In the absence of even acceptable-quality DeLong Smackdowns this past week, what to do? Back to David Graeber! What do we have on the menu today? A continuation of our death march through chapter 11 of David Graeber's Debt, of course!
First we have:
Europe had a greater share of gold and silver mines than it had of population. That gave Europe a high price level, and so the things that Asia might have bought from Europe seemed to Asia to be too expensive. Europe produced little that the Middle East wanted to buy at the prevailing price level--but Graeber never bothered to acquire the literacy in economics he would have needed. So he does not grasp that...
As of 1500, the Portuguese and Spanish (and shortly thereafter the Dutch, and eventually the English and the French) had ships were better. A lot better. They could sail further in worse weather without sinking. Invention and technological change mattered. That mattered a lot.
Mediterranean naval wars were fought by Western Europeans, Egyptians with their ports on the Red Sea, and Turks--who by this time had ports on the Persian Gulf. What the Western Europeans learned, the Turks, Egyptians, etc. learned as well, with the Ottoman Muslims being rather better at Mediterranean oared galley-fighting up until the 1570s.
"The principle that the seas should be a zone of peaceful trade"? "Unarmed Indian Ocean merchants"? Why does Graeber say things like this that are simply not true?
This is depressing.
Once again, simply wrong:
Graeber writes that: "entire project of American colonization [would have] foundered, had it not been for the demand [for silver] from China." That is simply wrong. The silver mountain of Pitosi would have been a lot less profitable to mine, but it still would have been profitable even had China and India and Indonesia and their demands for precious metals never existed. And the rest of the engine of American colonization--staple plantations, slavery, settler colonies--would have proceeded on track, or would perhaps have been accelerated as precious metal extraction absorbed the energies of fewer of those making the voyage from Europe to America.
Graeber writes that: "Many of these Chinese products ended up in the new cities of Central and South America". That is simply bonkers. The plague- and conquest-driven depopulation had been severe, and subsequent colonial growth had not been all that rapid. There were at most 200,000 people in the cities of Latin America in 1700. That was at most 0.03% of the world's population in a world in which China was 25%. How could a group of people one-thousandth as numerous be a significant source of demand for Chinese-produced products in 1700? Once again, Graeber appears to betray himself by his total innumeracy and inability to keep from writing bullshit.
Graeber writes that: "This Asian trade became the most significant factor in the global economy". Well, no. The engine of commercial development within Europe and then of industrial development became the most significant factor in the global economy. The second most significant factor in the global economy was the Columbian Exchange--the transfer of New World biologicals to the Old World, and the transfer of Old World biologicals to the New World. The third most significant factor in the global economy was the sugar and molasses to rum and guns to slaves triangle "trade", if you want to call it that, which you should not, between America, Europe, and Africa. The fourth most significant factor was the general demographic expansion of the human population during the age of the commercial revolution. And the fifth was the beginning of the European settlement diaspora. The trade of American precious metals for Asian spices, silks, teas, cottons, and porcelains was of substantial benefit to European elites--but not the dominant factor in the world economy. It came at most sixth.
Graeber writes that: "Those who ultimately controlled the financial levers [of the Asian trade]--particularly Italian, Dutch, and German merchant bankers--became fabulously rich." Once again, simply no. Italian merchants and merchant bankers had profited from the trade with Asia before Vasco da Gama as it came through Suez and over the Silk Road--not afterwards. German merchants and merchant bankers were never players at all. And it was not Dutch bankers who got rich off the Asian trade--they got rich off of providing financial services to the booming Dutch domestic economy--it was merchants and investors who staffed and financed the fleets of the VOC.
Graeber asks: "How did the new global economy cause the collapse of living standards in Europe?" It didn't. The collapse of living standards in Europe had other, Malthusian causes. The expansion of the silver-to-preciosities trade with Asia has no plausible connection with it. And Graeber does not even attempt to offer one.
Can we read one more page to see? We can:
The "price revolution" meant that those whose dues to their feudal lords or whose long-term lease payments to their landlords were denominated not in commodities but in silver suddenly found it much easier to pay--and the feudal and land lords found that their receipts did not go as far. This is not a source of impoverishment. The enclosure of common lands? A very real process, but not one that had anything to do with the discovery of silver in America or the growing trade with Asia. "Thousands of one-time peasants being forced out of their villages"? The rural population of Europe did not fall but grew substantially. In England, for example, the population grew from roughly 2.5 million in 1400 to roughly 4 million in 1600 and 5.8 million by 1750.
This is really depressing. And I have no heart to read any further today.
The absence these days of what I regard as high-quality critiques of my writings on the internet poses me a substantial intellectual problem, since I have this space and this feature on my weblog: the DeLong Smackdown Watch. So what should I do with it? Counter-smacking inadequate and erroneous smack downs is, after all, not terribly satisfying. The fun is in absorbing and rethinking issues in response to cogent and interesting critiques.
But there is one task left undone, from April Fool's Day 2013. Then I dealt with chapter 12 of David Graeber's Debt: The First 5000 Years in the manner that that chapter richly deserved to be dealt with. But nobody has taken an equivalent look at the earlier chapters. So, henceforth, now, until and unless my critics step up their game, I'm going to devote the Monday DeLong Smackdown space to a close reading of chapter 11 of David Graeber's Debt: The First Five Thousand Years.
As you may or may not remember, my initial assessment of David Graeber's Debt: The First 5000 Years, gained from skimming the first several chapters, was rather positive:
Economic Anthropology: David Graeber Meets the Noise Machine...: ...and is annoyed at having his summary of anthropological findings dismissed as "nonsensical": David Graeber: On the Invention of Money:
I mentioned that the standard economic accounts of the emergence of money from barter appears to be wildly wrong... this contradicted a position taken by one of the gods of the Austrian pantheon.... Credit and debt comes first, then coinage emerges thousands of years later and then, when you do find 'I'll give you twenty chickens for that cow' type of barter systems, it's usually when there used to be cash markets, but for some reason--as in Russia, for example, in 1998--the currency collapses or disappears." Indeed. It really looks from the anthropologists that Adam Smith was wrong--that we are not animals that like to "truck, barter, and exchange" with strangers but rather gift-exchange pack animals--that we manufacture social solidarity by gift networks, and those who give the most valuable gifts acquire status hereby...
He soon fixed that positive assessment:
David Graeber: 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...
And then he gave three contradictory and inconsistent explanations of how he came to write such a sentence demonstrating a previously-unseen total cluelessness about the economy in which he lived: The Very Last David Graeber Post...:
(1) Graeber claimed that it was perfectly true, but not of Apple but of other companies (none of which he has ever named)....
(2) Graeber, when questioned about the Apple passage by Mark Gimein, said that he believed he had been misled by Richard Wolff....
(3) And Graeber claimed that it was his editor/publisher's fault...
Things went downhill from there. And so when I finally got the change to read Graeber's chapter 12, on the post-1971 world, I read it with a jaundiced eye: dozens upon dozens of simple mistakes:
- The Federal Reserve is not a council of eighteen private bankers plus a presidential appointee as their chair.
- Korean-American shopkeepers do not long to treat everybody else in Brooklyn the way Saul and Samuel treated the people of Amalek.
- That people are happier to hold the debt of the Swiss than the US government shows that it is not fear of being bombed by the US Air Force that makes people eager to hold U.S. Treasuries.
- The Federal Reserve is perfectly constitutional--as is the FDA, the FCC, the EPA, the FTC, etc.
- Nixon did not close the gold window because of the mounting costs of the Vietnam War.
- There is nothing that makes Iraq more likely than any other corner of the world to be the source of the next forward leap in human society.
- The Federal Reserve does not lend private banks money at the prime rate--you really don't know whether to laugh or cry at passages like: "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')..."
- And dozens upon dozens more in chapter 12 alone.
I looked, but could not find anybody masochistic enough give a similarly jaundiced reading to David Graeber's earlier chapters. So we began in on chapter 11. We had noted:
Graeber's lumping together of five eras--the Waning of the Middle Ages, the Commercial Revolution, the Industrial Revolution, the First True Era of Globalization, and the Drive to High Mass Consumption--in his one chapter on "The Age of the Great Capitalist Empires, 1450-1971", mixing not just apples and oranges but apples, yeast, giant redwoods, and tyrannosaurs. Such a macedoine is highly unlikely to produce anything coherent.
Graeber's starting his chapter in 1450 and ending it in 1971. Richard Nixon's 1971 abandonment of the Bretton Woods system is not the end of or the beginning of any important story. And what does 1450 mark? The Fall of Constantinople to Mehmet II? But that happened in 1453.
Graeber's long introductory quotation about debt peonage. As Marx knew better than anyone else, capitalism is three things--(i) wage labor, (ii) the separation of private property in land from thick-tie social relationships, and (iii) markets--that together a world in which people are the puppets of market forces transmitted through the equilibrium prices at which they buy and sell. Debt peonage is when there is one and only one person from whom you have to buy--the patron, the latifundista--one and only one person to whom you can sell--again, the patron--and, soon and inevitably, one and only one person to whom you try to pay the interest on your debt. What does debt peonage have to do with the creation of great capitalist empires? Very little. How does debt peonage require a great capitalist empire to support it? It doesn't. How do great capitalist empires depend on debt peonage? They don't.
Graeber's writing that it is "odd to frame [1450-1971] as just another turn of an [ongoing] historical cycle". He is right. It is odd.
Graeber's claiming that the amount of bullion and precious-metal coinage in Europe underwent some sort of inflection point in 1450. It did not.
Graeber's claiming that starting in 1450 we see a "turn away from virtual currencies and credit economies" back to bullion. We do not. The funded, liquid, traded debt of the Dutch Republic in 1600 as it fought off Spanish-Habsburg conquest vastly exceeded the debt that Philippe IV Capet could issue in 1300. And the virtual credit flows later on in the 1450-1971 period absolutely dwarfed those before 1450.
Graeber's writing of "the 1400s... [as] a century of endless catastrophe: large cities were regularly decimated by the Black Death". The 1400s saw a very substantial rebound in urban life after the disasters of the 1300s: Europe's largest cities in 1500 look to have been half again as numerous as they had been in 1400.
Graeber's writing of how in the 1400s saw "knightly classes squabbl[ing] over the remnants, leaving much of the countryside devastated by endemic war..." The 1400s saw rather less endemic warfare than the centuries on either side of it had. It was the 1300s that had the bulk of the Hundred Years War. It was the 1500s that had first the French-Spanish struggles over Italy and then the Wars of Religion. Wars, yes. Chevauchee, yes--urning out of the countryside as a way to get the opposing knights to come out of their castles. But only par for the late-medieval course.
Graeber's claiming that in the 1400s "Christendom was staggering, with the Ottoman Empire... pushing steadily into central Europe..." Here Graeber has simply lost his mind. The 1400s do not see the Ottoman Empire anywhere in central Europe--in the 1400s it conquers Constantinople, acquires a very loose acknowledgement of vassalage from the Khan of the Crimea, establishes naval bases and outposts at the site of the 2014 Winter Olympic Games, wins a somewhat stronger acknowledgement of vassalage from the Princes of Wallachia and Moldavia, and conquers (a) Bosnia, (b) Albania, (c) Attica, and (d) the Peloponnese count either. If conquering Bosnia is a steady push into central Europe that causes Christendom to stagger, that is news to everyone except the Bosniaks. The first of the two unsuccessful Ottoman attempt to conquer Vienna came in 1529. The conquest of Buda and Pest did not, IIRC, occur until 1541. The attack on Malta in 1565 might count as an incursion into southern Europe--if Malta were in southern Europe, that is, and if the attempt to conquer Malta had not been a failure. The Ottomans did conquer Cyprus in 1570-1. The Ottoman high-water marks took place at the Battle of Lepanto in 1571 on sea, and in the first half of the 1600s on land. Perhaps Graeber simply doesn't look either at maps or dates?
Let's mock Graeber again on his claiming that in the 1400s "Christendom was staggering..." Western Christendom does shrink along its borders with the Ottoman Empire. But everywhere else things are different: The 1400s see the ethnic cleansing of Muslims and Jews from the Spanish peninsula by Castile. The 1400s see the advance of the Portuguese forces of Dom Henrique Aziz and his successors from Cueta south along the coast of Africa and into the Indian Ocean. The 1400s see Cristobal Colon and his Spanish company leap across the Atlantic in the last eight years of the century. The 1400s see Casimir IV Jagiellon of Poland on the offensive deep into the Ukrainian steppe. They see Ivan III Rurik of Muscovy subdue the Khanate of Kazan. My considered and sober judgment is that a California high-school student cribbing from Wikipedia would have done considerably better.
And let us mock Graeber for forgetting that just a couple of pages after he writes about how in the 1400s "the commercial economy sagged... whole cities went bankrupt, defaulting on their bonds..." with the knightly classes "squabbl[ing] over the remnants" he writes that the 1400s saw "so much wealth was flowing into the hands" of people outside the knightly feudal hierarchy that "government... forbid... the lowborn to wear silks and ermine". You see the problem? The "lowborn" wearing silks and ermine are the burghers and guild masters of the cities that Graeber claimed--only two pages before--had been depopulated by plague and were defaulting on their debt because economies had "sagged" and, in places, "collapsed". This is word salad.
Note that up to this point in the chapter, with its many errors and misconceptions, Graeber has managed to drop only one footnote. Does the footnote explain or justify any of his more bizarre claims? No. It simply notes Dyer (1989), Humphrey (2001), and Federici (2008) as sources for the changing level of English real wages and the changing quality of English "festive life". (I would note that were Graeber to talk in the presence of the Londoners of the days of Charles II Stuart (1660-1685) of how "Medieval festive life, with its floats and dragons, maypoles and church ales, its Abbots of Unreason and Lords of Misrule" was in the "next centuries" after 1450 "destroyed" would have evoked their surprise and laughter. There was a reduction in "festivity" as the so-called Little Ice Age and the down-phase of the Malthusian population cycle took hold: with fewer growing days and smaller farms you did need to put in more working hours. But Graeber's religious-ideology claims are greatly overstated. In general in early-modern Europe Reformers were not Calvinists, Calvinists were not Puritans: And even Puritans were not culturally hegemonic for much more than a decade anywhere other than Scotland and New England. You can talk about a privatization and a desacralization of celebration and spectacle. But I really do not think you can talk of any sort of destruction of feast and festivity...)
Graeber's inability to do arithmetic leaves him unaware of how badly the numbers on the price revolution he presents undermine his own thesis on post-1450 seeing a relative shift from credit to bullion.
Graeber's inability to understand why economic historians have shifted from Jean Bodin's monetary wage-stickiness understanding of declining real wages in Europe post-1400 to demographic-Malthusian ones.
Graeber's sudden declaration that "the place to start" if you are looking for "the origins of the modern world economy" is "not in Europe at all"--meaning that he started the chapter in the wrong place, and then couldn't get his act together to rewrite it to start it in the right place, China.
Graeber's failure to understand that the Chinese abandonment of paper money for specie is hardly "the place to start" in understanding a modern world economy that makes and has made immense use of paper money and other financial instruments for half a millennium.
Graeber's strange claim that the Ming Dynasty saw American silver as something that made their task of ruling easier, and that they welcomed.
Graeber's strange belief that the Chinese economy boomed during the Ming Dynasty because of a mid-Ming shift to pro-market pro-silver policies rather than favorable agricultural capital and agricultural technology.
Graeber's strange belief that the Ming continued Mongol feudalization and tax policies as a reaction against the Mongols.
Graeber's reliance for Ming economic history on Brook (1998), a cultural history that fails to recognize that for most Chinese inhabitants the replacement of Mao by Deng came as a profound liberation.