Some Quotes From Talking to My Daugher About the Economy
Prologue
My reason for writing it (the book) was the conviction that the economy is too important to leave to the economists.
But books that popularize science are important in a world where the president of the United States wages open war against it and our children eschew science courses.
the more scientific our models of the economy become, the less relation they bear to the real, existing economy out there. This is precisely the opposite of what obtains in physics, engineering and the rest of real sciences, where increasing scientific sophistication throws more and more light on how nature really works.
1. Why So Much Inequality?
We saw how in the beginning … was surplus. And from agricultural surplus there emerged writing, debt, money and states - and from these economies emerged technologies and armies. Simply put, the geographical conditions in Eurasia - the nature of the land and the climate - meant that agriculture and surplus and all that went with it took hold with great force, leading to the emergence of rulers of states in command of armies equipped with technologies such as guns and made even more lethal by the biochemical weapons they carried in their bodies and on their breath.
So, inequality flourishes at two levels: first on a global level, which explains why certain countries entered the twentieth and twenty-first centuries dirt poor, while others enjoyed all the advantages of power and wealth, often secured by looting the poorer countries. The other level is within societies themselves, although it’s often the case that the few wealthy individuals in the poorest of countries are wealthier than many of the richest citizens of wealthier nations.
Don’t be too hard on them. It’s incredibly easy to convince ourselves that the order of things – especially when it favours us – is logical, natural and just. But at the same time be hard on your own temptation to accept the inequalities that you, today, as a teenager, find outrageous. When you feel as if you’re about to give in to the idea that outrageous inequality is somehow unavoidable, remember how it all begins: with babies born naked into a society that segregates those it will dress up in expensive outfits and the others, whom it condemns to hunger, exploitation and misery. Maintain your outrage but sensibly, tactically, so that when the time comes you can invest it in what needs to be done to make our world truly logical, natural and just.
2. The Birth of the Market Society
These two types of values, experiential and exchange, couldn’t be more different from one another. Yet very often in today’s societies, just as all goods are thought of as commodities, so all values are measured – by economists, at any rate – as if they were exchange values. Anything without a price, anything that can’t be sold, tends to be considered worthless, whereas anything with a price, it is thought, will be desirable.
Oscar Wilde wrote that a cynical person is someone who knows the price of everything but the value of nothing. Our societies tend to make us all cynics. And no one is more cynical than the economist who sees exchange value as the only value, trivializing experiential value as unnecessary in a society where everything is judged according to the criteria of the market.
Money may have always been an important tool that helped people achieve their goals, but it wasn’t a goal in and of itself to the extent that it is today. Under the feudal system a landowner would have never thought of selling his castle, no matter how much money he was offered. He would have thought it immoral and disgraceful. If he had been forced to do so out of need, he would have considered himself a humiliated and despicable failure. Today there is hardly a castle, painting or yacht that won’t be sold if the price is right. In the triumph of exchange values over experiential values, as societies with markets evolved into market societies, something else happened: money was transformed from being a means into an end.
3. The Marriage of Debt and Profit
4. The Black Magic of Banking
If entrepreneurs are time-travelling opportunists, bankers are their incorrigible travel agents. In our sci-fi context unbounded entrepreneurial ambition translates into boundless future exchange value being snatched from the future and brought into the present via the time membrane.
Since they are not constrained to lend existing exchange value, bankers have every reason to keep conjuring up loans in the same manner – by a few strokes on their keyboards – for the more people they lend to and the more money they create for the economy, the greater the profits they retain for themselves. Just as laboratory rats, having discovered that pulling a lever results in being given a pellet of food, end up pulling it incessantly, bankers lend and lend and lend.
In reality, this has always been a game of cat and mouse, in which the banker mice possess infinite options for bypassing, and making a mockery of, the obstacles placed in their path by central bankers. However hard central bankers have tried to stop bankers from starting uncontrollable fires, the bankers have almost always got away with arson, forcing panicking central bank officials to create rivers of new money with which to extinguish the flames.
This toxic relationship between bankers and the state ensures that bankers have no reason to be cautious. Yes, after a crash they restrain their activities for a time. Like a driver fined for speeding, they may drive well below the limit for a while afterwards, but they soon find themselves speeding again. Soon after the state authorities have bailed them out and stability has returned, the bankers will be at it again, creating money as if there is no tomorrow.
As you grow up and experience more of the ups and downs of the economy, you will notice a piece of mind-bending hypocrisy: during the good times, bankers, entrepreneurs – rich people in general – tend to be against government. They criticize it as a ‘brake on development’, a ‘parasite’ feeding off the private sector through taxation, as an ‘enemy of freedom and entrepreneurship’. The cleverer among them even go so far as to deny that government has any moral right, or duty, to serve society, by claiming that ‘there is no such thing as society – there are just individuals and families’, or ‘society is not well defined enough for the state to be able to serve it’. And yet, when a crash occurs brought on by their actions, those who have delivered the fieriest of speeches vehemently opposing substantial government intervention in the economy suddenly demand the state’s aid. ‘Where is the government when we need it?’ they yelp.
This is not a new contradiction. It reflects the problematic relationship the powerful have always had with the state. While they fear the state will intervene to curb their self-enrichment, they also sorely need it. The inequality that market societies generate – gigantic concentrations of wealth alongside widespread deprivation and poverty – makes them jittery. What other than a mighty state can protect them when the grapes of wrath have grown too heavy for the vines and the desperate masses congregate threateningly outside their fenced villas? But, then again, if the state has sufficient power to keep the riff-raff at bay, it will also have enough power to confiscate their property and throw them onto the street if the government were to fall into the hands of those thronging crowds.
Philosophers and writers have referred to that something as the ghost in the machine, the intangible power that makes us who we are. Allow me to suggest that when you hear politicians, economists and commentators talk about public debt as if it is a curse, you remind yourself that it is a lot more than that. It is the ghost in the machinery of market societies that makes them function, however well or badly they do. And when the powerful or their spokespersons demonize the state, scoffing at government and public debt, remember that they need the state as badly as they need their kidneys and livers.
The black magic of banking destabilizes market societies. It massively amplifies wealth creation during the good times and wealth destruction during the bad times, constantly skewing the distribution of power and money. But to be fair, bankers are just that: massive amplifiers. The root causes of market society’s fundamental instability lie elsewhere, buried deeply in the weird nature of two peculiar commodities: human labour and money.
5. Two Oedipal Markets
This is a lovely example of the power of optimism, but also of the demonic strength of pessimism. In the context of the stag hunt, both are self-fulfilling. And this is the essence of Rousseau’s allegory: if a goal can only be achieved collectively, success depends not just on each individual pulling together but primarily on each individual believing that every other individual will do so.
This is why the unemployment deniers are wrong: because the labour market is based not just on the exchange value of labour but on people’s optimism or pessimism about the economy as a whole, and so across-the-board wage cuts may well result in no new hirings or even lay-offs.
6. Haunted Machines
Machines work away, producing astonishing products in vast quantities, but instead of this making our lives easier, we’ve become more stressed than ever. We may no longer chain children to factory looms, but just as every employer is forced by competition to adopt the latest innovation, so most of us feel chained to our technology, increasingly harassed by the need to keep pace with its demands.
Many of us now have lower-quality jobs than we used to and feel more insecure than ever – and more anxious still about our children finding a job that will allow them the privilege of slogging away precariously at a mindless task in order to keep a roof over their heads. In important ways, we resemble hamsters on their spinning wheels: no matter how fast we run, we are not really going anywhere. We might well conclude that the machines aren’t slaving away for our benefit; at times it even seems like we’re working furiously to maintain them.
In this light, Mary Shelley’s novel might serve as an allegory: a warning to its nineteenth-century readers that, if they were not careful, instead of serving humanity technology would create monsters to enslave us, terrorize us, possibly even destroy us; that these creations born of human ingenuity – like the life that Doctor Frankenstein managed to conjure from bits of corpses – would turn against their creators with tragic results.
Great futuristic movies like The Matrix strike a nerve because they speak to us about the present. The Matrix is a reflection – a documentary through metaphor, you might say – of our times or at least of our anxieties. It reveals our fear of a mechanization so complete, of a commodification of our bodies and enslavement of our minds so successful, that we are no longer even aware of it, made oblivious to our reality by the very technologies that rule us. In fact, The Matrix expresses a fear that this may already have happened but we have no way of knowing if it has.
With automation happening at the furious pace that it is today, the likelihood of prices plunging more quickly than companies can cope with is all the greater.
The Luddites are among history’s more misunderstood protagonists. Their quarrel was not with the machines themselves, even though they wrecked quite a few of them; they were opposed to the fact that so few owned the machines. It was the social arrangement not the technology they objected to.
7. The Dangerous Fantasy of Apolitical Money
What is truly interesting about this story is that it reminds us why money is, and must always be, political. That money is political is not something Bitcoin’s supporters dispute. Their love for Bitcoin and other so-called cryptocurrencies stems from what they see as its anarchic, anti-establishment, counter-authoritarian nature. This is as political as it gets. What Bitcoin supporters would not like, however, is what I am going to say next: that money can be kept separate from the state and from the political process leading to the formation of our governments and their policies is a dangerous illusion.
8. Stupid Viruses?
Epilogue
The key to happiness, the American writer Henry David Thoreau once wrote, is not to look for it. It is like a colourful butterfly: ‘The more you chase it, the more it will elude you. But if you turn your attention to other things, it will come and sit softly on your shoulder.’
That’s why movies like The Matrix and V for Vendetta have proved so popular: they appeal to our need to be self-directing, autonomous, free thinkers. The worst slavery is that of heavily indoctrinated happy morons who adore their chains and cannot wait to thank their masters for the joy of their subservience.
This was so in Mesopotamia and it is so today. Every dominion needs a dominant ideology to legitimize it, a narrative that invokes fundamental ethical values in order to justify itself while threatening punishment for those who doubt in it. Organized religion has provided such narratives for centuries, developing sophisticated superstitions to shore up the power of rulers, justifying their autocratic power – and the violence and theft it allows – as the divinely mandated natural order of things.
Since the nineteenth century, economists writing books and newspaper articles, now appearing on TV, radio and online, have been the apostles of market society. When normal people hear or read them, they tend to draw this conclusion: The economy is too technical and boring to bother. I should leave it to the experts. Except the truth is that there are no real experts, and the economy is too important to leave to the economists. As we have seen in this book, economic decisions decide everything from the mundane to the profound. Leaving the economy to the experts is the equivalent of those who lived in the Middle Ages entrusting their welfare to the theologians, the cardinals and the Spanish inquisitors. It is a terrible idea.
All systems of domination work by enveloping us in their narrative and superstitions in such a way that we cannot see beyond them. Taking a step or two back, finding a way to inspect them from the outside, allows us a glimpse of how imperfect, how ludicrous, they are. Securing this glimpse keeps you in touch with reality.
Market society also instils illusory beliefs in us, though never as efficiently or happily as HALPEVAM. They thus lead us to behaviours that reinforce it at the expense of our creativity, our relationships, our humanity and of course our planet. Whether you adapt your behaviour to suit market society’s needs, or become obstinate enough to want to adapt society to your own ideas about what society should be like instead, performing the Archimedean leap – a periodic mental withdrawal from our society’s norms and certainties – is vital.
The appeal of this name came in part from my belief that the best way to see your country, your society, is to see it through the eyes of an outsider, a refugee. Try mentally to travel to a faraway place, if not necessarily in order to move your world – though how splendid that would be! – but to see it clearly for what it is. Doing so will grant you the opportunity to retain your freedom. And to remain a free spirit as you grow up and make your way in this world, it is essential that you cultivate a rare but crucial freedom: the liberty that comes from knowing how the economy works and from the capacity to answer the trillion-dollar question: ‘Who does what to whom around your neck of the woods and further afield?’