Sunday, July 7, 2013

Debt and the deep sources of inequality

In a previous post I noted that economists (particularly mainstream ones, like Brad DeLong) could actually learn quite a bit from anthropologists like David Graeber. One thing that they (anthropologists, not mainstream economists) seem to understand is that debt is a social relation that evolved with the creation of inequality. Debt servitude or slavery being quite old, as a result. As noted by Flannery and Marcus, in their The Creation of Inequality:
"The first step in such a process is to loan food and valuables to impoverished neighbors. The second step is to foreclose on the loan. Families who accept food and shelter from wealthy neighbors are in a poor position to deny the latter’s claims to luxury items and hereditary privileges."
As much as historians (noted here and here before), anthropologists do work with the concept of surplus. For that reason they note that societies in which there is a significant surplus have more opportunities for inequality. The basis of Flannery and Marcus' explanation for the deep causes on inequality are associated to the work of another anthropologist, Irving Goldman, who suggested three causes for inequality, namely: a religious life force associated to a leader, a particular kind of expertise, and physical and military prowess. Often a combination of three were necessary.

So you can think of early agricultural societies as ones in which certain social groups were capable of extracting surplus from other groups, as a result of their technical expertise, and a combination of religious and military power. And as much as societies have changed throughout the millennia, it is still essentially true that it is the ability of one group to extract surplus from another that determines income distribution.

Mechanisms have changed, so weakening trade unions, maintaining higher average unemployment through macroeconomic policies, using trade and tax policies to weaken labor and strengthening corporations and so on are a few of the instruments used now to create inequality. And yes, debt still is a way of subjugating particular classes and countries.

PS: By the way, Flannery and Marcus say that: "the worst inequality results not from the granting of new privileges to the people on top but from the removal of existing privileges from the people on the bottom." And this is based on historical and archeological records, not the current right-wing strategy of eliminating the protections of the Welfare State.

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