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April Fools' Festival Final Day: A Change of Pace

Let me get more serious, and answer a question from Noah Smith about what David Graeber means with his book Debt:

The rational kernel inside the bullshit goes roughly like this:

Humans have evolved to be gift-exchangers--beings that maintain our societies by engaging in gift-exchange relationships with kin, close friends, and immediate neighbors. Why? For two big reasons: First, to keep us all pulling roughly in the same direction. Second, to take advantage of the division of labor. There are powerful psychological mechanisms that urge us to engage in such gift-exchange relationships, and to keep such gift-exchange relationships reciprocal--in rough balance.

When agriculture and cities are invented, things get weird: rather than just gift-exchange relationships with thick-tie counterparties--kin, close friends, and immediate neighbors--we find ourselves engaged in weird thin one-sided gift-"exchange" with kings, priests (& gods).

And then when money is invented things get professionally weird: we now find ourselves in ultra-thin one-shot cash-on-the-barrelhead gift-exchange relationships with pretty much anybody else in the world. & then when money and debt come together and debt is defined in money terms with interest attached things get ultra weird: all of a sudden the repayment we are supposed to make if we are the indebted party is quantified. Then a willingness on the creditor's part to forego some of the interest owed is turned into an additional gift from them to us that leaves us even more in their debt--under a greater social obligtion--then ever before.

Through this process of the manufacture of debt-peonage, dynamic fundamental human equality reinforced by psychological-social homeostatic thick-tie gift-exchange gets turned into a mechanism for brutal economic oppression and inequality--all the while claiming we are in realm of freedom & equality.. How? Because quantification and enumeration also introduce property and Bentham into the mix.

That is a rational reconstruction of what @davidgraeber would have said--were he not too lazy to do the work...

A sampling of David Graeber:

Henry Farrell’s work is a classic example of de-legitimization, by which I mean, it is not written in an attempt to engage an author in a serious debate about issues, but rather, to try to make a case why that author’s arguments are undeserving of debate and do not have to be assessed or considered at all. Rather than refute him point by point, which would presumably bore most readers to tears, perhaps it would be more interesting to explore how such a strategy works...

The greater the need to improvise, the more democratic the cooperation tends to become. Inventors have always understood this, start-up capitalists frequently figure it out, and computer engineers have recently rediscovered the principle: not only with things like freeware, which everyone talks about, but even in the organization of their businesses. Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garages...

One element, however, tends to go flagrantly missing in even the most vivid conspiracy theories about the banking system, let alone in official accounts: that is, the role of war and military power. There’s a reason why the wizard has such a strange capacity to create money out of nothing. Behind him, there’s a man with a gun.... The essence of U.S. military predominance in the world is, ultimately, the fact that it can, at will, drop bombs, with only a few hours’ notice, at absolutely any point on the surface of the planet. No other government has ever had anything remotely like this sort of capability. In fact, a case could well be made that it is this very power that holds the entire world monetary system, organized around the dollar, together...

The endlessly cited Apple quote was not supposed to be about Apple. Actually it was about a whole of series of other tiny start-ups created by people who’d dropped out of IBM, Apple, and similar behemoths. (Of them it’s perfectly true.)

Nixon’s floating of the dollar [meant] that foreign central banks have little they can do with these dollars except to use them to buy U.S. treasury bonds... the tax effect or, as I preferred to put it... “tribute.” Economists prefer to call it seignorage.... By 2000, East Asian countries had begun a systematic boycott of the IMF. In 2002, Argentina committed the ultimate sin: they defaulted [on their debts to the U.S.]--and got away with it. Subsequent U.S. military adventures were clearly meant to terrify and overawe, but they do not appear to have been very successful: partly because, to finance them, the United States had to turn not just to its military clients, but increasingly, to China, its chief remaining military rival...

For those who don't know how the Fed works: technically, there are a series of stages. Generally the Treasury puts out bonds to the public, and the Fed buys them back. The Fed then loans the money thus created to other banks at a special low rate of interest ("the prime rate"), so that those banks can then lend at higher ones. In its capacity as regulator of the banking system, the Fed also establishes the frac tional reserve rate: just how many dollars these banks can "lend"--effectively, create-for every dollar they borrow from the Fed, or have on deposit, or can other wise count as assets. Technically this is 10 to to 1, but a variety of legal loopholes allow banks to go considerably higher.

The passage got horribly garbled at some point into something incoherent, I still can’t completely figure out how, was patched back together by the copyeditor into something that made logical sense but was obviously factually wrong. I should have caught it at the proofreading stage but I didn’t...

The Federal Reserve... is... a peculiar... consortium of privately owned banks whose chairman is appointed by the United States president, with Congressional approval, but which otherwise operates without public oversight...

I did catch it when the book first came out, tried to get the publisher to take it out, and have been continually trying since July. All to no avail. I have absolutely no idea why a book can go through eight editions and it’s impossible to pull out a couple lines of obviously incorrect text but they just keep telling me, no, I have to wait until July…

I can speak with some authority here since I was myself born of humble origins and have advanced myself in life almost exclusively through my own incessant labors. I am well known by my friends to be a workaholic—to their often justifiable annoyance. I am therefore keenly aware that such behavior is at best slightly pathological, and certainly in no sense makes one a better person.

Allow me to reassure the reader: You have absolutely no idea how frustrating this is, especially as the stupid line has been held out, reproduced, sent around in every conceivable way to suggest that nothing else in the book is likely to be factually accurate To which all I can reply is: well, notice how this is the only quote in the book that happens with. That one sentence gets repeated a thousand times. No other one does. That’s because it’s the only sentence flagrantly wrong like that. In fact, I’ve communicated with, or read reviews by, scholars of Greece, Mesopotamia, and Islam, Medievalists, Africanists, historians of Buddhism, and a wide variety of economists, etc, etc, and none have noticed any glaring errors—in fact, the most frequent reaction is that it’s remarkable that someone who is not an area specialist actually more or less gets it right (remember, these are scholars often loathe to admit even their own colleagues in the field get it more or less right.) The book is pretty meticulously researched and has stood up to scholarly review. The problem is I haven’t been able to get the one idiotic garbled sentence out despite my utmost endeavors. But it will be. They promise. Soon…

The irony is I never go off and pick fights, in the book and in almost everything I wrote I’m actually extremely charitable to those who disagree with me (except maybe Adam Smith, but the editor pulled some of the nice remarks I made about him because he thought they’d confuse people), and I really only respond to attacks if the attack contains blatant errors of fact – and recently, not even then.

Someone else said Farrell was a wingnut genocide denier on twitter so I just shrugged and said “oh, I didn’t know, I’ll just ignore him then.” So Farrell’s claim that I am out there spreading aspersions about him is yet another example of his utterly dishonest mode of argument. In fact, I did not say anything other than exactly that: “oh I didn’t know.” Really I have no idea whether the guy was right or not – how would I? But Farrell’s history of dishonest argument, of which the above remark is just the latest example, was indeed more than enough to lead me to want to take any excuse not to have to further engage with him, since, frankly, who would benefit? And believe me, I have much better things to do...

@markgimein "David Graeber,Debt,p96: Apple was founded by engineers from IBM who formed little democratic circles of 20-40 with laptops in garages.-HUH?!" @davidgraeber: "oh ask Mr Wolff.... Richard Wolff the Marxist economist whose student did a study of the origins of Apple and never published it" @markgimein: "Don’t know about Wolff. But I don’t think Apple was founded by IBM refugees. And when it was founded there were no laptops." @davidgraeber: "the laptops thing was a result of a compression of two sentences, that was silly. Richard Wolff actually and I think he led me astray. Yeah I know I think Wolff was just kind of wrong about a lot of this; I tried to check with him but he didn’t answer the email. It’s upsetting; it’s also possible he was talking about a different early start-up; anyway won’t be in the 2nd edition!"

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