the roots of power

Three really insightful paragraphs from the classic 1977 book, Poor People's Movements:

Common sense and historical experience combine to suggest a simple but compelling view of the roots of power in any society.  Crudely but clearly stated, those who control the means of physical coercion, and those who control the means of producing wealth, have power over those who do not.  This much is true whether the means of coercion consists in the primitive force of a warrior caste or the technological force of a modern army.  And it is true whether the control of production consists in control by priests of the mysteries of the calendar on which agriculture depends, or control by financiers of the large-scale capital on which industrial production depends. Since coercive force can be used to gain control of the means of producing wealth, and since control of wealth can be used to gain coercive force, those two sources of power tend over time to be drawn together within one ruling class.

Common sense and historical experience also combine to suggest that these sources of power are protected and enlarged by the use of that power not only to control the actions of men and women, but also to control their beliefs.  What some call superstructure, and what others call culture, includes an elaborate system of beliefs and ritual behaviors which defines for people what is right and what is wrong and why; what is possible and what is impossible; and the behavioral imperatives that follow from these beliefs.  Because this superstructure of beliefs and rituals is evolved in the context of unequal power, it is inevitable that beliefs and rituals reinforce inequality, by rendering the powerful divine and the challengers evil.  Thus the class struggles that might otherwise be inevitable in sharply unequal societies ordinarily do not seem either possible or right from the perspective of those who live within the structure of belief and ritual fashioned by those societies.  People whose only possible recourse in struggle is to defy the beliefs and rituals laid down by their rulers ordinarily do not.

What common sense and historical experience suggest has been true of many society is no less true of modern capitalist societies, the United States among them.  Power is rooted in the control of coercive force and in the control of the means of production.  However, in capitalist societies this reality is not legitimated by rendering the powerful divine, but by obscuring their existence....

--Frances Fox Piven and Richard A. Cloward, Poor People's Movements: Why They Success, How they Fail, p. 1-2.

For more on the way that culture normalizes and obscures the true workings of society, please see my earlier posts on Freire. For a very different look at the role of culture and what it can mean to suddenly see and understand the culture all around us, check out this brilliant speech by the late novelist David Foster Wallace titled, This is Water.

The role of fractional reserve banking in propelling the growth of capitalism in Protestant countries

Friends who know me know that I'm a huge fan of Max Weber's The Protestant Ethic and the Spirit of Capitalism. I discuss this book so often in person that I was surprised the other day when I did a search of my blog and discovered that I've never gone into much depth about the book here on the site. So today I want to rap down the basic thesis of The Protestant Ethic & The Spirit of Capitalism and then expand upon Weber's theory using data from Niall Ferguson's The Ascent of Money. (There is an excellent Wikipedia article on The Protestant Ethic & the Spirit of Capitalism for anyone who is looking for a more complete overview of the book.)

First published as a two-part article in 1904-5, The Protestant Ethic and the Spirit of Capitalism is one of the cornerstones of the field of sociology. In the book, Weber is trying to figure out why it is that capitalism developed faster in countries that adopted Protestantism while the development of capitalism in Catholic and other non-Protestant countries lagged behind. And what he finds is this:

The central question for a Christian is whether he/she is going to heaven. In Catholicism, for hundreds of years, the path to heaven was very clear -- pay "indulgences" to the church, and your sins are forgiven and when you die, you go to heaven. Indulgences were basically a way for the Catholic Church to tax all of Europe for hundreds of years. But Martin Luther and John Calvin hated the practice of indulgences (and many feudal princes in Germany and other provinces hated them too). Luther and then Calvin argued that God is so great, no human works could possibly be enough to earn his (sic) favor. Rather, everything is predestined, determined ahead of time by God. They argued that those who go to heaven are saved through God's grace alone, not human works (read: indulgences).

Which is fine as far as that goes, but people naturally want to know if they are one of the chosen, one of the elect who will be going to heaven. Weber writes:

"The question, Am I one of the elect? must sooner or later have arisen for every believer and have forced all other interests into the background." --The Protestant Ethic & The Spirit of Capitalism, p. 110.

This was no small matter either. Luther argued that only 144,000 people were going to heaven, so there were a limited number of seats on the bus, so to speak. So people started to look around for signs that one is "chosen." And what are the signs? Well according to Luther and Calvin, the chosen are those who dedicate their lives to creating God's will on earth. So the signs are that one works without ceasing -- and here's the kicker -- and one never spends much on the sins of the flesh. Luther and Calvin hated the sensuality of Catholicism, that peasants could get drunk, dance, and have sex with each other on Saturday and then pay their indulgences on Sunday and be forgiven. The mark of Protestantism became those who so ordered their lives so that they NEVER gave in to the sins of the flesh and never spent their earnings on bodily desires. Hence the Protestant Ethic was born.

"On the one hand it is held to be an absolute duty to consider oneself chosen, and to combat all doubts as temptations of the devil, since lack of self-confidence is the result of insufficient faith, hence of imperfect grace... On the other hand, in order to attain that self-confidence intense worldly activity is recommended as the most suitable means." --The Protestant Ethic and the Spirit of Capitalism, p. 111 and 112

"The God of Calvinism demanded of his believers not single good works, but a life of good works combined into a unified system. There was no place for the very human Catholic cycle of sin, repentance, atonement, release, followed by renewed sin.... [Protestantism] had developed a systematic method of rational conduct with the purpose of overcoming the status naturae, to free man from the power of irrational impulses and his dependence on the world and on nature." p. 117 - 118

"Sebastian Franck struck the central characteristic of this type of religion when he saw the significance of the Reformation in the fact that now every Christian had to be a monk all his life.... By founding its ethic in the doctrine of predestination, Protestantism substituted for the spiritual aristocracy of monks outside of and above the world the spiritual aristocracy of the predestined saints of God within the world." p. 121

Just to be clear, the relentless work ethic of Protestants was not a means to attain salvation but rather a system of self assurance (a method of existential anxiety control if you will) that simply affirmed one had already attained salvation through grace.

But something curious happens when people work extremely hard and rarely spend money. For the first time in human history you have large accumulations of capital. And large accumulation of capital naturally lead to banks (places to store that capital), which then provides the catalyst (and the capital) for the emergence of capitalism in all of the Protestant nations.

The explanatory powers of the theory are so strong that indeed, a whole academic discipline, sociology, emerged in its wake. And the writing in The Protestant Ethic and the Spirit of Capitalism is both so direct and searing that it has endured as one of the great academic treatises of all time.

And yet, as great as The Protestant Ethic and the Spirit of Capitalism is, I wonder if there are some additional factors that also help to explain the rise of capitalism in Protestant countries.

In an earlier post, I asked whether in fact, slavery, not Protestantism, was the catalyst for the emergence of capitalism? Indeed Eric Williams makes that point in his book Capitalism & Slavery and Eduardo Galeano builds upon that idea in, Open Veins of Latin America.

But I don't think it's an either/or situation. I think it's a both/and. Protestantism led to the accumulation of capital that developed the bourgeois class that accumulated even more capital that paid for the ships that participated in and profited from the African slave trade that further fueled the growth of capitalism.

After reading The Ascent of Money, I think I may have stumbled upon another important facet of the story: fractional reserve banking. I'll explain:

The early Christian Church and Islam too forbade the lending of money and charging interest. It was called usury and was considered one of the worst possible sins.

"For Christians, lending money at interest was a sin. Usurers, people who lent money at interest, had been excommunicated by the Third Lateran Council in 1179. Even arguing that usury was not a sin had been condemned as heresy by the Council of Vienna in 1311-12. Christian usurers had to make restitution to the Church before they could be buried on hallowed ground." --The Ascent of Money, p. 35

The earliest forms of modern banking began in Italy with the emergence of the powerful Medici family serving as an intermediary between various businesses.

"Of particular importance in the Medici's early business were the bills of exchange (cambium per literas) that had developed in the course of the Middle Ages as a way of financing trade. If one merchant owned another sum that could not be paid in cash until the conclusion of a transaction some months hence, the creditor could draw a bill on the debtor and use the bill as a means of payment in its own right or obtain cash for it at a discount from a banker willing to act as broker. Whereas the charging of interest was condemned as usury by the Church, there was nothing to prevent a shrewd trader making profits on such transactions. That was the essence of the Medici business. There were no checks; instructions were given orally and written in the bank's books. There was no interest; depositors were given discrezione (in proportion to the annual profits of the firm) to compensate them for risking their money. " --The Ascent of Money, p. 43-44

But it wasn't until the Reformation that modern banking and the modern capitalist system really took off. And Martin Luther and John Calvin were key in revising church teachings on lending with interest.

"From 1515 until early 1524, Luther's works indicate that he was completely opposed to lending money at interest. In the second time period, from late 1524 until his death in 1546, while still principally against usury -- especially among Christians -- Luther's writings indicate that he allowed for the practice of lending money at interest, albeit with certain restrictions." --Reforming the Morality of Usury: A Study of the Differences that Separated the Protestant Reformers, David Jones p. 52

In 1524, just 4 years after surviving the Diet of Worms and excommunication (but not execution) by the Catholic Church, Luther displayed a notable shift in his writing on usury:

"Luther's writings reveal that he tolerated and even suggested guidelines whereby usury may be practiced in the kingdom of this world. These guidelines include a call for itemized collateral, shared risk, and governmental oversight of usurious transactions." -- Reforming the Morality of Usury: A Study of the Differences that Separated the Protestant Reformers, p. 61

So too, Calvin's views on usury also represented a break from earlier church teachings. In Calvin's letter on usury in 1545 he makes a biblical case that usury might be permitted under certain circumstances:

"Calvin knew there were two Hebrew words translated as “usury.” One, neshek, meant “to bite”; the other, tarbit, meant “to take legitimate increase.” Based on these distinctions, Calvin argued that only “biting” loans were forbidden. Thus, one could lend at interest to business people who would make a profit using the money." -- Norman Jones, Utah State University

As a result of these theological shifts, the modern banking system began to emerge in Protestant countries in Europe.

"It was in Amsterdam, London and Stockholm [all cities that broke from Catholicism during the Reformation] that the next decisive wave of financial innovation occurred, as the forerunners of modern central banks made their first appearance. The seventeenth century saw the foundation of three distinctly novel institutions that, in their different ways, were intended to serve a public as well as a private financial function. The Amsterdam Exchange Bank (Wisselbank) was set up in 1609 to resolve the practical problems created for merchants by the circulation of multiple currencies in the United Provinces, where there were no fewer than fourteen different mints and copious quantities of foreign coins. By allowing merchants to set up accounts denominated in a standardized currency, the Exchange Bank pioneered the system of checks and direct debits or transfer that we take for granted today. This allowed more and more commercial transactions to take place without the need for the sums involved to materialize in actual coins. One merchant could make a payment to another simply by arranging for his account at the bank to be debited and the counterparty's account to be credited. The limitation on this system was simply that the Exchange Bank maintained something close to a 100 percent ratio between its deposits and its reserves of precious metal and coin....

It was in Stockholm nearly half a century later, with the foundation of the Swedish Riksbank in 1656, that the barrier was broken through. Although it performed the same functions as the Dutch Wisselbank, the Riksbank was also designed to be a Lanebank, meaning that it engaged in lending as well as facilitating commercial payments. By lending amounts in excess of its metallic reserve, it may be said to have pioneered the practice of what would later be known as fractional reserve banking, exploiting the fact that money left on deposit could profitably be lent out to borrowers. Since depositors were highly unlikely to ask en masse for their money, only a fraction of their money need to be kept in the Riksbank's reserves at any given time." --The Ascent of Money, p. 48-49

Think about how important fractional reserve banking is to the history of the world. I deposit $100 in a bank that is required to hold 10% reserves. The bank then lends out $90 to a business that spends that $90 on equipment to run their business and make a profit. The seller of that equipment deposits that $90 in a bank that then lends out $81 and so on. In just 3 transactions, the original $100 has been turned into $271 of economic activity.

Basically, while the Catholic countries (Spain, Portugal, Italy) were still thinking that money was metal and building far flung empires to dig the metal ore out of the ground, the Protestant countries of Europe figured out how to make money out of nothing more than trust. And in the end, money based on credit (trust in business relationships) proved to be more resilient than money based on metal. How crazy is that!?

The important point to note here is that, it was not just the Protestant ethic that led to (capital formation which caused) the emergence of modern capitalism. It was also the theological openings by Luther and Calvin to allow usury, to allow lending with interest that sparked the emergence of capitalism in Reformed countries as well. Free from the dictates of the Vatican, the Protestant countries quickly liberalized lending rules in ways that reshaped the balance of power in the world and gave birth to our modern capitalist economy.

Final thought: it's interesting to reflect on how different church doctrines lead to different lending patterns in the economy. Basically, the Catholic ban on usury led to the rise of mafia-style families like the Medici -- informal financial intermediaries who don't charge interest but take a cut of each transaction. By contract, Protestant support for usury can be said to lead to the development of the multinational banks. They both have their problems of course, but it's fascinating to reflect on the role of theology in dictating the direction of the economy.

Update #1: A number of researchers have noted that the ban on charging interest in Islam has impeded the economic growth of the Middle East, leading in part to the millions of young men with limited financial futures (who are then a target for recruitment by radical Islamic organizations). Also I think it's interesting to note that religions that tend to de-emphasize the importance of the physical world and give priority to the spiritual or invisible world, for example Buddhism and Hinduism, both lead to economic structures that are a complete disaster -- basically leaving the society stuck with a stone age economy. Western liberal support for Tibet is always something of a mystery to me given that Tibet was a theocracy with a population left destitute by a theology that paid little attention to the need to improve living standards. The Indian economy has shown remarkable growth in recent years but I would argue that Hinduism is not driving that growth -- rather as the country has become more secular, it has devoted more resources towards economic development (investing heavily in education and infrastructure).

2 radical questions

Following up on my last post... two of the most radical questions that one can ask another person are:

How are you? (pause)
What do you think? (pause)

When I say, "how are you?" I don't mean the casual NY, "howyadoin'?" Nor do I mean the casual Californian, "Hey, how's is going!?" Those are both rhetorical questions that are not soliciting answers.

The radical act in conversation is to ask "How are you?" and really mean it -- closing one's lips after the question, sitting in silence listening for the reply, signaling clearly that the other person can fill that space however they want. It takes some getting used to. At first, people will brush it off with, 'fine, fine,' and try to move on. But if you persist, "no really, how are you?" radically transformative things can happen.

"What do you think? (pause)" is similar. It acknowledges the other person's agency and subjectivity in the world. It instantly confirms that there are an infinite number of ways of seeing things. It begins a conversation of two people coming to understand each other's worldviews. Some people, particularly poor people or people in oppressive situations can sometime go their entire lifetimes without ever being asked, "What do you think?" Asking, "What do you think?" and pausing for as long as it takes for the other person to realize that the floor really is theirs to do with as they please, is a radical and transforming act.

I traveled in Central America during college on a trip led by a couple of sociology professors. "How are you? (pause)" and "What do you think? (pause)" were two of the tools they relied on in their research and in their teaching. At first I was disappointed that these two professors did not already have all the answers. But as I watched students and indigenous people bloom and come alive when asked these two questions (always with the complete pause at the end) I came to see what a radical act it was. I started using it everywhere -- with taxi cab drivers, hotel housekeepers, host mothers, children, and soldiers. And the world opened in ways I've never experienced before. The crazy thing is, there is always an answer after the question that is more remarkable than anything we could ever guess.

mutuality

This is less of a post and more of a plea. And it goes something like this:

How do relationships end? I'm talking about all relationships -- romantic relationships, work relationships, friendships, family relationships -- heck even international relationships between countries. How do they end? It seems to me that most of the time they end when one or both people conclude that the other person has so clearly violated the common sense norms by which we all operate, that he/she must be exiled. And apparently, the best means of exile in our current culture is to stop communicating and walk away.*

But here's the thing, as I touched on in an earlier post, there is no such thing as the one common sense set of rules for anything. We are all walking around with really complex sets of rules in our heads about how things obviously should be -- and no one else is walking around with that same set of rules.

So then the only way that we can ever come to any sort of lasting relationship with another is through extensive on-going dialogue about our respective sets of rules. What are my rules? What are your rules? Where did they come from? What end do they serve?

That conversation is so much harder than it appears for a lot of reasons.

• For that conversation to work, each person has to realize that his/her ironclad rules are just as arbitrary as the next person's.
• Because our own internal sets of rules are so hard won over a lifetime of experience, it's difficult to even acknowledge that they exist, let alone hold them loosely or even (gasp!) consider letting them go.
• Furthermore, to even open up that conversation is to engage not just in a process of sharing, but also in a process of negotiation as to what the new rules will be between two people. Because anytime we start sharing we will see that the two sets of rules don't match and will eventually be in conflict. So most people in a dominant position won't even want to start the conversation for fear of losing power through renegotiation of the rules.
  

My thinking on this matter has been sparked by starting to read bell hooks' book, Teaching to Transgress: Education as the Practice of Freedom. I don't hear about bell hooks as much as I used to, perhaps because I'm running in the wrong circles, perhaps because I'm not in school anymore, perhaps because black feminism has been co-opted by Oprah Winfrey's emphasis on the power of positive thinking (which apparently helps sell lots of consumer products too).

What I take away from reading bell hooks is that only through a continual dialogue about: who makes the rules? what are the rules? why are the rules that way? to what end do these rules serve? what shall the new rules be? says who? based on what values? to what new end? -- can we ever hope to come to any sort of deeper truths as individuals and as a society. It's exhausting, I know. But it is also the path of freedom and liberation I believe. Because really, only through such a dialogue can we ever hope to truly see another, honor another, and find mutuality with another -- which is the basis for love.

[*I should add: sometimes another person really does operate in bad faith, and then ending the relationship and walking away is the best strategy. I just don't think other people operate in bad faith nearly as much as we think.]

Things that seem normal but aren't, part 5

Continuing my occasional series, "Things that seem normal but aren't"...

9. Our cultural fascinating with the concept of "The One." The concept of The One permeates so many areas of culture. Most major religions -- Buddhism, Judaism, Christianity, and Islam are all fixated on the concept of The (Chosen) One. Sports commentators call Michael Jordan, Kobe Bryant, or Tiger Woods, The One. During the 2008 presidential campaign, Oprah Winfrey anointed Obama as The One. It seems like any movie which costs over $100 million to make must be focused on The One -- Lord of the Rings, The Matrix, Terminator, and Star Wars are all about the search for The One. Furthermore, beauty pageants and reality TV shows like Survivor are designed to identify and crown The One.

But here's what makes all of that so weird -- anything worth doing, anything of lasting value, any truly great accomplishment, is almost ALWAYS a collective effort. Furthermore, it seems bizarre that the search for The One shows up in religious contexts because it invalidates the concept that we are ALL made in God's image and that the divine resides in ALL of us (in which case, we wouldn't really need to wait around for The One in the first place would we?) My hunch is that the reason our culture is so fascinated with the concept of The One is because secretly we all think we are the one, it's an affirmation and reflection of our own narcissism.

At the end of the day, The One, as a concept is the foundation of theocracy, fascism, monarchism, and hyper-individualism. But as animals, what makes us truly happy is connection with others, interrelationship, and collective experience. Therefore it seems to me that the sooner we abandon the concept of The One and acknowledge our interconnection instead, the happier we will be. Furthermore, it seems that shifting our focus to "the all" and collective approaches to problem solving will better enable us to build things of lasting value -- families, buildings, companies, cities, societies.

As one example, imagine if instead of spending billions of dollars every Saturday on college football (the search for The One national champion and The One Heisman trophy winner) what if every Saturday the people of every major city poured out to build (and improve) houses in the area. I know, it's very Amish, but when you realize that we spend billions of dollars on football while literally walking by people who are homeless, that's the definition of insanity.

10. The fact that apocalyptic thinking shows up in almost every generation. It seems that every time I turn around, there's another blockbuster movie about the end of the world (2012, 28 Days Later, Blindness, anything with Keanu Reeves, etc.). It makes sense to me that any generation growing up since World War I would be infused with a certain level of apocalyptic thinking -- because since then, humans have actually had the capacity to end the world with our own means.


But apocalyptic thinking goes back as far back as recorded history. The people who wrote Revelations weren't predicting the end of the world thousands of years later, they thought it was imminent. Jesus and Paul were certain that the world was about to end. Every generation has its religious gurus who predict the end of the world and it seems that they are usually able to attract a decent-sized following. The persistence of apocalyptic thinking throughout human history seems disproportionate to the size of the threat. So what explains that?

Like the point above, in some ways it seems that perhaps apocalyptic thinking is a reflection of our own narcissism. Apocalyptic thinking gives us a narrative for exploring the fact that, as time-limited mortal creatures, every generation really does experience itself as the last. It's a way to make each generation feel important, chosen if you will, the pinnacle and ultimate expression of humanity. It's a way of overcoming our own insignificance in the face of the relentless march of time.

So just to be clear, to me, the 2012 stuff seems really silly. But as I said above, since WWI we really have had the capacity for our own self-annihilation and global warming seems a credible threat to the future of the planet that merits immediate and comprehensive action.

Finally, a little antidote to the heaviness of this post. In looking for a picture to accompany this post I stumbled upon a blog post titled, "Signs of the Impending Apocalypse." It's pretty funny. [Hint, Heidi and Spencer are sign #4!]

Update #1: Another sign of the impending Apocalypse? The Booty Pop Panties commercials running on MTV right now.

a quick thought on culture

I was watching VH1 today and someone said that The Who was the first rock band to smash their equipment on stage -- and that at the time, that was a huge deal.

I took note of that and then remembered seeing Nirvana at the Cow Palace back in 1993. At the end of an extraordinary set, they not only smashed all of their own equipment, but Kurt Cobain climbed up on top of a giant wall of speakers and launched himself through the air into Dave Grohl's massive drum set.

Thus The Who was the first rock band to smash their own equipment on stage and Nirvana was the first rock band to smash their own bodies on stage.

I wonder if this then captures some of the differences between Baby Boomers and Generation X. Baby Boomers directed their rage outwards for the first time, and Generation X directs their rage inward and turns it up to 12.

Is violence intrinsic to money?

Recently I stumbled upon a completely fascinating interview with University of Sydney Political Economy Professor Dick Bryan titled "The underlying contradiction of capitalist finance." I want to walk through some of the highlights of the interview and then share some reflections. First, the money quotes (definitely check out the whole article too):

What exactly is "money"?

[I]n most conventional analysis, there is an association of money with the state: indeed, in the tradition of Keynes, there is an understanding that money is ‘state money’, as opposed to ‘commodity money’ such as gold. State money is bits of paper, or entries in a balance sheet that are themselves valueless, but trust in state guarantees gives them effective value; commodity money is valued in itself.
But there are not just two absolute forms of money: there is a spectrum of moneys. There is (generally) safe, low-return money, which is state money in the form of cash or money in the bank. There are also highly liquid assets which are serving money functions, but they are not state money. They are derivative forms of money.

The financial crisis explained:

It seems to me very significant that the first intervention of the governments and central banks was not about shoring up financial institutions directly, it was to say to financiers: bring in your mortgage-backed securities and we will convert them into state money.
It's a signal to me that these securities were indeed being treated like money, in the sense that when their moneyness suddenly disappeared, the state sought to convert them into another money form. The initial response to the crisis of governments and central banks was not to say, as the stock markets fell, 'bring in your shares and we'll convert them to cash.' Nor did they say to banks 'bring in the titles to your properties and we’ll lend to you against your physical assets.' They said 'bring in your securities, and we'll convert them to cash.' It is, to repeat, a signal that the initial liquidity crisis, when securities markets crashed, was about a crisis of money.

Mortgage backed securities and the collapse of the housing bubble:

With mortgage-backed securities, what got sold into the market is not the mortgages, but claims on the income stream from the mortgages. And what is critical about derivatives is that they are financial exposures to an asset without ownership of the underlying asset.
With an oil future, you own exposure to the price of oil, but without owning any oil itself. So it is with mortgage-backed securities: you own exposure to the performance of a bundle of mortgages, but without owning the mortgages themselves.
And that separation is critical, for the mortgages themselves are illiquid – they last for 20 or 30 years, but the securities on the mortgages were highly liquid – they could be repackaged with other sorts of securities, turned into fancy products, and on-sold and re-sold. Further, the derivative dimension – the difference between ownership of the asset and ownership of an exposure to the performance of the asset was precisely what made sub-prime lending so profitable – as long as it lasted. The financial markets could separate out the performance of mortgages from the performance of house prices. They could sell the former, but retain the latter.
That is the reason that mortgage originators could keep lending to people who would buy houses that were expected to increase in value, even though they would almost certainly not repay loans: it was possible to hold the exposure to the prices of houses and sell off the exposure to the repayment of mortgages. It was a smart strategy for capital as long as house prices didn’t fall!

The nature of money (this is the home run in the interview in my opinion):

What's gone wrong in the markets is partly about regulation, a loss of order and morality in markets. Those things are now being widely criticized.
But there is another element here, about the nature of money. What concerns me in left and liberal debate is the strand that says that if we can make markets more efficient, more transparent, more ethical, then markets will not be volatile. That seems to be a basic premise, and it's basically wrong.

Money is itself the expression of a social relation. The concept of value is contested. The concept of equivalence is contested. We see that most starkly in exchange rates. What is one currency is worth in terms of another? There is no real answer. The neo-classical economists want to talk about fundamental value, but we know that doesn't work.

And it's not just at the level of exchange rates. Within a currency, equivalence is a contested concept. As Marxists, we should be pointing that out -- that there is social conflict expressed in the money form.

Any suggestion that once we have better regulation, money will become harmonious as a social unit, and then we can enter into debates about good or bad monetary policy, misses the point that money is always contestable. It has never been objective.

We have played out little social myths to construct money as objective. We had gold. We had Bretton Woods. We have "fundamental value" provided by neo-classical economists. They were all trying to tell us that money is an objective measure, and what we have to learn is that money is not an objective measure. Money is capitalist money, and it is money within capitalism.

Where do we go from here:

And central to that politics is new ways of resistance to the way in which the finance system, for all its fancy trading of risks, has systematically shifted risks onto labor -- until, that is, labor (in the form of house buyers) itself financially imploded, and the risks were suddenly thrown back onto capital. But, of course, it was then passed on to the state, which in turn will pass it back labor, but at a slower pace than was done by financial risk shifting, and in ways where labor’s implosion will not be at the cost of capital.
The point here is to analyze what’s happened so as to clearly identify the risk-shifting process and the best points of resistance to it; not to join the search for a clever set of state regulations which will somehow tame finance and place it at the service of production. ...
The state has always fudged on the issue of "moral hazard" -- of the extent to which the state should intervene to mop up for capital when capital stuffs up, and whether such mopping-up puts bad incentives into the market.
In all the financial sector reforms, and not just in the financial sector, there has always been a fudge about the question of whether there will be bail-outs. We've found something out. We've found that the state will always bail out big capital, in particular big banks. ...

What becomes most interesting in this is, how much of a watershed is this in the concept of markets, and how the states regulate markets? The moral hazard issue, historically framed as a dilemma, is now solved. What does that say about the virtue of profitability and entrepreneurship -- those moral virtues of the market, let people enjoy success because they also face the threat of failure? If that threat of failure is now going to be qualified, what is the constraint of the upside? If we are to have the carrot of profit, but not the stick of loss, how is that going to play out in wider social circles?

Okay so a few thoughts from all of this:

First, a bit of a tangent: It's interesting to watch (and participate in) the political debate in the U.S. since the invention of blogs, Facebook, and Twitter. Now it is so much easier for new ideas from any part of the world to enter the debate. And what's really striking to me is that Naomi Klein and Ian Welsh are almost always correct and both usually about 2 to 3 years ahead of the curve. They are like goddamn Nostradamus in predicting how political decisions will play out and in understanding exactly where the economy is going (and who the likely economic winners and losers will be).

It's like Klein and Welsh are looking into a crystal ball that none of the rest of us have. And in fact they are. What I realized is that they are both Canadian and they both still read marxist economic analysis. Thus the reason Klein and Welsh are so consistently correct is that they both have access to a set of analytical tools that most Americans have lost the ability to use. The range of the political debate in the U.S. is so insanely small -- we argue over corporatism (Obama) vs. more corporatism (the Republican Party) as if that were any choice at all. Even on a good day, the most informed Americans are only exposed to half of the debate -- completely ignoring labor, class, poverty, race, gender, sex, ecology, and any discussion of power. So then when someone like Naomi Klein, Ian Welsh, or Dick Bryan comes along it completely blows our minds because we have been conditioned and mentally colonized to ignore those facets of the debate.

Okay but here's the larger idea I want to rap down:

It seems to me that the analysis put forward above by Bryan actually points us to a startling political theorem that goes something like this:

IF:

1. The state issues money;
2. Trust in state guarantees gives money its effective value;
3. Trust in state guarantees is only as strong as our trust in the state's ability to remain solvent;
4. In order to remain solvent, the state must be able to withstand threats from within and without -- usually through military power;
5. In order to remain solvent, the state also must balance its books (or come close);
6. Low prices of foreign inputs and high prices of domestic outputs help to balance the state's books;
THEN
7. It appears that violence is INTRINSIC to money.

Said differently: if money is always the expression of a social relation and the concept of value is always contested; then, it seems from the evidence of history that the way that that (hierarchical) social order is maintained and the way that contested values (particularly currencies) are negotiated and resolved is through military force.

Now at first glance that theorem seems absurd. But play out the argument for a minute and I think you'll find it's not as absurd as it seems at first blush:

[Just to be clear, I would be HAPPY to be wrong about this. Furthermore, I am NOT saying this is a good thing -- but rather that this is a realpolitik look at the way things are.]

Imagine if you will that worldwide, workers in all coffee plantations suddenly joined the United Farmer Workers Union and went on strike for better wages. Overnight coffee prices double, Starbucks franchises go out of business, stocks of coffee and restaurant companies plummet and drag the wider stock market index down with them. But in the U.S. this would not play out as a debate about workers rights in the third world. In the U.S. we would never even see a single coffee picker on TV or hear any of their legitimate requests for fair compensation -- but we would see endless interviews with hot baristas who had just lost their jobs. The Wall Street Journal would editorialize on the "Specter of Inflation." Political pundits on cable T.V. would cluck cluck on how "the President looks weak and ineffective." Republicans would rush to the floor of Congress to make speeches about how the President "has lost control of the economy." Debates about inflation in particular but also debates about masculinity and the "health" of the economy (read the health of the Dow Jones Industrial Average) are all smoke screens to put pressure on elected officials to use violence to maintain our wealth.

So the U.S. (over the last 200 years) [and European countries over the last 500 years] have maintained a policy of proactive violence to maintain the value of their money.

• Banana workers want a raise in Guatemala? We overthrow the democratically elected government of Jacobo Arbenz. (1954)

• Chile wants to nationalize copper mines that the U.S. relies on for cheap bullets to fight the Vietnam War and cheap phone cables to fund ITT's global expansion? We overthrown the democratically elected government of Salvador Allende. (1973)

• Coffee workers and manufacturing workers in Colombia want a raise, the U.S. (and Dole Fruit) fund death squads that have killed 2,500 union leaders in that country since 1986.

In every case, the violence committed by the U.S. (and U.S. taxpayer-funded mercenaries) has helped to keep U.S. inflation down and the value of the U.S. dollar up. And the craziest fucking part of all this is that we are all complicit in this without realizing it, just by virtue of the fact that we will throw out our own government the moment our purchasing power or our living standards decline.

It's always been a little strange to me that so-called "rich" nations -- the U.S., and Europe also have a long history of violence and genocide. Indeed as Eduardo Galeano shows in Open Veins of Latin America (and as Eric Williams shows in Capitalism & Slavery) it is precisely the violence of Europe and the U.S. that produced the enormous capital accumulation that fueled the industrial revolution and further enriched those nations. And it is precisely the permanent state of preemptive violence, that we are loath to acknowledge, that reinforces our trust in the state guarantees of U.S. paper money and gives our currency continued value over time.

Update #1: I just want to add a quick note about the mechanics by which the U.S. makes the decision to overthrow a democratically elected government (or any other government for that matter). I don't necessary think anyone in the Nixon White House for example, necessarily made it their mission to figure out how to hold down wages in other countries per se (although there may have been some who thought like that). For the most part, I think the decision-making process is so much more subtle than that. It's more likely that the head of ITT or the global conglomerate that owned the copper mines in Chile went to college with Kissinger or other senior administration officials. They were roommates, buddies, they had dinner in the dining hall together and now they vacation together and their kids are growing up together.

When Allende announces he's going to nationalize the phone company, the head of ITT feels like something important is being stolen from him personally. So he gets on the phone with the highest ranking buddy he can find in the administration and says, 'Hey, you've really got to help me out, the crazy President of Chile is trying to steal my company from me.' And so the senior administration official makes some calls to help out his friend and they find some military planners who never did like the democratically elected government down there in the first place and they call the political folks who know for sure that they don't want Nixon 'to look soft on communism' (because that never plays well with the base) and it all just snowballs from there. Politics isn't rational, it's tribal -- it's about groups of friends looking out for each other. But the net effect of elites looking out for each other (and using military force to do it) is the perpetuation of a system of injustice that has existed for over 500 years.

I suppose it was only a matter of time...

I was at the local wine shop the other night and the guy behind me in line was buying a beverage called Neuro Sleep -- it's literally a soft drink to help you sleep -- an anti-energy drink. I went home and googled it and it turns out that the Neuro Drink company makes beverages to tweek performance and mood in ALL areas of your life -- Neuro Gasm to improve sexual performance, Neuro Sonic for work, Neuro Trim to lose weight, Neuro Sport for exercise, and Neuro Bliss to manage depression I guess.

In fact, we've been using beverages to tweak mood for a long time -- various forms of alcohol to (poorly) manage depression, increase desire, or facilitate sleep; various forms of sugary beverages to manage mood and provide fuel during exercise; and coffee or strong tea to boost alertness at work. So I suppose it was only a matter of time before someone figured out that they could add the latest over-the-counter herbal supplements to beverages and then market them as tonics to manage specific neurological functions. But at the same time it all feels so "Brave New World" meets "Children of Men." Oh yeah, the guy behind me in line said Neuro Sleep works great and I should try it -- and the clerk and everyone else in line agreed.

Things that seem normal but aren't, part 3

Continuing my occasional series, Things That Seem Normal But Aren't, I've got two more for you today.

6. The sheer volume of vampire stories in film, TV, and books. Look, I could understand if a new vampire movie came out every 15 to 20 years. But it seems that a new vampire-themed media product comes out every other week these days. Conservatives love vampires (ahem, Ayn Rand), progressives love vampires, men love vampires, women TOTALLY love vampires, old people like vampires, young people like vampires, Americans like vampires, people around the world like vampires. As a media brand, vampire rule. Which is all very odd when you think about it. What makes a sickly pale white guy who sucks people's blood compelling let alone sexy?

I gotta figure that the enduring power of vampires in our collective consciousness stems from the fact that vampires are really serving as a sort of metaphor for something else. My hunch is that vampires serve as a metaphor for the ways that men mess up women's lives and the ways in which women sacrifice their own lives for desire. As Carol Gilligan points out, for much of human history (really up until about the late 1960s) desire (eros) and death (thanatos) often went hand in hand (desire led to sexual union which led to childbirth where a high percentage of women lost their lives). Even since the advent of the pill and even with improved maternal and infant mortality in childbirth, men still seem to find ways to make women's lives messy (as Rene Russo's character Catherine said so well in The Thomas Crown Affair).

7. Car chases in movies. Even though we've mercifully escaped the era of the Cannonball Run series there are still an awful lot of car chases in movies. Which is surprising given that there really aren't that many car chases in real life. Of course there is the occasional O.J. Slow Speed Chase or various police pursuits on the freeway covered by local news traffic helicopters. But those are usually covered on the local evening news. It's unclear why someone would also pay money to see such things in a theater. But I think the role of the car chase in modern movies is not to simulate reality. Rather, the movie car chase recreates the primitive animal sensation of pursuit -- both predator and prey -- that is hardwired into our limbic system through millions of years of evolution. I think the movie car chase, even though unrealistic and foreign to our daily lives, gives us the dopamine rush and subsequent sense of relief when the danger passes that makes us feel satisfied -- like we went on an intense journey -- as we leave the theater (or as is usually the case these days -- as we hit the "open" button on the DVD remote and walk to the fridge).

Some musings on our digital culture...

Okay remember back to 1996 when e-mail first started to become universal and people were all like: 'E-MAIL -- IT'S INSTANT. No more waiting 3 days for the post office to deliver a letter -- you can have that letter RIGHT NOW!"

Except pretty soon people had so much e-mail that it took them 3 days to respond anyway?

And then came blogs and people were all like: "BLOGS! I can publish anything INSTANTLY to the world wide web!"

Which was true of course, but 70 million blogs later, less than 1% of them are getting any sort of decent traffic and only the top 100 blogs or so are making any money.

And then people drifted over to Facebook with its photos and walls and such. Which is great of course, but now instead of mostly writing to people (e-mail) we're now posting things about ourselves and writing on people's walls for all the world to see -- and that's slightly different. E-mail is like partner dancing and FB feels more like a rave sometimes -- each person doing his/her own thing and sometimes interacting but often just starring at each other it would seem.

But then Facebook wasn't fast enough so people started to gravitate to Twitter as well. And people were all like: 'Twitter, it's INSTANT! I can find out about the news 10 minutes before it hits the papers or blogs!' On Twitter it's possible to follow 500, 1,000 or 10,000 people -- usually people one has never met and does not know personally. But it seems like the real goal is to get people to follow you -- which has this weird, everyone-as-their-own-cult sort of feel to it. Can anyone actually follow 1,000 people on Twitter? Or is it just a courtesy to get people to follow you back? And if a large percentage of followers are just being ignored to pick up a follow-back, what sort of conversation are we actually having?

I guess my question comes down to this:

In this digital age, we have all become publishers, but is anyone listening (or it is all just white noise)?

If you are like me, you start your day like this:

1. You check e-mail, because a personal e-mail from a friend is still gold.
2. But if I don't get any good e-mail, and most days I don't, then I go check Facebook and see what friends are saying about themselves.
3. But after checking FB, I'm still longing for connection so I go to check Twitter to see what famous people and political pundits (strangers) are saying about themselves.

And by the end of the whole process I end up feeling more lost and alone than if I had never turned on my computer, and just called a friend instead.

The democratization of the conversation in the digital age is extremely cool. And at the same time, it's still a tiny handful of influencers (Malcolm Gladwell's "mavens") who are still dominating the conversation. And then there is a lot of noise. Now maybe some folks are figuring out a way to sort through the noise and aggregate it into patterns (I think that's the great challenge of our digital age) but most folks I talk to sound like they just feel overwhelmed by trying to drink water from the fire-hose of digital information we are pounded with each day.

I also feel that something not so great is happening. It feels to me that:

• Community is being commercialized,
• We have a digital filter (middle man) between us and other people, and
• The simulacrum of community is being passed off as actual community and that is impoverishing us and making our lives feel more empty -- in the quest to feel more connected.

In so many ways, e-mail, blogs, Facebook, and twitter, can sometimes feel like selling alcohol to thirsty people. It creates the impression and feel of quenching one's thirst, while actually dehydrating people (which then leads them to consume more alcohol -- a vicious circle.)

So often I feel like we are becoming the NASA SETI program -- beaming messages out into the world hoping that some alien life form will pick them up, but never really knowing if the message is received. But really what we need is actual community -- dancing together, dinner together, community groups and meeting together, bowling together.

[So I guess it wasn't just a question: it was a question and a statement.]

And yet, as soon as I finish this post, I'm gonna cross post it to FB and Twitter because on some level I think that messages are being received. It's just not the same thing as conversation 'though.

I guess we live in prisons of our own making.

Update #1: A Manifesto for Slow Communication. Some great stuff in there.

Update #2: "Facebook Exodus" is the #1 most-forwarded story on the New York Times website today (Sept. 1). Money quote:

“The more dependent we allow ourselves to become to something like Facebook — and Facebook does everything in its power to make you more dependent — the more Facebook can and does abuse us,” Harmsen explained by indignant e-mail. “It is not ‘your’ Facebook profile. It is Facebook’s profile about you.”

Things that seem normal but aren't, Part 2

Continuing my occasional series, "Things that Seem Normal But Aren't" I've got some new ones to add to the mix:

4. Woody Allen movies. Woody Allen is a creepy old guy who literally married his own long-time partner's step adopted daughter [see discussion in comments]. Ewww doesn't even begin to describe it. So I guess it's no surprise that Allen's latest movie, Whatever Works, follows the contours of his life. The plot courtesy of Wikipedia:

Boris Yelnikoff (Larry David), an eccentric, misanthropic University of Chicago graduate and chess teacher from Greenwich Village, finds a young woman (Evan Rachel Wood) from Mississippi lying on his doorstep. He takes her in for the night and eventually marries her, despite their 40 year age difference and their clashing cultural backgrounds. His philosophy on the matter is that life is short so he might as well enjoy himself.

Perhaps the weirdest thing about Woody Allen movies is the adulation he receives from old (creepy) white male reviewers -- like this embarrassing gem from Richard Corliss at Time Magazine:

Not again, we hear you groaning. Another Woody Allen movie that propagandizes crabby old guys attracting cute young women. This is not a comedy scenario; it's a criminal offense, right? Except that in Whatever Works, Allen has taken his usual ingredients--mismatched pairings, the collision of the bitter and the sweet, an abiding love for Dixieland jazz, classic Hollywood movies and his hometown--and somehow made his freshest film in ages. After four pictures abroad, two of which (Match Point and Vicky Cristina Barcelona) were pretty good, the 73-year-old writer-director has found new vigor and warmth in his old surroundings. Melody's perky nature rubs off on Boris and on the entire enterprise. No kidding: this is the feel-good movie of the year and a cinematic soul massage.

"Soul massage" -- riiiight. It's glorified mainstreamed pedophilia and it's just flat out weird that it passes for normal in our society.

5. Las Vegas. Imagine a mutual fund that publishes its returns and shows that you will lose at least 2% a year and will likely lose much more than that. And then imagine that the mutual fund company tells you -- don't worry about losing all that money -- it's gonna be fun!!! And then imagine lots and lots of people telling you how excited they are to invest in that mutual fund on weekends. Very strange indeed.

Even the hugely successful ad campaign, "What Happens in Vegas, Stays in Vegas" -- seems an odd allusion to the fact that the "What" in question is your money -- and it will definitely be staying in Vegas. Compare the excitement of people flying into Vegas with the depressing scene of people leaving Vegas and you'll wonder why folks continue to believe that losing money intentionally is fun. Somebody is paying for those pretty buildings and all of those blinking lights and that someone is us.

Things that seem normal but aren't, Part 1

[editor's note: I've been meaning to do this post for a while. I imagine it's the sort of post I could keep adding to for years and years.]

It seems to me that there are lots of things that SEEM normal in society that, when you actually stop to think about them, are actually very very strange. Here are a few:

1. Holy Communion (aka The Eucharist). The Roman Catholic Church teaches that through the process of transubstantiation the wafer and wine are LITERALLY turned into the body and blood of Jesus -- and then EATEN by the members of the congregation. That's not a typo or a misuse of the word "literally." Catholics believe that the wafer and wine are literally the body and blood of Jesus. So that means that 1.1 billion people on the planet practice cannibalism on Sundays to honor their creator. That's some crazy shit. And Protestant communion really isn't that much better is it? "Take and eat, this is my body broken for you." Really? Did I ask you to do that? I'm supposed to eat a representation of your body to honor a decision you made without consulting the rest of us? Really? What if I would have actually preferred for you to build an army, overthrow the government, and then pass universal health care instead?

2. Cheer leaders. At major sporting events, heck even at high school and junior high sporting events (and pee wee football games!) we take the prettiest girls from the surround area, dress them in the skimpiest outfits imaginable, and have them act as public emotional fluffers for the boys/men playing in the sporting event and the partisans who watch them. That's some crazy shit. And culture is powerful enough that many girls/women actually seek to perform these roles -- the task is seen as desirable and status producing. When I see college sports, with male "yell leaders" hoisting young women up for display or throwing them in the air, I feel like it is some weird Druidic taunting of the opponent -- like 'look at how hot our women are -- you can't have them because our warrior men (athletes) are so fierce.' But really, it seems that cheer leaders are the prize that the two teams are competing for -- because everyone knows that women prefer the alpha males. Cheerleaders are like the brief case full of cash that gets put on the table in the final round of the World Series of Poker -- letting everyone know what they are really playing for. And that is really really weird when you think about it.

3. Horror movies. In our country and indeed around the world, people pay money for entertainment which consists of moving images of young women (some young men, but mostly young women) being tortured and killed in the most gruesome ways imaginable. It is considered normal to consume this entertainment with friends or even a "cool" date. And often, these brutal sadistic images are considered funny. Again, that's some really weird shit when you think about it.

That's what I got for now. I'm sure other examples will come to me. If you have any examples of "thing that seem normal that aren't" I'd welcome them in the comments.