolution of print, and it’s bad for high-res graphics: comics, maps, diagrams, art books.
  • Screen size.  Not a problem for reading a novel, but a double-page spread can provide a lot of information, and it’s just not the same thing to thread that data through the small screen of an e-book reader.
  • Price.  I don’t have a Kindle because I can’t afford one.  At $199 for a color Kindle, it’s a significant loss if you lose it on a trip or drop it in the bathtub or whatever.  There’s much less sense of loss if you misplace a printed book.
  • Eyestrain.  Print is still the most comfortable way to read long texts.  (If you don’t think so, wait till you have middle-aged eyes.)
  • Reliance on dubious megacorporations and changing technology.  I’m still using books I bought 40 years ago; Random House can’t do anything to interfere with my enjoying them, plus the NSA is certainly not checking which parts of what physical books I’m reading.

Edit: Alert readers Carsten and JDHarris offered two more points:

  • It’s easy to put several books next to each other, hard (or at least very expensive) to do the same with e-readers
  • Books will never stop working mid-story because you forgot to plug them in last night
Searchability works differently for e-texts and physical books, and each has its advantages.  I’d hate to have to consult the OED in physical form: it’s way too big, and some types of searching (e.g. by language) would be impossible.  On the other hand, a book you know well, as a physical object, affords quick access you can hardly even define for an e-book.  You can flip immediately to a dog-eared page.  You know that a certain passage is this far into the book, top of the left-hand page.  You can make marks on the edges to point to often-consulted pages, and make notes in the margins which themselves become searchable by riffing the pages.

Plus, I’d say a bunch of people agree with me, because my print sales are pretty healthy.  For the LCK, this year, my sales are 57% print; for APAF, 42%.  Given that the print book is twice as expensive, I’d say that indicates that people still find the format valuable.  It’s probably significant that for the novel, the majority prefers the Kindle: genre books are a good match for e-books.

Yglesias is no doubt correct that print books are not likely to be a growth industry.  But print is far from disappearing, and people are going to continue to make money off it.  Especially that Jeff Bezos fellow.

I like almost anything by William Poundstone, so I pounced on his latest, Priceless.  It’s about prices.

It’s a bit miscellaneous… Poundstone wants to tell you about psychophysics and pricing consultants and even takes a foray into feminism.  But the overall theme is the irrationality of humans about money, something that’s come as a challenge to some modern overvaluations of The Market.

More precisely, it’s not that humans are irrational; it’s that they’re not rational in the way economists want them to be.

The main myth is that there is such a thing as a single price for an item… even for a single consumer.  It starts with the fact that all our senses and valuations are relative, not absolute.  That is, we have senses of how things compare, but very little good sense of the absolute value of things.

One neat bit: anchoring.  For instance, here’s a number: 56.  Now here’s a question: what’s a fair value for a dinner for two?

You are convinced, of course, that you answered the question without even thinking of the number I named.  Which indeed has nothing to do with dinners for two– I wrote it down before even coming up with the question!  But if we were doing this experiment for real, the results would be that people are influenced by the number; the answer they provide will be skewed in its direction.  It’s an anchor– somehow it affects the next calculation.  It works even if the subjects are told to ignore it.

These days, people happily use anchors in negotiations and in everyday pricing.  One of the simplest techniques is for your store to offer products at three price levels.  People tend to dismiss the lowest level as too cheap, probably shoddy, and the highest as overpriced.  They select the middle one.  But you can set the high and low ends almost arbitrarily.  The very same product, for instance, might be a medium choice at an ordinary supermarket and a low end choice at Whole Foods.

High end stores will have an item on display whose price is absurd.  But it serves as an anchor, making the real high-end items seem like a relative bargain.

Other pricing games show that people are not terribly good at quickly evaluating complex odds.  For instance, which of these offers is better?

  • a 10 in 12 chance of winning $9, otherwise you lose $3
  • a 3 in 12 chance of winning $91, otherwise you lose $21

If you calculated the average payoff, great.  Most people don’t apply the economist’s algorithm, though.  They evaluate whether something seems like a sure thing (and they are none too good at judging rare odds), and they are much more averse to losing what they have than to chances of winning new things.

Then there’s the ultimatum game, which drives economists crazy.  It’s simple: get a bunch of subjects, in pairs.  Each is offered $10.  Person A gets to divide the $10 any way they like, and person B can either accept or reject the division.  If they accept, the money is divided that way.  If they reject it, no one gets any money.

The economist’s reasoning: Person B should accept any offer, including $10 to $0.  After all, even if they’re offered only a pittance, it’s free money.

What actually happens: Most people offer a $6 to $4 split, which is usually accepted.  Person B may or may not accept a $7 to $3 offer.  They almost always reject anything more biased toward person A.

As noted, this experiment just bugs economists, and they’ve repeated it over and over.  (One of the forays into feminism: if person B is a woman, she’ll get slightly lower offers.  This is true even if person A is female.)

I don’t think it’s that shocking, myself.  People hate unfairness, and they don’t like it even within a game.  (The experimenters should probably just join a public gaming server for awhile, if they really think that the artificiality of games, the fact that no money is changing hands, suspends judgments of fairness.)  As social animals, we need to be extremely conscious of unfairness.  We didn’t evolve to be homo economicus, and if we had, we probably wouldn’t have developed an elaborate civilization.

Curiously, results from the ultimatum game differ across cultures.  Wherever there are markets and cooperative projects– which is to say, in most cultures– selfishness is punished.  Among the Machiguenga, who have neither, offers were consistently lowballed, and accepted.  The Ache hunter-gatherers, whose hunting superstars generously share their catches, would offer person B more than half.  So did the Au, of Papua New Guinea, but in that case, person B would reject the deal.  Among the Au, generous offers impose a debt, and people don’t always want to take on that obligation.

Anyway, fun book, lots more stuff like this.  As mentioned, though, it covers a lot of ground and not all of it may stick with you.

In your recent post, you noted that the (first) world is moving to a frivolity/art economy. What will that mean for employment? After all, robots are making our cars and, increasingly, our burgers— and, like it or not, those are jobs that in the past were filled by regular people whose natural talents were in menial work. Not everybody has the talent or desire to spend their time writing novels or direct avant-garde movies…and that’s OK; people shouldn’t be cut out of an economy because of their natural skill set. What will that mean for employment or the economy? It seems unrealistic to give everybody a $30k/year minimum income, for example, as I’ve seen suggested; that seems fiscally undoable.

—dhok

There’s a grim meathook future answer and a nice answer, depending on whether we follow our current plutocratic path or not.

But first I’d just note that your question seems rather regressive.  It’s like Aldous Huxley assuming that the future must include a huge population of subhuman menials.  Dumb repetitive work is what machines do very well; those jobs just disappear.

The grim meathook answer is what’s happening today: lots of low-paid service work— call center employees, Wal-Mart greeters, nannies, waiters, nursing home attendants, home sales party presenters, bodyguards, flight attendants, SEO farm writers.  What humans do better than robots, for the indefinite future, is deal with other humans.  We need and value human contact, and anyway most of these jobs, even if they’re not exciting, require a generalist.  Humans deal well with the moderately unexpected.

Or to put it another way, automation targets expensive, repetitive jobs.  When you get rid of the $40/hour factory jobs, you have a large population that is forced to take $10/hour service jobs.  Even for Mr. Scrooge it’s not worth bothering to replace those jobs.

In the more optimistic future, we use the increased productivity that automation brings to improve everyone‘s life.  That’s what even the curmudgeonly old USA did in the liberal era, so it’s not unthinkable.  Poverty used to be universal; in mid-century America the vast majority were middle class; an even richer society could, if it chose, eliminate poverty entirely.  (That “we’ll always have poverty” is a myth to comfort the 1%.  We could end absolute poverty globally for a surprisingly small sum.)

I don’t think anyone has ambitions limited to factory work or bagging groceries.  Everyone has some dream that they’d love to be paid to do. In our economic system, maybe it’s too silly or specialized to pay well, but a world where the robots do all the heavy lifting is one where everyone can be a specialist or a frivolist.

But even in the more ideal world, it remains true that humans are better at making other humans happy.  When you’re 94, you probably don’t want to be surrounded only by robots.  So ‘elder care’ is still a human niche, but it’s seen as valuable rather than degrading and paid enough to make it attractive.

The SEO writer may not exist in the happier future, but only because he’ll be doing something far weirder.  In the Incatena, rather than a thousand different jobs with a million people in each— a situation that may be automatable— there’s a million different jobs with a a thousand people in each.

In general we’ve moved from an agricultural economy to manufacturing, then to a services industry.  What’s next?  Probably a frivolity economy.

Candy_LargeWide

I think this bothers some people.  A standard complaint about capitalism is that it devotes enormous energy to producing things we don’t need and shouldn’t want.  Many thinkers, left and right, seem to think we should just produce the bare necessities– or at least, avoid obvious excesses, like plastic surgery and bondage gear.

My contention is that what capitalism is good at is producing things people want, whether or not either anarchist professors or austerian central bankers approve of them– and that it should produce those things.  In fact, if it didn’t, the economy would collapse.  In the far future, I expect human activity to be little but frivolity.

Continued on Research Access

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