The great economic revolutions are monetary
Anthropology in the financial crisis. The making of world society
First published in Storicamente (2009).
In an unpublished paper, “Second general conclusion. A means of overhauling society: the manipulation of currencies”, Mauss claims, following his friend François Simiand, that the great economic revolutions are “monetary in nature” and that the manipulation of currencies and credit could be a “method of social revolution…without pain or suffering”. He wished to give an economic content to juridical socialism:
“It suffices to create new monetary methods within the firmest, the narrowest bounds of prudence. It will then suffice to manage them with the most cautious rules of economics to make them bear fruit among the new entitled beneficiaries. And that is revolution. In this way the common people of different nations would be allowed to know how they can have control over themselves—without the use of words, formulas or myths” (Populaire, 6th May 1924).
Anthropology in the financial crisis[1]
Everyone knows that we are living through a hinge moment in world history generated by the financial crisis of 2008.[1] The collapse of the credit boom has already had dramatic social consequences: the default and nationalization of banks, dramatic losses of personal savings and mortgage foreclosures on a massive scale. Where it will all end is anyone’s guess. Apart from these tangible effects, the present crisis also concerns ideas about the economy. Free market economics has gained an unparalleled dominance within the academy and society more generally in the last three decades. Economists, armed with impenetrable mathematical arguments, encouraged politicians like Margaret Thatcher and Ronald Reagan to claim ‘there is no alternative’ (TINA) to their market fundamentalism. They preached an eternally benevolent spiral, “beyond boom and bust,” guaranteed by radically reducing the role of the state and politics in distribution—the question of who gets what in the world. The collapse of this pretence has been as sudden as the paper fortunes built on it. All too often a distinction is drawn between the world of finance and the ‘real economy’, as if borrowing money for holidays against rising house prices and the theft of public assets by corporate predators were not real. I argue for a perspective that treats money as an integral part of society rather than as something semi-detached from it.
The period since the 1980s, ‘neo-liberal globalization’, has seen two apparently contradictory trends. On the one hand, for the first time, significant numbers of anthropologists have studied capitalism in its central workings; on the other, the majority have become more insular and introverted, offering fragmented narratives within a narrow framework of time and space, while leaving to others questions of where the world is heading and why. This check on the economists’ intellectual hegemony represents a chance for us to link our engagement with people’s lives to anthropology’s original mission to understand humanity as a whole. We have perhaps been intimidated into adopting a more blinkered posture than is warranted by our own intellectual traditions.
Bruce Kapferer has recently argued that, at its best, anthropology rests on ‘the subversion of dominance’ through an emphasis on the whole, ethnographic practice and sceptical reason. I agree. The scale of current events reminds us that the rupture between ethnography and history that launched the modern discipline needs to be mended. Then perhaps we will build more effective bridges between the everyday circumstances that we each know well and the larger unknowns that threaten to undermine us all, thereby helping to make emergent world society more meaningful.
Money is not just issued by governments or even by the banks: a distributed global network of financial institutions and actors of various kinds have lately joined the process of its creation as a plethora of credit instruments whose global circulation (commonly known as ‘the markets’) now vastly exceeds the use of money to finance international trade. For all the proliferation of issuers, this still leaves the bulk of humanity discriminated against, since access to the massive flows of global capital is limited to the few. Until recently, this question of distributive justice, indeed the politics of inequality as a whole, could be treated as secondary to the imperative of leaving ‘the markets’ free to bring about an irreversible increase in global prosperity.
The current financial crisis affects rich countries first, but it has more general effects, through its consequences for investment and monetary creation in the rest of the world. Already the ‘emerging markets’ of Eastern Europe, Latin America and Asia are threatened with catastrophe for making their vulnerable economies depend on the house of cards that was global finance. Who wins and who loses in all this is still to be determined. It is not certain, for example, that the world’s poor will suffer most, since they have less to lose than the principal beneficiaries of the boom. But it is certain that the question of distribution will once again come to the forefront of political debate. Marx [1859] argued that, by subsuming distribution under the mechanics of exchange, liberal economists sought to disguise class exploitation as a logic of market equilibrium. The era of ‘neo-liberalism’ achieved a similar effect. Now it is obvious that market exchange has profound consequences for distribution that are far from benign and require drastic political intervention.
It seems that, along with the bankruptcy of some banks and even countries, the delegation to private bureaucracies of the power to channel credit has already lost its air of inevitability and indeed its former legitimacy. The institutions of investment banking, financial markets and professional self-regulation, with their supposedly indispensable and insuperable expertise, are now challenged on their own terms, and by the same politicians and journalists who, only a few months ago, defended them as the best or, occasionally, the least bad of all worlds. The new role of states in the crisis breaks as well with neoliberal insistence on the need to limit their influence on the distribution of money. At the same time, the global character of the crisis exposes the financial limits of each nation-state. Attempts by European states to act independently only show up the political weakness of their economic institutions. The US Federal Reserve has had to co-ordinate with other central banks in order to ease the access of banks to credit around the world.
These phenomena reverse the economic orthodoxy concerning resource distribution that sought for three decades to release corporations from public constraints on accumulation. The challenge is both political and intellectual, in that we need to devise new global institutions and to think about them in fresh ways. After decades when inequality was justified as a necessary by-product of economic growth, the popping of the credit bubble that fostered this illusion means that the issue of distribution is certain to return to centre stage.
It is no coincidence that economic anthropology was last a powerful force in the 1970s, when the world economy was plunged into depression by the energy crisis, and has been marginalized by neo-liberal hegemony ever since. Now, if ever, is the time for anthropologists to renew an engagement with political economy that went into abeyance then. The prize at stake for our discipline as a whole is much larger than the revival of one of its parts. Anthropology’s highest mission is to start from where people are and go with them wherever they take you. That means engaging with their visions of the world, perhaps to catch a glimpse of the world humanity is making together. What better time to follow this imperative than when the model the world has been compelled to live by for three decades is in such disarray?
The making of world society
According to writers as varied as John Locke [1690] and Karl Marx [1859], ours is an age of money, a transitional phase in the history of humanity. Seen in this light, capitalism’s historical mission is to bring cheap commodities to the masses and break down the insularity of traditional communities before being replaced by a more just society. It matters where we are in this process, but the answers given differ widely. When a third of humanity works in the fields with their hands and a similar number has never made a phone call in their lives, I would say that capitalism still has quite a way to go. My focus here is on the part played by money in the formation of world society at a time when the risks of the process have just been brutally exposed. I prefer to call this ‘the new human universal’ [Hart 2008a] rather than the normal term, ‘globalization’, even though we now face the urgent question of whether world society faces another period of disintegration comparable to 1914-45 before the task of rebuilding it can again be undertaken with the seriousness that it was after 1945.
Emergent world society is the new human universal – not an idea, but the fact of our shared occupation of the planet crying out for new principles of association. The task of building a global civil society for the twenty-first century, perhaps even a federal world government, is an urgent one. Money, instead of being denigrated for its exploitive power, should be recognized for its redemptive qualities, particularly as a mediator between persons and society. Money—and the markets it sustains—is itself a human universal, with the potential to be emancipated from the social engines of inequality that it currently serves.
A lot hinges on where in the long process of human evolution we imagine the world is today. The Victorians believed that they stood at the pinnacle of civilization. I think of us as being like the first digging-stick operators, primitives stumbling into the invention of agriculture. In the late 90s, I asked what it is about us that future generations will be interested in and settled on the rapid advances then being made in forming a single interactive network linking all humanity. This has two striking features: first, the network is a highly unequal market of buyers and sellers fuelled by a money circuit that has become progressively detached from production and politics; and second, it is driven by a digital revolution whose symbol is the internet, the network of networks. My research over the last decade has been concerned with how the forms of money and exchange are changing in the context of this communications revolution.
The case for a recent speed-up of global integration rests on three developments of the last two decades: 1. the collapse of the Soviet Union, opening up the world to transnational capitalism and neoliberal economic policies; 2. the entry of China’s and India’s two billion people, a third of humanity, into the world market as powers in their own right; and 3. the abbreviation of time and distance brought about by the communications revolution and the population’s restless mobility. The corollary of this revolution is a counter-revolution—the reassertion of state power since September 11th and the imperialist war for oil in the Middle East, to which we may now add the strong possibility of a descent via another deflation to world war. We have regressed significantly from the hopes for equality released by the Second World War and the anti-colonial revolution that followed it. On the other hand, growing awareness of the risks for the future of life on this planet entailed in current levels and forms of economic activity might encourage more people to take globalization seriously. The ecological (‘green’) paradigm — manifested as concern for global warming and for total food, water and energy supplies – is powerful enough to replace market fundamentalism as the natural religion of this emergent world society.
[1] https://storicamente.org/hart (2009). I have indicated a few of my main sources, while providing links to my own relevant published work. In the last year I have published a major summary of my approach to money, with special reference to Polanyi, in Hart (2009a). Later essays amplify and update aspects of this one (the third with Horacio Ortiz): https://www.academia.edu/2716461/The_Financial_Crisis_and_the_End_of_All_Purpose_Money (2011) https://www.academia.edu/17730433/The_Anthropology_of_Money_and_Finance_Between_Ethnography_and_World_History (2014) https://www.academia.edu/17730880/Marcel_Mausss_economic_vision_1920_1925_Anthropology_politics_journalism (2014) https://www.academia.edu/34610028/Market_fundamentalism_at_the_crossroads (2018).