Debt (70 page)

In the wake of the subprime collapse, the U.S. government was forced to decide who really gets to make money out of nothing: the financiers, or ordinary citizens. The results were predictable. Financiers were “bailed out with taxpayer money”—which basically means that their imaginary money was treated as if it were real. Mortgage holders were, overwhelmingly, left to the tender mercies of the courts, under a bankruptcy law that Congress had a year before (rather suspiciously presciently, one might add) made far more exacting against debtors. Nothing was altered. All major decisions were postponed. The Great Conversation that many were expecting never happened.

We live, now, at a genuinely peculiar historical juncture. The credit crisis has provided us with a vivid illustration of the principle set out in the last chapter: that capitalism cannot really operate in a world where people believe it will be around forever.

For most of the last several centuries, most people assumed that credit could not be generated infinitely because they assumed that the economic system itself was unlikely to endure forever. The future was likely to be fundamentally different. Yet somehow, the anticipated revolutions never happened. The basic structures of financial capitalism largely remained in place. It’s only now, at the very moment when it’s becoming increasingly clear that current arrangements are not viable, that we suddenly have hit the wall in terms of our collective imagination.

There is very good reason to believe that, in a generation or so, capitalism itself will no longer exist—most obviously, as ecologists
keep reminding us, because it’s impossible to maintain an engine of perpetual growth forever on a finite planet, and the current form of capitalism doesn’t seem to be capable of generating the kind of vast technological breakthroughs and mobilizations that would be required for us to start finding and colonizing any other planets. Yet faced with the prospect of capitalism actually ending, the most common reaction—even from those who call themselves “progressives”—is simply fear. We cling to what exists because we can no longer imagine an alternative that wouldn’t be even worse.

How did we get here? My own suspicion is that we are looking at the final effects of the militarization of American capitalism itself. In fact, it could well be said that the last thirty years have seen the construction of a vast bureaucratic apparatus for the creation and maintenance of hopelessness, a giant machine designed, first and foremost, to destroy any sense of possible alternative futures. At its root is a veritable obsession on the part of the rulers of the world—in response to the upheavals of the 1960s and 1970s—with ensuring that social movements cannot be seen to grow, flourish, or propose alternatives; that those who challenge existing power arrangements can never, under any circumstances, be perceived to win.
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To do so requires creating a vast apparatus of armies, prisons, police, various forms of private security firms and police and military intelligence apparatus, and propaganda engines of every conceivable variety, most of which do not attack alternatives directly so much as create a pervasive climate of fear, jingoistic conformity, and simple despair that renders any thought of changing the world seem an idle fantasy. Maintaining this apparatus seems even more important, to exponents of the “free market,” even than maintaining any sort of viable market economy. How else can one explain what happened in the former Soviet Union? One would ordinarily have imagined that the end of the Cold War would have led to the dismantling of the army and the KGB and rebuilding the factories, but in fact what happened was precisely the other way around. This is just an extreme example of what has been happening everywhere. Economically, the apparatus is pure dead weight; all the guns, surveillance cameras, and propaganda engines are extraordinarily expensive and really produce nothing, and no doubt it’s yet another element dragging the entire capitalist system down—along with producing the illusion of an endless capitalist future that laid the groundwork for the endless bubbles to begin with. Finance capital became the buying and selling of chunks of that future, and economic freedom, for most of us, was reduced to the right to buy a small piece of one’s own permanent subordination.

In other words, there seems to have been a profound contradiction between the political imperative of establishing capitalism as the only possible way to manage anything, and capitalism’s own unacknowledged need to limit its future horizons lest speculation, predictably, go haywire. Once it did, and the whole machine imploded, we were left in the strange situation of not being able to even imagine any other way that things might be arranged. About the only thing we can imagine is catastrophe.

To begin to free ourselves, the first thing we need to do is to see ourselves again as historical actors, as people who can make a difference in the course of world events. This is exactly what the militarization of history is trying to take away.

Even if we are at the beginning of the turn of a very long historical cycle, it’s still largely up to us to determine how it’s going to turn out. For instance: the last time we shifted from a bullion economy to one of virtual credit money, at the end of the Axial Age and the beginning of the Middle Ages, the immediate shift was experienced largely as a series of great catastrophes. Will it be the same this time around? Presumably a lot depends on how consciously we set out to ensure that it won’t be. Will a return to virtual money lead to a move away from empires and vast standing armies, and to the creation of larger structures limiting the depredations of creditors? There is good reason to believe that all these things will happen—and if humanity is to survive, they will probably have to—but we have no idea how long it will take, or what, if it does, it would really look like. Capitalism has transformed the world in many ways that are clearly irreversible. What I have been trying to do in this book is not so much to propose a vision of what, precisely, the next age will be like, but to throw open perspectives, enlarge our sense of possibilities; to begin to ask what it would mean to start thinking on a breadth and with a grandeur appropriate to the times.

Let me give an example. I’ve spoken of two cycles of popular movements since World War II: the first (1945–1978), about demanding the rights of national citizenship, the second (1978–2008), over access to capitalism itself. It seems significant here that in the Middle East, in the first round, those popular movements that most directly challenged the global status quo tended to be inspired by Marxism; in the second, largely, some variation on radical Islam. Considering that Islam has always placed debt at the center of its social doctrines, it’s easy to understand the appeal. But why not throw things open even more
widely? Over the last five thousand years, there have been at least two occasions when major, dramatic moral and financial innovations have emerged from the country we now refer to as Iraq. The first was the invention of interest-bearing debt, perhaps sometime around 3000 bc; the second, around 800 ad, the development of the first sophisticated commercial system that explicitly rejected it. Is it possible that we are due for another? For most Americans, it will seem an odd question, since most Americans are used to thinking of Iraqis either as victims or fanatics (this is how occupying powers always think about the people they occupy), but it is worthy of note that the most prominent working-class Islamist movement opposed to the U.S. occupation, the Sadrists, take their name from one of the founders of contemporary Islamic economics, Muhammad Baqir al-Sadr. True, much of what has since come to pass for Islamic economics nowadays has proved decidedly unimpressive.
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Certainly in no sense does it pose a direct challenge to capitalism. Still, one has to assume that among popular movements of this sort, all kinds of interesting conversations about, say, the status of wage labor must be taking place. Or perhaps it’s naïve to look for any new breakthrough from the puritanical legacy of the old patriarchal rebellion. Perhaps it will come out of feminism. Or Islamic feminism. Or from some as yet completely unexpected quarter. Who’s to say? The one thing we can be confident of is that history is not over, and that surprising new ideas will certainly emerge.

The one thing that’s clear is that new ideas won’t emerge without the jettisoning of much of our accustomed categories of thought—which have become mostly sheer dead weight, if not intrinsic parts of the very apparatus of hopelessness—and formulating new ones. This is why I spent so much of this book talking about the market, but also about the false choice between state and market that so monopolized political ideology for the last centuries that it made it difficult to argue about anything else.

The real history of markets is nothing like what we’re taught to think it is. The earlier markets that we are able to observe appear to be spillovers, more or less; side effects of the elaborate administrative systems of ancient Mesopotamia. They operated primarily on credit. Cash markets arose through war: again, largely through tax and tribute policies that were originally designed to provision soldiers, but that later became useful in all sorts of other ways besides. It was only the Middle Ages, with their return to credit systems, that saw the first
manifestations of what might be called market populism: the idea that markets could exist beyond, against, and outside of states, as in those of the Muslim Indian Ocean—an idea that was later to reappear in China with the great silver revolts of the fifteenth century. It usually seems to arise in situations where merchants, for one reason or another, find themselves making common cause with common people against the administrative machinery of some great state. But market populism is always riddled with paradoxes, because it still does depend to some degree on the existence of that state, and above all, because it requires founding market relations, ultimately, in something other than sheer calculation: in the codes of honor, trust, and ultimately community and mutual aid, more typical of human economies.
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This in turn means relegating competition to a relatively minor element. In this light, we can see that what Adam Smith ultimately did, in creating his debt-free market utopia, was to fuse elements of this unlikely legacy with that unusually militaristic conception of market behavior characteristic of the Christian West. In doing so he was surely prescient. But like all extraordinarily influential writers, he was also just capturing something of the emerging spirit of his age. What we have seen ever since is an endless political jockeying back and forth between two sorts of populism—state and market populism—without anyone noticing that they were talking about the left and right flanks of exactly the same animal.

The main reason that we’re unable to notice, I think, is that the legacy of violence has twisted everything around us. War, conquest, and slavery not only played the central role in converting human economies into market ones; there is literally no institution in our society that has not been to some degree affected. The story told at the end of
chapter 7
, of how even our conceptions of “freedom” itself came to be transformed, through the Roman institution of slavery, from the ability to make friends, to enter into moral relations with others, into incoherent dreams of absolute power, is only perhaps the most dramatic instance—and most insidious, because it leaves it very hard to imagine what meaningful human freedom would even be like.
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