1. LETS and me
2. The euro crisis
3. The collapse of national capitalism
4. A human economy approach
5. Harnessing bureaucracy to grassroots democracy

LETS and me

All my life money has been an obsession. I have always been keener to understand it than to have a lot of it. When I was 5, I was bewildered by the relationship between rationing coupons and pocket money (Hart 2000:176). When I was 12, I took up betting on the horses. Gambling saw me through university (Hart 2013). I even became an entrepreneur in the slums of a West African city as part of my doctoral fieldwork. I put together a small real estate fortune during the 70s and then lost it when I was divorced. So, when I was asked to give a public lecture to my fellow anthropologists in the mid-80s, it was not surprising that I hit upon the topic of money. I brought plenty of personal experience to my subject, none of which showed in my official presentation. I called this ‘Heads or tails?’, referring to the two sides of a coin, one representing money as an aspect of political society, the other its value as a commodity in exchange. My argument was that both sides, state and market, were indispensable to money, but for much of the 20th century we had been subjected to ruinous swings between theories emphasizing one side to the exclusion of the other. The lecture was published in Man (Hart 1986).

In the course of my analysis, I drew attention to the invention of LETS in British Columbia. I am told that this was the first reference to LETS in an academic journal. I subsequently took a closer interest in LETS and then I met Michael Linton in a Manchester pub during 1994. Until then, I had thought of LETS as a stand-alone alternative trading circuit, in full flight from the mainstream capitalist economy, sometimes harassed by government agencies, but embodying the spirit of utopian socialism in small local communities. Over a couple of pints, Michael quickly sketched a very different vision of the potential of LETS. He saw their operation in cities like Manchester (my home town) as linking individuals to numerous exchange circuits reflecting their different interests. These in turn would be fully integrated with normal commerce and tax regimes. Breakthroughs in communications technology (this was the time when the internet went public and the World Wide Web was invented) would bring the plastic revolution to LETS. We could make our own money and markets inside capitalism, but on a very different ethical basis.

For much of the 90s, I was Director of Cambridge University’s African Studies Centre. This brought me into an engagement with some of that continent’s most pressing problems, in Nigeria, Angola, South Africa and elsewhere. Of these by far the most dramatic was Angola. This country had suffered a million war deaths in three decades; its people lived perpetually on the brink of disaster. Yet the rest of the world was largely indifferent. I organized a conference and a book (Why Angola Matters, Hart and Lewis 1995). But the sheer scale of the poverty, violence and dislocation then afflicting Africa drew me into a deeper reflection on the nature of our unequal world and what to do about it. I studied the history of movements to end slavery, colonialism and apartheid, drawing especially on the writings of anti-colonial revolutionaries, such as M.K. Gandhi, Frantz Fanon and C.L.R. James. I was convinced that we face an acute crisis for world civilization and that the universities, with their specialist disciplines, cannot help us to understand it, even less to overcome it.

So I left Cambridge to try out a new life as a writer in Paris. The first outcome was a book on — you’ve guessed it — money (The Memory Bank: Money in an Unequal World, Hart 2000). Unlike in my academic work, I drew on my wide personal experience in writing this. I asked what future generations would be interested in about our times; and at the height of the dot com boom that seemed obviously enough our stumbling efforts to launch a digital revolution in communications. So my theme was the relationship between that revolution and changing forms of money and exchange. I proposed that markets and money have redemptive features, especially if organized on a non-capitalist basis. Reflecting the neoliberalism and techno-utopianism of the age, I was even more opposed to states than to capitalism and forecast their imminent demise. This contradicted my earlier conclusion that states and markets are equally indispensable to money. My argument was that electronic money enables a shift of power from its producers to users (see Dodd 2005:401-4006). I drew heavily on the example of LETS in all this. But I was still concerned that there was a large gap between the world’s economic problems and the scale of community currencies which affected only a few people mainly in the rich countries.

Soon afterwards, I went to see Michael Linton and Ernie Yacub on Vancouver Island. We agreed to start writing a book together on LETS. I wanted to have closer access to their theoretical and practical experience of “open money” (http://openmoney.org) and they imagined I might bring some skills and perspective as a writer on money. For much of 2001-2002, we exchanged ideas and material in preparation of the book, Common Wealth: Building Community and Economic Democracy with Open Money. We became involved in the Japan Open Money Project and Kohkoku magazine (“Future Open Design”) which was linked to Japan’s second largest advertising agency. I was impressed by the combination of several corporate enterprises and grassroots democratic organizations. This led me to wonder if the liberal revolutions that inaugurated the modern world, combining capitalist firms with popular movements of many kinds in England, America, France and Italy, might be revived in our day. If so, Japan would be a leading candidate for such a revolution. I was thrilled that LETS might play a part in this. I interacted with members of Japan’s New Association Movement (NAM) and formed a relationship with Makoto Nishibe whose work on LETS, labour money and use of the internet for community currencies I still find inspiring (Nishibe 2005).

Our efforts were not limited to Japan. Michael and I attended a “Wizards of OS” conference in Berlin where we explored the relationship between open money and the free software/open source movement. And he pursued an amazing range of links from international electronic payments at the European Commission to schools in London and the fast-growing barter club scene in Argentina (this was the time of the peso crisis and the rise of trueque, Hart 2002). I advised on a research programme on the informal economy in France including several projects on LETS which the French call SEL. Le Monde argued in an editorial that SEL was the most promising face of social democracy in France at the time. So the movement towards open money seemed to be gathering pace in the years following the millennium. The gap was narrowing between the problems we face as human civilization and our attempts to approach these problems through LETS-based initiatives.

Michael, Ernie and I aimed to promote greater equality and freedom by showing people how to organize in thousands of closed exchange circuits on the model of LETSystems. We express our desires democratically whenever we spend money; but this kind of voting is massively unequal. The vast majority of people alive have hardly any money to spend at all. How much better if we made our own money and voted with that. A new approach to money, offering individuals and communities more effective control of their own economic decision-making, was the most direct way to restore democracy to our participation in society. Harnessing the potential of the internet was essential if these efforts were to succeed; and Michael, with collaborators around the world, devoted much effort to developing the software and technology to make this happen. The urgent task was to link community currencies into wider interactive systems. Ideally the banks could do this, but for now we had to go it alone.

A proper currency service provider would enable users to create their own systems in the space available and give them access to other similar systems. A stand-alone community currency is like a radio or TV that can only tune to one station, a computer with just one programme. Supporting trade between people who keep their accounts in different currencies requires that the registries can communicate with each other through a cross-clearing network. This would be operated primarily through the internet, using its own money domain naming system (MDNS).  This would start with national top-level domains responsible for the registration of regional sub-domains, which would be in turn responsible for local registration. This facility would be further enhanced by ‘multi-cc’ smart-card systems. The cards could carry up to 15 different currencies at a time, off-line and anonymous, and were designed to make community money systems easily adopted in the retail sector. The combination of the cross-registry clearing and smart card systems would create a platform for virtually any form of open money. When the software achieved a kernel of cross-platform protocols capable of defining the integrated platform of any application, it would become open source software, open money in the fullest sense. Of course, co-ordination in this area is difficult when there is no one body concerned with establishing standards.

There is a paradox in using the terms open and closed in this context. For the majority of community currencies such as LETS the definitive principle is that the exchange circuits they sustain are closed. In contrast, the markets sustained by conventional money are open-ended networks of limitless extent, so that money seems to drain away to unseen centres of power that are invariably located elsewhere, leaving us powerless to prevent its passing. The whole point of LETS was that the purchasing power generated by trade comes round again to nourish the participating community; and it promotes internal production rather than the import/export pattern that predominates in mainstream markets. This is particularly so when the circuits are small and the community is a well-defined local area. But open money circuits may be scaled up to a much larger membership dispersed around the internet. The greater control afforded by closed circuit networks needs to be offset by an open source approach to the software needed to operate community money. This dialectic of local community and global network, reflected in a combination of closed circuits of exchange and open distribution methods, has been a constant feature of Michael Linton’s approach to LETSystems.

The book stalled, however, and was eventually abandoned. I have had time since to reflect on the reasons for this. The main one was that I lacked Michael and Ernie’s hands-on knowledge of the systems we were promoting and, as an anthropologist, I was used to writing about things I had first-hand experience of, even if only as a lecturer on books I had read. We seemed to have incompatible views on the historical character of money. Michael usually promoted LETS as the opposite of normal money, representing local closure as a virtue and money’s unbounded circulation as a threat. I have always seen money and markets as the way we extend the reach of our local societies to make more inclusive trading communities, drawing on Simmel (1900), Mauss (1925) and Polanyi (1944) in support of this idea. Clearly the explosion of money, markets and communications in the age of the internet was deeply dangerous; but it also brought closer the possibility of forming a world society based on universal human principles expressed through universal media.

I became aware of some unsettling contrasts in the rhetoric we each brought to persuading people that “open money” could benefit them (Hart 2009). We are all deeply socialized to treat the money system we know as natural. So, if one of the obstacles to disseminating community currencies is the difficulty of persuading people consciously to adopt new ideas, another is their unconscious use of old models when designing new forms of association. The nation-state has enjoyed tremendous success as the dominant form of society over the last century or two, so that we have internalized its principles and reproduce them whenever we seek to construct new forms of community. To my mind, Michael Linton’s commitment to extending the social range and interaction of community currencies was offset by the emphasis on local closure which others in the movement emphasized more strongly. As Simmel (1900) put it, money is the concrete symbol of our human ability to make universal society and the logic of community currencies fights that possibility. A federation of limited currencies is clearly the way to go, but the resources needed for effective coordination on a large scale were then simply unavailable to scattered activists.

It is perhaps predictable that the early development of community currencies took the form of defensive particularistic units offering a temporary refuge from the ravages of capitalism. Such groups normally emphasize relations of personal trust between members, shared morality in contrast with the ruthless impersonality of the world outside. Harking back to the labour theory of value, some have based their measure of money on time (time dollars, Ithaca hours), thereby putting some distance between their exchanges and the national economy. These communities have usually been local and police the boundaries of face-to-face communities. This is what most people imagine community currencies to imply; and indeed a substantial part of the movement will retain this character indefinitely. But virtual relations at distance and face-to-face communication reinforce each other in a complementary way and should not be posed as stark alternatives.

The euro crisis

After a period when the euro was just a virtual currency and depreciated heavily against the US dollar, coins and notes were introduced on 1 January 2002, with mildly euphoric expectations of a new era for Europe. The national currencies of twelve countries, which had been linked together for some time, now ceased to be legal tender, being replaced by what is in effect a federal state currency like the dollar. By contrast, at the other end of the world in Argentina, the crisis of the peso, which was linked to the dollar, provoked a proposal for a parallel currency, the argentino, based on a federation of currencies issued by provincial governments. This lasted no longer than Adolfo Rodriguez Saa, one of five presidents in less than two weeks, who announced it. Then the peso itself was made new, this time at a dollar price 30% lower than before.

I published a comparison of these events (Hart 2002, “A tale of two currencies” – it was the best of times, it was the worst of times). Both cases were an admission of the failure of national currencies and involved coining new currencies to remedy this. The eventual failure of national monopoly currencies is inevitable in my view and I believed then that this opened avenues for ordinary citizens to take initiatives in their own hands through community currencies. What were the options besides joining ever larger currency blocs? Might the deficiencies of central bank money improve prospects for the take-up of community currencies?

The French press celebrated a European unity more complete than any known since the Roman Empire. The euro was to lead to a United States of Europe and offered the best chance yet of limiting the excesses of national governments. The banks did their best to slow the change down; but then the habit of supping copiously at the trough of national monopoly money dies hard. The television news had shots of bemused but happy punters fingering their euros in supermarket lines. There was no economic analysis. The birth of the euro was a practical matter of handling change; but above all it was a political symbol — apparently some people made a display with their starter kit it on the living room table.

I wrote of the euro then:

The euro’s management is likely to be less democratically accountable to the public even than its national precursors. The twelve central bank governors of the participating countries represent what is in effect a league of states. The euro may not be a national currency, but it does aim to be a federal state currency, like the dollar…The legacy of Maastricht is that the economic destiny of 300 million Europeans is now tied to the fortunes of a single currency whose management cannot possibly meet their varied needs and interests. The euro is in principle a throwback to the Bretton Woods era of fixed parity exchange rates and it does not take much imagination to figure out that the deflationary consequences for some parts of the European economy could be unpleasant. The constituent governments of Euroland will come under pressure from their own people for more flexible instruments of economic management. The euro cannot do the job all by itself (Hart 2002:21).

In Argentina, ordinary citizens floated their own ‘social money’ in the 1990s, forming an association, Red Global de Trueque Solidario, which issued 15 million currency units (creditos) and then split into a more money-minded organization, Red Global de Trueque, and one stressing egalitarian community, Red del Trueque Solidario. The credits were a single-issuer scrip like the national currencies that they aimed to complement. They were given away or bought cheaply as tokens of exchange within a closed circuit. These and provincial government experiments in local currency were a response to the rigidity of the fixed peso/dollar exchange rate which squeezed the life out of the domestic economy, when profligate debt and capital flight made devaluation inevitable. After flourishing for a few years, this “barter club” network crashed when rival powers (the government, criminal mafias?) flooded the market with counterfeit notes.

Europeans were not yet reduced to the desperate measures of the Argentinians, but they too could not afford to rest content with the money forms at their disposal. The member states of the Eurozone and the Argentinians were both acutely aware of the inadequacies of national currencies. Both took extreme measures to address thes; but, whereas they were forced upon Argentina, the Europeans were proactive in anticipating them. Becoming a member of a larger currency bloc is a way of trying to cope with ‘the markets’ — the global tide of virtual money which threatens to swamp the independence of national economies. I drew on my work with Michael Linton to suggest that his vision of many community currencies hooked up through multiple domain name systems and smart cards was relevant. A combination of improved technology and economic failure might be the stimulus they needed to gain wider acceptance. I concluded that the most important forms of money are social and, after several thousand years of only two kinds (commodity money and state money in various combinations), it might now be time to embrace another, people’s money.

The euro involved only a limited break with the territorial principle. Its logic was still that of a central bank monopoly within an expanded territory. There are other democratic possibilities, I claimed. We could make our own money rather than pay for the privilege of receiving it from our rulers. Europeans may not yet have been reduced to the desperate measures of the Argentinians, but they too had some way to go before they could rest content with the money forms at their disposal. Now, in countries such as Greece, the time for desperate measures like those invented by the Argentinians a decade ago has arrived. The contradictions built into the euro, conceived of in the euphoria of the free market’s “victory” in the Cold War, were disguised by the long credit boom. The financial crisis of September 2008 was at first represented by Europe’s elites as largely an “Anglo-Saxon” problem. The years since then have seen one inadequate half-measure after another. Meanwhile the crisis escalates and the dominant austerity policies are revealed ever more clearly as an anti-democratic move imposed on ordinary people by a class of bankers, politicians and bureaucrats.

The conversion of the whole world to free market capitalism (“neoliberal globalization”) in the early 1990s coincided with a digital revolution in communications. Wall Street took the lead in exploiting these new possibilities. After the dot-com boom crashed in 2000, a regime of low interest rates fuelled speculation in property. American bankers discovered that there was more to be made from lending to people with little money (through mortgages and credit card debt) than to people who have a lot, since higher interest rates and fees could be charged and assets could be seized on default. This led to the invention of “sub-prime” mortgages and to packaging these debts with other sounder loans for sale in capital markets with artificially inflated credit ratings. After 2005, it became obvious to some American finance houses that they should sell on the risky paper they had accumulated. But who would buy what they wanted to “short” (Lewis)? Enter Europe’s financial institutions who found they had a reasonably clear field, after the Cold War ended, in the “emerging markets” of Eastern and Southern Europe, Latin America, and Southeast Asia. French and German banks lent recklessly to Southern Europe, and they also bought heavily into American sub-prime mortgage bonds in the years just before the crash. Of all the world’s regions, the major and permanent loser in this economic crisis is Europe. Europeans now find themselves at the centre stage of the world economy, as they have not been since the 1930s, with financial markets hanging on each negotiation and election.

The central problem is not even mainly one of credit and debt, but rather reflects a deep-seated shift in the world economy, with national and international political institutions now unable to influence a money circuit that has gone global and lawless. In the second half of the twentieth century, humanity formed a single interactive social network for the first time. Money has acquired its apparent pre-eminence because the economy has been extended rapidly from a national to a global level without any of the social regulation that existed before. Naturally, the financial specialists used their newfound freedom to loot the world in scandalous ways that we will have to repair, if we can. But, in addition to drawing people en masse into unsustainable credit schemes, they also put in place some of the institutional mechanisms that will make the market work for all of us and not just for those with lots of money. Capitalism has clearly been instrumental in the making of world society, even if it is unlikely to be the basis for its stable functioning. Money is not simply a means of exploitation; it is also a mediator between individuals and society. Money, and the markets it sustains, is itself a human universal which could be emancipated from the social engines of inequality that it currently serves. It allows us, especially in its modern digital form, to move wealth to where it is needed in seconds, for example.

The monetary crisis that has overwhelmed the Eurozone needs to be seen in this context. The apparent triumph of the free market at the end of the Cold War induced two huge political blunders, both of them based on the premise that society should be shaped by the market economy rather than the other way round. First, the radical privatization of Soviet bloc public economies ignored the common history of politics, law, and social custom that shored up market economies in the West, thereby delivering economic control into the hands of gangsters and oligarchs. And second, the European single currency, which was supposed to provide the social glue for political union, was adopted without first developing effective fiscal institutions or economic convergence between northern and southern Europe.

The big mistake was to replace national currencies with the euro. An alternative proposal, the “hard European Currency Unit” (ECU), would have floated nationally managed currencies alongside a low-inflation European central bank currency. Countries that didn’t join the euro, like Britain and Switzerland, have in practice enjoyed the privilege of this plural option, but Eurozone countries cannot devalue and so must reduce their debts through deflation—or default. The euro was invented when money was already breaking up into multiple forms and functions. The Americans fought their Civil War before centralizing their currency; whereas the Europeans centralized their currency as a means of achieving political union. In this sense, the EU is a neoliberal experiment based on the dogma that markets logically precede politics.

Techno-utopian projects usually make the same mistake. Advertising itself as an “anonymous open source p2p digital currency”, BitCoin’s sponsors apparently believed that a market for money can be secured by mathematical innovation alone, while the actual politics is hidden. Early 2013 saw a classic “bubble” when the BTC/US$ exchange rate rose from $13 to $266 and fell to $50 in a matter of hours, only to stabilize around $100 afterwards. This last development was probably contrived by a single exchange that handles 80% of BitCoin transactions, thereby giving it greater influence over the price than a central bank. So much for the free market.

It is obvious enough that member states of the Eurozone have been denied the option of devaluation as a means of reducing national debt. The key problem for the European Union is the democratic deficit which has led governments to be accountable to finance rather than to their own people, as they largely were during the decades of social democracy after 1945. The economic stalemate in the Eurozone has political sources and could be resolved if the terms of public debate acknowledged contemporary social realities. It is unlikely, however, that the ruling elites who brought about the crisis will introduce effective solutions, since their prime responsibility is to save their own skins and those of their financial backers. Revolution and world war are not unthinkable conseqeunces of this mess. The EU was a bold political experiment that had some prospect of making regional federation the next stage in the making of world society. But its monetarist premises never allowed for the expression of economic democracy; and that is now coming back to haunt them.

The euro crisis is pushing Europe’s rulers inexorably along a path of social polarization, between a corporate bureaucracy and a population rapidly being stripped of the political, legal, and economic powers won after 1945. The whole story is a Greek tragedy in both the ancient and contemporary senses, where even the best intentions can no longer remedy the consequences of past mistakes. The tragedy is that, by granting undemocratic powers to the European Central Bank, the EU has ensured that the euro’s stability will be achieved only at the cost of general economic hardship. Mass political resistance will be the inevitable result, thereby further undermining the stability of the currency.

The collapse of national capitalism

The current crisis of the world economy is not merely financial, a moment in the historical cycle of credit and debt. The removal of political controls over money in recent decades has led to a situation where politics is still mainly national, but the money circuit is global and lawless. The crisis should rather be seen as the collapse of the money system that the world lived by throughout the twentieth century. This has been unravelling since the US dollar went off the gold standard in 1971, when a new regime of floating currencies emerged, and money derivatives were invented the following year. As the need for international cooperation intensifies, the disconnection between the economy and political institutions makes effective solutions impossible to reach.

There is still a tendency to see the disaster we are living through in economic rather than political terms. By attacking the free market rather than the use of the state to siphon wealth to the top, neoliberalism’s detractors often reproduce the ideology they claim to oppose. The euro is by no means the only symptom of this crisis, but it may well be seen in retrospect as the decisive nail in the coffin of the world economy. One way of approaching our moment in history is to ask not what is beginning, but what is ending. This is by no means straightforward. What is ending is “national capitalism,” the synthesis of nation-states and industrial capitalism whose main symbol is national monopoly currency (legal tender policed by a central bank). It was the institutional attempt to manage money, markets, and accumulation through a central bureaucracy within a cultural community of national citizens. However, it was never the only active principle in world political economy: cities, regional federations and empires are as old or much older.

National capitalism’s origins lay in a series of linked revolutions of the 1860s based on a new alliance between capitalists and the military landlord class. These ranged from the American civil war and Japan’s Meiji restoration to Italian and German unification. At the same time, Marx published Capital and a revolution took place in transport and communications (steamships, continental railways, and the telegraph). These new governments launched a bureaucratic revolution in the late nineteenth century and sponsored large corporations in a drive towards mass production. The national system became generalized after the First World War when states turned inward to manage their economies in times of war and depression. Its apogee was the social democracy built in the thirty years after 1945, what the French call les trente glorieuses.

People learn to understand each other as members of communities and money is an important vehicle for this. They share meanings as a way of achieving their practical purposes together. Nation-states have been so successful in such a relatively short time that it is hard for us to imagine society in any other way. Five different types of community came together in the nation-state:

•  Political community: a link to the world and a source of law at home
•  Community of place: territorial boundaries of land and sea
•  Imagined or virtual community: the constructed cultural identity of citizens
•  Community of interest: subjectively and objectively shared purposes in trade and war
•  Monetary community: common use of a national monopoly currency

The rise and fall of single currencies is therefore one way of approaching national capitalism’s historical trajectory.

At present, national politics and media are so parochial that we find it hard to think about the human predicament as a whole. But money is already global in scope and the need to overcome this limitation is urgent. Perhaps only a world war and all the losses it would bring will concentrate our minds once more on fixing the world we live in.

Mainstream economics says more about what money does than what it is. Its main function is held to be as a medium of exchange, a more efficient lubricant of markets than barter. Another school emphasizes money’s function as a means of payment, especially of taxes to the government and hence on “purchasing power.” It is considered by some as a standard of value or unit of account, with the focus again on government’s role in establishing the legal conditions for trade. John Locke conceived of money as a store of wealth, a new form of property that allowed the accumulation of riches to escape from the limitations of natural economy.

Karl Polanyi (1964) argued that only modern money combines the four functions (payment, standard, store, and exchange) in a few “all-purpose” symbols—the national currency. Although his analysis was intended only to illuminate the history of money, Polanyi’s approach offers profound insight into the causes of today’s global economic crisis. Our challenge is to conceive of society once more as something plural rather than singular, as a federated network rather than a centralized hierarchy, the nation-state. The era of national monopoly currencies is very recent (beginning in the 1850s), and it took the United States, for example, half a century to secure an uncontested monopoly for its “greenbacks.” However, “all-purpose money” has been breaking up for four decades now, since the US dollar was de-pegged from gold.

Since the Bretton Woods system of fixed parity exchange rates ended in the early 1970s, the world economy has reverted to the plural pattern of competing currencies that existed before central banks learned how to control national economies in the late nineteenth century. One aspect of the present crisis is that the international rule system imposed after the Second World War was subverted by the creation of an offshore banking system which brought the informal economy to the heart of global finance (Shaxson 2011). The separation of functions between different types of monetary instruments was also crucial to money’s great escape from the rules of the Keynesian consensus. Central bank control was eroded by a shift to money being issued in multiple forms by a globally distributed network of corporations, not just governments and banks.

Some brief examples will serve to indicate the momentous changes that have overtaken money in the last few decades. In Switzerland today, euros are commonly accepted in shops alongside the national currency. If you pay with a card, you can often choose the unit of account (Swiss franc, euro, pound sterling, US dollar). But only francs are acceptable for the payment of local taxes. Are national currencies a store of wealth? Hardly. They have all been radically depreciated and may even disappear, hence the flight to gold—which could turn out to be the biggest asset bubble of them all. As for real estate, the collapse of subprime mortgages got us into the present mess. And I have not even touched on what credit default swaps and collateral debt obligations are used for, or who issues them. The shadow banking system—hedge funds, money market funds, and structured investment vehicles that lie beyond state regulation—is literally out of control.

Georg Simmel (1900) considered money’s twin anchors to be its physical substance (coins, paper, etc.) and the social institutions supporting the community of its users. He predicted that the first would wither away, making the second more visible. The digital revolution in communications has been transforming money’s substance for two decades now. But globalization has made national society seem a lot less self-sufficient than it did a century ago. Radical reductions in the cost of transferring information have introduced new conditions for engagement with the impersonal economy, and world society is increasingly driven by money, markets, and telecommunications. The replacement of single currencies by numerous types of more specialized monetary instruments is one inevitable result of this.

This process of social extension beyond national boundaries is fraught with danger. We need to extend systems of social rights to the global level before the contradictions of the market system collapse into world war—but local political organization resists such a move. This dialectic of globalization is very ancient. Ours is becoming a multi-polar world whose plurality of associations and convergent income distribution resembles the medieval period more than anything since.

Simmel’s prophecy has been realized to a remarkable degree, as the digital revolution accelerates and cheapens electronic transfers. But if the essence of money is its use in a community with shared social institutions, national capitalism has lost its grip on social reality. We must therefore move from singular (national) to plural (federal) conceptions of society. The infrastructure of money has already become decentralized and global, so a return to the national solutions of the 1930s or a Keynesian regime of managed exchange rates and capital flows is bound to fail. The idea of world society is still perceived by most people as at best a utopian fantasy or at worst a threat to us all. We need to build an infrastructure of money adequate to humanity’s common needs, although this agenda seems impossibly remote right now. One move in this direction goes by the name of “alter-globalization” (Pleyers 2010), and the idea of a “human economy” (Hart, Laville and Cattani 2010) offers a bridge to that movement. The economy always has two faces, being pulled both inwards to secure local guarantees of a community’s rights and interests and outwards by engaging with outsiders through the medium of money and markets of various sorts—not just our own.

A human economy approach

Nobel laureate economist Ronald Coase (2012) has published an article, ‘Saving economics from the economists’ in the Harvard Business Review. “The degree to which economics is isolated from the ordinary business of life is extraordinary and unfortunate”, he writes. “In the 20th century, economics identified itself as a theoretical approach of economization and gave up the real-world economy as its subject matter. It thus is not a tool the public turns to for enlightenment about how the economy operates. But because it is no longer firmly grounded in systematic empirical investigation of the economy, it is hardly up to the task…. It is time to reengage with the economy. Market economies springing up in China, India, Africa, and elsewhere herald unprecedented opportunities for economists to study how the market economy gains its resilience in societies with cultural, institutional, and organizational diversity. But knowledge will come only if economics can be reoriented to the study of man as he is and the economic system as it actually exists.”

There are many heterodox economists who reject the dominant model of rational choice in ‘free’ markets, and want to reconnect the study of the economy to the real world; to make its findings more accessible to the public; and to place economic analysis within a framework that embraces humanity as a whole, the world we live in. The human economy approach shares all these priorities. Our focus draws inspiration from and seeks to contribute to the tradition of economic thought, but, more explicitly than these currents within economics, we are open to other traditions in the humanities and social sciences, notably anthropology, sociology, history and development studies.

The University of Pretoria research programme (http://web.up.ac.za/humaneconomy) has been shaped by the ‘alter-globalization’ movement of the last decade. It is the third phase of an international project that originated in the World Social Forum. The first phase (2002-2009) was a series of volumes in several languages, produced by a network of Latin American and Francophone researchers and activists, which aimed to introduce a wide audience to the core themes that might organize alternative approaches to the economy. These books, called Dictionary of the Other Economy, brought together short essays on the history of debate on many topics. A second phase saw publication of the first English-language collection in this series, The Human Economy: A Citizen’s Guide (Hart, Laville and Cattani, 2010). Fifteen countries were represented, but there was only one author from Asia and Africa, where most people live.  The focus on exchanges between researchers and activists also left questions of research methodology relatively unexplored.

The University of Pretoria program adds a Southern African node to the network of scholars and activists represented by publications so far, thereby giving greater weight to African, Asian and Latin American voices in a broader South-South and North-South dialogue. It is the first coordinated academic research program in the process initiated by the World Social Forum. Starting from a core of social anthropologists, the program has extended its inter-disciplinary reach to include sociology, history, political science, geography and education. We have appointed some 20 post-doctoral fellows from Africa, Asia, the Americas and Europe; and in 2012 an inter-disciplinary group of eight African PhD students from five countries. Our main research focus is on Southern Africa, but participants bring research expertise from many geographical areas.

Our first method is ethnographic with the aim of joining the people where they live in order to discover what they do, think and want. Second, the economy is always plural and so we must address the variety of particular institutions through which people experience economic life. Third, we wish to help people to organize and improve their own lives. Our findings ultimately should be accessible for their practical use. This all adds up to a sort of humanism. It must be so, if the economy is to be returned from remote experts to the people who are most affected by it. But humanism is not enough.  The human economy must be informed by an economic vision capable of bridging the gap between everyday life and humanity’s common predicament, which is inevitably impersonal and lies beyond the actor’s point of view. This means drawing on philosophy, world history, literature and grand social theory.

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 (Hart 2010). We urgently need to make a world where all people can live together. Humanity’s hectic dash from the village to the city is widely assumed to be driven by “capitalism”. But a number of social forms have emerged to organize the process on a large scale: empires, nation-states, cities, corporations, regional federations, international organizations, capitalist markets, machine industry, global finance, telecommunications networks. So the task is to figure out how states, cities, big money and the rest might be selectively combined with citizens’ initiatives to promote a more democratic world society. We envisage the human economy in terms of a dialectic of small-scale humanism and large-scale impersonal institutions. Somehow these two poles of our social existence must b eintegrated effectively.

If economic strategies should be anchored in people’s everyday lives, aspirations and local circumstances, the movement should be one of extension from the local towards the global. We can’t arrive instantly at a view of the whole, but we can engage more concretely with the world that lies beyond familiar institutions. The chief way of achieving social extension has always been through markets and money in a variety of forms. They are intrinsic to our human potential, not anti-human as sometimes depicted. Of course they should take forms more conducive to economic democracy.

The principles of an ‘economy’, conceived of as a specific strategy, must be discovered, articulated and disseminated. Such an economy, to be useful, should be based on general principles that guide what people do. It is not just an ideology or a realistic description. The social and technical conditions of our era — urbanization, fast transport and universal media – must underpin any inquiry into how the principles of human economy might be realised. We do not assume that people know best, although they usually know their own interests better than those who presume to speak for them. In origin ‘economy’ privileged budgeting for domestic self-sufficiency; ‘political economy’ promoted capitalist markets over military landlordism; ‘national economy’ sought to serve the interests of a citizen body. Perhaps ‘human economy’ is a way of envisaging how unique human beings are linked to humanity as a whole. It would then synthesise the others in a sequence of social extension (house-market-nation-world) whose typical social units co-exist at complementary levels.

Harnessing bureaucracy to the ends of grassroots democracy

The euro crisis is a consequence of the neoliberal idea that politics can be banished from monetary policy, a dream shared by the techno-utopians who designed BitCoin. But it also manifests the collapse of national capitalism as the dominant economic system of our times. This ought to represent an opportunity for community currencies – and I once thought so – but many of them unconsciously retain the assumptions of national capitalism in their basic form as stand-alone bounded entities. The ‘human economy’ approach must express an economic vision that can bridge the gap between everyday life (what people know) and humanity’s common predicament, which is inevitably impersonal and lies beyond the actor’s point of view (what they don’t know). Humanity’s shared occupation of the planet cries out for new principles of association. Small may be beautiful and a preference for initiatives grounded in local social realities is unchallengeable; but large-scale bureaucracies, whether governments or business corporations, are also essential if our aspirations for economic democracy are to be realised. Money and markets should take forms that are more conducive to this end. It helps to recognize that they already span the extremes of human experience.

We have to start with what people do, think and want where they live; but what we all share as humanity also matters. The human economy idea may have its origins in small-scale informal activities and a humanist ideology, but it requires the development of global social networks and ideas too. For the human predicament is impersonal; there are powerful anti-humanist forces in our lives. So we have to build bridges between local subjectivities and the new human universal, world society. To be human is to be a person who depends on and must make sense of impersonal social conditions.

There is a pressing need for more effective social coordination at the global level and the drive towards local self-organization is strong everywhere. Special-interest associations of every kind proliferate. Resistance to the unequal society we have made often takes the form of denigrating the dominant bureaucratic institutions — “the state” and “capitalism” being favourites – in favour of promoting small-scale self-organized groups and networks. Yet it is inconceivable that any future society of this century could dispense altogether with the principal social forms that have brought us to this point. So the real task is to work out how states, cities, big money and the rest might be selectively combined with citizens’ initiatives to promote a more democratic world society. Combining the flux of self-organized small-scale initiatives with the rigidity and longevity of large bureaucracies is devilishly difficult; but in the end this strategy offers more lasting prospects for success than going it alone as “mice in the basement”.

This idea is not particularly new. It is just that many activists in the community currencies field would not consider working with bureaucracies that they think of as the antithesis of what they aspire to. Yet the shippers of Nantes and Bordeaux provided strong support to the French revolution, the industrialists of Milan and Turin to the Italian revolution. Kenya’s world-leading experiment in mobile money, M-pesa, was launched by a subsidiary of Vodacom. Hewlett-Packard has long developed research stations in outlying areas in an attempt to make computers accessible to the world’s “poorest four billions”. The notion of a ‘popular economy’ has emerged in Latin America since the 1990s, bringing new coalitions (peasants, urban informal workers, unions) into an alliance with progressive political regimes. Brazil under Lula introduced a system of community development banks with over 50 branches of which the first was Banco Palmas. These combine microfinance and complementary currencies with strong local democratic input and are seen as promoting the social and solidary economy. The government of Uruguay has sponsored a ‘3C’ alternative circuit of exchange and credit for SMEs in which national utilities and local tax offices anchor the circulation of unpaid invoices as currency by accepting them in payment of bills. A major problem with alternative trading circuits is what the big players could use them for and this restricts acceptance of the means of payment. But everyone has to pay for telephones and local taxes. My last example is outlined more fully since I know it at first-hand.

Invoice Clearing Bureau South Africa (ICB) is the licence holder of an electronic invoice validation system. This was the brainchild of Neville Kerdachi, a South-African-born Lebanese now in his early 70s. He took part in his family’s businesses before establishing his own as a manufacturer, real estate developer and horse-owner. His vocation, however, was as a factor in Durban port, buying up shipping invoices for cash at a discount (against delays in payment and the risk of non-payment). His experience in this field goes back half a century. This led to the formation of ICB which is hosted by BANKSERV as a platform linking buyers, sellers and banks. The company chairman is Vishnu Padayachee, an activist and organizer under apartheid, prominent development economist and former director of South Africa’s central bank.

The aim of e-Invoice Banking is to speed up access to liquidity tied up in invoices due to mature at some future time. More generally it addresses the question of slow payment by big buyers to small suppliers (SMEs), while also offering the former a rationalised method for handling their own invoices in bulk (at a smaller than usual discount). Once an invoice has been placed in the system by the seller and acknowledged by the buyer, it is validated by the bank which may then pay 70% or more of the invoice value to the supplier (validation takes place through a sophisticated, yet quite easily integrated system, which is the competitive advantage of ICB’s software). It dramatically changes a firm’s cash flow, a major headache for most regardless of size, enabling it to purchase more stock, build cash balances etc). Liquid diamonds, someone called the system. ICB charges R25 per transaction and also hopes to gain revenues from licensing its system abroad.

Launching this system has not been easy. The banks have been slow (as usual) to adopt it and attempts to secure the political patronage of the South African government proved to be unworkable. The system does not require separate regulation since it is just an intermediary between buyers, sellers and the banks. In principle it could be set up anywhere in the world. It has won approval and interest from the Bank of International Settlements and the World Bank, among other global institutions. But the mechanism is essentially decentralised and does not rely on such support. Its birth has undoubtedly been facilitated by the sophistication of online finance in South Africa. The transition to mobile telephony (which is currently expanding fastest in Africa) is just one step away.

This system potentially addresses the needs of a large number of SMEs and provides a service to big corporations like Nestle and Walmart. ICB’s software is superior to their internal accounting processes. Its speed and efficiency allows outstanding invoices to be cleared on a large scale at a lower discount rate than competing services. Setting up small accounts is always labour-intensive and gradual, whereas a contract with one large corporation can contribute significant capital to the process of building up the e-invoice network. In the history of internet commerce, the most successful operators (Amazon, iTunes) have combined individual blockbuster best-sellers with a million small items (the long tail) which make up half of Amazon’s total revenues. The lesson of ICB, which is not yet fully established, is that the needs of small businesses are not best met by forming networks with similar organizations at a level removed from big business and government. Innovation on an appropriate scale requires hi-tech organizational resources — and money of course — that lie beyond the reach of grassroots networks. Yet, when combined fruitfully, the benefits for the little people can be substantial – for an estimated 200,000 Black SMEs in South Africa, for example. The key to ICB’s strategy is the low cost of individual operations, their integration into existing bureaucratic systems and an ability to span the whole range of economic activity. There are wider lessons for all who would solve common economic problems through monetary innovations.

The beneficiaries of these innovations are ordinary individuals with complex economic lives. Lindiwe — a middle-aged Zulu woman who once worked in a factory and is now a domestic servant in Durban — rents township accommodation from the municipality and travels to and from work in informal minibuses. She looks after her mother who receives a state pension and her brother’s young daughters since he has AIDS. Her teenage sons are unemployed and drifting into crime and drugs. Her husband disappeared over ten years ago. She sells cosmetics to neighbours in her spare time, shops once a week in a supermarket and at local stores the rest of the time. She attends a prosperity church, has joined a savings club and owes money to loan sharks, but doesn’t have a bank account. Note the variety of sources she draws on, few of them directly part of corporate capitalism. Lindiwe understands her own life better than anyone. But there are questions she doesn’t know the answers to: Why are there no longer mining jobs for the men? Why did all the factories close? Why are the schools failing? Why has a Black government done so little to reduce poverty and inequality?

A human economy approach must somehow bridge the gap between Lindiwe’s life and a world driven by forces she cannot know. But, given our preference to anchor economic strategies in people’s everyday lives, aspirations and local circumstances, we have to push out the limits of understanding through extension from the local towards the global. We can’t arrive instantly at a view of the whole, but we can engage more concretely with the world that lies beyond the familiar institutions that immediately secure our rights and interests. Lindiwe could not juggle the plethora of institutional factors in her life without money. Her unanswered questions require a new kind of political education, one grounded in the circumstances she knows well, but also capable of opening up to broader perspectives. Innovations in money and markets, as all proponents of complementary and community currencies know, are particularly well-suited to this purpose since they span the extremes of human experience.

Keynote address for the 2^nd International Conference on Complementary Currency Systems, “Multiple monies and development: making payments in diverse economies”, held at ISS, The Hague, 19-23 June 2013.

References to be added

I will first explain what I mean by saying that the informal economy, a concept I was associated with coining in the early 1970s, has taken over the world, largely as a result of neoliberal deregulation over the last three decades (pp. 1-3). After a brief account of my own early exposure to West Africa (pp. 3-5), I turn to the question of how and why Africa has long been a symbol of global inequality. Even after independence, Africans are still waiting from emancipation (pp. 5-10). Even so Africa’s development prospects in the 21st century are brighter than for a long time (pp. 10-12). In the course of the 20^th century, regional differences in the forms of African political economy converged on the model of agrarian civilization that was once known as the Old Regime. The antidote to the Old Regime is a liberal revolution (pp. 12-15). Accordingly I next consider the role played by free trade and protection in the revolutions that made modern France, the United States, Italy and Germany, with particular reference to the latter’s Zollverein (customs union) in the 19^th century (pp. 15-16). Turning to the Southern African example, which includes the oldest extant customs union in the world, I examine the organization of international trade there (pp. 16-18). In conclusion I review the prospects for greater integration of trade regimes in Africa. Is an African customs union possible or desirable? How might it come about? (pp. 18-19).

How the informal economy took over the world[1]

Soon after the millennium I learned of an illegal trade that had grown up in the southern French cities of Marseilles and Montpellier. It supplied stolen cars and car parts to Africa and was staffed mainly by North Africans. Some of them dreamed of reclaiming the Mediterranean for Islam and they all ignored official paperwork, relying on word-of-mouth agreements, mainly within a religious brotherhood. This traffic grew so big that elements in the French car industry were drawn South to meet a demand of which there is no trace in the official record. An army of policemen, customs and tax officials were allegedly part of this remarkable machine. Russian and Latin American mafias became involved and the gang added Brussels and Hamburg as bases for their world strategy.

Nor is mainstream French politics without its criminal side. President Mitterand’s office apparently ran a slush fund supplied by petrol companies and licenced distributors in Africa from which, among other things, he transferred election funds to his friend, Helmut Kohl in Germany.  President Chirac’s corruption charge from his days in the Paris mayor’s office is still going through the courts. Now there are more scandals involving wholesale tax evasion by the controller of the government budget and allegations of corruption by the head of the IMF when she was Minister of Finance. Meanwhile the Tuareg tradition of smuggling everything from smartphones to bazookas across the Sahara on camels has been interrupted by a French army invasion to save the Mali government in the name of the ‘war on terror’. All of this pales into insignificance next to the City of London which converted a failed colonial empire into a network of tax havens that would probably surpass in scope Swiss private banking, if either could be measured.[2] At the other end of the world, a major Japanese information technology corporation, NEC, discovered not long ago a parallel criminal company using the same name, accountancy methods, suppliers and customers, but with the advantage of paying no tax because it was entirely off the books.[3] This is known as brand-jacking.

Informality has come a long way since I provided an ethnographic account of income opportunities available to the urban poor in Ghana four decades ago.[4] Then I was interested in revealing unrecorded activities that existed between the cracks of the state-made economy. It never occurred to me that these added up to much, but I thought they might be relevant to current debates concerning rampant unemployment in Third World cities. These people were working, but often for meagre and erratic rewards. I was careful to distinguish between legal and illegal activities, but this was often blurred. I have since identified three ways that the formal and informal may be combined. What I have been talking about so far reflects the first of these: negation, breaking the rules, crime; and we are reminded that this takes place at every level of the economy. Second, informality is built into abstract rule systems as unspecified content. Workable solutions to problems of administration invariably contain processes that are invisible to the formal order. For example, employees sometimes ‘work to rule’. They follow their job descriptions to the letter without any of the informal practices that allow these abstractions to function. Everything grinds to a halt. Third, some activities exist in parallel, as residue. They are just separate from the bureaucracy. The logic of the formal/informal pair is stretched to include peasant economy, traditional payments and domestic life as being somehow ‘informal’. Yet these social forms often shape informal economic practices and vice versa. Is society just one thing – one state with its rule of law – or can some spheres of social life be left by bureaucracy to their own devices?

The idea of an informal economy arose at a turning point in world history in the early 1970s. At that time it was universally assumed that only the state could engineer significant development on behalf of its citizens. The United States’ losing war in Vietnam, however, provoked a global financial crisis which led to the dollar being depegged from gold in 1971. The next year money futures were invented in Chicago in response to wild currency fluctuations and the world of derivatives was launched; the Bretton Woods system of fixed exchange rates unravelled. The formation of OPEC and the energy crisis of 1973 brought about a world depression, the consequences of which we are still living with. By the end of the decade neoliberal conservatives were installed in power throughout the West and the post-war Keynesian experiment in regulated public economies was over. The seeds of the current crisis were sown then.

The informal economy’s improbable rise to global dominance is a result of the mania for deregulation in the following three decades. This was linked of course to the wholesale privatization of public goods and services and to the capture of politics by high finance. Deregulation provided a fig leaf for corruption, rent-seeking, tax evasion and public irresponsibility. Nowhere was this more evident than in the culture of the Wall Street banks from the 1980s. This was no secret at the time. Each major bank spawned a tell-all book written by undercover reporters or disillusioned former employees.[5] The removal of official restraints on financial practices generated a culture of personal excess from the trading floor to boardroom politics; moral responsibility towards clients was replaced by predation. Yet, during the credit boom, celebration of unending prosperity drowned criticism. Even after the bust, the political ascendancy of finance has hardly been challenged.[6]

Apart from the main financial houses, the shadow banking system — hedge funds, money market funds and structured investment vehicles that lie beyond state regulation – is literally out of control. Tax evasion is now an international industry that dwarfs national budgets. The Silicon Valley giants that now dominate world economy – Apple, Google, Amazon, Facebook – pay next to no taxes. The Cambridge economist, Sir James Mirrlees, won a Nobel Prize for proving that you can’t force the rich to pay more than they are willing to.[7] None of this touches on the blatant criminal behaviour of transnational corporations who now outnumber countries by 2 to 1 in the top 100 economic entities on the planet.[8] Where to stop? The drug cartels from Mexico and Colombia to Russia, the illegal armaments industry, the global war over intellectual property (“piracy”), fake luxury goods, the invasion and looting of Iraq, 4 million dead in the East Congo scramble for minerals. The informal economy was always a way of labelling the unknowable, but the scale of all this goes beyond comprehension. Yet we often talk about the international rule system as if we were all still living in the regulated national economies of 1970. And what can it possibly mean to assert – as is often the case – that Africa’s economies are 70-90% ‘informal’? The ubiquity of the informal economy today is a powerful symptom of the endemic causes of and failure to address the world economic crisis.

An old man’s prayers

It is hard to recall what I was really thinking about when I set out for Accra in 1965 to do field research towards a PhD in social anthropology.  Audrey Richards wrote to my supervisor, Jack Goody, who was already there: “God knows what Keith is going to do when he arrives, but he doesn’t”. My plan was to study the politics of independence by investigating how migrants from the savannah interior learned how to be citizens through voluntary associations, political parties, broadcasting and the like. Ghana was a police state at the time and I soon found that no-one wanted to discuss politics with me. So I turned instead to the street economy of the slum where I lived. The rest is history, as they say. I became dissatisfied with the idea that the state was the only vehicle for development and, as I have said, drew attention to informal economic practices in the cracks of the state-made economy. This ethnographic intervention made visible what had largely been invisible before. I did not anticipate that a concept would be coined to define these multifarious activities[9] or that deregulation would eventually render all levels of the world economy substantially informal.

Although I was an apprentice career academic at the time, I was influenced by the Zeitgeist of the 1960s. Western youth rejected the authority of our parents’ generation – unwisely as it turned out. We chanted the names of the heroes of the anti-colonial revolution – Ho Chi Minh, Fidel Castro, Che Guevara, Mao Tse Tung and the rest – and believed that the defeat of colonial empire had major implications for humanity as a whole (civil rights, the women’s movement, the anti-nuclear campaign, even world politics). In the course of the 1970s, we saw this dream unravel. By the end of that decade I wrote a book on West Africa[10] that sought to explain why post-colonial state formation had failed in societies that were still predominantly rural. It was an angry book, perhaps because I took the failure personally. I argued that modern states had been erected on the basis of backward agriculture. Either some sectors of the economy had to raise productivity levels by adopting machine methods or the state would devolve to a level compatible with that of production. I called this “Haitianization”, after C.L.R. James’s great account of the slave revolution in San Domingo.[11] This recognized the role of foreign financial pressures; and it was prophetic, since the 1980s saw the Bretton Woods institutions pull the rug out from under African governments and before long failed states became commonplace in the region. At much the same time, I joined James himself and began a belated education in Panafricanism.

As Hegel said, an old man repeats the same prayers he learned as a child, but they are now coloured by the experience of a lifetime. This lecture might be an attempt to prove that my youthful aspirations were not misguided. Or, to put it another way, we need to ask now whether the international and national bureaucracies that regulate the movement of people, goods and money around the world, within and beyond the African continent, serve the interests of the vast majority or just the powerful few who can hold the rules of democratic states in contempt.[12] Hernando De Soto is a controversial figure; but he has a point when he argues that, whereas developing countries like Peru were once stuck in a colonial mercantile system, they are now constrained by an international bureaucracy that works only for the developed countries (and their corporations) who would never have developed in the first place, if their infant capitalist economies had been saddled with similar encumbrances.[13] The imposition of customs duties and other taxes on the profits of international trade goes to the heart of this crisis for democracy today. Politics is still mainly national, but the economy has gone global and is both over- and under-regulated at the same time. Nowhere is this problem more urgent than in Africa.

Waiting for emancipation in an unequal world

We live in a racist world. Despite the collapse of European empire and the formal adoption of a façade of international bureaucracy, the vast majority of black Africans are still waiting for meaningful emancipation from their perceived social inferiority. The idea that humanity consists of a racial hierarchy with blacks at the bottom is an old one. But the Caribbean economist, W. Arthur Lewis, made a strong case that the formation of a world economy divided between rich manufacturing exporters and poor raw material exporters belongs to the decades before the First World War, when Africa was carved up by the imperial powers.[14] That bipolar economic order has been shifting for some time now, largely as a result of the emergence of Japan and then China and India as engines of capitalist growth.

Now there is talk, much of it overheated, of economic growth in Africa. In the present decade, 7 out of the 10 fastest-growing economies (as conventionally measured) are African.[15] In 1900 Africa was the world’s least densely populated and urbanized continent with 7.5% of the total. Today it is double that, with an urban share fast approaching the global average. According to UN projections, Africa will contain 24% of all the people alive in 2050, 35% in 2100. This is because its annual population growth rate is 2.5% at a time when the rest of the world is ageing. The Asian manufacturing countries already recognize that Africa is the fastest-growing market in the world. This could provide a long delayed opportunity for Africans to raise their collective profile in international negotiations. If they succeed, it will be a world revolution, the death knell for a racist world order, no less. And that is a prize for us all to wish for.

For centuries Africa was a source of slaves shipped across the Atlantic, but also to the Indian Ocean and Arab worlds. The movement to abolish slavery was officially completed in the late 19^th century. But emancipation is rarely as simple as that. In West Africa, abolition was a disaster. The internal drive to capture slaves continued apace and, despite a shift to their use in domestic production, supply soon exceeded demand and the price of slaves fell drastically, leading to their widespread abuse. Colonial empires were subsequently justified by the mayhem in West Africa and by the drive to abolish the Arab slave trade in East Africa. But colonial regimes still relied on indigenous slave masters in several places. Much later, when these regimes fell, Africans were offered emancipation once more, this time through national independence. This was followed by the regression of most African economies for a half-century. Ghana had an economy bigger than Indonesia’s in 1960 and per capita income on a par with South Korea’s. Now, despite Ghana’s recent partial economic recovery, for both indicators the Asian countries are more than twenty times larger than Ghana’s. Apartheid was defeated in South Africa, but two decades later the country is more unequal and unemployment is massive, while the government shoots its own people if they complain. Writers coin metaphors for misrule throughout the continent: “The Postcolony”, “Politics of the Belly”, “Architects of Poverty”.[16] Africans are still waiting for a freedom that would secure them equal membership of world society. But they have never encountered more favourable conditions than now. When Africa had only 2% of global purchasing power, the whole continent could be dismissed as irrelevant to the world economy. That is no longer the case and rapidly becoming less so.

For too long Africa has stood as the world’s most vivid symbol of inequality, one reinforced by most of its inhabitants being identifiable by the colour of their skin. ‘Africa’ is either a continental territory separated from the Eurasian landmass by the Mediterranean and Red Seas or the place that black people (and for that matter the human species) come from. But “the land of the blacks” is hard to pin down and “Subsaharan Africa” may make sense from a European perspective looking South, but not if you focus on the Northeast region, where the Nile links Egypt to Sudan, Ethiopia and the Lakes further South. The African continent is divided into three disparate regions — North, South and Middle (West, Central and East Africa); but a measure of convergence between them is now taking place. A preoccupation with Africa’s post-colonial failure to ‘develop’ – or to ‘take-off’ — has obscured what really happened there in the twentieth century. The rise of cities has been accompanied by the formation of weak and venal states, locked into dependency on foreign powers and leaving the urban masses largely to their own devices. These have generated spontaneous markets to meet their own needs which have come to be understood as an “informal economy”.[17]

For some four decades now, Jack Goody has tried to explain why the institutions of Africa South of the Sahara diverged so strongly from the Old World civilizations of Eurasia and North Africa, turning later to refute the idea of Europe being exceptional in relation to Asia.[18] He based his explanation of Africa’s divergence on low population density, so that people were scarcer than land there, intensification of production was weak and the property foundations of a class society were never developed, as they were in Eurasia. But Goody did not investigate whether and how this was changing in the modern period. In order to make sense of the extraordinary transformation of this highly variegated continent, I distinguish between three broad types of social formation: “egalitarian societies” based on kinship; “agrarian civilization” in which urban elites control the mass of rural labour by means of the state and class power; and “national capitalism”, where markets and capital accumulation are regulated by central bureaucracies in the interest of citizens as a whole. These oversimplified categories allow me to indicate some broad historical trends.

In 1900, Africa had less than 2% of its inhabitants living in cities. By 2000, a population explosion saw the urban share rise to between a third and a half, compressing into one century what took much longer elsewhere. This urban revolution does not just consist in the unprecedented proliferation of cities, but also in the installation of the whole package of pre-industrial class society: states, new urban elites, intensification of agriculture and a political economy based on the extraction of rural surpluses and the city bazaar.[19] Africa has a more complex history than is captured by my typology; but its dominant institutions before the modern period may be understood in terms of the classless type based on kinship in the main. The second type, agrarian civilization, covered most of Europe, Asia and North Africa for the last few millennia. National capitalism has only taken root so far in South Africa, until recently for the benefit of whites only. Middle Africa has made a belated transition to the Old Regime of agrarian civilization in the course of the twentieth century, while Europe and North America, followed by Asia, embraced national capitalism. This brought North and Middle Africa closer together as pre-industrial class societies, while South Africa has drawn closer to the rest of Africa in its political form since the coming of majority rule. At the same time, the fastest-growing economies are from West, Central, East and Southern Africa, not from the North (where popular insurgency has now taken hold) or South Africa (which currently shares the economic weakness of the metropolitan economies of Europe and North America).

The anti-colonial revolution unleashed extravagant hopes for the transformation of an unequal world. These have not yet been realized for most Africans. But the model of development they were expected to adopt was ‘national capitalism’. Development in this sense never had a chance to take root across Africa. For the first half of the twentieth century, African peoples were shackled by colonial empire and in the second, their new nations struggled to keep afloat in a world economy organized by and for the major powers, then engaged in the Cold War. Africa’s new national leaders thought they were building modern economies, but in reality they were erecting fragile states based on the same backward agriculture as before.[20] This weakness inexorably led them to exchange the democratic legitimacy of the independence struggle for dependence on foreign powers. These ruling elites first relied on revenues from agricultural exports, then on loans contracted under dubious circumstances, finally on the financial monopoly that came from being licensed to supervise their country’s relations with global capitalism. But this bonanza was switched off in the early 1980s, when foreign capital felt that it could dispense with the mediation of local state powers and concentrated on collecting debts from them. Many governments were made bankrupt and some countries collapsed into civil war.

Concentration of political power at the centre led to primate urbanization, as economic demand became synonymous with the expenditures of a presidential ‘kleptocracy’. The growth of cities should normally lead to enhanced rural-urban exchange, as farmers supply food to city-dwellers and in turn buy the latter’s manufactures and services.[21] But this progressive division of labour requires a measure of protection from the world market at first and it was stifled at birth in post-colonial Africa by the dumping of subsidized food from North America and Europe and of cheap manufactures from Asia. For ‘structural adjustment’ meant that Africa’s fledgling national economies had no protection from the strong winds of world trade. A peasantry subjected to violence and political extraction was forced to choose between stagnation at home and migration to the main cities or abroad. Somehow the cities survived on the basis of markets that emerged to meet the population’s needs and to recycle the money concentrated at the top. These markets are the key to understanding the economic potential of Africa’s urban revolution.

Africa’s urban informal economy everywhere supplies food, housing and transport; education, health and other basic services; mining, manufactures and engineering; and trade at every level, including transnational commerce and foreign exchange. But its scope varies. In West/Central Africa, where white settlement was minimal, the cities were substantially an indigenous creation and their markets were always unregulated. Foreign middlemen like Lebanese traders flourished outside colonial administrative controls. The great ports of the Atlantic seaboard enjoy a degree of mercantile freedom that now underwrites their contribution to Africa’s commercial growth. Today Angolan women jump on planes heading for London, Paris, Dubai and Rio, where they stock up on luxury goods for resale in the streets of Luanda. In Southern Africa, however, cities were built by a white settler class who imposed strict controls on the indigenous population’s movements. South Africa’s informal economy today is hedged in as a result by rules designed to promote modern industry. Elsewhere, in Zimbabwe, Mozambique and Kenya, the state has long played a more controlling role than would be considered normal today in Lagos or Dakar.

African nation-states have learned the hard way that they are not free to choose their own forms of political economy. When the world was divided by the Cold War, state ownership of production and control of distribution seemed to offer the best chance of defending the national interest against colonial and neo-colonial predators. From the 80s, the mania for privatization often led to ownership being ceded to foreign corporations. Structural adjustment forced governments to abandon public services, lay off many workers and allow the free circulation of money. In the Congo, Angola, Mozambique, Somalia, Chad, Liberia, Sierra Leone and now Mali, failed states and civil wars encouraged informal mining and trade, concentrating wealth and power in the hands of warlords and their followers. The restoration of peace sometimes restored limited bureaucratic controls over distribution. The situation is highly dynamic and variable.

Tax collection in Africa never attained the regularity it has long achieved in Europe and Asia; and governments still rely on whatever resources they can extract from mineral royalties and the import-export trade. The new urban classes control and live off these revenues, usually under a patrimonial regime propped up by foreign powers. This constitutes an Old Regime ripe for liberal revolution; and the Arab Spring that began in North Africa during 2011 carries great significance for the continent as a whole.[22] The new states and class structures of Africa’s urban revolution are entangled in kinship systems that remain indispensable to the informal economy as a means of social organization. The middle classes pass off exploitation of cheap domestic labour as an egalitarian model of African kinship; while ‘family business’ has never lost favour and child labour is still acceptable. Formal bureaucracy, on the other hand, is hostile to kinship, where it is normally viewed as corruption. In the absence of a welfare state, Africans must rely on kinship to see them through the life cycle of birth, marriage, childrearing, old age and death; and this reinforces the power of rural elders who control access to the land in the face of emigration by the youth and women.

The prospect of rapid economic improvement soon in Africa seems counter-intuitive to many, especially given Africa’s symbolic role as the negation of ‘white’ superiority. Black people have long been the stigmatized underclass of an unequal world society organized along racial lines; but the shift of global economic power from West to East makes this situation highly dynamic now. Rather than face up to a decline in their economic fortunes, the North Atlantic societies prefer to dwell on the misfortunes of black people and on what they imagine is Africa’s permanent exclusion from modern prosperity. Failed politicians and ageing rock stars announce their mission to ‘save’ Africa from its presumed ills. The western media represent Africa as the benighted battleground of the four horsemen of the apocalypse: conquest, war, famine and death. It all goes to reassure a decadent West that at least some people are a lot worse off than themselves.

Africa’s development prospects in the 21st century

Every person of African descent, whatever their actual history and experience – they could be Barack Obama, for example — suffers the practical consequences of being stigmatized by colour in a world society built on racial difference. This situation will only be ended when Africans are economically ‘developed’ to a level that guarantees them political and cultural equality in our world. The Victorians called it ‘evolution’, but ‘development’ is much the same thing, even if many citizens of the rich countries believe that growth is no longer a priority and should be reversed. So what does development mean in the African context and how is it to be achieved in the century to come?

In 1800 the world’s population was around one billion. At that time less than 3% lived in cities. The rest lived by extracting a livelihood from the land. Animals and plants were responsible for almost all the energy produced and consumed by human beings.  A little more than two centuries later, world population has reached 7 billion. The proportion living in cities is about a half. Inanimate energy sources converted by machines now account for the bulk of production and consumption. For most of this period, the human population has been growing at an average annual rate of 1.5%; cities at 2% a year; and energy production at around 3% a year. Many people now live longer, work less and spend more as a result. But the distribution of all this extra energy has been grossly unequal. A third of humanity still works in the fields with their hands. Americans each consume 400 times more energy than the average Ugandan, for example.

‘Development’ thus refers in the first instance to this hectic dash of humanity from the village to the city. It is widely assumed that the engine driving this economic growth and the inequality it entails is “capitalism”. Development then means trying to understand both how capitalist growth is generated and how to make good the damage capitalism causes in repeated cycles of creation and destruction. A third meaning refers to the developmental state of the mid-twentieth century, the idea that governments are best placed to engineer sustained economic growth with redistribution. Pioneered by Fascist and Communist states, this model took root in the late colonial empires around the Second World War,  was adopted after the war in the leading Western industrial societies and became the norm for developed and newly independent countries afterwards until the 1970s.

The most common usage of ‘development’ over the last half-century, however, refers to the commitment of rich countries to help poor countries become richer. In the wake of the anti-colonial revolution, such a commitment was real enough, even if the recipes chosen were often flawed. But after the watershed of the 1970s, this commitment has faded. If, in the 1950s and 60s, the rapid growth of the world economy encouraged a belief that poor countries could embark on their own enrichment, from the 80s onwards ‘development’ has more often meant freeing up global monetary flows and applying sticking plaster to the wounds inflicted by this system. Development has thus been the label for political relations between rich and poor countries after colonial empire, for some decades defined by “aid”, but the preferred term nowadays is “partnership”.

There are massive regional discrepancies in development since the collapse of the European empires. After the anti-colonial revolution, many Asian countries installed successful capitalist economies, with and without western help, eventually bringing about an eastward shift in the balance of global economic power. But other regions, especially Africa, the Middle East and much of Latin America, stagnated or declined since the 1970s – a pattern from which Africa now seems to be rebounding. These divergent paths have led to the circulation of a variety of development models, with an Asian emphasis on authoritarian states being opposed to Western liberalism and radical political alternatives coming out of Latin America.

There are two pressing features of our world: the unprecedented expansion of markets since the Second World War and massive economic inequality between (and within) rich and poor nations. Becoming closer and more unequal at the same time is an explosive combination. Forbes magazine reported in March 2009 that the top ten richest individuals had a net worth between them of $250 billion, roughly the annual income of Finland (population 5 million) or of middle-ranking regional powers such as Venezuela (28 million), South Africa (49 million) and Iran (72 million). The same sum of a quarter trillion dollars equals the annual income of 26 Sub-Saharan African countries with a combined population of almost half a billion. Providing adequate food, clean water and basic education for the world’s poorest people could be achieved for less than the West spends annually on makeup, ice cream and pet food. Car ownership in developed countries is 400 per thousand persons, while in the developing countries it is below 20. The rich pollute the world fifty times more than the poor; but the latter are more likely to die from the pollution. A report published just before the millennium claimed that world consumption increased six times in the previous two decades; but the richest 20% accounted for 86% of private expenditure, the poorest 20% for only 1.3%. Africa, with a seventh of the world’s population, then had 2% of global purchasing power.[23]

Africa’s advantage in the current crisis is its weak attachment to the status quo. The world economy is precarious in the extreme, but Africans have less to lose; and the old Stalinist ‘law of unequal development’ reminds us that, under such circumstances, winners and losers can easily change places.[24] To speak of a possible economic upturn begs the question of what Africa’s new urban populations could produce as a means of bringing about their own economic development. So far, African countries have relied on exporting raw materials, when they could. Minerals clearly have a promising future owing to scarce supplies and escalating demand; but the world market for food and other agricultural products is skewed by western farm subsidies and prices are further depressed by the large number of poor farmers seeking entry. Conventionally, African governments have aspired to manufacturing exports as an alternative, but here they face intense competition from Asia. It would be more fruitful for African countries to argue collectively in the councils of world trade for some protection from international dumping, so that their farmers and infant industries might at least get a chance to supply their own populations first.

The evolving rural-urban division of labour which I identified earlier as the mainspring of development was frustrated in the case of post-colonial Africa. Fragmentation of sovereignty leaves Africa’s 54 countries in a poor bargaining position when it comes to negotiating mineral revenues, for example; and any appeal for great protection would have to be backed up by serious political coordination of a kind that is hardly visible at present. The world market for services is booming, however, and perhaps greater opportunities for supplying national, regional and global markets exist there. The fastest-growing sector of world trade is the production of culture: entertainment, education, media, software and a wide range of information services. The future of the human economy, once certain material requirements are satisfied, lies in the infinite scope for us to do things for each other — singing songs or telling stories — that need not take a tangible form. The largest global television audiences are for sporting events like the World Cup or the Olympic Games. Any move to enter this market will confront transnational corporations and the governments who support them. Nevertheless, there is a lot more to play for here and the terrain is less rigidly mapped out than in agriculture and manufactures. It is also one where Africans are well-placed to compete because of the proven preference of global audiences for their music and plastic arts.

Classes for and against a liberal revolution

The liberal revolutions that launched modern western society between the 17^th and 19^th centuries were sustained by three ideas: that freedom and economic progress require increased movement of people, goods and money in the market; that the political framework most compatible with this is democracy, putting power in the hands of the people; and that social progress depends on science, the drive to know objectively how things work that leads to enlightenment. For over a century now an anti-liberal tendency has disparaged this great emancipatory movement as a form of oppression and exploitation in disguise; and this is partially true, as with many social revolutions. Africa today must escape soon from varieties of Old Regime that owe a lot to the legacy of slavery, colonialism and apartheid; but conditions there can no longer be attributed just to these ancient causes. The peasant and worker revolutions of the 20^th century – and the ideologies that sustained them – are less relevant to Africa’s current circumstances than classical liberalism, reinforced by endogenous developments in economy, technology, religion and the arts.[25] These would have to be built on the conditions and energies generated by Africa’s  urban revolution in the 20^th century.

We all know that power is distributed very unequally in our world and any new movement would soon run up against entrenched privilege. In fact, world society today resembles quite closely the Old Regime of agrarian civilization, as in eighteenth century France, with isolated elites enjoying a lifestyle wildly beyond the reach of masses with almost nothing. It is not just in post-colonial Africa where the institutions of agrarian civilization rule today.[26] Since the millennium, the United States, whose own liberal revolution once overcame the Old Regime of King George and the East India Company, is now a rent-seeking plutocracy and regressed under George W. Bush to presidential despotism in the service of corporations like Halliburton. It is no longer the case that immense riches are principally acquired through selling products cheaper than ones competitors; access to rents secured by political privilege — such as the patents awarded to Big Pharma, monopoly rents from movie DVDs and music CDs or the use of tax revenues to bail out the Wall Street banks — now guarantee much greater profits and more reliably.[27]

In The Wretched of the Earth,[28] Frantz Fanon provided an excellent blueprint of how to go about analysing the class structure of decadent societies that are ripe for revolution, in his case the anti-colonial revolution. He pointed out that political parties and unions were weak and conservative in late colonial Africa because they represented a tiny part of the population: the industrial workers, civil servants, intellectuals and shopkeepers of the town, a class unwilling to jeopardize its own privileges. They were hostile to and suspicious of the mass of country people. The latter were governed by customary chiefs supervised in turn by the military and administrative officials of the occupying power. A nationalist middle class of professionals and traders ran up against the superstition and feudalism of the traditional authorities. Landless peasants moved to the town where they formed a lumpenproletariat. Eventually colonial repression forced the nationalists to flee the towns and take refuge with the peasantry. Only then, with the rural-urban split temporarily healed by crisis, did a mass nationalist movement take off. This compressed summary offers one model of how to analyse the potential for another African revolution now.

The African states brought into being by independence likewise rely on chiefs to keep the rural areas insulated from the more unruly currents of world society. Where the state’s writ has been fatally undermined, warlords take their place. Since the ‘structural adjustment’ policies of the 1980s, international agencies have systematically preferred to approach rural populations through NGOs, the missionaries of our age, rather than the departments of national government. World trade is organized by and for an alliance of the strongest governments and corporations. Some of the latter, especially in remote extractive industries, operate as independent states with the state. The cities, although massively expanded in size, still sustain a very small industrial workforce, since mechanized production is poorly developed in post-colonial Africa. The civil servants have been ravaged as a class by neoliberal pressure to cut public expenditures. This leaves us with the informal economy of unregulated urban commerce, a phenomenon that is not best summarized by the pejorative term, lumpenproletariat. Clearly, trade and finance are not organized, in Africa or the world at large, with a view to liberating the potential of these classes. It is not likely, therefore, that a liberal revolution could succeed by relying solely on a popular economic movement from below. There are larger players on the scene and their influence too must surely be felt. If Africans want to have a say in what happens to them next, they will have to tap old and new social forces to develop their own capacity for transnational association, in the face of the huge coalitions of neo-imperial power mobilizing to deny them that opportunity for self-expression.

Panafricanism gave way to aspirations for national capitalism half a century ago because world society was not organized then to accommodate it. When the anti-apartheid movement led to African independence in South Africa, global thinking took second place to the non-racial nationalism that the ANC had always espoused. But, as a result of neoliberal globalization, one of the strongest political movements today is the formation of large regional trading blocs: the EU, NAFTA, ASEAN, Mercosur. This is a good time for Africans to renew the movement towards greater continental unity, at first in economic affairs and as a complement to, not replacement for national governments, since the rest of the world is doing the same thing and they will inevitably lose out again if they fail to do so. If we needed any reminder of the contemporary salience of Panafricanism, we have only to note the USA’s recent establishment of a unified African military command, with the aim of controlling access to mineral resources there in competition with China and Europe.

It was never the case that a national framework for development made sense in Africa and it makes even less sense today. The coming African revolution could leapfrog many of the obstacles in its path, but it will not do so by remaining tied to the national straitjacket worn by African societies since they won independence from colonial rule. Perhaps comparative history might open up fresh perspectives on this question.

Freedom and protection in the early modern revolutions[29]

In 1793, the French revolution turned to the Terror, a campaign whose main target was the Girondins, a moderate faction whose base was in the Atlantic region, notably Bordeaux. At the same time, the Bretons raised a ‘Royal and Catholic Army’, supported from the sea by Britain, against which the Republic sent out an army of its own to fight in what became known as the War of Vendée.[30] The port city of Nantes, at the mouth of the Loire, was France’s largest and was heavily involved in slavery and trade with the Caribbean. It stood out for the Republic and was besieged by the Royalist army. The battle that led to its relief was considered decisive for the revolution, as was the shippers’ financial support for the Republican army. In the same period, some 4,000 Catholics and presumed Royalists were publicly executed by drowning inside the city, an episode that came to be known as ‘the national bathtub’. The obvious question is why the Nantes bourgeoisie risked so much for the revolution. One reason undoubtedly is that France, although centrally administered by the monarchy, was then a patchwork of local fief-holders, each of whom exacted what they could from people and goods moving through their territory. The republic promised to end all that. It was after all a liberal revolution whose main premise was to abolish restrictions on freedom of movement. The Nantes shippers had an interest in reducing the costs of moving their trade goods inland and so they allied themselves with anti-monarchist forces.

What the American, French and Italian revolutions had in common was mass insurgency linked to an extended period of warfare over attempts to remove fragmented sovereignty, unfair taxes and restrictions placed on movement and trade. Apart from their initial resistance to British imposition of an East India Company tea monopoly and of taxes to pay for the crown’s military costs, the American revolutionary government faced more than one rebellion of its own as a result of imposing excise duties on alcohol production. The Italian Risorgimento too was backed financially by the industrialists of Milan and Turin who wanted to replace Austrian protectionism and control of a jumble of territories with a unified national home market and unrestricted access to world trade. In all three cases, the power of merchant and manufacturing capital played a decisive part in the revolution, whatever else animated the overthrow of the Old Regime.

Perhaps the most notable example of a customs union that served as a precursor to political unification – before our own post-war European Common Market — was the Prussian Zollverein, launched in 1818, culminating five decades later in the German Empire. This started out piecemeal as a way of harmonising tariffs, measures and economic policy in scattered territories controlled by the Prussian ruling family. In the aftermath of Napoleonic conquest and British commercial expansion, the Germans felt vulnerable because of their extreme political fragmentation. Prussia’s main aim was to expand a protected zone of internal free trade and to exclude the Austrians. By the 1860s, most of what subsequently became Germany had joined the customs union. Some middle-sized states tried to break away to form their own union because of Prussia’s dominance, but they failed. The process was informed by the arguments of their leading economist of the day, Friedrich List, whose ‘national system’ of political economy was designed to prevent Germans from becoming just “drawers of water and hewers of wood for Britain”.[31] List emphasized the scope for innovation within an expanded free trade area protected from the cold winds of the world market. Americans such as Alexander Hamilton and Henry Clay were highly susceptible to such arguments.

The Southern African example

The Union of South Africa was founded in 1910. Like other British dominions, its structure was federal, bringing together provinces with highly disparate histories, geography and populations, as well as being linked to a patchwork of territories under British rule within and beyond its boundaries. As part of the aspiration to coordinate and rationalize this patchwork, a South African customs union (SACU) was formed in 1889, the oldest of its kind extant, involving eventually what became Botswana, Lesotho, Swaziland, Namibia and South Africa itself.[32] This union was tightly controlled from Pretoria; but, as part of President Mbeki’s push to make relations with South Africa’s neighbours more equal, democratic and consensual, SACU headquarters were moved to Namibia in 2004 and members were granted more independence in their dealings with other countries. This arrangement is now in disarray since the smaller countries have signed separate agreements with the European Union which in effect allow them to act of ports of trade for European goods, subverting South Africa’s attempts to control their entry and draw revenues from their importation. Now relations within SACU are at a low, proof, if any were needed, that moves towards greater regional integration will have to acknowledge South Africa’s unequal weight.

At the same time, the Southern African Development Community (SADC) has been expanded since the fall of apartheid to include Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. This makes SADC potentially the largest regional economy in Africa, one that is again naturally dominated by South Africa. But the reality within the region at present is a maze of national restrictions on the movement of people, goods and money, crosscut by bilateral deals of bewildering variety. Under the ANC, South Africa has increased, rather than reduced a sense of division between its own citizens and the many Africans who come there to live and work. Nevertheless, SADC remains the best chance for South Africa to coordinate economic policy with its neighbours. This would mean breaking with ‘capitalism in one country’ and its plethora of confusing and contradictory bilateral deals. In fact, under President Mbeki, nothing much happened at the level of SADC, since his attention was firmly focused on reforming regional cooperation at the continental level.[33]

Thabo Mbeki’s idea of an ‘African renaissance’ expressed the reasonable belief that a black majority government in South Africa might be a leading catalyst for an African economic revival based on greater political coordination between what have been, since independence, isolated nation-states that constituted easy pickings for the world’s great powers. His diplomatic energy was unstinted and, as a result, the Organization of African Unity in Addis Ababa was reconstituted as the African Union (AU), with the New Partnership for Africa’s Development (NEPAD) as its economic arm based in Johannesburg and as its political arm the African Peer Review Mechanism (APRM). A Pan African Parliament (PAP), composed of representatives nominated by member states, also sits in Johannesburg. The principal measures anticipated were a single currency for Africa as a whole, a continental central bank and trade harmonization.

South Africa’s economic relations with the rest of Africa now are not so different from what they were under the apartheid regime, which was not as isolated as it seemed at the time.[34] The main innovation has been an increased emphasis on a bilateral alliance with Africa’s other great power, Nigeria, mainly an exchange of oil supplies for manufactures and services. South African investment has diversified in the last two decades, especially in East Africa, where communications, hotels, retail, security and minerals have been the main sectors. Although names like MTN and Shop Rite are now familiar in East, West and Central Africa, most outward investment is still within the expanded SADC. Half of South Africa’s African investments are in Mozambique, with Mauritius next, mostly at the expense of Zimbabwe. Exchange controls on South African firms have been relaxed for African investments. The Johannesburg Stock Exchange is now linked to Nairobi. South African banks now finance oil exploration in the DRC, Nigeria, Angola and Gabon. Some firms have been active in the DRC, notably the huge energy project of the Inga Dam led by the power utility, Eskom.

Finally, India, Brazil and South Africa have formed a South-South alliance (IBSA) aimed at increasing trade and investment between them and perhaps influencing world economic councils. This was followed by South Africa’s admission to the BRICS. Such initiatives are inconsistent with regional integration and African unity; and South Africa’s economic policies have been haphazard as a result. Above all, Thabo Mbeki’s leadership was aimed exclusively at the very political class that has failed Africa so often since independence and he did not factor the forces of civil society into his plans.

Towards greater integration of African trade

As Daniel Bell once said, “The national state has become too small for the big problems in life and too big for the small problems”.[35] One answer is to rely more on subsidiarity. This is one of the features of federalism, whereby sovereignty is constitutionally divided between a central governing authority and constituent political units (like states or provinces). The principal of devolving power to the lowest effective authority is one condition for wider political association among previously sovereign entities. Federalism has been around for as long as the nation-state, if not longer; but the assumption of a national monopoly over political economy is deeply rooted in contemporary civilization. Most of the largest countries are federal in constitution, but this has not prevented them from behaving like nation-states of late.

Africa currently suffers from a labyrinthine confusion of regional associations which do little to strengthen their members’ bargaining power in world markets. The situation on the ground is rather different, where African peoples have for centuries developed patterns of trans-border movement and exchange which persist despite their rulers’ attempts to force economy and society into national cages. This is one major reason why so much of the African economy is held to be ‘informal’: state regulations are routinely ignored, with the result that half the population and most economic activity are criminalized and an absurd proportion of governmental effort is wasted on trying to apply unenforceable rules. The answer to this chaos is classical liberalism, the drive to establish the widest area possible of free trade and movement with minimal regulation by the authorities. Unfortunately, the last three decades of neoliberal globalization have done much to discredit this recipe; but the boundaries of free commerce and of state intervention, for South Africa’s sake and that of its smaller African neighbours, should be pushed beyond the limits of existing sovereignties.

The first step should not be to seek economic coordination at the most inclusive level of the African continent as a whole. A single currency and central bank are inappropriate to this stage of Africa’s development, given the disparities between member states. The global economic crisis has shown up vividly the limitations of such institutions for the Eurozone.[36] The existing pattern of regional associations needs to be rationalized with the aim of simplifying administration and abolishing conflict between rules at different levels. In South Africa’s case, this should probably mean abandoning SACU in order to concentrate on building up SADC as a customs union with one set of rules for all members. At present visas are still required for travel between many SADC countries and a maze of bilateral deals and tariff barriers make a mockery of the idea of an ‘economic community’. A new model of integration within the Southern African region (eventually extending to East Africa) would have to break with the historical constraints imposed by existing bodies. Selective tariffs need urgently to be reduced within SADC, but this would not prevent protectionist measures being introduced at the regional level, where necessary. A consistent policy of trade liberalisation would free up the movement of people, goods and capital within the region and allow existing informal practices to conform more closely to economic rules. Only then does it make sense to reach out to other African regions such as the Economic Community of West African States (ECOWAS). The political elites can’t be kept out of all this, but the driving force for regional integration on this scale would have to be a broad-based social movement. My emphasis here differs from Thabo Mbeki’s.

‘Africa’ is still a significant category in world affairs and these piece-meal steps towards regional integration would benefit from a revival of the Panafrican impulse that President Mbeki tried to kindle. The AU and especially its economic arm, NEPAD, might try to persuade the rest of the world that Africa’s poverty is a drag on the growth of the global economy. If the continent’s infant agricultural, manufacturing and service industries are to have a chance to develop, there must be agreement at the level of multilateral institutions such as the WTO that Africa deserves special protection, at least for a period. Such arguments are unlikely to be persuasive coming from an Africa as irrationally divided as at present. The continental and regional strategies need to be pursued side by side. This lecture has pointed towards an African Customs Union as one possible vehicle for a more integrated trade policy. I have only hinted by analogy about how that might develop; but for Africa’s and the world’s sake, I hope that something along these lines starts soon.

Keynote address for a World Customs Organization/World Bank conference on ‘Informality, international trade and customs’, Brussels, 3-4 June 2013

The genealogy of this problem begins with Locke and the liberal (bourgeois) revolution of the 18th century Enlightenment culminating in Kant. Locke sought a protected zone for private property free of interference by public agents (of the king). This led to the normative separation of public and private interests which was never actually achieved (as in the establishment of the Bank of England, a private institution, to nationalise the king’s war debts). This confusion was resolved in two ways: by the invention of ulititarian economics (Smith, Bentham) which reduced public outcomes to the interplay of private individual interests or by Kant’s attempt to discover the grounds for a cosmopolitan moral politics. State laws ended at territorial boundaries and geography generated endless cultural variations. So how could humanity make society in the world as a whole? His answer was the categorial imperative. We all want to be good or at least to be seen as being good. Cultures define the good differently, but the desire to be good makes a conversation across them possible. This project is still liberal, nourished by the American and French revolutions, plus the drive to abolish slavery. The liberal legacy emphasises personal responibility for ones actions, especially in common law traditions, where intention is key to legal culpability. Civil law traditions, as in Continental Europe, retain a strong division between law and right, lex and ius, loi et droit.

Hegel broke all this up with The Philosophy of Right (1821) where he argued that the problem was that bourgeois morality (a property of individual persons) could not address the problem of how and why societies move in history. Modern social thought has followed him. The main problems addressed by Marx, Weber and Durkheim can be found in this book: why capitalism generates poverty and economic inequality, the legitimation crisis of the modern state and the sources of solidarity in an advanced division of labour. Hegel also devoted a large part of the book to corporations. His position on responsibility can be summarised as follows: a child offers to help dry the dishes, then breaks a plate, bursts into tears and says “I didn’t mean to…” Hegel says, If you meant to, you would be a monster, but we are responsible for the social consequences of our actions and you must learn not to break plates when helping out. He identified three sources of social action: abstract right (from the family to coercion), morality (see above) and “the system of needs” (Sittlichkeit). This last is the most advanced basis for society, when citizens internalize the laws as being in their own interest — i.e. most people stop at a red because it is right to and has become a habit.

Fast forward to Max Weber who wanted to retain Kantian subjectivity, but also aspired to a Hegelian historical science of society. He identified three sources of social action: tradition (habit), charisma (force of personality) and rational-legal (embodied in market and bureaucracy, respectively). The movement of history was towards rationalization, but this was at the expense of social relations between persons based on morality (which were essential to the other two forms). This led to the legitimation crisis of the modern state and made him pessimistic about our future (the iron cage being made with bars that were stronger than our individual wills). He thought Kant’s categorical imperative was a pipedream, so what might be the basis for international comparison? His answer was social science organized in associations and journals to accumulate objective knowledge of the world. Weber was thus a neo-Kantian positivist. He could not have accounted for how the world’s largest and most coercive bureaucracy (the Soviet Union) collapsed from the inside with almost no loss of life.

Talcott Parsons set out to build a more hopeful American sociology in The Structure of Social Action (1937). He was convinced that Herbert Spencer, the evolutionary utlitarian who dominated the turn of the century, was dead and he had been killed by a quartet: Durkheim, Weber, Marshall and Pareto. Following the twin founders of British social anthropology, Malinowski and Radcliffe-Brown, he took his lead from Durkheim’s project of finding the basis for moral education in a capitalist division of labour and he bowdlerised Weber (whom he translated contentiously, giving rise to rival American and German traditions of intepreting W) to make him seem more Durkheimian than he was. D wanted to know how the social glue of the Third Republic might be strenghtened, whereas W was mostly interested in the consequences of certain ideological claims. His sources were historical records written by the powerful. He had no way of knowing what ordinary people believed. So if the king claims divine right to rule, he should not kill the head of his church. Claims to legitimacy constrain how power may be exercised. Parsons wanted to argue that people believe in their doctor, professor, lawyer, banker etc on moral grounds of their performing a social task responsibly and not just because they are rational experts.

Parsons’ vision emerged as the dominant ideology of the social democracy instituted in the leading Western industrial nations after World War 2. For the first time in history a world revolution was driven by developmental states committed to raising ordinary people’s purchasing power, to providing for their needs (education, health, transport, security) through enhanced public services and to equalising income distribution as far as possible, since this maximises demand in the home market and reduces conflict between citizens. In this period, an ethos of public responsibility did often shape the actions of private individuals. It was not outlandish to suppose that many doctors cared for their patients and even bank managers gave advice in their customers’ interests and not just their own.

The next part of the story is more familiar to thirtysomething researchers. The social democracy was eroded by a series of global crises in the 1970s culminating in the election of politicians committed to removing state controls and regulations from market economy. This was a naked return to Victorian utilitarianism, as well as a return to the gilded age, and it was sustained by belief in the benevolent consequences of giving free rein to markets. Economists who had previously acknowledged the social context of economic action now turned inward to a technical science based on manipulating prices. Following the emergence of money markets in the 70s and of the internet in the 90s, a credit boom for three decades supported the notion that this was a new era of rational economic management in which finanical professionals could do no wrong. The best students flocked into banking. Every Wall St bank spawned a tell-all confession of corporate malpractice from the late 1980s. We can’t claim that we had no way of knowing what was going on. Deregulation of finance generated political and cultural excess on a massive scale at all levels.

Then came the crash. Immediately and ever since, the American and the European governments put public money into rescuing the banks (whose true circumstances were usually hidden from view) rather than let them fail and use the money to regenerate job creation through public spending. The democratic deficit has become ever more obvious (an immobilised and partisan Congress, the euro crisis and the growing split between a German-dominated ECB and S Europe). Failure to take responsibility for public transgression is endemic and not just in financial circles (Berlusconi, priest child molesters etc). The emasculation of governments, privatisation of public interests, corruption and wrongdoing have been exacerbated by the collapse of national capitalism, Hegel’s recipe for modern political economy that was installed in the late 19th century and has been unravelling since the 1970s. The money system has gone global. Central banks exercise diminishing influence over their own currencies. The world economy is ripe for takeover by transnational corporations whose impersonal purpose is most singular: the make money for shareholders. In many ways industrial capitalism has been replaced by a rent-seeking system which, like the Old Regime, grants wealth to those with political privilege not to those who sell competitive products for profit. A world dominated by the US has become increasingly plutocratic.

So what is to be done? The first question is whether anything sustainable can be rescued from this mess or are we rather condemned to a sequence of wars and revolutions until a more just society emerges, as after 1945? If “neoliberalism” has indeed restored the Old Regime that was once overthrown by the liberal revolutions of the 17-19th centuries, perhaps instead of pining for the workerist revolutions of the 20th century, we should take insipration from the anti-colonial revolution which sought to rid the non-Western peoples of empire. The world is no longer unipolar, but Asia, Africa and Latin America are rising to challenge western hegemony. We are in the thick of a world revolution of unknowable dimensions and it is unlikely to be illuminated by asking how bankers might be made more morally accountable to their respective publics. A first step would be to learn where the contemporary divorce of morality from politics, law and economics came from; to look for positive examples in the intellectual and social history of the last 400 years; and to come up with sharp, original questions that help define the mess we now find ourselves in, that help return us somehow to a viable democratic life in which all human beings have a common interest.

Thanks for stimulating this excursion into the history of ideas.

Best, Keith

He continues, “Economics thus becomes a convenient instrument the state uses to manage the economy, rather than a tool the public turns to for enlightenment about how the economy operates. But because it is no longer firmly grounded in systematic empirical investigation of the working of the economy, it is hardly up to the task….The reduction of economics to price theory is troubling enough. It is suicidal for the field to slide into a hard science of choice, ignoring the influences of society, history, culture, and politics on the working of the economy. It is time to reengage the severely impoverished field of economics with the economy. Market economies springing up in China, India, Africa, and elsewhere herald unprecedented opportunities for economists to study how the market economy gains its resilience in societies with cultural, institutional, and organizational diversities (sic). But knowledge will come only if economics can be reoriented to the study of man as he is and the economic system as it actually exists.”

This plea echoes a movement of economics students a decade ago, calling itself “post-autistic economics”, which later took the form of the real-world economics review. In addition, the legions of heterodox economists multiply and an interdisciplinary World Economics Association, formed in 2011, soon acquired over 10,000 members. So there is plenty of resistance within the profession to an economics whose dominant model is one of rational choice in “free” markets. From Coase’s summary and these other developments we may infer several priorities: to reconnect the study of the economy to the real world; to make its findings more accessible to the public; and to place economic analysis within a framework that embraces humanity as a whole, the world we live in. A century ago, Alfred Marshall defined economics as “both a study of wealth and a branch of the study of man” in his synthesis of the marginalist revolution, Principles of Economics (1890). Marshall was Keynes’ teacher at Cambridge, a cooperative socialist who also developed a Hegelian theory of the welfare state.

The “human economy” approach shares all these priorities. Our focus definitely draws inspiration from and seeks to contribute to the tradition of economic thought, but, more explicitly than the currents within economics described above, we are open to other traditions in the humanities and social sciences, notably anthropology, history and development studies. The Human Economy Program at the University of Pretoria has been shaped more directly by another movement of the last decade which now goes by the name of “alter-globalization”. It is the third phase of an international project that originated in the first World Social Forum held in Porto Alegre in 2001. The first phase (2002-2009) was a series of volumes in several languages, produced by a network of researchers and activists in Latin America and France, which aimed to introduce a wide audience to the core themes that might organize alternative approaches to the economy. These books, called Dictionary of the Other Economy, brought together short essays on the history of debate on particular topics and offered some practical applications of concepts relevant to building economic democracy. Taken together they pointed to a new language for addressing common problems of development.

A second phase saw publication of the first English collection in this series, The Human Economy: A Citizen’s Guide (Hart, Laville and Cattani 2010), for which a number of additional authors were commissioned from Britain, North America and Scandinavia. The new title reflected a desire to emphasize continuity with existing practice in a global context of humanity as a whole. The emphasis was on what people are doing already, even if this is obscured, marginalized or even repressed by mainstream institutions. Fifteen countries were represented, but there were no authors from Asia and Africa, where most of the people live.  Extension of the international project to the Anglophone West still left a lot to do. It was also clear that the focus on interaction between researchers and activists left questions of research methodology relatively unexplored.

The University of Pretoria program is a new departure in several senses. First, by adding a Southern African node to the burgeoning network of scholars and activists represented by publications so far, it seeks to give greater weight to African and Asian voices and to broaden the geographical range of South-South and North-South dialogue. Second, it is the first coordinated academic research program in the process initiated by the World Social Forum and encapsulated in the series of books mentioned above. Earlier volumes were aimed at a general audience of activists, whereas our priority is to contribute dedicated academic research to the search for greater economic democracy. Third, starting from a core of social anthropologists, the program has extended its reach to include sociology, history, political science, economics, geography, education and agriculture. In the first two years we have appointed 18 post-doctoral fellows from Africa (South Africa, Zimbabwe and Angola), Asia (Nepal), the Americas (Brazil, Jamaica, USA and Canada) and Europe (Britain, France, Germany, Netherlands, Spain, Greece and Italy). In 2012 we appointed an inter-disciplinary group of 8 African PhD students from South Africa, Lesotho, Zimbabwe, Nigeria and Cameroon. The majority of these two groups are carrying out research in Southern Africa, but they bring to Pretoria previous and continuing research interests in a wide range of geographical areas.

The Human Economy program started out with only loose guidelines. Our aim is to build a conversation, among ourselves and with other specialists, ultimately with the general public. This conversation is as much based on empirical investigation and comparison as it is on developing a theoretical and methodological framework for planning research. Our first basic method is inspired by the ethnographic revolution that launched social and cultural anthropology in the twentieth century. This was the first sustained effort by a class of academics to break out of the ivory tower and to join the people where they live in order to discover what they do, think and want. Second, the economy is always plural and people’s experience of it across time and space has more in common that the use of contrastive terms like “capitalism” or “socialism” would suggest. This approach addresses the variety of particular institutions through which most people experience economic life. Third, our aim is to promote economic democracy by helping people to organize and improve their own lives. Our findings must therefore ultimately be presented to the public in a spirit of pragmatism and made understandable for readers’ own practical use.

All of this is compatible with a humanist view of the Human Economy. It must be so, if the economy is to be returned from remote experts to the people who are most affected by it. But humanism by itself is not enough.  The human economy must also be informed by an economic vision capable of bridging the gap between everyday life (what people know) and humanity’s common predicament, which is inevitably impersonal and lies beyond the actor’s point of view (what they don’t know). For this purpose a variety of methods have to be drawn from philosophy, world history, literature and grand social theory. Globalization is irreversible and we have to extend our normal reach to address its contradictions. 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. We urgently need to make a world where all people can live together. Small may be beautiful and a preference for initiatives grounded in local social realities is unchallengeable, but large-scale bureaucracies, whether governments or business corporations, are also essential if our aspirations for economic democracy are to embrace the movement of the world we live in.

What after all is the “great transformation” of human history that we are living through? Around 1800 the world’s population was about one billion. At that time less than 3 in 100 people lived in cities. The rest lived mainly by extracting a livelihood from the land. Animals and plants were responsible for almost all the energy produced and consumed by human beings.  A bit more than two centuries later, world population has reached seven billions. The proportion living in cities is about a half. Inanimate sources converted by machines now account for the bulk of energy production and consumption. For most of this period, the human population has been growing at an average annual rate of 1.5%; cities at 2% a year; and energy production at around 3% a year. This last figure is double the rate of population increase, a powerful index of the economic expansion of the last 200 years. As a result, many people live longer, work less and spend more than they did before. But the distribution of all this extra energy has been grossly unequal. A third of humanity still works in the fields with their hands. Americans each consume 400 times more energy than the average Ugandan.

This hectic dash of humanity from the village to the city is widely assumed to be driven by an engine of economic growth and inequality known as “capitalism”. But several social forms have emerged to organize the process on a large scale, not all of them reducible to this single term: empires, nation-states, cities, corporations, regional federations, international organizations, capitalist markets, machine industry, global finance and telecommunications networks. There is a pressing need for more effective social coordination at the global level and the drive towards local self-organization is strong everywhere. Special-interest associations of every kind proliferate. Resistance to the unequal society we have made often takes the form of denigrating the dominant bureaucratic institutions — “the state” and “capitalism” being favourites in this regard – in favour of promoting small-scale self-organized groups and networks. Yet it is inconceivable that any future society of this century could dispense altogether with the principal social forms that have brought us to this point. So the real task is to work out how states, cities, big money and the rest might be selectively combined with citizens’ initiatives to promote a more democratic world society. A first step would be to emancipate ourselves from viewing the economy exclusively in national terms.

This idea is not particularly new. It is just that many activists in the SSE (social and solidarity economy) field will not consider working with bureaucracies that they think of as the enemy. Yet the French revolution was partly financed by the shippers of Bordeaux and Nantes, the Italian revolution by the industrialists of Milan and Turin. Kenya’s world-leading experiment in mobile money, M-pesa, was launched by a subsidiary of Vodacom. Hewlett-Packard has developed research stations in outlying areas for some years now as part of an attempt to make computers accessible to the world’s “poorest four billions”. The notion of a “popular economy” has emerged in Latin America since the 1990s, bringing new coalitions (peasants, urban informal workers, unions) into an alliance with progressive political regimes. Brazil under Lula introduced a community banking system combining microfinance and complementary currencies with strong local democratic input. The government of Uruguay has sponsored a “3C” alternative circuit of exchange and credit for SMEs in which national utilities and local tax offices anchor the circulation of unpaid invoices as currency. South Africa is developing a solution to the problem of slow payments to the self-employed by pioneering a clearing system that allows banks to pay 70% of the value of invoices immediately. It doesn’t make sense to go it alone on a small scale, but equally one has to be selective in picking capitalist firms and state regimes to work with.

This dialectic of small-scale humanism and large-scale impersonal institutions may be illustrated by an example, even if the balance here is tipped towards the former pole. Lindiwe — a middle-aged Zulu woman who once worked in a factory and is now a domestic servant in Durban — rents township accommodation from the municipality and travels to and from work in informal minibuses. She looks after her mother who receives a state pension and her brother’s young daughters since he has AIDS. Her teenage sons are unemployed and drifting into crime and drugs. Her husband disappeared over ten years ago. She sells cosmetics to neighbours in her spare time, shops once a week in a supermarket and at local stores the rest of the time. She attends a prosperity church, has joined a savings club and owes money to loan sharks, but doesn’t have a bank account. Note the complexity of her economic arrangements and the variety of sources she draws on, few of them directly part of corporate capitalism. Lindiwe understands her own life better than anyone else. But there are questions she doesn’t know the answers to: Why are there no longer mining jobs for the men? Why did all the factories close? Why are the schools failing? Why has a Black government done so little to reduce poverty and inequality?

So the human economy approach must somehow bridge the gap between Lindiwe’s life and a world driven by forces she cannot know. But, given our preference to anchor economic strategies in people’s everyday lives, their aspirations and their local circumstances, the intellectual movement involved should be conceived of as being one of extension from the local towards the global. We can’t arrive instantly at a view of the whole, but we can engage more concretely with the world that lies beyond the familiar institutions that immediately secure our rights and interests. According to Mauss and Polanyi (especially, but all the founders of modern social theory too), the chief way of achieving social extension has always been through markets and money in a variety of forms.

Lindiwe could not juggle the plethora of institutional factors in her life without money. Money and markets are intrinsic to our human potential, not anti-human as they are often depicted. Of course they should take forms that are more conducive to economic democracy. Her unanswered questions require a new kind of political education, one grounded in the circumstances she knows well, but also capable of opening up to broader perspectives. It helps to recognize that money and markets span the extremes of infinite expansion and finite closure. As Simmel said, money reflects our human potential to make universal society. It is also true, of course, that human motivations for economic action are more holistic than the economists allow for, taking in concerns with well-being and the good life, for example. These have traditionally been shaped by organized religion. A human economy approach must revisit the complex interaction between religion, education and economy too.

The principles of an “economy”, conceived of as a specific strategy, must be discovered, articulated and disseminated. Such an economy, to be useful, should be based on general principles that guide what people do. It is not just an ideology or a call for realism. The social and technical conditions of our era — urbanization, fast transport and universal media – should underpin any inquiry into how the principles of human economy might be realised. A human economy approach does not assume that people know best, although they usually know their own interests better than those who presume to speak for them. The history of the word “economy” is both long and unfinished. Any modern English dictionary reveals the residue of that history in the way we use terms like economy, economical and economize today, referring as they do to order, management and thrift in contexts ranging from household budgets to the world of markets and money.

In origin “economy” privileged budgeting for domestic self-sufficiency; political economy promoted capitalist markets over military landlordism; national economy sought to equalize the chances of a citizen body. Perhaps “human economy” could be a way of envisaging the next stage, linking unique human beings to humanity as a whole. It would then be a synthesis of the various elements in a sequence of social extension, house-market-nation-world, whose typical social units are not replaced, but rather co-exist. We are of course getting way ahead of ourselves. The Pretoria Human Economy program is first of all a new node in an international network animated by a common desire to advance economic democracy through academic research, social initiatives and public outreach. Based in Southern Africa, our aim is to articulate a new perspective in South-South and North-South dialogues concerning a better world. This will be achieved through research and intellectual exchange more than by issuing programmatic statements such as this one. But we have to keep our eyes on the prize. So why not ask where the human economy is situated in a historical sequence of named economic strategies that still co-exist? Appendix 1 contains an expanded list of candidates drawn from economic history, each with its own governing principles.

Finally, there is a contemporary political context that might add point to the human economy idea at this time. Oliver Williamson received a Nobel prize in economics last year for his development of Coase’s theory of the firm. Coase asked why, if markets are efficient, any self-employed person would choose to work in a collective rather than outsource what they can’t best do themselves. Williamson takes this division between what is internal and external to the firm to be entirely flexible, as should be the social division of labour as a whole, including relations between corporations and governments who have maintained an uneasy alliance for a century and a half. The Fordist phase of internalizing transaction costs is over for a number of reasons, not least because the digital revolution has cheapened the cost of transferring information reliably. This does not mean that corporations have ceased to be large and powerful. Of the 100 largest economic entities on earth two-thirds are corporations and, of those, half are bigger than all but 8 countries. Moreover, I believe we are witnessing a drive for corporate home rule which would leave them the only citizens in a world society made to suit their interests. This is the logical conclusion of the collapse of the difference between real and artificial persons in law in the late 19th century (Hart 2005 The Hit Man’s Dilemma: Or business personal and impersonal), granting business corporations the legal standing of individual citizens. As Thomas Jefferson foresaw, how could mere human beings compete with organizations of their size, wealth and longevity?

Coase/Williamson provides the flexibility to imagine a world where companies control the marketing of their brand, outsource production, logistics and much else and internalize government. For example, why rely on governments for conflict resolution? Corporations also have to handle conflict resolution internally. Why have state laws, when what the world needs most is moral law? The discourse of Corporate Social Responsibility is a major field for negotiating changes in the relationship between firms and society. We all know about the privatization of public services, which is another side of that coin. This is a matter of deadly significance and we have to ask what kinds of political mobilization are capable of resisting it.

The human economy idea may have its origins in small-scale informal activities and a humanist ideology, but effective resistance to a corporate takeover will require selective alliances between self-organized initiatives on the ground and large-scale bureaucracies of the public and private kind. It will also require the development of global social networks of the kind from which our Human Economy program drew its impetus. For, as Camus told us in The Plague, the human predicament is impersonal; there are powerful anti-humanist forces in our common lives. So we have to build bridges between local actors and the new human universal, world society. To be human is to be a person who depends on and must make sense of impersonal social conditions. But in the struggle with the corporations, we need to be very sure that we are human and they are not. The drive for economic democracy will not be won until that confusion has been cleared up.

Appendix 1   Some forms of economy and their principles

Domestic economy: budgeting for household self-sufficiency, anti-market

Religious economy (Buddhist, Christian, Islamic): countryside and city in God’s natural plan, for commerce against usury

Political economy: capitalist markets against military landlordism

National economy: moderating capitalist inequality in a national citizen community (macro-economics)

Market economy: rational individual choice in a free market (micro-economics)

Socialist economy (cooperative, state, communist): control by the workers in a workers’ state

Capitalist economy: one-world capitalism, free flow of money, financial globalization

Human economy: house-market-world, human beings for all humanity, economic democracy

http://thememorybank.co.uk/2009/05/09/the-hit-mans-dilemma-lite/

Most anthropologists take their lead from the academic work done by Polanyi and his collaborators at Columbia University after the war. Trade and Market in the Early Empires (1957) established the “substantivist” school of anthropologists and historians who were committed to analysing the economies of “non-industrial” societies. I reject that division of economic anthropology’s subject matter and so did Polanyi when he wrote The Great Transformation (1944). I love his masterpiece for its vivid, erudite and passionate writing. It is truly a work of literature as well as being visionary. I know of few works of any kind with similar power to make such an impact on first-time readers. His discussion of money there is a source of endless inspiration for me and I have recently drawn on a late paper, “Money objects and money uses” (1964), to explain the collapse of the twentieth-century money system. Polanyi, with Georg Simmel, is the key figure for me in helping to explain the current world economic crisis. Polanyi sees money and markets as ways of extending societies beyond their local insularity, thereby introducing a permanent tension between their external and internal dimensions. If nature, humanity and society should not be treated as “fictitious commodities” (land, labour and capital), Polanyi implies that money is the most inclusive means of our social interdependence and must not be bought and sold like a sack of potatoes.

I have never found much use for Polanyi’s typology of modes of transaction as a set. But his vision of human economies as being articulated by a limited number of institutional forms found widely across human history is an essential part of how I think now. So too is his reminder that the social solidarity embodied in associational life is as vital for economic democracy as the interaction of states and markets. The concepts of “solidarity economy”, “plural economy” and “human economy” overlap considerably and find common inspiration in Polanyi’s work, possibly more than any other single author. This undoubtedly accounts for his current popularity at a time when many people around the world are seeking to move beyond the sterile contrast between “revolutionary” and “reformist” approaches to improving the economy.

The core of a “human economy” approach (Hart, Laville and Cattani 2010), in my view, is its emphasis not just on local institutional particulars or its humanism, reflecting what people concretely do, think and want wherever they live, but also on the need for an economic vision to bridge the gap between everyday life and humanity’s widest associations which are inevitably impersonal and lie beyond the actor’s point of view. It is urgently imperative (a “new human universal”) for all humanity to learn how to live together in world society. Polanyi, writing towards the end of what has been described as “the second thirty years war”, epitomises this idea in his masterpiece, where the word “human” crops up repeatedly in the context of economy. The question is how far opposition to large-scale bureaucracies, whether governments or business corporations, along with a preference for initiatives grounded in local social realities, can take us when our aspirations for economic democracy must somehow embrace the movement of the world we live in. And here Polanyi’s theoretical framework shares some deficiencies with other strands of the socialist tradition.

What after all is the “great transformation” of human history that we are living through? In 1800 the world’s population was around one billion. At that time less than 3 in 100 people lived in cities. The rest lived mainly by extracting a livelihood from the land. Animals and plants were responsible for almost all the energy produced and consumed by human beings.  A bit more than two centuries later, world population has reached seven billions. The proportion living in cities is about a half. Inanimate sources converted by machines now account for the bulk of energy production and consumption. For most of this period, the human population has been growing at an average annual rate of 1.5%; cities at 2% a year; and energy production at around 3% a year. This last figure is double the rate of population increase, a powerful index of the economic expansion of the last 200 years. As a result, many people live longer, work less and spend more than they did before. But the distribution of all this extra energy has been grossly unequal. A third of humanity still works in the fields with their hands. Americans each consume 400 times more energy than the average Ugandan.

This hectic dash of humanity from the village to the city is widely assumed to be driven by an engine of economic growth and inequality known as “capitalism”. But several social forms have emerged to organize the process on a large scale, not all of them reducible to this single term: empires, nation-states, cities, corporations, regional federations, international organizations, capitalist markets, machine industry, global finance and telecommunications. There is a pressing need for more effective social coordination at the global level and the drive towards local self-organization is strong everywhere. Special-interest associations of every kind proliferate. Resistance to the unequal society we have made often takes the form of denigrating the dominant bureaucratic institutions — “the state” and “capitalism” being favourites in this regard – in favour of promoting small-scale self-organized groups. Polanyi may be read as supporting such a move. Yet it is inconceivable that any future society of this century could dispense altogether with the principal social forms that have brought us to this point. So the real task is to work out how states, cities, big money and the rest might be selectively combined with citizens’ initiatives to promote a more democratic world society. This requires us to emancipate ourselves from viewing the economy exclusively in national terms.

Polanyi’s vision of human history was deceptively simple. He presented the emergence of “market society” in the nineteenth century as a radical break. Marx and Engels likewise believed that what they were witnessing in Victorian England entailed an irreversible change for the world as a whole. They were right. But or course their dialectical method is quite different from Polanyi’s and they would never have used Polanyi’s idea of “market society”. Polanyi was aware of historical continuities in the longue durée. Nonetheless, he insisted that we should acknowledge the qualitative change that took place when “market society” first became dominant. This moment was marked by Britain’s repeal of the Speenhamland law in 1834, when human labour was consequently reduced to the status of a “fictional commodity”. Polanyi’s characterization of this new social form as “the market” (sometimes the “self-regulating market” or its counterpart in economic ideology, the “free market”) leaves out some important features of the bureaucratic revolution that underpinned a shift to mass production and consumption in the late nineteenth century.

The modern synthesis of the nation-state and industrial capitalism may be termed “national capitalism” (Hart 2009): the institutional attempt to manage money, markets and accumulation through central bureaucracy in the interest of a community of citizens. It is linked to the rise of large corporations as the dominant form of business and it represented a new alliance between capitalists and the traditional enforcers (the military landlord class) formed with the aim of containing the urban masses unleashed by the industrial revolution. It was in essence Hegel’s recipe in The Philosophy of Right (1821), the idea that only state power could contain the inequality intrinsic to capitalist development, while markets could in turn limit excessive concentrations of political power. Marx certainly didn’t envisage anything of this sort, nor did Polanyi see it in retrospect; but Max Weber could hardly miss the dualism of East and West in the new German empire’s ruling partnership between Prussian bureaucracy and Rhineland capitalism. “National capitalism” is still the dominant social form in our world, even if it may now be on the brink of collapse.

All the agrarian civilizations of Eurasia tried to keep markets and money in check, since power came from the landed property of an aristocratic military caste which feared that markets might undermine their control over society. This was expressed in medieval Europe as an opposition between the “natural economy” of the countryside and the commerce of the city. Long before this Aristotle, Alexander the Great’s tutor when the Macedonian cavalry overran the Greek cities, located society in the self-sufficiency of manorial estates, declaring that markets geared to profit-making were anti-social. This view of economy (oikonomia, literally “household management”) prevailed until the dawn of the modern era, when Jane Austen could describe one of her characters as a poor “economist” for her inability to handle the servants in a large country house. When Marx and Engels claimed that history had been a struggle between town and countryside, they had this conflict between landed power and urban commerce in mind.

Even in stateless societies, markets were usually kept marginal and subject to regulation by the agents of dominant social institutions. Why are markets supposed to be subversive of traditional social arrangements? Because commerce knows no bounds – all markets are in a sense world markets – and this threatens local systems of control. They offer a potential means of escape to the dominated classes: women, young people, serfs and slaves, ethnic minorities. The power of long-distance merchants often modified the autonomy of local rulers. This dialectic of local and global economy defined the struggle between competing interests long before it became a prominent feature of how we perceive the modern world. Adam Smith knew what he was taking on when he proposed that society had nothing to fear from markets and indeed much to gain. He stopped short of claiming that society’s interests as a whole were best served by markets left to their own devices; but these reservations have largely been forgotten since then.

The last two centuries have seen a strident debate between capitalist and socialist camps insisting that markets are either good or bad for society. The latter draws implicitly on the pre-industrial apologists for landed rule whose line was, broadly speaking, Aristotle’s. Karl Marx himself considered money to be indispensable to any complex economy and was radically opposed to the state in any form. However, many of his followers, when they did not try to outlaw markets and money altogether, preferred to return them to the marginal position they occupied under agrarian civilization and were less hostile to the state, pre-industrial society’s enduring legacy for our world. Polanyi falls within this anti-market camp since he acknowledged Aristotle as his master and considered “the self-regulating market’s” contradictions to have been the principal cause of the twentieth-century’s horrors.

A less apocalyptic version of socialism in the tradition of Saint-Simon acknowledges the social damage done by unfettered markets (what Joseph Schumpeter called “creative destruction”), but would not wish to do away with the wealth they produce. Indeed the leading capitalist societies at one stage all signed up for the idea that states should try to contain the inequality and ameliorate the social misery generated by markets. The BRICS are entering this stage now. The emphasis has shifted over time between reliance on states and on markets for managing national economy, between social and liberal democracy of various colours. The general economic breakdown of the 1930s turned a large number of American economists away from celebrating the logic of markets towards contemplating their repair. This “institutional economics” persists as the notion that markets need self-conscious social intervention, if they are to serve the public interest. John Maynard Keynes produced the most impressive synthesis of liberalism and social democracy in the last century. Much recent writing on Polanyi would place him within this tendency rather than as a card-carrying anti-marketeer. He did recognize a role for the market and lined up with those who sought institutional means to correct capitalism’s ills.

The market’s apologists likewise divide between some for whom it is a trans-historical machine for economic improvement best left to itself and those who acknowledge a role for enlightened public management of commerce. Classical liberals promoted markets as a means towards greater individual freedom as a corrective to the arbitrary social inequality of the Old Regime. But the industrial revolution brought about a shift to urban commerce that made vast new populations of wage labourers rely on markets for food, housing and all their basic needs. Under these circumstances, in Britain especially, society itself seemed to retreat from view, being replaced by an “economy” characterized this time by market contracts instead of domestic self-sufficiency. Indeed, Margaret Thatcher, one of the architects of the contemporary revival of market fundamentalism, once said “There is no such thing as society”. Others hold that society’s remaining defences are simply too weak to hold out against the rising tide of global money: you can’t buck “the markets”. Unregulated markets are engines of inequality, so this notion of markets as a natural force beyond social regulation serves also to legitimize wealth and even to make poverty seem deserved.

The founders of modern social theory all considered markets to be progressive in that they broke up the insularity of traditional rural society and brought humanity into wider circles of discourse and interaction. But they differed over the consequences of this move. Marx and Engels considered that the power of private money (capital) was too fragmented to organize the urban societies brought into being by machine production of commodities; so they looked to the enhanced social potential of large concentrations of workers for a truly collective remedy. Weber recognized that the formal rationality of capitalist bureaucracy led to the substantive deterioration of livelihood for many. But, as a liberal, he considered wholesale state intervention in markets to be a recipe for economic disaster. Durkheim and Mauss were both cooperative socialists who wanted to emphasize the human interdependence entailed in an expanded social role for markets and money, while rejecting the Social Darwinist claim that an unfettered capitalism ensures the “survival of the fittest”. Marcel Mauss gave higher priority to the human drive towards greater social inclusiveness, for which money and markets in various forms are indispensable, than to the consolidation of territorial states.

It is odd that Polanyi sometimes reduces the structures of national capitalism to an apolitical “self-regulating market.” For his analysis of money, markets and the liberal state was intensely political, as was his preference for social planning over the market. His wartime polemic, reproducing something of his opponents’ abstractions, was more a critique of liberal economics than a critical account of actually existing capitalism. This would explain the lingering confusion over whether he thought a “disembedded” market was possible or was just a figment of liberal ideology, market fundamentalism. Similarly, we might argue today either that neoliberalism did effectively disembed the market economy or that its claim to have done so was a mystification of the invisible political processes of rentier finance in which markets are still embedded. In either case, the post-war turn to social democracy or “embedded liberalism” – the apogee of national capitalism – was hardly anticipated by The Great Transformation. We should not repeat this error when we draw inspiration from Polanyi in the struggle for economic democracy today.

References

Blanc, J. 2011. Compte rendu de lecture: C. Hann and K. Hart (eds) Market and Society: The great transformation today, Cambridge: Cambridge University Press (2009). Revue Française de Sociologie 52, 4: 812-815.

Hart, K. 2009. Money in the making of world society. In C. Hann and K. Hart (eds) Market and Society (see above), 91-105.

Hart, K., J-L. Laville and A.D. Cattani (eds) 2010. The Human Economy: A citizen’s guide. Cambridge: Polity.

Holmes, C. 2012. Problems and opportunities in Polanyian analysis today, Economy and Society, 41, 3: 468-484.

English original of an Afterword (Postface) to be published in French in Isabelle Hillenkamp et Jean-Louis Laville (eds)   Socio-économie et démocratie: l’actualité de Karl Polanyi (forthcoming).

This interview is part of an ongoing series about open access (OA), publishing, communication, and anthropology.  The first interview in this series was with Jason Baird Jackson.  The second interview was with Tom Boellstorff.  The third installment of this OA series is with Keith Hart.
Part 1

Ryan Anderson: Thanks for doing this interview, Keith.  Let’s just jump right in here: What do you think about this whole ‘open access’ conversation going on in anthropology?

Keith Hart: Obviously I am in favor of it. The form that the discussion takes in contemporary anthropology seems to be specifically American, where the contradictions of established practice are most acute. In the most general sense, OA is a strategy of resistance to privatization of the commons, any commons. As such it is central to the intellectual property wars. But here I think we are talking about a much narrower issue of how to make research publications freely available without undermining their role as cultural capital in academic career advancement. This reflects the interests of a mass of unemployed young researchers who can’t afford to pay for information and yet still hope to find academic employment some day. The tension is between maintaining the intellectual commons and conserving ideas as private property. The situation is exacerbated in American anthropology by the peculiarly obdurate policy of the professional association (AAA) which elevates a closed regime of private production for profit above sharing knowledge with the general public. I am reminded of Marx’s early journalism against restriction of peasants’ access to fallen wood in the Westphalian forests. Most OA activists can’t fight privatization with his polemical intensity because they have already bought into the premises of an academic career. I met some anthropology friends on Twitter in 2009 who were as agitated then by the AAA’s restrictive (I am inclined to say “insane”) policies as they are now. We formed the Open Anthropology Cooperative–but we will return to that later. I am still struck by the insularity of American anthropologists who rarely consider if the French, for example, have come up with interesting responses to this general problem. Is OA an issue in Brazil or Scandinavia, in Japan or India? American anthropology isn’t the world and I hope that the OAC’s global membership will discuss these questions fruitfully. But then we run up against the limitations of language. Being able to read and write in English is not universal, yet how often is concern with OA extended to the issue of language barriers?

RA: These are some really important points you bring up.  First of all, let’s talk about the idea that American anthropology “isn’t the world,” as you say.  What do you know about some of the OA-related conversations that are taking place in France, Scandinavia, Brazil and elsewhere?  Where can or should we look to connect with those conversations?  Also, why do you think language barriers are so rarely addressed in OA discussions in the US?

KH: It doesn’t take a lot of effort to put “open access France” or wherever in a search engine. If you do, you’ll find a government paper of 2010 in English on the subject. But you won’t get far without French. Still, the translation machines are getting better all the time. My wife, Sophie Chevalier, edits an open access online multimedia anthropology journal in French called ethnographiques.org which was founded a decade ago by a cooperative of young French and Swiss researchers. It now has the highest rating awarded by the Agency for Evaluation of Higher Education and Research (AERES). The journal is open to the English-speaking world, having published interviews with Goody, Sahlins, Barth etc, and it provides French subtitles for clips in other languages. It is extremely open in its form and content, but effectively closed to monolingual Americans. The French are very sensitive to having lost their status as the global lingua franca in the 18th and 19^th centuries and that has led the universities there to turn inwards. Curiously the Americans and the British often exhibit the same tendency despite benefiting from the rise of English as a second language. Sophie is on the editorial board of a more traditional journal and has taken up the issue of open access publishing as a leading administrative figure in French anthropology. She is an active member of revues.org, a platform for electronic resources in the human and social sciences run by the Centre for Open Electronic Publishing (Cléo) in Marseille. This innovative portal publishes many open access journals and scientific documents and is now joining up with similar operations in Spanish and Portuguese. You may be interested to know that France also has the second largest blogosphere in the world after you-know-where. But the first question for any researcher concerns the language of publication, rather than open access as such.

Only an American would ask why language isn’t an issue for Americans. Just think “Empire”. The rest of us know that Americans expect us to come to them, not the other way round. It was so for the British when we ran the world. It used to be said that African colonial politicians could only meet each other between the wars in Paris and London. It is the same for the world’s anthropologists these days, with the AAA annual meetings offering us all a chance to meet colleagues from our own country! SM’s readers should check out what open access means for Africans today, for example. For many there OA means having access to any research publications at all and of ensuring that national research standards have a point of comparison. The obsession in much of the periphery is with not dropping off the table altogether or somehow finding a place at it, however precarious. In South Africa, where I work, the government pays researchers handsomely for publishing in accredited international journals. The fear is that South African universities will be parochial (little do they know!), but this institutional drive is conservative and does little to promote OA there. Brazil is an interesting case. It is a huge diverse country, like the United States, with a flourishing anthropology that has recently broken out of the Amazonian ghetto to offer commentary on urban life in general. It is also rather insular, like the US. The academic publishers there are experimenting with OA, but, until I brush up on my Portuguese, much of that is closed to me. Eduardo Viveiros de Castro is well-known for his “perspectivist” approach to ethnography, but he has also put a lot of effort into online cooperation and dissemination of Lusophone research. We live at a time when the old imperial anthropologies are giving way to many national and regional varieties. The institutional framework is everywhere different. There is a debate over at WSIS on “Is open access only for rich countries?”. You would think that anthropologists would study open access in comparative perspective, but apparently they don’t.

RA: And where does the creation of the Open Anthropology Cooperative fit within all of this?  How and why did that come about?

KH: In the 90s, after launching Prickly Pear Pamphlets (the predecessor of Marshall’s Prickly Paradigm), I founded a mailing list called the amateur anthropological association or the small-triple-a (motto: amateurs do it for love). It was supposed to be the anti-AAA, giving a place for outsiders as well as professionals and students. It lasted a few years. Then in May 2009, Kerim Friedman expressed his disappointment over the AAA’s foot-dragging in a blog post. (The same issue was brought up again in 2012 by you, Matt and others at SM).  Kerim’s post led to a heated denigration of the AAA’s impenetrable bureaucracy. Chris Kelty said it had become a mini-welfare state for its employees; a “neurotic institution” run by non-university staff. Casual griping quickly spread to Twitter, where a loose network of anthropologists had already formed. Before long, quasi-revolutionary suggestions were made to start a new, open, less bureaucratic and more inclusive worldwide community of anthropologists. Twitter was ideal for spreading the news and gaining momentum, but more space and organization were needed when the discussion actually became a movement to build a new network for anthropologists. Justin Shaffner and I set up a forum on The Memory Bank website with that in mind.

A small group of us committed to specifying a name and purpose for this proposed collective. The key voices were: Kerim Friedman, Paul Wren, Keith Hart, Fran Barone, Carol McGranahan, Jeremy Trombley, Steven Devijver, Cosimo Lupo, Olumide Abimbola, Àngels Trias i Valls and Justin Shaffner. We shared a strong attachment to anthropology, an interest in new media and a commitment to open access. In the new forum, participants brainstormed about two pressing development issues: “structure” and “function”. What would a new organization look like and what would it do?

Jeremy Trombley suggested that “we should begin by offering a structure that is open enough to allow it to become whatever it can down the road”. In contrast to the AAA’s bureaucratic intransigence, he proposed that “every member [should] be able and willing to take an initiative. There’s no need to get bogged down in unnecessary voting; if there’s something you think needs to get done and you can do it, then go for it”. The team, in hosting a new online organization for anthropologists that used only digital tools, aspired to a truly global scope, egalitarian ideals and the abolition of hierarchy. Its model was the negation of formal academia’s typical malfunctions. This antithetical framework proved to be both liberating and stifling in the weeks, months and years ahead. We made a lot of mistakes and some of the founders left in a huff. We have been trying to catch up with our own uncontrolled expansion ever since.

Fran Barone and I are finishing a chapter for a book, Media, Anthropology and Public Engagement, edited by Simone Abraham and Sarah Pink, so it’s hard to compress our thoughts in a few sound bites. We moved to Ning on the suggestion of Max Forte who joined us later and left soon afterwards. Membership exploded: 1,000 in the first three months, 7,000 today. The OAC consistently receives on average 500 visits a day. The top ten countries varies, but the United States accounts for most visits with Britain a clear second, followed by India, Australia, Canada, Germany, France, Italy, Japan and Brazil. Visits are divided roughly United States 30%, other Anglophone 30%, Europe 30%, Rest of the World 10%. This distribution understates the remarkable geographical and social range of the OAC’s membership which is much broader. The leading countries are much the same, but the OAC has drawn members in double figures or more from over fifty countries. Active participation through posting comments on the site is much lower and skewed towards the main Anglophone countries, although the OAC early on hosted specialist groups operating in German, Norwegian, Italian, French, Russian, Portuguese, Spanish and Turkish. The language issue is crucial. Despite this initial diversity and the OAC’s global reach, the trend is inexorably towards the dominance of native English-speakers. We are, however, running an online seminar by a Brazilian anthropologist in English and Portuguese later this month.

You can see that this history links the OAC closely to SM. I think you do what you do well (certainly I am a regular reader), but the focus on American academic anthropology is rather narrow. I have even seen the OAC described as being “European” on SM, which says something about the insularity of American anthropologists. The OAC is still searching for an identity, but there is no parallel in world anthropology for the kind of interaction on offer there. I could say a lot more, but that will have to do for now. I am really grateful for the bridge that you make personally between our two organizations, Ryan.

 Part 2

Ryan Anderson: Earlier you referred to OA as “a strategy of resistance to privatization of the commons”.  Would you care to elaborate on that?

Keith Hart: I meant that private property is still the great unresolved contradiction of modern society, not least because its ubiquity often makes society invisible. For Rousseau, the invention of private property was the origin of social inequality. The liberal Enlightenment looked to anthropology for the knowledge needed to realize a democratic revolution against the Old Regime. Morgan (followed by Engels) used Rousseau’s framework to make the history of unequal society the main object of a democratic anthropology. More recently, Lévi-Strauss, Wolf and Goody renewed this tradition, each in their own way. Now David Graeber has taken it up again. But the ethnographic turn made this a marginal current in twentieth century anthropology.

I grew up in a working class district of Manchester. The doors of our houses had to be kept open for neighbors to come in and out as they wished. Even inside the house, bedroom and bathroom doors were never closed. Privacy was the opposite of being open to the free flow of solidarity. I thought that spirit had gone forever, but I found it again when I moved to France fifteen years ago. Here the tradition of people occupying the streets (manifestation) is very much alive and the notion of a public sphere that belongs to all is palpable.

In my lectures I refer to the example of a Masai warrior who works as a nightwatchman in Nairobi. He buys a watch with his wages. What could be more personal or private than a wristwatch, attached to your skin? He returns to the village and a friend immediately says “Give me your watch”. He has to give him the watch. Why? The solidarity of age-mates, so vital for the defense of the village’s cattle, is undermined by distinctions based on private property. In our societies, we take private ownership for granted. The institutions that secure it for us are hidden most of the time. Only when we are relieved of our possessions or a contract is broken do we realize that we normally depend on the law; and we complain about the inadequacy of police protection.

Modern economics insists that individual exchange is universal, but the barter myth of money’s origins is based on the assumption of private property. All that is missing from barter is the money. In fact private property law has been invented independently only two or three times, by the Romans, the Chinese and maybe the Aztecs. It was invented by centralized states to secure the property of traders. The Romans made a distinction between rights in persons and rights in things. Ownership was normally based on having made something or using it; and this right was secured by being a member of a particular social group. Traders neither made nor used what they owned, but the state guaranteed their right to the thing against local brigandage, as they would put it.

There has never been a society so committed to private property as the United States and this goes with unusually weak social protection by the state. In the movie Bowling for Columbine, Michael Moore asks why American society is so prone to gun violence. He inserts a cartoon at one point to explain that it is because of the history of racism. But the cause is more plausibly an unchecked system of markets based on private property without the social protection of an effective welfare state. This also accounts, in my view, for the apparent anomaly of the US being the most modern society and the most religious. God and guns fill in for the welfare state. Canadians are both secular and less violent. The Europeans are hardly religious at all.

The euro crisis also hinges on privatization. After the Cold War ended, the Europeans decided that the winning side was the free market, forgetting their own long history of formal and informal public institutions shoring up markets. So they introduced a new currency to make a single market, without addressing the gap between North and South or developing fiscal institutions in common. They supposed that markets based on private property would lead them to political union. (The Americans, in contrast, fought a civil war before centralizing their currency.) The basic flaws in all this were hidden by the credit boom, but the financial crisis brought them out with a vengeance.

This is why I spoke of Marx’s early journalism. It underpinned his lifelong attempt to expose and replace an economy founded exclusively on private property. I am suggesting that, if we are distressed by what is going on in the universities today, we need to stand back and address fundamental issues first.

RA: You also highlighted what you call the tension between the maintenance of an intellectual commons and the conservation of ideas as private property.

KH: We still think of private property as belonging to living persons and oppose private and public spheres on that basis. But what makes property private is holding exclusive rights against the world. Abstract entities like governments and corporations, as well as individuals, can thus hold private property. We are understandably confused by this, especially since the corporations’ rise to public power rests on collapsing the difference between real and artificial persons in economic law. This constitutes a major obstacle not only to the practice of democracy, but also to thinking about it. Sadly, it has become commonplace for intellectuals to obscure the distinction between living persons and abstractions, as well as between persons, things and ideas.

Private property has not only evolved from individual ownership to predominately  corporate forms, but its main point of reference has also shifted from “real” to “intellectual” property, that is from material objects to ideas. This is partly because the digital revolution in communications has led to the economic preponderance of information services whose reproduction and transmission is often costless or nearly so. A similar sleight of hand is at work here as in the claim to corporate personhood. If I steal your cow, its loss is material, since only one of us can benefit from its milk. But if I copy a CD or DVD, I am denying no-one access to it. Yet corporate lobbyists depend on this misleading analogy to influence courts and legislators to treat duplication of their “property” as “theft” or even “piracy.”

The term “information feudalism” is highly appropriate for our era. Human work was once conceived of as collective physical energy, as so many “hands”. The internet has raised the significance of intangible commodities. Now that production of things is being replaced by information services, labor is increasingly understood as individual creativity, as subjectivity. And it is this shift that has been captured by big money in the claim that “intellectual property” deserves closer regulation in the interest of its owners.

The fight is on to save the commons of human society, culture and ecology from the encroachments of corporate private property. This is no longer just a question of conserving the earth’s natural resources, although it is definitely that too, nor of the deterioration of public services left to the mercies of privatized agencies. Increasingly we buy and sell ideas; and their reproduction is made infinitely easier by digital technologies. So the larger corporations have launched a campaign to assert their exclusive ownership of what until recently was considered shared culture to which all had free and equal access. Across the board, separate battles are being fought over music, movies, literature, software, GMOs, pharmaceuticals, the internet and the universities without any real sense of the common cause that they embody.

RA: In your opinion, is this a conflict that can be resolved?  Is there some sort of middle ground solution here?

KH: Well, we do have to take on the corporations, but my answer is yes, there is a middle ground solution and it is one we are well-placed as anthropologists to make use of. Durkheim believed that individuality was more developed in societies with an advanced division of labor because of their increased interdependence. The problem is that this pervasive individualism makes it harder for us to perceive the work of society in shaping our lives. This is especially so in a regime of private property, where the collective forces underpinning individual ownership are for the most part invisible. His key idea was ‘‘the non-contractual element in the contract’’. In a market transaction, only the buyer and seller appear to be involved; but it rests on an invisible array of institutions — of state law, social customs and shared history — without which it could not take place. How can people be made more aware of the importance of this social glue in their lives?

Some three decades later, Marcel Mauss wrote his famous essay, The Gift, which may be seen as a renewal of his uncle’s mission to make the non-contractual element in the contract visible. But he focused on a range of phenomena that were more prominent in ‘‘archaic’’ societies than our own, systems of competitive gift-exchange. He saw these as an individualized variant of a more general form of obligatory community service (prestation). The principle of giving with the expectation of a return persists in societies dominated by capitalist markets. A cooperative socialist, Mauss worked for an anti-capitalist revolution, but one based on developing the human dimensions of market institutions that existed already. He considered the Bolshevik revolution’s violent repression of markets to have been a disaster.

For Mauss, being human always means reconciling freedom and obligation, individual and collective interests. The ‘‘free gift’’ is not the opposite of self-interested contracts. It is always interested and often a source of inequality. Nor is ‘‘capitalism’’ the whole story when it comes to the modern economy. The gift is the non-contractual element in the contract. By obscuring, marginalizing and even repressing the more humane aspects of markets as well as their intrinsic inequality, bourgeois ideology prevents us from seeing how our current practices might sustain new directions for the economy. Much more sustains the market than the exchange of spot contracts. Most contracts (notably relations of credit and debt) involve deferred payment and thus resemble gifts whose defining characteristic is delayed return. This is to say nothing of the role of institutions like the welfare state in capitalist societies.

Mauss introduced three new elements to his uncle’s original approach. First, he abandoned Durkheim’s sociological reductionism, seeking rather to identify social phenomena in their totality, a dynamic assemblage of persons, networks, groups, things and ideas more readily revealed through ethnography than by specialist disciplines. Archaic gift-exchange brings together individuals and communities, law and economy, magic and religion, art and technology. Mauss advocated an economic movement from below for contemporary societies, aiming at consumer democracy through a combination of cooperatives, mutual insurance and professional associations. The generosity of the archaic gift does not point to a non-market alternative, but rather to the humanity inherent in markets that remains to be liberated by such a modern movement.

Second, Durkheim oversimplified the contrast between primitive and modern societies. Against his uncle’s implicit evolutionism, Mauss held that all economies were plural in practice; indeed, the basic human economic arrangements co-exist in any society, a position later associated with Polanyi and revived by Graeber. It is counter-productive to imagine economic change as the radical replacement of one set of institutions by another. Third, Mauss’s had an inclusive vision of human history with the boundaries of local societies being pushed ever outwards. Both gift-exchange and markets extend society by taking members out of their locally grounded system of rights and interests to engage with foreigners. Markets and money in some form are universal, since no society can be self-sufficient. Where Malinowski opposed the Trobriand kula to money and markets, Mauss saw a parallel with the free market, at least with the invisible infrastructure of human expansiveness and trust that he believed made markets possible.

Mauss’s counter-intuitive idea that gifts and markets share a common human substance soon gave way to the old notion that they are each other’s opposite, now reified as ‘‘gift economy’’ versus ‘‘market economy’’, the very contrast that he wrote his essay to refute. He rejected brutal contrasts of this kind and that makes him an ideal starting-point in any search for a middle-ground between extremes of right and left.

Part 3

Ryan Anderson: Let’s bring things back to the issue of OA and the academy.  You have said that many OA activists are inhibited from fighting against the privatization of the intellectual commons because they have already “bought into the premises of an academic career”.  Why do you mean by this?

Keith Hart: Intellectual life is intrinsically individualistic. We may like to think of ourselves as social creatures, but unfortunately they only hand out brains one at a time. Collaboration is particularly developed in the hard sciences and the academy has always depended on an informal cultural commons: teaching, seminars, conferences, free sharing of ideas, equal access to libraries and so on. Everyone wants personal recognition, but up to the 1950s, this aspect of academic life took a back seat to the university as a community of scholars, teachers and their students.

The Cold War and the drive to restore home food supplies after the Second World War boosted research on armaments and agriculture. The post-war boom saw lots of public money being directed to universities for research. Private companies also poured money into research on chemicals. Student enrolments took off in the 1960s, so that universities now became big business. We think of them as medieval institutions, but the late twentieth-century university was something unique, a mass production line for workers in bureaucracies and the main research arm of the state. The academics had always ruled their own institutions, but this expansion gave power to administrators. Research came to dominate other academic activities. The humanities and social sciences didn’t have much to offer, but they too jumped onto the research bandwagon.

I have discussed what happened next, at least for Britain, in “How my generation let down our students”. The watershed of the 1970s culminated in the neoliberal counter-revolution that saw Reagan and Thatcher come to power. Competitive pseudo-markets based academic assessment on so-called “objective” indicators, especially research publications. Bureaucracies became more interventionist along with the wholesale corporatization of university culture. What was left of academic community was destroyed by the growing gap between a few established professors who took leave often and a reserve army of precarious young teachers. The publishing oligopoly exhausted library budgets with their over-priced journals, while the academics competed for the status of getting published in them. Everyone agrees that the contents are worthless and are not read. Faced with the challenge of the internet, most academics did their utmost to maintain the system of feudal private property that has now overwhelmed the universities.

Yet we are living through a genuine revolution in the production and dissemination of knowledge; and the vast army of graduate students queuing up for admission is well aware of the freedom and opportunities afforded by a digital commons. The “bourgeois skeptic” accepts in principle the system of private property and competitive markets, but maintains a critical attitude. He complains about one isolated aspect of the system and then rests content when a minor concession is made. The AAA is an endless source for such skepticism, not least when it comes to OA. Yet most of its critics are tied to the labor market it serves. At least the AAA knows that it is 100% for the private property system.

Academics have been on the losing end of a class war for almost half a century. We are extremely unself-conscious about how we got into this situation and have no idea how to get out of it. This makes us easy pickings. Wedded to bourgeois ideology and ignorant of Mauss’s actual teaching, we failed to recognize the social conditions that preserved our individuality and sold our commons for the illusion of personal advancement. The mass of young researchers who are now desperate to gain a toehold in the academy did not bring about this situation. We did — those of us who got in while the going was good and then acquiesced in the destruction of what we had.

RA: So what’s stopping us from making changes, from going OA, and building a strong digital commons?

KH: Don’t underestimate the power of the academy to shape its inmates even when they are out of school. Most of us have been in school all our lives after all. But yes, one strategy must be to make the most of the social and technical possibilities afforded by the digital revolution. This requires some other means of economic support, of course. It doesn’t make sense these days to bank on an academic job for life. But I can say that every online initiative I have been in was compromised by attitudes and habits formed in the academy. The main clients for any forum concerned with anthropology are graduate students. These inevitably wish to conserve the status quo they hope to join, even as they like to think of themselves as critical.

Our experience with the Open Anthropology Cooperative has been that there are many complications when trying to build an open network. We were surprised by the flood of enrolments and found ourselves struggling to catch up without ever really solving tough problems of organization and navigation. We discovered that we had to moderate admissions in order to control spammers and trolls. Any member could open up a discussion group, but many that did so soon neglected it. The result was a proliferation of pages without a clearly recognizable shape. We allowed too many decisions to be debated openly and that sapped our spirits and energies. We opted for Ning as a platform which allowed newcomers to get started without any preparation. But it had a Facebook feel that put some people off; it was tackily commercial; and above all we conceded significant control of our data to them. People only turn to the OAC when they have dealt with their email, Facebook account and existing favorite sites.

In our drive to establish an egalitarian community, we didn’t pay enough attention to the leadership needed and fell back on a muted managerial style whose demands diverted us from developing the site’s potential. We mixed an academic network with social media and the resulting ambivalence inhibited our members’ participation. The administrative team consisted mostly of graduate students whose other priorities drained their energies. As we know, anthropologists already have a problem with making their public presence felt; and this reticence surely affected the quality of life on the network. The fact that anything you write there is stored forever by Google must be yet another source of inhibition. Most newcomers are at first astonished by the vitality and diversity of the site, only to discover that it is hard to find your way around and much of what is there appears to be dead.

There is an upside to all this, of course. The OAC has attracted a large and genuinely global membership. At one stage we hosted discussion groups in some ten languages. We have stayed true to our founding mission to keep participation as open as possible.  Professionals, students and outsiders interact with remarkable freedom and without central direction. Apart from the many blogs, groups and forum discussions, we have accumulated a remarkable archive of spontaneous commentary, visual and literary artifacts, plus thousands of personal pages. We initially aimed at accumulating a repository of materials that would be valuable in research and teaching, but lack the manpower to see this through. The OAC Press publishes working papers, classical texts and book reviews online and we hold interdisciplinary seminars lasting two weeks that have been a marked success. These succeed perhaps because they replicate what is already familiar within the academy. In sum, there is still plenty of potential for development here, but we face complications that strain our part-time energies and don’t diminish over time.

Our discipline seems to have little to offer when it comes to thinking through these problems theoretically and practically. Anthropologists, it seems, suffer from an inability to catch up with a changing world at the same time as we meticulously document it. It was never anthropology’s priority to change the world and that leaves us rather helpless to solve issues that we ought to be expert in. The fastest-growing sector of world trade is in cultural commodities – entertainment, education, media, information services – increasingly online. The universities are doing at best a flawed job of providing people with the education they want when they want it and at an affordable price. Everywhere sclerotic corporate hierarchies are outsourcing to smaller flexible units or being replaced by them. This is particularly true of research today. There are massive opportunities out there to address the demand for lifetime self-learning and anthropology should be admirably suited to that. With imagination and less dependence on the universities, anthropology could enter a new golden age. Yet discussion of OA by anthropologists today focuses on a minor liberalization of research publications conceived of in the traditional way. We are too tied to existing academic expectations (scholarship more than education) and don’t ask enough what the people want and how to give it to them.

RA: That’s a good point–a lot of the OA discussions just focus on freeing up traditional academic research publications.  That’s a pretty limiting way of looking at the possibilities we have right in front of us.  So what would happen if we dropped the attachment to all of those academic expectations?  What do people want, and how can anthropologists, in particular, find ways to “give it to them”?

KH: I don’t disparage academic work. I have devoted my life to it. But anthropology was born as part of a democratic project and the academy has become enmeshed in a particularly coercive kind of bureaucracy. I have a pseudo-Maoist slogan: Walk on two legs (it’s better than standing on one foot and falling over). By all means keep one foot in the academy, if you can, but don’t settle for the status quo and keep the other foot out there, in the market, moving forward while shifting your balance as circumstances permit.

“What the people want” is the mainspring of a genuine democracy; it is not something we give to them, but rather what we have to find out in order to be socially useful. I have said already that anthropology was an Enlightenment project to discover what all humanity has in common as the basis for a democratic revolution against the arbitrary inequality of agrarian civilization. Kant’s Anthropology from a Pragmatic Point of View (1798) was the culmination of that project and yet modern anthropologists never refer to it in their histories of the discipline. It is my inspiration. He elsewhere summarized “philosophy in the cosmopolitan sense of the word” as four questions:

What can I know?

What should I do?

What may I hope for?

What is a human being?

The first question is answered in metaphysics, the second in morals, the third in religion and the fourth in anthropology. But the first three questions “relate to anthropology”, he said, and might be subsumed under it. Kant conceived of anthropology as an empirical discipline, but also as a means of moral and cultural improvement. It was thus both an investigation into human nature and, more especially, into how to modify it, as a way of providing his students with practical guidance and knowledge of the world.

He intended his lectures to be “popular” and of value in later life. Above all, the Anthropology was to contribute to the progressive political task of uniting world citizens by identifying the source of their “cosmopolitan bonds”. The book thus moves between vivid anecdotes and Kant’s most sublime vision as a bridge from the everyday to horizon thinking. Anthropology is the practical arm of moral philosophy. It does not explain the metaphysics of morals which are categorical and transcendent; but it is indispensable to any interaction involving human agents. It is thus “pragmatic” in a number of senses: it is “everything that pertains to the practical”, popular (as opposed to academic) and moral in that it is concerned with what people should do, with their motives for action.

The Anthropology was a best seller for its day. It sold 2,000 copies in two years. The rapid development of global communications today contains within its movement a far-reaching transformation of world society. “Anthropology” in some form is one of the intellectual traditions best suited to make sense of it. The academic seclusion of the discipline, its passive acquiescence to bureaucracy, is the chief obstacle preventing us from grasping this historical opportunity. We cling to our revolutionary commitment to joining the people, but have forgotten what ethnography was for or what else is needed, if humanity is to succeed in building a universal society. The internet is a wonderful chance to open up the flow of knowledge and information. Rather than obsessing over how we can control access to what we write, which means cutting off the mass of humanity almost completely from our efforts, we need to figure out new interactive forms of engagement that span the globe and to make the results of our work available to everyone.

Ever since the internet went public and the World Wide Web was invented, I have made online self-publishing and interaction the core of my anthropological practice. It matters less that an academic guild should retain its monopoly of access to knowledge than that “anthropology” should be taken up by a broad intellectual coalition for whom the realization of a new human universal – a world society fit for humanity as a whole — is a matter of urgent personal concern.

RA: That’s a good thought to end on.  Thanks, Keith, for taking the time to do this.  If anyone has comments or questions, please feel free to share and join the conversation.

A la recherche du temps perdu

The idea of an informal economy was born at the moment when the post-war era of developmental states was drawing to a close. The 1970s were a watershed between three decades of state management of the economy and the free market decades of one-world capitalism that ended with the financial crisis of 2008. It seems now that the economy has escaped from all attempts to make it publicly accountable. What are the forms of state that can regulate a world of money that is now essentially lawless? The informal economy started off forty years ago as a way of talking about the Third World urban poor living in the cracks of a rule system that could not reach down to their level. Now the rule system itself is question. Everyone ignores the rules, especially the people at the top – the politicians and bureaucrats, the corporations, the banks – and they routinely escape being held responsible for their illegal actions. Privatization of public interests is probably universal, but what is new about neoliberalism is that, whereas the alliance between money and power used to be hidden, now it is celebrated as a virtue, wrapped up in liberal ideology.

This is the context for my lecture. The informal economy seems to have taken over the world, while cloaking itself in the rhetoric of free markets. We are witnessing the world-historic collapse of the twentieth-century attempt to impose national controls on the economy. Inevitably, when witnessing this collapse, we dream of restoring the era of social democracy, of Stalinism and of developmental states. The rules operated then with some degree of success. This nostalgia for the heyday of what I call “national capitalism” will not serve us well today. We need to analyse the contemporary world economic crisis at a number of levels. Above all, we should acknowledge that the core problem is not narrowly economic, but one of political failure, both national and international. Money and markets have escaped from public control and cannot be put back in that straitjacket. The question then concerns what democratically accountable structures might be capable of regulating the world economy and under what social conditions? I will try to answer that question today by reflecting initially on the history of a concept with which I have been closely associated.

Origins and critique of the informal economy

Before the First World War no-one believed that the state, a hangover from pre-industrial society, could manage the turbulence of urban commerce. Industrial capitalists and the military landlord class formed an alliance in the 1860s and afterwards to keep in check the proliferating working class spawned by the machine revolution. Germany and Japan took cooperation between these classes within new state structures to an unprecedented level. But the Great War revealed hitherto unimagined government powers: to raise and kill off huge armies, organize industrial production, control market prices and monopolize propaganda. After the war, the issue was which kind of state – welfare democracy, fascist, communist – would win the race to organize world society. The whole period, 1914-1945, was a nightmare: two world wars, the Great Depression, a succession of ugly conflicts such as the Spanish civil war, the Japanese invasion of Manchuria, the Italian attack on Abyssinia. Writing just before the end of all this, Karl Polanyi[1] blamed it all on the nineteenth-century experiment to make society conform to market principles.

No wonder then that, in the late 1940s, the world turned to post-war governments of various kinds to build an alternative system. Their mission, for the first and only time in world history, was to reduce the gap between rich and poor, to increase the purchasing power of working people and to expand public services. The European empires were dismantled, beginning in Asia; a new world order was inaugurated under US hegemony, implementing the accords of Bretton Woods; the United Nations was formed and “development” – a post-colonial compact between rich and poor nations — was the order of the day. All of this took large amounts of state intervention. The post-war boom began to come unstuck around 1970. By the end of that decade, neoliberal conservatives were installed in power throughout the West. Their slogan was the free market and in the 1980s, with the active support of the IMF and World Bank, they set about dismantling state restrictions on the international flow of money in the name of “structural adjustment”, at first in the developing countries. This was the context in which the “informal economy” emerged, not only as a description of the Third World urban poor, but as a universal feature of modern economies.

In the early 1990s, not long after the fall of the Berlin Wall, I wrote a critique of my own concept.[2] I made the obvious point that the formal/informal pair, representing bureaucracy and popular self-organization as they did, mirrored the poles of the Cold War, ‘state socialism’ vs. ‘the free market’. I had earlier argued, in a published lecture on money,[3] that the habit of contrasting market and state theories of money as alternatives, then Friedman’s monetarism vs. Keynesian macro-economics, was ruinous since currency was both a token of political authority (‘heads’) and a commodity (‘tails’). After three decades of welfare-state democracy, the neoliberal counter-revolution was well under way by the 1980s; and we are now possibly witnessing the start of another long swing back from over-reliance on the market to increased state intervention in some form or another. So the state/market pair has not faded away. In the immediate aftermath of the Cold War, however, I was optimistic that new paradigms could emerge; and I questioned the usefulness of the informal economy as a concept, given its origins in the nuclear nightmare of twentieth-century society’s polarities.

The formal/informal pair first saw light in the context of development debates during the world crisis of the early 70s – a sequence of events that included America’s losing war in Vietnam, the dollar being detached from gold in 1971, the invention of money market futures the next year and the dismantling of the Bretton Woods regime of fixed parity exchange rates. This was soon followed by a world depression induced by the energy crisis of 1973 and then by a glut of euro-dollar loans that ended up as the Third World debt crisis of the 80s. ‘Stagflation’ in the West (high unemployment and inflation) prepared the ground for Reagan, Thatcher and their imitators from 1979-80 onwards. After the ‘modernization’ boom of the 60s, the notion that poor countries could become rich by emulating ‘us’ gave way to gloomier scenarios around 1970, fed by zero-sum theories of ‘underdevelopment’, ‘dependency’ and ‘the world system’ advanced by the other side in the Cold War.

In development policy-making circles, this trend manifested itself as fear of ‘Third World urban unemployment’. It had been noted that cities there were growing rapidly, but without comparable growth in ‘jobs’, conceived of as regular employment by government and businesses. At this time, Keynesians and Marxists alike held that only the state could lead an economy towards development and growth. Richard Nixon reflected this consensus shortly before his fall when he said “We are all Keynesians now”. There were a few liberal economists around, but none of them influenced policy. The question was, How are ‘we’ (the bureaucracy and its academic advisors) going to provide the people with the jobs, health, education, housing and transport that they need? And what will happen if we don’t? The spectre of urban riots and even revolution raised its head. The word ‘unemployment’ evoked images of the Great Depression.

This whole story didn’t square with my fieldwork experience in the slums of Ghana’s capital, Accra. It took me some time to work out why, but the result was a paper for a 1971 conference on ‘Urban unemployment in Africa’. It eventually appeared in 1973, after an International Labour Office report influenced by my paper had launched the idea of an ‘informal sector’ in Kenya.[4] I wanted to persuade development economists to abandon the ‘unemployment’ idea and accept that there was more going on in the grassroots economy than their bureaucratic imagination allowed for. To that end, I had two sections: the first was a vivid ethnographic description (“I have been there and you haven’t”); the second tried to engage their interest in the consequences for development theory, using what I call ‘economese’ — how to sound like an economist without formal training in the discipline — something I had learned by moonlighting as a writer for The Economist.

I had no ambition to coin a concept, just to insert a vision of irregular economic activity into the debates of development professionals. This was a classic move in the genre of ‘realism’. The ILO Kenya report, on the other hand, did want to coin a concept and that is what it subsequently became, a keyword helping to organize a segment of the academic and policy-making bureaucracy. The idea of an ‘informal economy’ thus has a double provenance reflecting its two sides, suspended between bureaucracy (the ILO) and the people (ethnography). Drawing attention to activities that had previously been invisible to the bureaucratic gaze had a clear value, but I was struck later by how static my analysis had been. My aim had been to show that no single idea (‘the state’) can ever capture the complexity of real life. But I conceived of informal income opportunities as at best a minor appendage to the state-made economy, perhaps a bit more than “taking in each other’s washing”, but essentially going nowhere.

No-one could have anticipated what happened next: under a neoliberal imperative to reduce the state’s grip on ‘the free market’, manifested in Africa as ‘structural adjustment’, national economies and the world economy itself became radically informal. Not only did the management of money go offshore, but corporations outsourced, downsized and casualized their labour forces, public functions were privatized, often corruptly, the drugs and illicit arms trades took off, the global war over ‘intellectual property’ dominated capitalism’s contradictions and whole countries, such as Mobutu’s Zaire, abandoned any pretence of formality in their economic affairs. Here was no ‘hole-in-the-wall’ operation living between the cracks of the law. The market frenzy led to the ‘commanding heights’ of the informal economy taking over the state-made bureaucracy. Just as the Cold War ended in confusion between the poles that launched it (Hegel’s ‘negative dialectic’)  – ‘state capitalism’, ‘market socialism’, the Pentagon fighting for the free market as the largest non-market collective in world history – so too the formal/informal pair, inspired by the state/market opposition, leaked into each other to the point of becoming often indistinguishable. What is the difference between a Wall Street bank laundering gangsters’ money through the Cayman Islands and the mafias running opium out of Afghanistan with the support of several national governments?[5]

I concluded then that the informal economy concept was insufficiently dynamic. I thought this might be partly a consequence of living under the threat of nuclear holocaust. We didn’t want the opposed sides and their symbols to move, since the result could be the annihilation of all life on the planet. In any case, they did move eventually – at several levels. Another criticism was that ‘informal’ says what these activities are not, but not what they are. We need to know more about what is going on under the rubric of ‘informal’ when it has expanded to include activities of bewildering variety. The urgent task is to expose the positive principles organizing the informal economy and to place these investigations within an adequately broad historical framework.

The dialectics of form

General Forms have their vitality in Particulars, and every Particular is a Man (William Blake)

Most people here live substantially inside what we may call the formal economy. This is a world of salaries or fees paid on time, regular mortgage payments, clean credit ratings, fear of the tax authorities, regular meals, moderate use of stimulants, good health cover, pension contributions, school fees, driving the car to the commuter station, summer holidays by the sea. Of course middle class households suffer economic crises from time to time and some people feel permanently vulnerable, not least many students. But what makes this lifestyle ‘formal’ is the regularity of its order, a predictable rhythm and sense of control that we often take for granted. I only discovered how much of this had become natural to me when I went to live in a West African city slum almost 50 years ago.

I would ask people questions that just didn’t make sense to them, like, how much do you spend on food a week? Most households were in any case unbounded and transient. Assuming that someone had a regular wage (which many didn’t), it was pitifully small; the wage-earner might live it up for a day or two and then was broke, relying on credit, help from family and friends or not eating at all. A married man might use his wage to buy a sack of rice and pay the rent, knowing that he would have to hustle until the next pay check. In the street people moved everything from marijuana to refrigerators in deals marked more by flux than stable incomes. After completing my doctorate, I went to work in a development studies institute. There I saw my main task as trying to get this ethnographic experience across to development economists. My use of the conceptual pair formal/informal came out of those conversations.

The formal and informal aspects of society are already linked, since the idea of an ‘informal economy’ is entailed in the institutional effort to organize society along formal lines. ‘Form’ is the rule, an idea of what ought to be universal in social life; and for most of the twentieth century the dominant forms have been those of bureaucracy, particularly of national bureaucracy, since society was identified to a large extent with nation-states. This identity is now ending as a result of neoliberal policies, the digital revolution in communications and the global economic crisis.

Formal and informal appear to be separate entities because of the use of the term ‘sector’. This gives the impression that the two exist in different places, like agriculture and manufacturing, whereas both the bureaucracy and its antithesis contain the dialectic within themselves, as well as between them. There is a widespread perception that together they constitute a class war between the bureaucracy and the people. It was not supposed to be like this. Modern bureaucracy was invented by the Italian city-states of the quattrocento as part of a democratic political project to give citizens equal access to what was theirs as a right. It still has the ability to co-ordinate public services on a scale that is beyond the reach of individuals and most groups. So it is disheartening that bureaucracy (‘the power of public office’) should normally be seen now as the negation of democracy (‘the power of the people’) rather than as its natural ally.

Forms are necessarily abstract and a lot of social life is left out as a result. The gap may be reduced by naming a variety of practices as an ‘informal sector’. They appear to be informal because their forms are largely invisible to the bureaucratic gaze. Mobilizing the informal economy will require a pluralistic approach based on at least acknowledgement of those forms. Equally, the formal sphere of society is not just abstract, but consists of the people who staff bureaucracies and their informal practices. Somehow the human potential of both has to be unlocked together.

‘Form’ is an idea whose origin lies in the mind. Form is the rule, the invariant in the variable. It is predictable and easily recognized. Idealist philosophers from Plato onwards thought the general idea of something was more real than the thing itself. Words are forms, of course. In his Science of Logic,[6] Hegel shows the error of taking the idea for reality. We all know the word ‘house’ and might think there is nothing more to owning one than saying ‘my house’. But before long the roof leaks, the paint peels and we are forced to acknowledge that the house is a material thing, a process that requires attention. The ‘formal sector’ is likewise an idea, a collection of people, things and activities; but we should not mistake the category for the reality it identifies.

What makes something ‘formal’ is its conformity with such an idea or rule. Thus formal dress often means that the men are supposed to look the same, so they adopt a ‘uniform’ that cancels out their individuality. Formality endows a class of people with universal qualities, with being the same and equal. What makes dress ‘informal’ is the absence of such a shared code. But anyone can see that clothing styles in an informally dressed crowd are not random. We might ask what these informal forms are and how to account for them. The dialectic is infinitely recursive. No wonder that most economists find the conceptual dichotomy confusing and impossible to measure.

There is a hierarchy of forms and this hierarchy is not fixed for ever. The twentieth century saw a general experiment in impersonal society whose forms were anchored in national bureaucracy, in centralized states and laws carrying the threat of punishment. The dominant economic forms were also bureaucratic and closely linked to the state as the source of universal law. Conventionally these were divided according to principles of ownership into ‘public’ and ‘private’ sectors. This uneasy alliance of governments and corporations is now sometimes classified as ‘the formal sector’. On the surface they share being subject to regulation, conformity to the rule of law. How then might unregulated economic activities, ‘the informal economy’, relate to this formal order? They may be related in any of four ways: as division, content, negation and residue.

The moral economy of capitalist societies is based on an attempt to keep separate impersonal and personal spheres of social life. The establishment of a formal public sphere entailed another based on domestic privacy. The pair was meant to constitute complementary halves of a single whole. Most people, once men more than women, divide themselves every day between production and consumption, paid and unpaid work, submission to impersonal rules in the office and the free play of personality at home. Money is the means whereby the two sides are brought together, so that their interaction is an endless process of separation and integration or division. The division of the populations into males and females is the master metaphor for this dialectic of complementary unity. When the lines between the paired categories become blurred, we enter a phase of ‘negative dialectic’, from which a new idea may eventually emerge. Identifying the informal practices that constitute a bureaucracy implies such a blurring of the ideal.

For any rule to be translated into human action, something else must be brought into play, such as personal judgment. So informality is built into bureaucratic forms as unspecified content. This is no trivial matter. Workable solutions to problems of administration invariably contain processes that are invisible to the formal order. For example, workers sometimes ‘work to rule’. They follow their job descriptions to the letter without any of the informal practices that allow these abstractions to function. Everything grinds to a halt. Or take a commodity chain from production by a transnational corporation to final consumption in an African city. At various points invisible actors fill the gaps that the bureaucracy cannot handle directly, from the factories to the docks to the supermarkets and street traders. Informal processes are indispensable to commerce, as variable content to the form.

Of course, some of these activities break the law, through a breach of safety regulations, tax evasion, smuggling, the use of child labour, selling without a licence etc. The third way that informal activities relate to formal organization is thus as its negation. Rule-breaking takes place both within bureaucracy and outside it; and so the informal is often illegal. It is hard to draw a line between colourful women selling oranges on the street and the gangsters who exact tribute from them. When the rule of law is weak, the forms that emerge in its place are often criminal in character. Modern civilization protects the public image of bureaucratic processes from a hybrid reality that mixes formal order with corruption and criminality. We enjoy watching movies about cops and gangsters, but we insulate these fictions from belief in the rule of law that helps us to sleep at night.

The fourth category is not so obviously related to the formal order. Some ‘informal’ activities exist in parallel, as residue. They are just separate from the bureaucracy. It would be stretching the logic of the formal/informal pair to include peasant economy, traditional institutions and domestic life as somehow ‘informal’. Yet the social forms characteristic of these domains often shape informal economic practices and vice versa. Is society just one thing – one state with its rule of law – or can it tolerate institutional pluralism, leaving some spheres to their own devices? Communities depend on members understanding each other for practical purposes; and so they operate through culture. They use implicit rules (customs) rather than state-made laws and regulate their members informally, through the sanction of exclusion rather than punishment. European empires, faced with a shortage of administrative resources, turned to ‘indirect rule’ as a way of governing semi-autonomous subject peoples. Anthropologists played their part in making this work. Any serious attempt to combine the formal and the informal anew requires similar openness to plurality of form.

The demise of national capitalism

To talk of “the informalization of the world economy” is to point to the absence of effective rules at any level of society, from the top to the bottom. We need to be clear about the different dimensions of this crisis. It is not merely financial, a moment in the historical cycle of credit and debt. I prefer to approach our times as a formative episode in the history of money. The removal of political controls over money in recent decades has led to a situation where politics is still mainly national, but the money circuit is global and lawless. We are witnessing the collapse of the money system that the world lived by in the twentieth century. This system has been unravelling since the US dollar went off gold in 1971 and its chief symbol today is the crisis for the single currency that was meant to protect European countries from their individual vulnerability. As the need for international cooperation grows, the disconnection between economy and political institutions makes effective solutions unattainable.

The informal economy’s improbable rise to global dominance is the result of the mania for deregulation in the last three decades, linked to the wholesale privatization of public goods and services and to the capture of politics by high finance. Deregulation provided a fig leaf for corruption, rentier accumulation, tax evasion and public irresponsibility. Nowhere was this more evident than in the culture of the Wall Street banks from the 1980s. This was no secret at the time. Each major bank spawned a tell-all book written by undercover reporters or disillusioned employees – from Liar’s Poker (Salomon Bros) to F.I.A.S.C.O. (Morgan Stanley).[7] The removal of official restraints on financial practices generated a culture of personal excess from the trading floor to boardroom politics; moral responsibility towards clients was replaced by an ethos of predation. Yet, while the credit boom lasted, criticism was drowned by celebrations of unending prosperity. Even after the bust, the political ascendancy of finance has hardly been challenged. And we wonder why our leaders routinely refuse to take responsibility for their own failures.

Apart from the main financial houses, the shadow banking system — hedge funds, money market funds and structured investment vehicles that lie beyond state regulation – is literally out of control. Tax evasion is an international industry that dwarfs national budgets.[8] The Cambridge economist, Sir James Mirlees, won a Nobel Prize for proving that you can’t force the rich to pay more than they are willing to. Mitt Romney’s non-disclosure of his tax returns has inscribed this principle at the heart of the US presidential elections! None of this touches on the outright criminal behaviour of transnational corporations who now outnumber countries by 2 to 1 in the top 100 economic entities on the planet.[9] Where to stop? The drug cartels from Mexico and Colombia to Russia, the illegal armaments industry, the global war over intellectual property (“piracy”), fake luxury goods, the invasion and looting of Iraq, 4 million dead in the Congo scramble for minerals. In 2006, the Japanese electronics firm NEC discovered a criminal counterpart of itself, operating on a similar scale under the same name and more profitably because it was wholly outside the law.[10] The informal economy was always a way of labelling the unknowable, but the scale of all this goes beyond comprehension.

2011 saw the first political consequences of the financial crisis of 2008. We still tend to talk about the encroaching disaster we are living through in economic rather than political terms. Even neoliberalism’s detractors reproduce the free market ideology they claim to oppose. The euro is by no means the only symptom of this crisis, but it may come to be seen as the decisive nail in the coffin of the world economy today. We seem to be at the end of something. What is ending is “national capitalism”, the synthesis of nation-states and industrial capitalism. Its main symbol has been national monopoly currency (legal tender). It was the institutional attempt to manage money, markets and accumulation through central bureaucracy within a cultural community of national citizens. National capitalism was never the only active principle in world political economy: regional federations, empires and globalization are at least as old or much older.

National capitalism’s origins lay in a series of linked revolutions of the 1860s and early ‘70s based on a new alliance between capitalists and the military landlord class.  These ranged from the American civil war and Japan’s Meiji restoration to Italian and German unification, Russia’s abolition of serfdom, the French Third Republic and Britain’s second Reform Act. In all this, Marx published Capital and a revolution in transport and communications (steamships, continental railways and the telegraph) took place. These new national governments launched a bureaucratic revolution in the late nineteenth century and then sponsored large business corporations in a drive towards mass production. The national system became generalised after the First World War when states turned inward to manage their economies in war and depression. Its apogee was the social democracy built after 1945, what the French call les trente glorieuses.

Money expands the capacity of individuals to stabilise their own personal identity by holding something durable that embodies the desires and wealth of all the other members of society. People learn to understand each other as members of communities and money is an important vehicle for this. Nation-states have been so successful in a relatively short time that it is hard for us to imagine society in any other way. Five different types of community come together in the nation-state form:

•        political community: a link to the world and a source of law at home

•        community of place: territorial boundaries of land and sea

•        imagined or virtual community: the constructed cultural identity of citizens

•        community of interest: subjectively and objectively shared purposes in trade and war

•        monetary community: common use of a national monopoly currency

The rise and fall of single currencies is therefore one way of approaching national capitalism’s historical trajectory.

Money is the principal means for us all to bridge the gap between everyday personal experience and a society whose wider reaches are impersonal. According to Georg Simmel,[11] it is the concrete symbol of our human potential to make universal society. At present national politics and media frame economic questions in such relentlessly parochial terms that we find it hard to think about the human predicament as a whole. But money is already global in scope and the need to overcome these limitations is urgent. My fear is that only a major war and all the losses it would bring will concentrate our minds once more on fixing the world we live in.

Karl Polanyi (see note 1) is enjoying a major revival today for the good reason that our crisis is strongly reminiscent of the disaster he sought to explain then, namely the collapse of the Victorian free market ideal, resulting in world war and depression. He listed money, along with land and labour, as a “fictitious commodity” whose unregulated exchange came close to buying and selling society itself. He held that money and markets originate in the extension of society beyond its local core; society has to become more inclusive since none was ever self-sufficient. But conflict between the internal and external dimensions of an economy is often highly disruptive. This is why societies have traditionally held markets at arm’s length and why acceptance of market principles at the core of modern societies invites disaster.

Mainstream economics says more about what money does than what it is. Its main function is held to be as a medium of exchange, a more efficient lubricant of markets than barter. Another school emphasizes money’s function as a means of payment, especially of taxes to the government and hence on “purchasing power”. It is also a standard of value or unit of account, with the focus again on government’s role in establishing the legal conditions for trade; while John Locke conceived of money as a store of wealth, a new form of property that allowed the accumulation of riches to escape from the limitations of natural economy.[12]

In a little-known article,[13] Polanyi later approached money as a semantic system, like writing. He argued that only modern money combines the four functions (payment, standard, store and exchange) in a few “all-purpose” symbols, national currency. By contrast, primitive and archaic forms of money attached the separate uses to different symbolic objects or “special-purpose” monies.  Polanyi argued against the primacy of money as a medium of exchange and for a multi-stranded model of its evolution.  For him and for Keynes, it was above all a means of payment or the “purchasing power” of citizens which drives modern economies, not so much a medium of exchange for buying and selling as such.

Although this analysis was intended only to illuminate the history of money, Polanyi’s approach offers profound insight into the causes of today’s global economic crisis. Our challenge is to conceive of society once more as something plural rather than singular, as a federated network rather than as a centralized hierarchy, the nation-state. The era of national monopoly currencies is very recent (from the 1850s); it took the United States, for example, half a century to secure an uncontested monopoly for “greenbacks”; and “all-purpose money” has been breaking up for four decades now, since the US dollar was de-pegged from gold.

Since the break-up of the Bretton Woods system of fixed parity exchange rates, the world economy has reverted to the plural pattern of competing currencies that was normal before central banks learned how to control national economies in the second half of the nineteenth century through the bank rate, for example. One aspect of the crisis is that the international rule system imposed after the Second World War was systematically subverted by the creation of an offshore banking system which brought the informal economy to the heart of global finance. Nick Shaxson (Note 6 above) provides an astonishing account of how the City of London replaced the colonial empire it lost with another based on tax havens. The separation of functions between different types of monetary instruments was also crucial to money’s great escape from the rules of the Keynesian consensus that was institutionalised in the Bretton Woods system. Central bank control was eroded by a shift to money being issued in multiple forms by a global distributed network of corporations, not just governments and banks.

Some brief examples must serve to indicate the momentous changes that have overtaken money in the last few decades. In Switzerland today, euros are commonly accepted in shops alongside the national currency. If you pay with a card, you can often choose the unit of account (Swiss franc, euro, pound sterling, US dollar). But only francs are acceptable for payment of local taxes. Are national currencies a store of wealth? Hardly — they have all been radically depreciated and may even disappear; hence the flight to gold. But gold could turn out to be the biggest asset bubble of them all. As for real estate, the collapse of subprime mortgages got us into the present mess. And we have not even touched on what credit default swaps and collateral debt obligations are used for or who issues them.

Simmel considered money’s twin anchors to be its physical substance (coins, paper etc.) and the social institutions supporting the community of its users. He predicted that the first would wither away, making the second more visible. Radical cheapening of the cost of transferring information as a result of the digital revolution in communications has been transforming money and exchange for two decades now, confirming Simmel’s prophecy. But globalization has made national society seem a lot less self-sufficient than it did a century ago. This process whereby markets, money and telecommunications have extended society rapidly beyond national boundaries, even as they have invaded the core institutions of domestic society, is fraught with danger. We need to extend systems of social rights to the global level before the contradictions of the market system collapse again into world war. But local political organization resists such a move. After centuries of a unipolar divergent world economy ruled by the West, ours is a multi-polar world whose plurality of associations and convergent income distribution resembles the medieval period more than any since.

The euro crisis: an episode in the history of money

The monetary crisis that has overwhelmed the eurozone of late needs to be seen in this context. The apparent triumph of the free market at the end of the Cold War in 1989/90 induced two huge political blunders, both of them based on the premise that society should be shaped by market economy rather than the other way round. Radical privatization of Soviet bloc public economies ignored the common history of politics, law and social custom that shored up market economies in the West, thereby delivering the economy into the hands of gangsters and oligarchs. And the European single currency was supposed to provide the social glue for political union without first developing effective fiscal institutions or economic convergence between North and South.

The big mistake was to replace national currencies with the euro. An alternative proposal, the hard ecu, would have floated politically managed national currencies alongside a low-inflation European central bank currency. Countries that didn’t join the euro, like Britain and Switzerland, have in practice enjoyed the privilege of this plural option. Eurozone countries cannot devalue and so must reduce their debts through deflation or default. Argentina’s example of default after the peso crashed is directly relevant to countries like Greece and Spain today. The euro was invented after money was already breaking up into multiple forms and functions. The Americans centralized their currency after a civil war; the Europeans centralized theirs as a means of achieving political union.

The infrastructure of money has already become decentralized and global. A return to the national solutions of the 1930s or to a Keynesian regime of managed exchange rates and capital flows is bound to fail. Where are the levers of democratic power to be located, now that globalization has exposed the limitations of national economic management? The cultural logic of national capitalism leads the political classes who got us into this mess to repeat the same mistakes. Politics is a dialogue of the deaf, between those who deny the need for any political regulation of markets and others who remain trapped in the outmoded model of central bank money.

The idea of world society is still perceived by most people as at best a utopian fantasy or at worst a threat to us all. We need to build an infrastructure of money adequate to humanity’s common needs. “Economy” has multiple meanings, but the idea of putting ones house in order in a world shaped increasingly by markets combines several of them. In this conception, economy is pulled inwards to secure local guarantees of a community’s rights and interests; and outwards to make good local supply by engaging with outsiders through the medium of money and markets of various sorts, not just our own.  The trick is to manage this dialectic of internal and external forces effectively.

Our societies are becoming increasingly emancipated from their territorial base. Three things count above all in these societies — people, machines and money, in that order. But money buys the machines that control the people. Our political task – and I believe it was Marx’s too – is to reverse that order of priority, not to help people escape from machines and money, but to encourage them to develop themselves through machines and money. To the idea of economic crisis and its antidotes, we must add in 2011-12 the possibility of political revolution. Europe has become the main focus once more of a world revolution. Meanwhile, the EU persists with purely monetary measures such as the European Central Bank’s latest commitment to underwrite sovereign debt, when the issue is the political union itself and its current democratic deficit. National capitalism was based on a class compromise that reached its peak in the post-war decades. In the absence of a replacement with some prospect of offering economic democracy to the masses, informality and extreme inequality will continue to be the norm, until the next world war, that is.

A footnote on periodization

As an antidote to the daily news, I attempt a historical periodization of the last two centuries or more, mainly to indicate that the present rupture in history opens up the prospect of several decades of turbulence. It is commonplace to compare the current crisis with the 1930s, but this is misleading, since the Great Depression was part of a sequence launched after three decades of financial globalization by the outbreak of war in 1914.

1776-1815            Age of war and revolutions

1815-1848            The industrial revolution

1848-1873            Origins of national capitalism

1873-1914            First age of financial globalization

1914-1945            The second thirty years war

1945-1979            The golden age of national capitalism

1979-2008            Second age of financial globalization

2008-                    Another age of war and revolutions?

Debt is everywhere today. What is “sovereign debt” and why must Greece pay up, but not the United States? Who decides that the national debt will be repaid through austerity programmes rather than job-creation schemes? Why do the banks get bailed out, while students and home-owners are forced to repay loans? The very word debt speaks of unequal power; and the world economic crisis since 2008 has exposed this inequality more than any other since the 1930s. David Graeber has written a searching book that aims to place our current concerns within the widest possible framework of anthropology and world history. He starts from a question: why do we feel that we must repay our debts? This is a moral issue, not an economic one. In market logic, the cost of bad loans should be met by creditors as a discipline on their lending practices. But paying back debts is good for the powerful few, whereas the mass of debtors have at times sought and won relief from them.

What is debt? According to Graeber, it is an obligation with a figure attached and hence debt is inseparable from money. This book devotes a lot of attention to where money comes from and what it does. States and markets each play a role in its creation, but money’s form has fluctuated historically between virtual credit and metal currency. Above all Graeber’s enquiry is framed by our unequal world as a whole. He resists the temptation to offer quick remedies for collective suffering, since this would be inconsistent with the timescale of his argument. Nevertheless, readers are offered a worldview that clearly takes the institutional pillars of our societies to be rotten and deserving of replacement. It is a timely and popular view. Debt: The first 5,000 years is an international best-seller. The German translation recently sold 30,000 copies in the first two weeks.

I place the book here in a classical tradition that I call “the anthropology of unequal society” (Hart 2006), before considering what makes David Graeber a unique figure in contemporary intellectual politics. A summary of the book’s main arguments is followed by a critical assessment, focusing on the notion of a “human economy”.

The anthropology of unequal society

Modern anthropology was born to serve the coming democratic revolution against the Old Regime. A government by the people for the people should be based on what they have in common, their “human nature” or “natural rights”. Writers from John Locke (1690) to Karl Marx (1867) identified the contemporary roots of inequality with money’s social dominance, a feature that we now routinely call “capitalism”. For Locke money was a store of wealth that allowed some individuals to accumulate property far beyond their own immediate needs. For Marx “capital” had become the driving force subordinating the work of the many to machines controlled by a few. In both cases, accumulation dissolved the old forms of society, but it also generated the conditions for its own replacement by a more just society, a “commonwealth” or “communism”. It was, however, the philosophers of the eighteenth-century liberal enlightenment who developed a systematic approach to anthropology as an intellectual source for remaking the modern world.

Following Locke’s example, they wanted to found democratic societies in place of the class system typical of agrarian civilizations. How could arbitrary social inequality be abolished and a more equal society founded on their common human nature? Anthropology was the means of answering that question. The great Victorian synthesizers, such as Morgan, Tylor and Frazer, stood on the shoulders of predecessors motivated by an urgent desire to make world society less unequal. Kant’s Anthropology from a Pragmatic Point of View, a best-seller when published in 1798, was the culmination of that Enlightenment project; but it played almost no part in the subsequent history of the discipline. The main source for nineteenth-century anthropology was rather Jean-Jacques Rousseau.  He revolutionized our understanding of politics, education, sexuality and the self in four books published in the 1760s: The Social Contract, Emile, Julie and The Confessions. He was forced to flee for his life from hit squads encouraged by the church. But he made his reputation earlier through two discourses of which the second, Discourse on the Origins and Foundations of Inequality among Men (1754), deserves to be seen as the source for an anthropology that combines the critique of unequal society with a revolutionary politics of democratic emancipation.

Rousseau was concerned here not with individual variations in natural endowments which we can do little about, but with the conventional inequalities of wealth, honour and the capacity to command obedience which can be changed. In order to construct a model of human equality, he imagined a pre-social state of nature, a sort of hominid phase of human evolution in which men were solitary, but healthy, happy and above all free. This freedom was metaphysical, anarchic and personal: original human beings had free will, they were not subject to rules of any kind and they had no superiors. At some point humanity made the transition to what Rousseau calls “nascent society”, a prolonged period whose economic base can best be summarized as hunter-gathering with huts. This second phase represents his ideal of life in society close to nature.

The rot set in with the invention of agriculture or, as Rousseau puts it, wheat and iron. Here he contradicted both Hobbes and Locke. The formation of a civil order (the state) was preceded by a war of all against all marked by the absence of law, which Rousseau insisted was the result of social development, not an original state of nature. Cultivation of the land led to incipient property institutions which, far from being natural, contained the seeds of entrenched inequality. Their culmination awaited the development of political society. He believed that this new social contract was probably arrived at by consensus, but it was a fraudulent one in that the rich thereby gained legal sanction for transmitting unequal property rights in perpetuity. From this inauspicious beginning, political society then usually moved, via a series of revolutions, through three stages:

The establishment of law and the right of property was the first stage, the institution of magistrates the second and the transformation of legitimate into arbitrary power the third and last stage. Thus the status of rich and poor was authorized by the first epoch, that of strong and weak by the second and by the third that of master and slave, which is the last degree of inequality and the stage to which all the others finally lead, until new revolutions dissolve the government altogether and bring it back to legitimacy (Rousseau 1984:131).

One-man-rule closes the circle. “It is here that all individuals become equal again because they are nothing, here where subjects have no longer any law but the will of the master”(Ibid: 134). For Rousseau, the growth of inequality was just one aspect of human alienation in civil society. We need to return from division of labour and dependence on the opinion of others to subjective self-sufficiency. His subversive parable ends with a ringing indictment of economic inequality which could well serve as a warning to our world. “It is manifestly contrary to the law of nature, however defined… that a handful of people should gorge themselves with superfluities while the hungry multitude goes in want of necessities” (Ibid: 137).

Lewis H. Morgan (1877) drew on Rousseau’s model for his own fiercely democratic synthesis of human history, Ancient Society, which likewise used an evolutionary classification that we now call bands, tribes and states, each stage more unequal than the one before.  Morgan’s work is normally seen as the launch of modern anthropology proper because of his ability to enrol contemporary ethnographic observations of the Iroquois in an analysis of the historical structures underlying western civilization’s origins in Greece and Rome. Marx and Engels enthusiastically took up Morgan’s work as confirmation of their own critique of the state and capitalism; and the latter, drawing on Marx’s extensive annotations of Ancient Society, made the argument more accessible as The Origin of the Family, Private Property and the State (1884). Engels’s greater emphasis on gender inequality made this a fertile source for the feminist movement in the 1960s and after.

The traditional home of inequality is supposed to be India and Andre Beteille, in Inequality among Men (1977) and other books, has made the subject his special domain, merging social anthropology with comparative sociology. In the United States, Leslie White at Michigan and Julian Steward at Columbia led teams, including Wolf, Sahlins, Service, Harris and Mintz, who took the evolution of the state and class society as their chief focus. Probably the single most impressive work coming out of this American school was Eric Wolf’s Europe and the People without History (1982). But one man tried to redo Morgan in a single book and that was Claude Lévi-Strauss in The Elementary Structures of Kinship (1949). In Tristes Tropiques (1955), Lévi-Strauss acknowledged Rousseau as his master. The aim of Elementary Structures was to revisit Morgan’s three-stage theory of social evolution, drawing on a new and impressive canvas, “the Siberia-Assam axis” and all points southeast as far as the Australian desert. Lévi-Strauss took as his motor of development the forms of marriage exchange and the logic of exogamy. The “restricted reciprocity” of egalitarian bands gave way to the unstable hierarchies of “generalized reciprocity” typical of the Highland Burma tribes. The stratified states of the region turned inwards to endogamy, to the reproduction of class differences and the negation of social reciprocity.

Jack Goody has tried to lift our profession out of a myopic ethnography into an engagement with world history that went out of fashion with the passing of the Victorian founders. Starting with Production and Reproduction (1976), he has produced a score of books over the last three decades investigating why Sub-Saharan Africa differs so strikingly from the pre-industrial societies of Europe and Asia, with a later focus on refuting the West’s claim to being exceptional, especially when compared with Asia (Hart 2006, 2011).  The common thread of Goody’s compendious work links him through the Marxist pre-historian Gordon Childe (1954) to Morgan-Engels and ultimately Rousseau. The key to understanding social forms lies in production, which for us means machine production. Civilization or human culture is largely shaped by the means of communication — once writing, now an array of mechanized forms. The site of social struggles is property, now principally conflicts over intellectual property. And his central issue of reproduction has never been more salient than at a time when the aging citizens of rich countries depend on the proliferating mass of young people out there. Kinship needs to be reinvented too.

David Graeber: the first 50 years

Graeber brings his own unique combination of interests and engagements to renewing this “anthropology of unequal society”. Who is he? He spent the 1960s as the child of working-class intellectuals and activists in New York and was a teenager in the 1970s, which turned out to be the hinge decade of our times, leading to a “neoliberal” counter-revolution against post-war social democracy. This decade was framed at one end by the US dollar being taken off the gold standard in 1971 and at the other by a massive interest rate increase in 1979 induced by a second oil price hike. The world economy has been depressed ever since, especially at its western core. Graeber says that he embraced anarchism at sixteen.

The debt crisis of the 1980s was triggered by irresponsible lending of the oil surplus by western banks to Third World kleptocrats (Hart 2000: 142-143) and by the new international regime of high interest rates. In market theory, bad loans are supposed to discipline lenders, but the IMF and World Bank insisted on every penny of added interest being repaid by the governments of poor countries. This was also the time when structural adjustment policies forced those governments to open up their national economies to the free flow of money and commodities, with terrible consequences for public welfare programmes and jobs. If the anti-colonial revolution inspired my generation in the 1960s, Graeber’s internationalism was shaped by this wholesale looting of the successor states. He took an active part in demonstrations against this new phase of “financial globalization”, a phenomenon now often referred to as the “alter-globalization movement” (Pleyers 2010), but he and his fellow activists call it the “global justice movement”. Its public impact peaked in the years following the financial crisis of 1997-98 (involving Southeast Asia, Russia, Brazil and the failure of a US hedge fund, Long-Term Capital Management), notably through mass mobilizations in Seattle, Genoa and elsewhere. In the Debt book, Graeber claims that they took on the IMF and won.

David Graeber received a doctorate in anthropology from the University of Chicago based on ethnographic and historical research on a former slave village in Madagascar. This was eventually published as a long and exemplary monograph, Lost People: Magic and the legacy of slavery in Madagascar (Graeber 2007a). The history of the slave trade, colonialism and the post-colony figure prominently in how he illustrates global inequality through a focus on debt. Before that, he published a strong collection of essays on value, Toward an Anthropological Theory of Value: The false coin of our own dreams (Graeber 2001), in which he sought to relate economic value (especially value as measured impersonally by money) and the values that shape our subjectivity in society. This hinged on revisiting both Karl Marx and Marcel Mauss, providing the main account in English of how the latter’s cooperative socialism shaped his famous work on the gift (Mauss 1925). A theme of both books is the role of magic and money fetishism in sustaining unequal society.

Politics forms a central strand of Graeber’s work, with four books published so far and more in the works: Fragments of an Anarchist Anthropology (2004), Possibilities: Essays on hierarchy, rebellion, and desire (2007b), Direct Action: An ethnography (2009a) and Revolutions in Reverse: Essays on politics, violence, art, and imagination (2011c). These titles reveal a range of political interests that take in violence, aesthetics and libido. He insists on the “elective affinity” between anthropological theory and method and an anarchist programme of resistance, rebellion and revolution; and this emphasis on “society against the state” makes him a worthy successor to Pierre Clastres (1974). Graeber’s academic career has been fitful, most notoriously when he was “let go” by Yale despite his obvious talent and productivity. This fed rumours about the academic consequences of his political activities. These have led to numerous brushes with the police, but so far not to prolonged incarceration, although his inability to find a job in American universities could be seen as a form of exile.

Debt: The first 5,000 years was published in summer 2011 and Graeber began a year’s sabbatical leave from his teaching job in London by moving to New York, where he became an ubiquitous presence in the print media, television and blogs. In August-September he helped form the first New York City General Assembly which spawned the Occupy Wall Street movement. He has been credited with being the author of that movement’s slogan, “We are the 99%”, and helped to give it an anarchist political style. OWS generated a wave of imitations in the United States and around the world, known collectively as “the Occupy movement”, inviting comparison with the “Arab Spring” and Madrid’s Los Indignados in what seemed then to be a global uprising. Some shared features of this series of political events, such as an emphasis on non-violence, consensual decision-making and the avoidance of sectarian division, evoke Jean-Jacques Rousseau’s idea of the “general will”; and it is not wholly fanciful to compare David Graeber’s career so far with his great predecessor’s.

Graeber and Rousseau both detested the mainstream institutions of the world they live in and devoted their intellectual efforts to building revolutionary alternatives. This means not being satisfied with reporting how the world is, but rather exploring the dialectic linking the actual to the possible. This in turn implies being willing to mix established genres of research and writing and to develop new ones. Both are prolific writers with an accessible prose style aimed at reaching a mass audience. Both achieved unusual fame for an intellectual and their political practice got them into trouble. Both suffered intimidation, neglect and exile for their beliefs. Both attract admiration and loathing in equal measure. Their originality is incontestable, yet each can at times be silly. There is no point in considering their relative significance. The personal parallels that I point to here reinforce my claim that Graeber’s Debt book should be seen as a specific continuation of that “anthropology of unequal society” begun by Rousseau two and a half centuries ago.

Debt: the argument

Much of the contemporary world revolves round the claims we make on each other and on things: ownership, obligations, contracts and payment of taxes, wages, rents, fees etc. David Graeber’s book, Debt: The first 5,000 years, aims to illuminate these questions through a focus on debt seen in very wide historical perspective. It is of course a central issue in global politics today, at every level of society. Every day sees another example of a class struggle between debtors and creditors to shape the distribution of costs after a long credit boom went dramatically bust.

We might be indebted to God, the sovereign or our parents for the gift of life, but Graeber rightly insists that the social logic of debt is revealed most clearly when money is involved. He cites approvingly an early twentieth-century writer who insisted that “money is debt”. This book of over 500 pages is rich in argument and knowledge. The notes and references are compendious, ranging over five millennia of the main Eurasian civilizations (ancient Mesopotamia, Egypt and the Mediterranean, medieval Europe, China, India and Islam) and the ethnography of stateless societies in Africa, the Americas and the Pacific. Its twelve chapters are framed by an introduction to our moral confusion concerning debt and a concluding sketch of the present rupture in world history that began in the early 1970s. Graeber’s case is founded on anthropological and historical comparison more than his grasp of contemporary political economy, although he has plenty to say in passing about that. There is also a current of populist culture running through the book and this is reinforced by a prose style aimed at closing the gap between author and reader that his formidable scholarship might otherwise open up.

Perhaps this aspect of the book may be illustrated by introducing a recent short film. Paul Grignon’s Money as Debt (2006, 47 minutes) — an underground hit in activist circles — seeks to explain where money comes from. Most of the money in circulation is issued by banks whenever they make a loan. The real basis of money, the film claims, is thus our signature whenever we promise to repay a debt. The banks create that money by a stroke of the pen and the promise is then bought and sold in increasingly complex ways. The total debt incurred by government, corporations, small businesses and consumers spirals continuously upwards since interest must be paid on it all. Although the general idea is an old one, it has taken on added salience at a time when the supply of money, which could once plausibly be represented as public currency in circulation, has been overtaken by the creation of private debt.

The film’s attempt to demystify money is admirable, but its message is misleading.  Debt and credit are two sides of the same coin, the one evoking passivity in the face of power, the other individual empowerment. The origin of money in France and Germany is considered to be debt, whereas in the United States and Britain it is traditionally conceived of as credit. Either term alone is loaded, missing the dialectical character of the relations involved. Money as Debt demonizes the banks and interest in particular, letting the audience off the hook by not showing the active role most of us play in sustaining the system. Money today is issued by a dispersed global network of economic institutions of many kinds; and the norm of economic growth is fed by a widespread desire for self-improvement, not just by bank interest.

David Graeber offers a lot more than this, of course; but his book also feeds off popular currents too, which is not surprising given how much time he spends outside the classroom and his study. His analytical framework is spelled out in great detail over six chapters. The first two tackle the origins of money in barter and “primordial debt” respectively. He shows, forcefully and elegantly, how implausible the standard liberal origin myth of money as a medium of exchange is; but he also rejects as a nationalist myth the main opposing theory that traces money’s origins as a means of payment and unit of account to state power. In the first case he follows Polanyi (1944), but by distancing himself from the second, he highlights the interdependence of states and markets in money’s origins.  A short chapter shows that money was always both a commodity and a debt-token (“the two sides of the coin”, Hart 1986), giving rise to a lot of political and moral contestation, especially in the ancient world. Following Nietzsche, Graeber argues that money introduced for the first time a measure of the unequal relations between buyer and seller, creditor and debtor. Whereas Rousseau traced inequality to the invention of property, he locates the roots of human bondage, slavery, tribute and organized violence in debt relations. The contradictions of indebtedness, fed by money and markets, led the first world religions to articulate notions of freedom and redemption in response to escalating class conflict between creditors and debtors, often involving calls for debt cancellation.

The author now lays out his positive story to counter the one advanced by mainstream liberal economics. “A brief treatise on the moral grounds of economic relations” makes explicit his critique of the attempt to construct “the economy” as a sphere separate from society in general. This owes something to Polanyi’s (1957) universal triad of distributive mechanisms – reciprocity, redistribution and market – here identified as “everyday communism”, hierarchy and reciprocity. By the first Graeber means a human capacity for sharing or “baseline sociality”; the second is sometimes confused with the third, since unequal relations are often represented as an exchange – you give me your crops in return for not being beaten up. The difference between hierarchy and reciprocity is that debt is permanent in the first case, but temporary in the second. The western middle classes train their children to say please and thank you as a way of limiting the debt incurred by being given something. All three principles are present everywhere, but their relative emphasis is coloured by dominant economic forms. Thus “communism” is indispensable to modern work practices, but capitalism is a lousy way of harnessing our human capacity for cooperation.

The next two chapters introduce what is for me the main idea of the book, the contrast between “human economies” and those dominated by money and markets (Graeber prefers to call them “commercial economies” and sometimes “capitalism”). First he identifies the independent characteristics of human economies and then shows what happens when they are forcefully incorporated into the economic orbit of larger “civilisations”, including our own. This is to some extent a great divide theory of history, although, as Mauss would insist, elements of human economy persist in capitalist societies. There is a sense in which “human economies” are a world we have lost, but might recover after the revolution. Graeber is at pains to point out that these societies are not necessarily more humane, just that “they are economic systems primarily concerned not with the accumulation of wealth, but with the creation, destruction, and rearranging of human beings” (2011a: 130). They use money, but mainly as “social currencies” whose aim is to maintain relations between people rather than to purchase things.

“In a human economy, each person is unique and of incomparable value, because each is a unique nexus of relations with others” (Ibid: 158). Yet their money forms make it possible to treat people as quantitatively identical in exchange and that requires a measure of violence. Brutality — not just conceptual, but physical too — is omnipresent, more in some cases than others. Violence is inseparable from money and debt, even in the most “human” of economies, where ripping people out of their familiar context is commonplace. This, however, gets taken to another level when they are drawn into systems like the Atlantic slave trade or the western colonial empires of yesteryear. The following extended reflection on slavery and freedom — a pair that Graeber sees as being driven by a culture of honour and indebtedness — culminates in the ultimate contradiction underpinning modern liberal economics, a worldview that conceives of individuals as being socially isolated in a way that could only be prepared for by a long history of enslaving conquered peoples. Since we cannot easily embrace this account of our own history, it is not surprising that we confuse morality and power when thinking about debt.

So far, Graeber has relied heavily on anthropological material, especially from African societies, to illustrate the world that the West transformed, although his account of money’s origins draws quite heavily on the example of ancient Mesopotamia. Now he formalizes his theory of money to organize a compendious review of world history in four stages. These are: the era from c.3000 BC that saw the first urban civilizations; the “Axial Age” which he, rather unusually, dates from 800BC to 600AD; the Middle Ages (600-1450AD); and the age of “the great capitalist empires”, from 1450AD to the US dollar’s symbolic rupture with the gold standard in 1971. As this last date suggests, the periodization relies heavily on historical oscillations between broad types of money. Graeber calls these “credit” and “bullion”, that is, money as a virtual measure of personal relations, like IOUs, and as currency or impersonal things made from precious metals for circulation.

Money started out as a unit of account, administered by institutions such as temples and banks, as well as states, largely as a way of measuring debt relations between people. Coinage was introduced in the first millennium as part of a complex linking warfare, mercenary soldiers, slavery, looting, mines, trade and the provisioning of armies on the move. Graeber calls this “the military-coinage-slavery complex” of which Alexander the Great, for example, was a master. Hence our word, “soldier”, refers to his pay. The so-called “dark ages” offered some relief from this regime and for most of the medieval period, metal currencies were in very short supply and money once again took the dominant form of virtual credit. India, China and the Islamic world are enlisted here to supplement what we know of Europe. But then the discovery of the new world opened up the phase we are familiar with from the last half-millennium, when western imperialism revived the earlier tradition of warfare and slavery lubricated by bullion.

The last four decades are obviously transitional, but the recent rise of virtual credit money suggests the possibility of another long swing of history away from the principles that underpinned the world the West made. It could be a multi-polar world, more like the middle ages than the last two centuries. It could offer more scope for “human economies” or at least “social currencies”. The debt crisis might provoke revolutions and then, who knows, debt cancellation along the lines of the ancient jubilee. Perhaps the whole institutional complex based on states, money and markets or capitalism will be replaced by forms of society more directly responsive to ordinary people and their capacity for “everyday communism”.

All of this is touched on in the final chapter. But Graeber leaves these “policy conclusions” deliberately vague. His aim in this book has been to draw his readers into a vision of human history that runs counter to what makes their social predicament supposedly inevitable. It is a vision inspired in part by his profession as an anthropologist, in part by his political engagement as an activist. Both commitments eschew drawing up programmes for others to follow. Occupy Wall Street has been criticized for its failure to enumerate a list of “demands”. No doubt much the same could be said of this book; but then readers, including this reviewer, will be inspired by it in concrete ways to imagine possibilities that its author could not have envisaged.

Towards a human economy

David Graeber and I came up with the term “human economy” independently during the last decade (Graeber 2009b, 2011a; Hart 2008, Hart, Laville and Cattani 2010). The editors of The Human Economy: A citizen’s guide distanced ourselves, in the introduction and our editorial approach, from any “revolutionary” eschatology that suggested society had reached the end of something and would soon be launched on a quite new trajectory. The idea of a “human economy” drew attention to the fact that people do a lot more for themselves than an exclusive focus on the dominant economic institutions would suggest. Against a singular notion of the economy as “capitalism”, we argued that all societies combine a plurality of economic forms and several of these are distributed across history, even if their combination is strongly coloured by the dominant economic form in particular times and places.

For example, in his famous essay on The Gift (1925), Marcel Mauss showed that other economic principles were present in capitalist societies and that understanding this would provide a sounder basis for building non-capitalist alternatives than the Bolshevik revolution’s attempt to break with markets and money entirely. Karl Polanyi too, in his various writings, insisted that the human economy throughout history combined a number of mechanisms of which the market was only one. We argued therefore that the idea of radical transformation of an economy conceived of monolithically as capitalism into its opposite was an inappropriate way to approach economic change. We should rather pay attention to the full range of what people are doing already and build economic initiatives around giving these a new direction and emphasis, instead of supposing that economic change has to be reinvented from scratch. Although this looks like a gradualist approach to economic improvement, its widespread adoption would have revolutionary consequences.

David Graeber’a anarchist politics inform his economic analysis; and he has always taken an anti-statist and anti-capitalist position, with markets and money usually being subsumed under the concept of capitalism. That is, he sees the future as being based on the opposite of our capitalist states. The core of his politics is “direct action” which he has practised and written about as an ethnographer (Graeber 2009a). In The Human Economy, we argued that people everywhere rely on a wide range of organizations in their economic lives: markets, nation-states, corporations, cities, voluntary associations, families, virtual networks, informal economies, crime. We should be looking for a more progressive mix of these things. We can’t afford to turn our backs on institutions that have helped humanity make the transition to modern world society. Large-scale bureaucracies co-exist with varieties of popular self-organization and we have to make them work together rather than at cross-purposes, as they often do now.

Graeber also believes, as we have seen, that economic life everywhere is based on a plural combination of moral principles which take on a different complexion when organized by dominant forms. Thus, helping each other as equals is essential to capitalist societies, but capitalism distorts and marginalizes this human propensity. Yet he appears to expect a radical rupture with capitalist states fairly soon and this is reflected in a stages theory of history, with categories to match. At first sight, these positions (let’s call them “reform” and “revolution”) are incompatible, but recent political developments (the “Arab Spring” and Occupy movements of 2011, however indeterminate their immediate outcomes) point to the need to transcend such an opposition.

The gap between our approaches to making the economy human is therefore narrowing. Even so, there are differences of theory and method that point to some residual reservations I have about the Debt book. The first of these concerns Graeber’s preference for lumping together states, money, markets, debt and capitalism, along with violence, war and slavery as their habitual bedfellows. Money and markets have redemptive qualities that in my view (Hart 2000) could be put to progressive economic ends in non-capitalist forms; nor do I imagine that modern institutions such as states, corporations and bureaucracy will soon die away. Anti-capitalism as a revolutionary strategy begs the question of the plurality of modern economic institutions. As Mauss showed (Hart 2007), human economies exist in the cracks of capitalist societies. David Graeber seems to agree, at least when it comes to finding “everyday communism” there and, by refusing to sanitize “human economies” in their pristine form, he modifies the categorical and historical division separating them and commercial economies. Revolutionary binaries seem to surface at various points in his book, but an underlying tendency to discern continuity in human economic practices is just as much a feature of David Graeber’s anthropological vision.

An argument of Debt’s scope hasn’t been made by a professional anthropologist for the best part of a century, certainly not one with as much contemporary relevance. The discipline largely abandoned “conjectural history” in the twentieth century in order to embrace the narrower local perspectives afforded by ethnographic fieldwork. Works of broad comparison such as Wolf’s and Goody’s were the exception to this trend. Inevitably Graeber’s methods will come under scrutiny, not just from fellow professionals, but from the general public too. (He tells me that academics don’t read footnotes any more, but laymen do). To this reader, the first half of the book – which relies heavily on ethnographic sources to spell out the argument — is more systematic, in terms of both analytical coherence and documentation, than the second, concerned as it is with fleshing out his cycles of history. In either case, little attempt is made to analyse contemporary political economy, although Graeber makes more explicit reference to this than, for example does Mauss in The Gift, where readers’ understanding of capitalist markets is taken for granted. Nowhere in the book is any reference made to the digital revolution in communications of our times and its scope to transform economies, whether human or commercial (Hart 2000, 2005).

Well, that is not quite true, for the author does occasionally introduce anecdotes based on common or his personal knowledge. The problem is that many readers who take on trust what he has to say about ancient Mesopotamia or the Tiv, may find these stories contradicted by their own knowledge. It is something akin to “Time magazine syndrome”: we accept what Time has to say about the world in general until it impinges on what we know ourselves and then its credibility dissolves. Thus:

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 (Graeber 2011a: 96).

The veracity of this anecdote has been challenged by numerous Californian bloggers and the author’s scholarship with it. Graeber is aware of the pitfalls of making contemporary allusions. In the final chapter (Ibid: 362-3), he cleverly introduces an urban myth he often heard about the gold stored under the World Trade Centre and then (almost) rehabilitates that myth using documented sources. Fortunately, David Graeber has not been deterred by the pedants from crossing the line between academic and general knowledge in this book and his readers benefit immensely as a result. I contributed to the publisher’s blurb for this book and said that he is “the finest anthropological scholar I know”. I stand by that. The very long essay he recently published on the divine kingship of the Shilluk (Graeber 2011c) covers the same ground as a number of famous anthropologists from Frazer onwards, but with an unsurpassed range of scholarship, as well as a democratic political perspective. Inevitably in a book like this one, the fact police will catch him out sometimes. But it is a work of immense erudition and deserves to be celebrated as such.

Our world is still massively unequal and we may be entering a period of war and revolution comparable to the “Second Thirty Years War” of 1914-1945 which came after the last time that several decades of financial imperialism went bust. Capitalism itself sometimes seems today to have reverted to a norm of rent-seeking that resembles the arbitrary inequality of the Old Regime more than Victorian industry. The pursuit of economic democracy is more elusive than ever; yet humanity has also devised universal means of communication at last adequate to the expression of universal ideas. Jean-Jacques Rousseau would have leapt at the chance to make use of this opportunity and several illustrious successors did so in their own way during the last two centuries. We need an anthropology that rises to the challenge posed by our common human predicament today. No-one has done more to meet that challenge than David Graeber, in his work as a whole, but especially in this book.

References

Beteille, Andre   1977   Inequality among Men. Blackwell: Oxford.

Childe, V. Gordon   1954   What Happened in History. Penguin: Harmondsworth.

Clastres, Pierre    1989 (1974)    Society against the state: Essays in political anthropology. Zone Books: New York.

Engels, Friedrich   1972 (1884)   The Origin of the Family, Private Property, and the State. Pathfinder: New York.

Goody, Jack   1976   Production and Reproduction: A Comparative Study of the Domestic Domain. Cambridge University Press: Cambridge.

Graeber, David   2001   Toward an Anthropological Theory of Value: The false coin of our own dreams. Palgrave: New York.

——    2004    Fragments of an Anarchist Anthropology. Prickly Paradigm: Chicago.

——    2007a   Lost People: Magic and the legacy of slavery in Madagascar. Indiana University Press: Bloomington IN.

——   2007b   Possibilities: Essays on hierarchy, rebellion, and desire . AK Press: Oakland CA.

——    2009a   Direct Action: An ethnography. AK Press: Baltimore MD.

——    2009b   Debt, Violence, and Impersonal Markets: Polanyian Meditations. In Chris Hann and K. Hart editors Market and Society: The Great Transformation today. Cambridge University Press: Cambridge, 106-132.

——   2011a    Debt: The first 5,000 years. Melville House: New York.

——   2011b   The divine kingship of the Shilluk: On violence, utopia, and the human condition or elements for an archaeology of sovereignty, Hau: Journal of Ethnographic Theory 1.1: 1-62.

——   2011c   Revolutions in Reverse: Essays on politics, violence, art, and imagination. Autonomedia: New York.

Hann, Chris and K. Hart   2011   Economic Anthropology: History, ethnography, critique. Polity: Cambridge.

Hart, Keith   1986   Heads or tails? Two sides of the coin. Man 21 (3): 637–56.

——   2000   The Memory Bank: Money in an unequal world. Profile: London; republished in 2001 as Money in an Unequal World. Texere: New York.

—— 2005 The Hit Man’s Dilemma: Or business personal and impersonal. Prickly Paradigm: Chicago.

——   2006   Agrarian civilization and world society. In D. Olson and M. Cole (eds.), Technology, Literacy and the Evolution of Society: Implications of the work of Jack Goody. Lawrence Erlbaum: Mahwah, NJ, 29–48.

——   2007   Marcel Mauss: in pursuit of the whole – a review essay. Comparative Studies in Society and History 49 (2): 473–85.

——   2008   The human economy. ASAonline 1. http://www.theasa.org/publications/asaonline/articles/asaonline_0101.htm

——   2011   Jack Goody’s vision of world history and African development today (Jack Goody Lecture 2011). Halle/Saale: Max Planck Institute for Social Anthropology, Department II.

Hart, Keith, J-L. Laville and A. Cattani editors   2010   The Human Economy: A citizen’s guide. Polity: Cambridge.

Kant, Immanuel   2006   Anthropology from a Pragmatic Point of View. Cambridge University Press: Cambridge.

Lévi-Strauss, Claude   1969 (1949)   The Elementary Structures of Kinship. Beacon: Boston.

——    1973 (1955) Tristes Tropiques. Cape: London.

Locke, John   1960 (1690)   Two Treatises of Government. Cambridge University Press: Cambridge.

Marx, Karl   1970 (1867)   Capital Volume 1. Lawrence and Wishart: London.

Mauss, Marcel   1990 (1925)  The Gift: The form and reason for exchange in archaic societies. Routledge: London.

Morgan, Lewis H. 1964 (1877) Ancient Society. Bellknapp: Cambridge MA.

Pleyers, Geoffrey   2010   Alter-globalization: Becoming actors in a global age. Polity: Cambridge.

Polanyi, Karl   2001 (1944)   The Great Transformation: The political and economic origins of our times. Beacon: Boston.

——   1957   The economy as instituted process. In K. Polanyi, C. Arensberg and H. Pearson editors Trade and Market in the early Empires. Free Press: Glencoe IL, 243-269.

Rousseau, Jean-Jacques   1984 (1754)   Discourse on Inequality. Penguin: Harmondsworth.

I have been writing about the euro for a decade (Hart 2002, 2007a, 2012), always from a critical perspective, since I have long believed that a single currency cannot address the needs of a large and diverse region. Moreover, the European Union’s ambition to transcend national capitalism by becoming a federal power in the world economy was always compromised by yoking member states to a system whose logic harks back to the gold standard. The contradictions of this fixed exchange-rate regime, conceived of in the euphoria of the “free market’s victory” in the Cold War, were disguised by the long credit boom. Even the financial crisis brought about by the fall of Lehman Brothers in September 2008 was at first represented by Europe’s elites as largely an “Anglo-Saxon” problem. The Italian finance minister joked that his country’s banks were sound since their managers didn’t speak English! The French social model, which Sarkozy had been elected to reform, began to look more attractive overnight. The last three years have seen one failed half-measure after another as the region’s leaders consistently underestimated what was needed to fix the growing sovereign debt crisis in Southern Europe. Germany has become at once a lot stronger and more isolated in the process.

A brief sketch of the history of the global economic crisis is in order. The conversion of the whole world to free market capitalism (“neoliberal globalization”) in the early 1990s coincided with a digital revolution in communications. Wall Street took the lead in exploiting these new possibilities. After the dot com boom crashed in 2000, a regime of low interest rates fuelled speculation in property. American bankers discovered that there was more to be made from lending to people without any money (mortgages, credit card debt) than to people who have some, since higher interest rates could be charged and assets could be seized on default. This led to the invention of “sub-prime” mortgages, lending to borrowers who could not hope to repay, then packaging these debts with other sounder loans for sale in the capital markets with the highest credit ratings possible (Jorion 2007). The banks also insured against bad loans using new instruments such as “credit default swaps” and “collateral debt obligations” (Tett 2010). As the bubble picked up steam, leverage rates escalated; some banks and especially the insurance group, AIG, became wildly over-exposed. The expectation that the bubble would last for ever led to the use of computer models that had no place for a decline in housing prices.

After 2005, it became obvious to some American finance houses that they should sell on the risky paper they had accumulated. But who would buy what they wanted to “short” (Lewis 2010)? Enter Europe’s financial institutions. Wall Street was so absorbed with its own bubble that the European banks found that they had a reasonably clear field, after the Cold War ended, in the “emerging markets” of Eastern and Southern Europe, Latin America and Southeast Asia. Spanish banks alone were exposed in Latin America to more than double the amount of all Wall Street taken together. Austrian banks found a niche lending to countries like Hungary, sometimes encouraging mortgage loans to be repaid in hard currencies like the Japanese yen and the Swiss franc. The French and German banks lent recklessly to Southern Europe. But they also bought heavily into American sub-prime mortgage bonds in the last years before the crash. National government efforts since 2008 to determine the viability of their own banks have been little more than a cover up. The sovereign debt crisis in Greece, Portugal, Ireland, Spain and Italy escalated in this context. I had this banking problem in mind when I concluded a lecture on international development in early 2009 with a prediction that “in this economic crisis, of all the world’s regions, the major and permanent loser will be Europe”.

It feels odd to write about the euro (in June 2012) when each day’s news reveals a new threat to the currency’s future and ever more implausible proposals – for a banking and fiscal union with teeth, for example. Europeans now find themselves at the centre stage of the world economy, as they have not been since the 1930s (see for example this piece by Niall Ferguson and Nouriel Roubini in the Financial Times, 8th June 2012, “Berlin is ignoring the lessons of the 1930s”), with financial markets hanging on each negotiation or election and the American president worrying that his own re-election chances depend on the Germans saving the euro. I cannot second-guess such fast-breaking developments here. Indeed, the central problem is not even mainly one of credit and debt, but rather reflects a deep-seated shift in the world economy, with national and international political institutions now unable to influence a money circuit that has gone global. In what follows, I will seek to explain the euro crisis as a key element in the slow unravelling of the twentieth century’s dominant social form, national capitalism.

I am not an Anglo-Saxon Euro-sceptic, but rather a Europhile who has lived in Paris for 15 years. I have long considered the European Union to be the most hopeful political experiment around today. I take no pleasure in predicting Europe’s long and painful adjustment to a much diminished place in the world.  I do, however, take satisfaction from having understood some of the causes of Europe’s institutional predicament today. The point of my analysis is to inform a more realistic political debate. My analytical tools draw on the history of economic anthropology (Hann and Hart 2011), a discipline that should combine world history, ethnography and critique. Anthropologists are quick to disparage the economists’ impersonal models in favour of their own researches on the ground; but we have not found it easy to extend our arguments to the global level. Money is a suitable vehicle for such an exercise, since it mediates between the extremes of human experience and, as such, offers a much neglected means of communication. We have to renew the classical tradition in the light of our contemporary predicament. In outlining my vision of money’s role in the making of world society (Hart 2009a), I offer here a selective reading of writers such as Mauss, Polanyi, Marx and Simmel. Then I will place the euro crisis in the demise of national capitalism.

In the wake of market fundamentalism

We have lived in the last three decades through an explosion of money, markets and telecommunications and are now beginning to experience the consequences. Whatever else this hectic period of “globalization” brings, it represents a rapid extension of society to a more inclusive level than the twentieth-century norm which identified society with the nation-state. In order to live in the world together, we have to devise new ways of doing things for each other that go beyond our attempts to achieve local self-sufficiency. I call this historical process ‘commoditization’ (Hart 1982), the evolution of methods for making work social, so that it can circulate in the form of commodities. This essay is one such commodity. No payment is involved, but it was written with the aim of circulating in this form. So far in history commoditization has been closely linked to the extension of society by means of markets and money. But there are other means and they may become more important as a result of the digital revolution in communications.

Theories of exchange tend to abstract the movement of markets from history by insisting on their “natural” ubiquity in human (and sometimes even animal) societies. In the extreme this becomes a kind of market fundamentalism that has had something of a free run of late, at least in the Anglophone countries. It is the foundation of neoliberal dogma, going back to Margaret Thatcher’s notorious claim that “there is no alternative” (TINA) to the free market, cousin to “there is no such thing as society”. The writers I cite below all believed that new human possibilities for association depend on recognizing the plurality of economic options that already exist in our societies.

The last two centuries have seen a strident debate between capitalist and socialist camps over whether markets are good or bad for society. The second draws on pre-industrial apologists for landed rule whose leading exponent was Aristotle. Karl Marx himself considered money to be indispensable to any complex economy and was radically opposed to the state in any form. But his followers, when they did not try to outlaw markets and money altogether, preferred to return them to the marginal position they occupied under agrarian civilization and were less hostile to the state, pre-industrial society’s enduring legacy for our world. Polanyi (1944) falls within this camp in that he acknowledged Aristotle as his master and considered “the self-regulating market” to have been the main cause of the twentieth-century’s horrors.

A less apocalyptic version of socialism in the tradition of Saint-Simon acknowledges the social damage done by unfettered markets (what Joseph Schumpeter called “creative destruction”), but would rather not lose the wealth they produce. Indeed all the leading capitalist societies at one stage signed up for Hegel’s (1821) idea that states should try to contain the inequality and social misery generated by markets. The emphasis has shifted over time between reliance on states and on markets for managing national economy, between social and liberal democracy. The general economic breakdown of the 1930s turned a large number of American economists away from celebrating the logic of markets towards contemplating their repair. This “institutional economics” persists as the notion that markets need self-conscious social intervention, if they are to serve the public interest. John Maynard Keynes (1936) produced the most impressive synthesis of liberalism and social democracy in the last century.

The market’s apologists likewise divide between some for whom it is a trans-historical machine for economic improvement best left to itself and those who acknowledge a role for enlightened public management of commerce. Classical liberals promoted markets as a means towards greater individual freedom against the arbitrary social inequality of the Old Regime. But the industrial revolution brought about a shift to urban commerce that made vast new populations of wage labourers rely on markets for food, housing and all their basic needs. Under these circumstances, in Britain in particular, society itself seemed to retreat from view, being replaced by an “economy” characterized by market contracts instead of domestic self-sufficiency. Others hold that society’s remaining defences are simply too weak to hold out against the rising tide of global money: you can’t buck “the markets”. Unregulated markets are engines of inequality, so this notion of markets as a natural force beyond social regulation serves also to legitimize wealth and even to make poverty seem deserved.

The challenge we face today, as the limits of market fundamentalism are revealed daily by yet more evidence of economic collapse, is to discover what is valuable in the extension of society by means of markets and money, while devising new institutional means of regulating their abuse.

Our moment in world history

According to writers as varied as John Locke (1690) and Karl Marx (1867), 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 multitudes never made a phone call in their lives, my guess is that capitalism still has quite a way to go. The focus of my research is on the evolution of markets and money at a time when world society is being formed rapidly, at considerable risk to us all. Following Kant (2006), I prefer to call this “the new human universal” (Hart 2009b) rather than the normal term, globalization.

Magellan’s crew completed the first circumnavigation of the planet some thirty years after Columbus crossed the Atlantic. At much the same time, Bartolomé de las Casas denounced the racial inequality of Spain’s American empire in the name of human unity. We are living through another Magellan moment. In the second half of the twentieth century, humanity formed a world society – a single interactive social network – for the first time. This was symbolized when the 60s space race allowed us to see the earth from the outside or when the internet went public in the 90s, announcing the convergence of telephones, television and computers in a digital revolution of communications. Our world too is massively unequal and the voices for human unity are often drowned. 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 (Hart 2000).

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 myself what it is about our times 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. So my research since then has been concerned with how the forms of money and exchange are changing in the context of this communications revolution.

Money has acquired its apparent pre-eminence because the economy was being extended rapidly from a national to a global level without any of the social regulation that existed before or will likely follow eventually. Naturally, the specialists in money used their newfound freedom from the social democracy of the 1940s to 70s to loot the world in scandalous and damaging ways that we will have to repair, if we can. But, in addition to drawing people en masse into unsustainable credit schemes, they also began to put in place some of the institutional mechanisms that will be necessary if we wish to make the market work for all of us and not just for them. A lot of the wealth piled up in recent decades came from exploiting discrepancies (arbitrage) in a world market that was rationalized and made more unitary in the process. Capitalism clearly is instrumental in making world society. It is unlikely to be the basis for its stable functioning, but it does get us some of the way there. Future generations will be most interested in the new social and cultural forms we are making, probably not in the money as such.

Polanyi versus Smith

When Adam Smith first told the barter origin myth of money he claimed that the “wealth of nations” resulted from the slow working out of a deep-seated propensity in human nature, “to truck, barter and exchange one thing for another”. He went on:

It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts … Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that (1961:17).

Smith acknowledged a degree of social complexity in the transactions: the idea of contract, private property (mine and yours) and equivalence (fairness), none of which could plausibly be traced to the non-human world. His latter-day successors have not shown similar modesty, routinely claiming that the markets of Wall Street today are animated by impulses that are not just eternally human, but shared at least with the primates. Traders are unusual people. They own things they neither made nor will use, but still claim the right to the value of their sale. They are willing to give up their goods in return for payment; and their customers then have the right to do what they like with them. This is so commonplace in our world that we think of it as eternal. It is in fact quite rare within the range of known human societies. What gives buyer and seller confidence that they each have exclusive rights to dispose of the commodity? The power of state law reinforces their contract and usually supports the money involved. They may operate as isolated individuals only because of the huge social apparatus backing their exchange.

Karl Polanyi’s stock is currently running high (Hann and Hart 2009). In The Great Transformation (1944) he traced the disaster of two world wars and the Great Depression to the installation of a “self-regulating market” in Britain during the nineteenth century, culminating in several decades of financial imperialism (Polanyi preferred to call it haute finance) underpinned by the gold standard, which came to an end in 1913-14. His critique was aimed both at the subversion of social institutions by market economy and at its ideological justification by the free market economics of the day. With this in mind, Polanyi inverted the liberal myth of money’s origin in barter:

The logic of the case is, indeed, almost the opposite of that underlying the classical doctrine. The orthodox teaching started from the individual’s propensity to barter; deduced from it the necessity of local markets, as well as of division of labour; and inferred, finally, the necessity of trade, eventually of foreign trade, including even long-distance trade. In the light of our present knowledge [Thurnwald, Malinowski, Mauss etc], we should almost reverse the sequence of the argument: the true starting point is long-distance trade, a result of the geographical location of goods and of the “division of labour” given by location.  Long-distance trade often engenders markets, an institution which involves acts of barter, and, if money is used, of buying and selling, thus, eventually, but by no means necessarily, offering to some individuals an occasion to indulge in their alleged propensity for bargaining and haggling (1944: 58).

Money and markets thus have their origin in the effort to extend society beyond its local core. Polanyi believed that money, like the sovereign states to which it was closely related, was often introduced from outside; and this was what made the institutional attempt to separate economy from politics and naturalise the market as something internal to society so subversive.

Polanyi distinguished between token and commodity forms of money. “Token money” was designed to facilitate domestic trade, “commodity money” foreign trade; but the two systems often came into conflict. Thus the gold standard sometimes exerted downward pressure on domestic prices, causing deflation that could only be alleviated by central banks expanding the money supply in various ways.  The tension between the internal and external dimensions of economy often led to serious disorganization of business (Polanyi 1944: 193-4). The liberal definition of money as just a medium of exchange obscured its function as a means of payment. Money was thus

…not a commodity, it was purchasing power; far from having utility itself, it was merely a counter embodying a quantified claim to things that could be purchased. Clearly, a society in which distribution depended on possession of such tokens of purchasing power was a construction entirely different from market economy (Ibid: 196).

In an  essay on the two sides of the coin (“heads or tails?”, Hart 1986), I argued following Polanyi that money is both a token of state authority and a commodity made by markets, at the same time an aspect of relations between persons and a thing detached from persons.  States and markets are combined in national capitalism, but policy swings erratically between the two extremes. David Graeber (2011) has drawn attention to similar long swings between money as virtual credit and as currency or bullion in the history of debt over the last five millennia.

In a later article, “Money objects and money uses”, Polanyi (1977: 97-121) approached money as a semantic system, like language and writing. His main point was that only modern money combines the functions of payment, standard, store and exchange and this gives it the capacity to sustain the set of functions through a limited number of “all-purpose” symbols. Primitive and archaic forms attach the separate functions to different symbolic objects which should therefore be considered to be “special-purpose” monies. Polanyi is arguing here against the primacy of money as a medium of exchange and for a multi-stranded model of its evolution. I will return to this later.

Mauss

Marcel Mauss’s position on markets and money (Hart 2007b) is an even more persuasive contribution to institutional economics than Polanyi’s. The Gift (1925) is an extended commentary on Durkheim’s (1893) argument that an advanced division of labour is sustained by “the non-contractual element in the contract”, a largely invisible body of state-made law, custom and belief that could not be reduced to abstract market principles. Mauss held that the attempt to create a free market for private contracts is utopian and just as unrealizable as its antithesis, a collective based solely on altruism. Human institutions everywhere are founded on the unity of individual and society, freedom and obligation, self-interest and concern for others. The pure types of selfish and generous economic action obscure the complex interplay between our individuality and belonging in subtle ways to others.

Mauss (1997) was highly critical of the Bolsheviks’ destruction of confidence in the expanded sense of sociability that sustained the market economy. In his view, markets and money were human universals whose principal function was the extension of society beyond the local sphere, even if they did not always take the impersonal form we are familiar with. This was why he disputed Malinowski’s (1921) assertion that kula valuables could not be considered to be money (Mauss 1990: 102n). Mauss advocated an economic movement from below, in the form of professional associations, co-operatives and mutual insurance, with the aim of achieving a consumer democracy (Fournier 2006). The significance for him of finding the archaic gift in contemporary capitalist societies was to refute the revolutionary eschatology of both right and left. Most of the possibilities for a human economy already co-exist in our world; so the task is to build new combinations with a different emphasis, not to repudiate a caricature of the market in the name of a radical alternative (Hart, Laville and Cattani 2010). Here Mauss follows Hegel — rather than Aristotle and Marx — in seeking the integration of institutions that have been variously dominant in history rather than representing them as mutually exclusive historical stages.

Mauss was interested in how we make society where it didn’t exist before. Hence we offer gifts on first dates or on diplomatic missions to foreign powers. How do we push the limits of society outwards? For him money and markets were intrinsic to this process. Hence giving personalized valuables could be considered to be an exchange of money objects if we operate with a broader definition than one based on impersonal currencies and focus rather on the function of their transfer, the extension of society beyond the local level. This helps to explain his claim that “the great economic revolutions are monetary in nature” (Fournier 2006: 212), meaning that they push us into unknown reaches of society and require new money forms and practices to bridge the gap. The combination of neoliberal globalization and the digital revolution has led to a rapid expansion of money, markets and telecommunications, all reinforcing each other in a process that has extended society beyond its national form, making it much more unequal and unstable in the process.

Commoditization and the dialectics of social abstraction

The third major influence has been Marx’s analysis of the historical relationship between people, machines and money in Capital. People ought to control machines and through them money, to be distributed in the general interest; but it is the other way round — money controls the machines and the people, with unequal and often socially disastrous results. Our political task is to reverse this situation. His book was a means to that end and he began it with the famous chapter on commodities which deserves our close attention, especially the opening section, “The two factors of a commodity: use-value and value (the substance of value and the magnitude of value)” (Marx 1970: 35-41).

Marx defines the commodity as a useful product of labour which, by means of social abstraction, is endowed with value in exchange. I earlier (Hart 1982) sought to improve on this definition, first by making the historical dialectic more explicit and then by taking up developments since Marx’s time. I recast the commodity as a process, “commoditization”, defined as “the progressive abstraction of social labour”. When we do things for each other in society, these services have to be detached from what we do for ourselves. This process of abstraction draws us into ever-widening circles of interdependence, the most inclusive of which are exchanges using money.

The commodity is progressively (but not necessarily in a historical sequence):

1. Some useful thing external to the producer;
2. Made social by becoming available to outsiders;
3. Specialisation extends exchange to an inter-community level;
4. Sometimes persons circulate, not things (e.g. marriage exchange);
5. Products of socially divided labour are circulated by means of gift-exchange, barter or payment of rent;
6. This may be elaborated as markets, exchange at negotiated rates;
7. Then special- and general-purpose monies enter into the circuit of exchange;
8. Money is the commodity crystallized as pure exchange value;
9. Now money can take the form of capital to make profit;
10. Eventually “industrial capital” employs human labour, as opposed to finance and merchant capital;
11. Passing beyond Marx’s time, services come to outweigh goods in the world market (things are replaced by what people do for each other);
12. Now commodities are often ideas and work for society may be wholly abstract, money is information flying around cyberspace as bits;
13. The world market for money is dominated by derivatives – secondary contracts that gamble on the future prices of actual commodities;
14. But people still do many things for themselves; make gifts; use old-fashioned cash; join computerized barter networks etc.

This is a just-so story; but it is based on Marx’s and it does illuminate a basic trend that he predicted, the apotheosis of capital as money exchanged for money in a pure form detached from what people do. It is consistent with Mauss’s argument that gift-exchange and market contracts rest on a shared logic of reciprocity; but not with the opposition between “gift economies” and “commodity economies” that animates so much anthropological discussion today.

In his introduction to Grundrisse (1973:100-108), Marx states that we must start from the concrete conditions of our moment in history and then draw some analytical abstractions from them. Some are content just to achieve abstract ideas; but for Marx the point is to insert these simplified abstractions back into their concrete starting-point. Yet he opens Capital with this abstract discourse on “commodities” and the three volumes never get to where he was aiming for in Grundrisse, “the world market and its crises”.

Both Marx (1970) and Simmel (1978: chapter 6) noticed that social abstraction through capitalist markets seemed to go along with intellectual abstraction as philosophy and science in ancient Athens, Renaissance Florence, England in the seventeenth century and, we might say, the USA in the twentieth. But we should not lose sight of the dialectics involved. The commodity remains something useful and in that use lies its concrete realization. Our method has somehow to reproduce this mutual determination of the abstract and the concrete.

We rely on the products of abstraction to engage with others in highly concrete ways; and information-based trade in commodities and money allows us to interact with increasing specificity at great distances. Thus I once had a service contract for my website with a firm in Bangalore, India. I could talk to the webmaster there by internet telephone, while he showed me various design possibilities through our browsers– all in real time and at no cost. This is getting close to what we could do to if we were in the same room together. Working with a PC will be a lot less lonely in future. The digital revolution in communications is as radical as any in human history, comparable to the invention of agriculture.

Money in the human economy

To call the economy human (Hart 2008; Hart, Laville and Cattani 2010) is to insist on putting people first, making their thoughts, actions and lives our main concern. Such a focus should also be pragmatic: making economy personally meaningful to students or readers, relating it to ordinary people’s practical purposes. Humanity is a moral quality, implying that, if we want to be good, we should treat other persons, people like ourselves, kindly. Since theoretical abstraction is impersonal and leaves no room for morality, a human economy would have to pay attention to the personal realm of experience; but it would be a mistake to leave it there. Humanity is also a collective noun, meaning all the people who have existed or ever will. The human economy is inclusive, a perspective reinforced by the new human universal that is emergent world society.

Anthropologists and sociologists have long rejected the impersonal model of money and markets offered by mainstream economics. Zelizer (1994), for example, shows that people refuse to treat the cash in their possession as an undifferentiated thing, choosing rather to earmark it — reserving some for food bills, some as holiday savings and so on. Her examples generally come from areas that remain invisible to the economists’ gaze, such as domestic life. People everywhere personalize money, bending it to their own purposes through a variety of social instruments. This was the message too of Money and the morality of exchange (Parry and Bloch 1989). When money and markets are understood exclusively through impersonal models, awareness of this neglected dimension is surely significant. But the economy exists at more inclusive levels than the person, the family or local groups. This is made possible by the impersonality of money and markets, where economists remain largely unchallenged. Money, much as Durkheim (1912) argued for religion, is the principal means for us all to bridge the gap between everyday personal experience and a society whose wider reaches are impersonal (Hart 2011).

Money is often portrayed as a lifeless object separated from persons, whereas it is a creation of human beings, imbued with the collective spirit of the living and the dead. Money must be impersonal in order to connect individuals to the universe of their social relations. But people make everything personal, including their relations with society. This two-sided relationship is universal, but its incidence is highly variable (Hart 2007c). Money in capitalist societies stands for alienation, detachment, impersonal society, the outside; its origins lie beyond our control (the market). Relations marked by the absence of money are the model of personal integration and free association, of what we take to be familiar, the inside (home). This institutional dualism, forcing individuals to divide themselves every day, asks too much of us. People want to integrate division, to make some meaningful connection between their own subjectivity and society as an object. It helps that money, as well as being the means of separating public and domestic life, was always the main bridge between the two. It is both the principal source of our vulnerability in society and the main practical symbol allowing each of us to make an impersonal world meaningful.

The reality of markets is not just universal abstraction, but the mutual determination of the abstract and the concrete (Hart 2007c). If you have some money, there is almost no limit to what you can do with it, but, as soon as you buy something, the act of payment lends concrete finality to your choice. Money’s significance thus lies in the synthesis it promotes of impersonal abstraction and personal meaning, objectification and subjectivity, analytical reason and synthetic narrative. Its social power comes from the fluency of its mediation between infinite potential and finite determination. To turn our backs on markets and money in the name of collective as opposed to individual interests reproduces the bourgeois separation of self and society. It is not enough to emphasize the controls that people already impose on money and exchange as part of their personal practice. That is the everyday world as most of us know it. We also need ways of reaching the parts of the macro-economy that we don’t know, if we wish to avert the ruin they could bring down on us all. Perhaps this was what Simmel (1900) had in mind when he said that money is the concrete symbol of our human potential to make universal society.

The two great means of communication are language and money. Anthropologists have paid much attention to the first, which divides us more than it brings us together, but not to money whose potential for universal communication is more reliable. We cannot afford to neglect money’s potential for universal connection. It is high time for anthropologists to return to an earlier philosophical tradition, building on Kant’s (2006) example, but also on the neo-Kantianism of Durkheim (1912), Mauss (1925) and Simmel (1900). I have been driven to this conclusion by studying how money and markets extend society at our moment in history. Money constitutes the most tangible manifestation of the new human universal that is our shared occupation of the planet.

The collapse of national capitalism

The current crisis of world economy is not merely financial, a moment in the historical cycle of credit and debt. The removal of political controls over money in recent decades has led to a situation where politics is still mainly national, but the money circuit is global and lawless. The crisis should rather be seen as the collapse of the money system that the world lived by in the twentieth century. This has been unravelling since the US dollar went off gold in 1971, a new regime of floating currencies emerged and money derivatives were invented in 1972. As the need for international cooperation intensifies, the disconnect between economy and political institutions undermines effective solutions.

2011/12 is the political consequence of the financial crisis of 2007/8. There is still a tendency to see the potential disaster we are living through in economic rather than political terms. In this respect, neoliberalism’s detractors often reproduce the free market ideology they claim to oppose. The euro is by no means the only symptom of this crisis, but it may well be seen in retrospect as the decisive nail in the coffin of the world economy today. One way of approaching our moment in history is to ask not what is beginning, but what is ending. This is not straightforward.

What is ending is “national capitalism”, the synthesis of nation-states and industrial capitalism (Hart 2009a). Its main symbol has been national monopoly currency (legal tender policed by a central bank). It was the institutional attempt to manage money, markets and accumulation through central bureaucracy within a cultural community of national citizens. It was never the only active principle in world political economy: regional federations, empires and globalization are at least as old or much older.

National capitalism’s origins lay in a series of linked revolutions of the 1860s/early 70s based on a new alliance between capitalists and the military landlord class.  These ranged from the American civil war and Japan’s Meiji restoration to Italian and German unification, Russia’s abolition of serfdom, the French Third Republic and Britain’s second Reform Act. In all this, Marx (1867) published Capital and a revolution in transport and communications (steamships, continental railways and the telegraph) took place. These new governments launched a bureaucratic revolution in the late nineteenth century and then sponsored large corporations in a drive towards mass production. The national system became generalised after the First World War when states turned inward to manage their economies in war and depression. Its apogee was the social democracy built after 1945, what the French call les trente glorieuses.

People learn to understand each other as members of communities and money is an important vehicle for this. They share meanings as a way of achieving their practical purposes together. Nation-states have been so successful in a relatively short time that it is hard for us to imagine society in any other way. Five different types of community come together in the nation-state:

•  political community: a link to the world and a source of law at home
•  community of place: territorial boundaries of land and sea
•  imagined or virtual community: the constructed cultural identity of citizens
•  community of interest: subjectively and objectively shared purposes in trade and war
•  monetary community: common use of a national monopoly currency

The rise and fall of single currencies is therefore one way of approaching national capitalism’s historical trajectory.

Money is the principal means for us all to bridge the gap between everyday personal experience and a society whose wider reaches are impersonal. At present national politics and media frame economic questions in such relentlessly parochial terms that we find it hard to think about the human predicament as a whole. But money is already global in scope and the need to overcome these limitations is urgent. My fear is that only a major war and all the losses it would bring will concentrate our minds once more on fixing the world we live in.

Mainstream economics says more about what money does than what it is. Its main function is held to be as a medium of exchange, a more efficient lubricant of markets than barter. Another school emphasizes money’s function as a means of payment, especially of taxes to the government and hence on “purchasing power”. It is also a standard of value or unit of account, with the focus again on government’s role in establishing the legal conditions for trade; while John Locke (1690) conceived of money as a store of wealth, a new form of property that allowed the accumulation of riches to escape from the limitations of natural economy.

As we have seen, Polanyi (1977) argued that only modern money combines the four functions (payment, standard, store and exchange) in a few “all-purpose” symbols, national currency. Although his analysis was intended only to illuminate the history of money, Polanyi’s approach offers profound insight into the causes of today’s global economic crisis. Our challenge is to conceive of society once more as something plural rather than singular, as a federated network rather than as a centralized hierarchy, the nation-state. The era of national monopoly currencies is very recent (from the 1850s); it took the United States, for example, half a century to secure an uncontested monopoly for “greenbacks” (Zelizer 1994); and “all-purpose money” has been breaking up for four decades now, since the US dollar was de-pegged from gold (Dembinski and Perritaz 2000).

Since the break-up of the Bretton Woods system of fixed parity exchange rates, world economy has reverted to the plural pattern of competing currencies that was normal before central banks learned how to control national economies in the second half of the nineteenth century through the bank rate, for example. One aspect of the crisis is that the international rule system imposed after the Second World War was systematically subverted by the creation of an offshore banking system which brought the informal economy to the heart of global finance (Shaxson 2011). The separation of functions between different types of monetary instruments was also crucial to money’s great escape from the rules of the Keynesian consensus. Central bank control was eroded by a shift to money being issued in multiple forms by a global distributed network of corporations, not just governments and banks.

Some brief examples must serve to indicate the momentous changes that have overtaken money in the last few decades. In Switzerland today, euros are commonly accepted in shops alongside the national currency. If you pay with a card, you can often choose the unit of account (Swiss franc, euro, pound sterling, US dollar). But only francs are acceptable for payment of local taxes. Are national currencies a store of wealth? Hardly — they have all been radically depreciated and may even disappear; hence the flight to gold. But gold could turn out to be the biggest asset bubble of them all. As for real estate, the collapse of subprime mortgages got us into the present mess. And we have not even touched on what credit default swaps and collateral debt obligations are used for or who issues them. The shadow banking system — hedge funds, money market funds and structured investment vehicles that lie beyond state regulation – is literally out of control.

Simmel (1900) considered money’s twin anchors to be its physical substance (coins, paper etc.) and the social institutions supporting the community of its users. He predicted that the first would wither away, making the second more visible. Radical cheapening of the cost of transferring information as a result of the digital revolution in communications has been transforming money and exchange for two decades now (Hart 2000), confirming Simmel’s prophecy. But globalization has made national society seem a lot less self-sufficient than it did a century ago. Lower costs of transferring information introduce new conditions for engagement with the impersonal economy. The formation of world society is driven by money, markets and telecommunications. Single currencies have given way to the separation of functions between different types of monetary instruments. Central bank control has eroded by a shift to money being issued in many forms by a global distributed network of corporations, not just governments and banks.

This process of social extension beyond national boundaries is fraught with danger, much as the kula ring was (Malinowski 1922). We need to extend systems of social rights to the global level before the contradictions of the market system collapse into world war. But local political organization resists such a move. This dialectic of globalization is very ancient. Ours is becoming a multi-polar world whose plurality of associations and convergent income distribution resembles the medieval period more than anything since.

Simmel’s prophecy has been realised to a remarkable degree, as the digital revolution promotes electronic transfers (Dembinski and Perritaz 2000). But if the essence of money is its use in a community with shared social institutions, national capitalism has lost its grip on reality. We must therefore move from singular (national) to plural (federal) conceptions of society. The infrastructure of money has already become decentralized and global. A return to the national solutions of the 1930s or to a Keynesian regime of managed exchange rates and capital flows is bound to fail. Where are the levers of democratic power to be located, now that globalization has exposed the limitations of national economic management? The cultural logic of national capitalism leads the political classes who got us into this mess to repeat the same mistakes. Politics is a dialogue of the deaf, between those who deny the need for any political regulation of markets and others who remain trapped in the outmoded model of state money.

The idea of world society is still perceived by most people as at best a utopian fantasy or at worst a threat to us all. We need to build an infrastructure of money adequate to humanity’s common needs. This agenda seems impossibly remote right now. One move in such a direction goes by the name of “alter-globalization” (Pleyers 2010). The idea of a “human economy“(Hart, Laville and Cattani 2010) offers a bridge to that movement. “Economy” is putting ones house in order in a world shaped increasingly by markets (Hann and Hart 2011). Social units of widely varying scale may be said to have one. Economy is pulled inwards to secure local guarantees of a community’s rights and interests; and outwards to make good local supply by engaging with outsiders through the medium of money and markets of various sorts, not just our own (Mauss 1925).

The euro crisis

An editorial in Libération, of 1^st January 2002, celebrated the launch of the euro as a revival of the spirit of the Roman Empire under the heading “Rubicon”:

La marche de César sur Rome fut l’acte fondateur d’une Pax romana qui étendit son empire plusieurs siècles durant d’un bout à l’autre de l’Europe, garantissant au continent prospérité et civilisation. Les Européens n’ont jamais tout à fait perdu le souvenir de cet âge d’or….L’euro, véritable icône de l’Union européenne, est une nouvelle réincarnation de l’éternel projet d’unité d’un vieux continent hanté par sa longue histoire de conflits sanglants… (p. 3)

Whatever we may think of Rome’s political system, the promise of overcoming the fragmentation of European sovereignty inherited from feudalism did indeed seem at first to be the huge symbolic prize conferred by monetary union. But Julius Caesar made his bid for power with an army. The euro was launched on a premise that politics, rather than being a precondition of economic integration, would follow the logic of free markets. This neoliberal fantasy still grips Europe’s political leadership and the euro crisis is its result.

At the same time, I published “a tale of two currencies” (Hart 2002), comparing the euro with the Argentinian peso which was then in disarray. The Argentinian default has since been celebrated as a success, with annual growth rates of 8% common in the following decade. Distressed national economies like Greece might be encouraged by this precedent, even if they are not a major food exporter in a commodities boom. Here is an excerpt from that article:

The euro’s management is likely to be less democratically accountable to the public even than its national precursors. The twelve central bank governors of the participating countries represent what is in effect a league of states. The euro may not be a national currency, but it does aim to be a federal state currency, like the dollar. The essence of state money is that currency of little or no worth is offered to a people by the government in payment for real goods and services, as the sole legal means of exchange within the territory and with the obligation to pay taxes on all transactions using it. Central banks jealously guard the national monopoly, policing the banks who actually issue most of the money and restricting circulation of rival currencies to narrow spheres of exchange.

The legacy of Maastricht is that the economic destiny of 300 million Europeans is now tied to the fortunes of a single currency whose management cannot possibly meet their varied needs and interests. The euro is in principle a throwback to the Bretton Woods era of fixed parity exchange rates, at least for the participating countries, and it does not take much imagination to figure out that the deflationary consequences for some parts of the European economy could be unpleasant. The constituent governments of Euroland will come under pressure from their own people for more flexible instruments of economic management. The euro cannot do the job all by itself.

The euro involves only a limited break with the territorial principle. Its logic is still that of a central bank monopoly within an expanded territory. There are other democratic possibilities. We can make our own money rather than pay for the privilege of receiving it from our rulers. Europeans may not yet be reduced to the desperate measures of the Argentinians, but we too have some way to go before we can afford to rest content with the money forms at our disposal. (Hart 2002:21)

The monetary crisis that has overwhelmed the eurozone of late needs to be seen in this context. The apparent triumph of the free market at the end of the Cold War in 1989/90 induced two huge political blunders, both of them based on the premise that society should be shaped by market economy rather than the other way round. Radical privatization of Soviet bloc public economies ignored the common history of politics, law and social custom that shored up market economies in the West, thereby delivering the economy into the hands of gangsters and oligarchs. And the European single currency was supposed to provide the social glue for political union without first developing effective fiscal institutions or economic convergence between North and South.

The big mistake was to replace national currencies with the euro. An alternative proposal, the hard ecu, would have floated politically managed national currencies alongside a low-inflation European central bank currency. Countries that didn’t join the euro, like Britain and Switzerland, have in practice enjoyed the privilege of this plural option. Eurozone countries cannot devalue and so must reduce their debts through deflation — or default. The euro was invented after money was already breaking up into multiple forms and functions. The Americans centralized their currency after a civil war; the Europeans centralized theirs as a means of achieving political union.

The infrastructure of money has already become decentralized and global. Where are the levers of democratic power to be located, now that globalization has exposed the limitations of national economic management? The cultural logic of national capitalism leads the political classes who got us into this mess to repeat the same mistakes. Politics is a dialogue of the deaf, between those who deny the need for any political regulation of markets and others who remain trapped in the outmoded model of state money.

It is obvious enough that member states of the eurozone have been denied the option of devaluation as a means of reducing national debt. In an eery echo of the 1930s, when Britain left the gold standard before mainland Europe and had a more lenient depression, the UK this time also took early advantage of a massive devaluation, while countries of the Eurozone could only deflate or default. The lessons of the 1930s and knowledge of Keynes’s (1936) remedies make it hard to understand why austerity policies are being universally pursued when they can only intensify the depression. The economist, Paul Krugman (2012), argues forcefully that a Keynesian approach would end the current depression. If he is right at the level of economic theory, he still has no political explanation for why Europe’s rulers are doing the opposite. All the evidence points to the dominant interest in this crisis being finance; and since politicians are addicted to money, it is hardly surprising that their policies favour the banks at the expense of the bulk of the electorate. The fact is that very few people benefited from the credit boom and those few will sacrifice the interests of the rest of us in order to retain their power. By this interpretation, austerity is good for disciplining the masses and keeping them cowed, certainly better than expanding demand and regulating capital flows. It is up to us to show them they are wrong to think so.

“Economy” has multiple meanings, but the idea of putting ones house in order in a world shaped increasingly by markets combines several of them. In this conception, economy is pulled inwards to secure local guarantees of a community’s rights and interests; and outwards to make good local supply by engaging with outsiders through the medium of money and markets of various sorts, not just our own.  The trick is to manage this dialectic of internal and external forces effectively.

The key problem with the eurozone is the democratic deficit which leads governments to be accountable to haute finance (Polanyi 1944) rather than to their own people, as they generally were during the decades of social democracy after 1945. Examples of alternative trajectories are not hard to find. Iceland suffered more than most from the financial crisis because three banks yoked their small island economy to the credit bubble (Lewis 2011). A new government, incidentally dominated by women, refused British and Dutch pressure to repay bad debts incurred in those countries; let the banks fail; limited household debt to a proportion of their existing assets; and put the former prime minister and the bankers on trial. The result is that their economy is now growing at 3% a year (compared with less than 1% in the eurozone) and the country’s sovereign debt rating has been raised, with the approval of the IMF. David Graeber (2011) has won widespread attention in the United States and Europe for his argument that a wholesale cancellation of debts for the masses is needed now on the model of the ancient jubilee. The small Baltic states have also shown that that the deflationary route has possibilities. Latvia, whose head of government instituted savage austerity, was re-elected and still wants to join the euro, is a prime example. Throughout the twentieth century, the Scandinavian countries and Switzerland showed that democratically accountable political elites could ensure among the highest rates of economic growth in the world.

I have tried to show here that the economic stalemate in the eurozone has political sources and could be resolved if the terms of public debate acknowledged contemporary social realities. It is unlikely however that the ruling elites who brought the crisis about will introduce effective solutions, since their prime responsibility is to save their own skins and those of their financial backers. To the idea of economic crisis and its antidotes, we must add in 2011-12 the possibility of political revolution. Europe has become the main focus once more of a world revolution. The European Union was a bold political experiment that had some prospect of making regional federation the next stage in the making of world society. But its monetarist premises never allowed for the expression of economic democracy.

The euro crisis pushes Europe’s rulers inexorably along a path of social polarisation, between a corporate bureaucracy and a population rapidly being stripped of the political, legal and economic powers we won after 1945. The whole story is a Greek tragedy in both the ancient and contemporary senses, where even the best intentions can no longer remedy the consequences of past mistakes. Just as it was always a mistake to imagine that a single currency would lead to political union, so too attempts to prevent the crisis from unravelling now persist in trying to fix the euro when the problem is the political union itself.  Europe’s rulers have grown so accustomed to hiding behind an economic fiction masquerading as democracy that they have no political solutions. Most politicians are not interested in transnational politics since it means losing some of their power and that is unthinkable. Finance gets national politicians elected and gives them power once they are in office; nothing else intrudes on their complicity. The European Union itself, designed as it was to address global economic problems through a regional federation, will inevitably be sacrificed and the euro with it. The resulting disaster may eventually generate the conditions for a genuine reconfiguration of world power of the sort that occurred after 1945.

References

Dembinski, P. and C. Perritaz 2000. Towards the break-up of money: when reality driven by information technology outshines Simmel’s vision. Foresight 2: 483–97.

Durkheim, E. 1960 [1893]. The Division of Labor in Society. Glencoe, Ill. Free Press.

———. 1965 [1912]. The Elementary Forms of the Religious Life. Glencoe, Ill.: Free Press.

Epstein, G. 2005. Financialization and the World Economy. Cheltenham: Edward Elgar.

Fournier, M. 2006 (1994). Marcel Mauss: A biography. Princeton: University Press.

Graeber, D. 2011. Debt: The first 5,000 years. New York: Melville House.

Hann, C. and K. Hart Editors. 2009. Market and Society: The Great Transformation today. Cambridge: The University Press.

Hann, C. and K. Hart. 2011. Economic Anthropology: History, Ethnography, Critique. Cambridge: Polity.

Hart, K. 1982.  “On commoditization”, E. Goody (Ed) From Craft to Industry, Cambridge, Cambridge U.P.

——-. 1986. Heads or tails? Two sides of the coin. Man 21: 637–56.

——–. 2000. The Memory Bank, London, Profile Books. Republished 2001: Money in an Unequal World, New York, Texere.

——–. 2002. A tale of two currencies. Anthropology Today 18: 1, 20-22.

——–. 2007a. On money and anthropology: towards a new object, theory and method. In E. Baumann, L. Bazin, P. Ould-Ahmed, P. Phélinas, M. Selim, R. Sobel (éds) Argent des anthropologues, monnaie des economists. Paris: Harmattan, 237-256.

———. 2007b. Marcel Mauss: In pursuit of the whole. A review essay. Comparative Studies in Society and History 49 (2): 473-485.

——–. 2007c. Money is always personal and impersonal. Anthropology Today 23(5): 11-16.

——–. 2008. The human economy. ASAonline 1: http://www.theasa.org/publications/asaonline/articles/asaonline_0101.shtml

——–. 2009a. Money in the making of world society. In C. Hann and K. Hart (eds) Market and society: The great transformation today. Cambridge: Cambridge University Press, 91-105.

——–. 2009b. Towards a new human universal: rethinking anthropology for our times, Radical Anthropology Journal 2: 4-10.

——–. 2011. Money as a form of religious life. Religion and Society: Advances in Research 1: 156–63.

——–. 2012. A crisis of money: the demise of national capitalism. openDemocracy, 14^th March http://www.opendemocracy.net/ourkingdom/keith-hart/crisis-of-money-demise-of-national-capitalism

Hart, K., J-L Laville and A. Cattani Editors. 2010. The Human Economy: A citizen’s guide. Cambridge: Polity.

Hegel, G.W.F. 1967 (1821). The Philosophy of Right. Oxford: The University Press.

Jorion, P. 2007. Vers la crise du capitalisme américain? Paris: La Découverte.

Kant, I. 2006 (1798). Anthropology from a Pragmatic Point of View. Cambridge: Cambridge University Press.

Keynes, J.M. 1936. A General Theory of Employment, Interest and Money. London: Macmillan

Krugman, P. 2012. End This Depression Now! New York: Norton.

Lewis, M. 2010. The Big Short: Inside the doomsday machine. New York: Penguin.

Locke, J. 1988 (1690). Two Treatises of Government. Cambridge: Cambridge University Press.

Malinowski, B. 1921. The primitive economics of the Trobriand Islanders. The Economic Journal 31:1-16.

——–. 1961 (1922). Argonauts of the Western Pacific. New York: Dutton.

Marx, K. 1970 [1867]:  Capital : the critique of political economy, Volume 1, London: Lawrence and Wishart.

——–. 1973 [1859] : Grundrisse, New York: Vintage Books.

Mauss, M. 1990 [1925]. The Gift: Form and reason for exchange in archaic societies. London: Routledge.

———. 1997. Écrits politiques. M. Fournier, ed. Paris: Fayard.

Parry, J. and M. Bloch Editors. 1989. Money and the Morality of Exchange. Cambridge: Cambridge University Press.

Pleyers, G. 2010. Alter-globalization: becoming actors in a global world. Cambridge: Polity.

Polanyi, K. 2001 (1944). The Great Transformation: The political and economic origins of our times. Boston: Beacon.

———-. 1977. Money objects and money uses. In The Livelihood of Man. New York: Academic Press, 97-121.

Shaxson, N. 2011. Treasure Islands: Tax havens and the men who stole the world. London: Bodley Head.

Sigaud, L. 2002. The vicissitudes of The Gift. Social Anthropology 10, 3: 335–58.

Simmel, G. 1978 (1900). The Philosophy of Money. London: Routledge.

Smith, A. 1961 (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. London: Methuen.

Tett, G. 2010. Fool’s Gold: How unrestrained greed corrupted a dream, shattered global markets and unleashed a catastrophe. London: Abacus.

Zelizer, V. 1994. The Social Meaning of Money, New York, Basic Books.

In the wake of market fundamentalism

We have lived in the last three decades through an explosion of money, markets and communications and are now beginning to experience the consequences. Whatever else this hectic period of ‘globalization’ brings, it represents a rapid extension of society to a more inclusive level than the twentieth-century norm which identified society with the nation-state. In order to live in the world together, we have to devise new ways of doing things for each other that go beyond our attempts to achieve local self-sufficiency. I call this historical process ‘commoditization’ (Hart 1982), the evolution of methods for making work social, so that it can circulate in the form of commodities. This essay is one such commodity. It does not have to be sold, but it was written with the aim of finding some limited circulation in this form. So far in history commoditization has been closely linked to the extension of society by means of markets and money. But there are other means and they may become more important as a result of the digital revolution in communications — and no doubt other factors.

The ubiquity of money and markets in contemporary world society has lent credibility to the idea that exchange is a human universal. I happen to think that it is not, being rather linked to the invention of agriculture and likely to be undermined by the sharing made possible through the internet; but this is not the place to make that argument. In any case, theories of exchange tend to abstract the movement of markets from history by insisting on their ‘natural’ ubiquity in human (and sometimes even animal) societies. In the extreme this becomes a kind of market fundamentalism which has had something of a free run in recent decades, at least in the Anglophone countries. It is the foundation of neoliberal dogma, going back to Margaret Thatcher’s notorious claim that “there is no alternative” (TINA), cousin to “there is no such thing as society”. In contrast, the intellectual sources I cite below – Polanyi, Mauss, Marx and Simmel – all believed that the realization of new human possibilities for association depend on recognizing the plurality of economic options that already exist in our societies.

The last two centuries have seen a strident debate between capitalist and socialist camps insisting that markets are either good or bad for society. The second draws on the pre-industrial apologists for landed rule whose leading exponent was Aristotle. Karl Marx himself considered money to be indispensable to any complex economy and was radically opposed to the state in any form. However, many of his socialist and communist followers, when they did not try to outlaw markets and money altogether, preferred to return them to the marginal position they occupied under agrarian civilization and were less hostile to the state, pre-industrial society’s enduring legacy for our world. Polanyi (1944) falls within this camp in that he acknowledged Aristotle as his master and considered ‘the self-regulating market’ to have been the principal cause of the twentieth-century’s horrors.

A less apocalyptic version of socialism in the tradition of Saint-Simon acknowledges the social damage done by unfettered markets (what Joseph Schumpeter called ‘creative destruction’), but would not wish to do away with the wealth they produce. Indeed the leading capitalist societies at one stage all signed up for Hegel’s (1821) idea that states should try to contain the inequality and ameliorate the social misery generated by markets. Within this framework, the emphasis has shifted over time between reliance on states and on markets for managing national economy, between social and liberal democracy of various hues. The general economic breakdown of the 1930s turned a large number of American economists away from celebrating the logic of markets towards contemplating their repair. This ‘institutional economics’ persists as the notion that markets need self-conscious social intervention, if they are to serve the public interest. John Maynard Keynes (1936) produced the most impressive synthesis of liberalism and social democracy in the last century.

The market’s apologists likewise divide between some for whom it is a trans-historical machine for economic improvement best left to itself and those who acknowledge a role for enlightened public management of commerce. Classical liberals promoted markets as a means towards greater individual freedom as a corrective to the arbitrary social inequality of the Old Regime. But the industrial revolution brought about a shift to urban commerce that made vast new populations of wage labourers rely on markets for food, housing and all their basic needs. Under these circumstances, in Britain in particular, society itself seemed to retreat from view, being replaced by an ‘economy’ characterized this time by market contracts instead of domestic self-sufficiency. Others hold that society’s remaining defences are simply too weak to hold out against the rising tide of global money: you can’t buck ‘the markets’. Unregulated markets are engines of inequality, so this notion of markets as a natural force beyond social regulation serves also to legitimize wealth and even to make poverty seem deserved.

The challenge we face today, as the limits of market fundamentalism are revealed daily by some manifestation or other of economic collapse, is to discover what is valuable in the extension of society by means of markets and money, while devising new institutional means of regulating their abuse. This is the context for the following reflections of commoditization, reflections emphasizing the sources of intellectual history that have proved valuable to me in my own research.

Our moment in world history

According to writers as varied as John Locke and Karl Marx, 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 multitudes never made a phone call in their lives, I would say that capitalism still has quite a way to go. The focus of my research is on the evolution of markets and money at a time when world society is being formed rapidly, at considerable risk to us all. I prefer to call this ‘the new human universal’ rather than the normal term, ‘globalization’.

Magellan’s crew completed the first circumnavigation of the planet some thirty years after Columbus crossed the Atlantic. At much the same time, Bartolomé de las Casas opposed the racial inequality of Spain’s American empire in the name of human unity. We are living through another ‘Magellan moment’. In the second half of the twentieth century, humanity formed a world society – a single interactive social network – for the first time. This was symbolized by several moments, such as when the 60s space race allowed us to see the earth from the outside or when the internet went public in the 90s, announcing the convergence of telephones, television and computers in a digital revolution of communications. Our world too is massively unequal and the voices for human unity are often drowned. 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 (Hart 2000).

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. So 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.

My 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. Certainly 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.

Social and cultural theorists talk of little else these days than ‘financialization’ (Epstein 2005), the idea that financial services have become the dominant arm of capitalism; and the media are obsessed, as I write, with ‘the credit crunch’, the first sign that this period of dominance is coming to an end. Money has acquired its apparent pre-eminence because the economy was being extended rapidly from a national to a global level without any of the social regulation that existed before or will likely follow eventually. Naturally, the specialists in money used their newfound freedom from the Keynesian consensus of the 1940s to 70s to loot the world in scandalous and damaging ways that we will have to repair, if we can. But, in addition to drawing people en masse into unsustainable credit schemes, they also began to put in place some of the institutional mechanisms that will be necessary if we wish to make the market work for all of us and not just for them. A lot of the wealth piled up in recent decades came from exploiting discrepancies (‘arbitrage’) in a world market that was rationalized and made more unitary in the process. Capitalism clearly is instrumental in making world society. It is unlikely to be the basis for its stable functioning, but it does get us some of the way there. That is what future generations will say of us; but they will be most interested in the new social and cultural forms we are making, probably not in the money as such.

Polanyi vs Smith

When Adam Smith first told the barter origin myth of money he claimed that the ‘wealth of nations’ resulted from the slow working out of a deep-seated propensity in human nature, ‘to truck, barter and exchange one thing for another’. He went on:

It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts … Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that (1961:17).

Smith acknowledged a degree of social complexity in the transactions: the idea of contract, private property (mine and yours) and equivalence (fairness), none of which could plausibly be traced to the non-human world. His latter-day successors have not shown similar modesty, routinely claiming that the markets of Wall Street today are animated by impulses that are not just eternally human, but shared with the animals too, or at least the primates. Traders are unusual people. They own things they neither made nor will use, but still claim the right to the value of their sale. They are willing to give up their goods in return for payment; and their customers then have the right to do what they like with them. This is so commonplace in our world that we think of it as eternal. It is in fact quite rare within the range of known human societies. What gives buyer and seller confidence that they each have exclusive rights to dispose of the commodity? The power of state law reinforces their contract and usually supports the money involved. They may operate as isolated individuals only because of the huge social apparatus backing their exchange.

Karl Polanyi’s stock is currently running high (Hann and Hart 2009). In his jeremiad for an earlier episode of market fundamentalism, The Great Transformation (1944), he inverts the liberal myth of money’s origin in barter:

The logic of the case is, indeed, almost the opposite of that underlying the classical doctrine. The orthodox teaching started from the individual’s propensity to barter; deduced from it the necessity of local markets, as well as of division of labour; and inferred, finally, the necessity of trade, eventually of foreign trade, including even long-distance trade. In the light of our present knowledge [Thurnwald, Malinowski, Mauss etc], we should almost reverse the sequence of the argument: the true starting point is long-distance trade, a result of the geographical location of goods and of the “division of labour” given by location.  Long-distance trade often engenders markets, an institution which involves acts of barter, and, if money is used, of buying and selling, thus, eventually, but by no means necessarily, offering to some individuals an occasion to indulge in their alleged propensity for bargaining and haggling (1944: 58).

Money and markets thus have their origin in the effort to extend society beyond its local core. Polanyi believed that money, like the sovereign states to which it was closely related, was often introduced from outside; and this was what made the institutional attempt to separate economy from politics and naturalise the market as something internal to society so subversive.

Polanyi distinguished between ‘token’ and ‘commodity’ forms of money. ‘Token money’ was designed to facilitate domestic trade, ‘commodity money’ foreign trade; but the two systems often came into conflict. Thus the gold standard sometimes exerted downward pressure on domestic prices, causing deflation that could only be alleviated by central banks expanding the money supply in various ways.  The tension between the internal and external dimensions of economy often led to serious disorganization of business (Polanyi 1944: 193-4). Another way of putting this contradiction is to oppose the liberal definition of money as just a ‘medium of exchange’ to one as a ‘means of payment’. Money was thus

…not a commodity, it was purchasing power; far from having utility itself, it was merely a counter embodying a quantified claim to things that could be purchased. Clearly, a society in which distribution depended on possession of such tokens of purchasing power was a construction entirely different from market economy (Ibid: 196).

Polanyi concluded in his notes to The Great Transformation that

money is not a decisive invention; its presence or absence need not make an essential difference to the type of economy…Money, like markets, is in the main an external phenomenon, the significance of which to the community is determined largely by trade relations. (Ibid: 276-7).

When he returned to the subject, as an American academic after the war (Polanyi 1977), much of his polemical intensity had been replaced by a more dispassionate concern to launch the comparative study of pre-industrial economies by anthropologists and historians. In “Money objects and money uses” (Ibid: 97-121), Polanyi approaches money as a semantic system, like language and writing. His main point is that only modern money combines the functions of payment, standard, store and exchange and this gives it the capacity to sustain the set of functions through a limited number of ‘all-purpose’ symbols. Primitive and archaic forms attach the separate functions to different symbolic objects which should therefore be considered to be ‘special-purpose’ monies. Here too Polanyi is arguing against the primacy of money as a medium of exchange and for a multi-stranded model of its evolution.

Mauss

Marcel Mauss’s position on markets and money is to my mind an even more persuasive basis for an ‘institutionalist political economy’ than Polanyi’s (Hart 2007a). The Gift (1925) is an extended commentary on Durkheim’s (1893) argument that an advanced division of labour is sustained by ‘the non-contractual element in the contract’, a largely invisible body of state-made law, custom and belief that could not be reduced to abstract market principles. Mauss held that the attempt to create a free market for private contracts is utopian and just as unrealizable as its antithesis, a collective based solely on altruism. Human institutions everywhere are founded on the unity of individual and society, freedom and obligation, self-interest and concern for others. The pure types of selfish and generous economic action obscure the complex interplay between our individuality and belonging in subtle ways to others.

Mauss (1997) was highly critical of the Bolsheviks’ destruction of confidence in the expanded sense of sociability that sustained the market economy. In his view, markets and money were human universals whose principal function was the extension of society beyond the local sphere, even if they did not always take the impersonal form we are familiar with. This was why he disputed Malinowski’s (1921) assertion that kula valuables could not be considered to be money (Mauss 1990: 102n). Mauss advocated an ‘economic movement from below’, in the form of syndicalism, co-operation and mutual insurance (Fournier 2006). His greatest hopes were for a consumer democracy driven by the co-operative movement. The true significance for him of finding elements of the archaic gift in contemporary capitalism was to refute the revolutionary eschatology of both right and left. Most of the possibilities for a human economy already co-exist in our world; so the task is to build new combinations with a different emphasis, not to repudiate a caricature of the market in the name of a radical alternative. Here Mauss follows Hegel — rather than Aristotle and Marx — in seeking the integration of institutional possibilities that have been variously dominant in history rather than representing them as mutually exclusive historical stages.

Lygia Sigaud (2002) has provided a trenchant account of The Gift’s subsequent trajectory in twentieth-century anthropology. She argues that the essay became famous only in the second half of the last century and then in a distorted version that privileged economic exchange to the detriment of Mauss’ other concerns. The chief culprit is Lévi-Strauss (1950), whose introduction to the collected essays was designed to harness Mauss’ reputation to his own theory of reciprocity as previously published in The Elementary Structures of Kinship (1949). But The Gift really took off as a staple of Anglophone anthropological discourse following Sahlins (1974) article, “The Spirit of the Gift,” which entrenched Lévi-Strauss’ claim that Mauss’ essay hinged on a faulty understanding of the Maori concept of hau. She notes that the opposition between ‘commodity economy’ (the West) and ‘gift economy’ (the Rest) began to take root after 1980. We could add that this is the period of neo-liberalism.

Sigaud makes no connection between Mauss’ essay and his political commitments. The trajectory she describes is a purely academic one. As a result, when trying to account for the remarkable discontinuity between what Mauss wrote and what he is now thought to have written, she relies for explanation on the cult of personality and the power of gossip in small-scale oral communities such as academic anthropology. In fact, Chris Gregory launched the modern trend with his book, Gifts and Commodities (1982), even though, as he states in Savage Money,

I have never used the distinction between gifts and commodities to classify societies nor have I ever suggested that ‘we’ are to commodities as ‘they’ are to gifts. Such an approach is anathema to me. My problem in Gifts and Commodities was to explain the paradox, brought about by colonization, of the efflorescence of gift exchange in a world dominated by commodity production and exchange. I characterized Papua New Guinea as an ‘ambiguous’ economy where things are now gifts, now commodities, depending on the social context (1982: 117). Thus I developed the logical opposition between gifts and commodities in order to try to understand the ambiguity of the historically specific situation of colonial Papua New Guinea (…) Ethnographic classification is quite distinct from conceptual division by the logical principle of dichotomy (1997: 47–49).

But it did no good. The ‘fictions’ employed ingeniously by Marilyn Strathern (1988) in The Gender of the Gift—that ‘we’ (the West or ‘Euroamerica’) are opposed to ‘them’ (the Rest or ‘Melanesia’), and that the gift is the conceptual opposite of the commodity in some linked way—are now routinely reproduced in introductory anthropology courses everywhere. Mauss’ text is adduced in support of this notion, even though it is the very ideology his essay was intended to refute.

Mauss was interested in how we make society where it didn’t exist before. hence we offer gifts on first dates or on diplomatic missions to foreign powers. How do we push th elimits of society outwards? For him money and markets were intrinsic to this process. Hence giving personalized valuables could be considered to be an exchange of money objects if we operate with a broader definition than one based on impersonal currencies and focus rather on th efunction of their transfer, th eextension of society beyond the local level. This helps to explain his claim that “the great economic revolutions are monetary in nature” (Fournier 2006: 212), meaning that they push us into unknown reaches of society and require new money forms and practices to fill the gap. The combination of neoliberal globalization and the digital revolution has led to a rapid expansion of money, markets and telecommunications, all reinforcing each other in a process that has extended society beyond its national form, making it much more unequal and unstable in the process.

Commoditization and the dialectics of social abstraction

The third major influence on my inquiries into markets and money, and probably the deepest, has been Marx’s analysis of the historical relationship between people, machines and money in Capital. People ought to control machines and through them money, to be distributed in the general interest; but it is the other way round — money controls the machines and the people, with unequal and often socially disastrous results. Our political task is to reverse this situation. His book was a means to that end and he began it with the famous chapter on ‘commodities’ which deserves our close attention, especially the opening section, “The two factors of a commodity: use-value and value (the substance of value and the magnitude of value)” (Marx 1970: 35-41).
Marx defines the commodity as a useful product of labour which, by means of social abstraction, is endowed with value in exchange. In an earlier article (Hart 1982), I sought to improve on this definition, first by making the historical dialectic more explicit and then by taking up developments since Marx’s time. I recast the commodity as a process, “commoditization”, defined as “the progressive abstraction of social labour”. When we do things for each other in society, these services have to be detached from what we do for ourselves. This process of abstraction draws us into ever-widening circles of interdependence, the most inclusive of which are exchanges using money.

The commodity is progressively (but not necessarily in a historical sequence):

1. Some useful thing external to the producer;
2. Made social by becoming available to outsiders;
3. Specialisation extends exchange to an inter-community level;
4. Sometimes persons circulate, not things (e.g. marriage exchange);
5. Products of socially divided labour are circulated by means of gift-exchange, barter or payment of rent;
6. This may be elaborated as markets, exchange at negotiated rates, not the gift;
7. Then special- and general-purpose monies enter into the circuit of exchange;
8. Money is the commodity crystallized as pure exchange value (Marx);
9. Now money can take the form of capital to make profit;
10. Eventually “industrial capital” employs human labour, as opposed to finance and merchant capital;
11. Passing beyond Marx’s time, services come to outweigh goods in the world market (things are replaced by what people do for each other);
12. Now commodities are often ideas and work for society is recognized as wholly abstract ciphers; money is information flying around cyberspace as bits;
13. The world market for money is dominated by derivatives – secondary contracts that gamble on the future prices of commodities actually bought and sold;
14. But people still do many things for themselves; make gifts; use old-fashioned cash; join computerized barter networks etc.

This is, of course, a bourgeois just-so story; but it is based on Marx’s and it does illuminate a basic trend that he predicted, the apotheosis of capital as money exchanged for money in a pure form detached from what people do. It is consistent with Mauss’s argument that gift-exchange and market contracts rest on a shared logic of reciprocity; but not with the opposition between “gift economies” and “commodity economies” that we have seen animates so much anthropological discussion today.

In his introduction to Grundrisse (1973:100-108), Marx states that we must start from the concrete conditions of our moment in history and then draw some analytical abstractions from them. Some are content just to achieve abstract ideas; but for Marx the point is to insert these simplified abstractions back into their concrete starting-point. Yet he opens Capital with this abstract discourse on “commodities” and the three volumes never get to where he was aiming for in Grundrisse, “the world market and its crises”.

Both Marx (1970) and Simmel (1978: chapter 6) noticed that social abstraction through capitalist markets seemed to go along with intellectual abstraction as philosophy and science in ancient Athens, Renaissance Florence, England in the seventeenth century and, we might say, the USA in the twentieth. But we should not lose sight of the dialectics involved. The commodity remains something useful and in that use lies its concrete realization. The reality is the mutual determination of the abstract and the concrete and our method has somehow to reproduce that.

We rely on the products of abstraction to engage with others in highly concrete ways; and information-based trade in commodities and money allows us to interact with increasing specificity at great distances. Thus I once had a service contract for my website with a firm in Bangalore, India. I could talk to the webmaster there by internet telephone, while he showed me various design possibilities through our browsers-- all in real time and at no cost. This is getting close to what we could do to if we were in the same room together. Working with a PC will be a lot less lonely in future. The digital revolution in communications is as radical as any in human history, comparable to the invention of agriculture (Hart 2000, 2005).

Money in the human economy

To call the economy ‘human’ is to insist on putting people first, making their thoughts, actions and lives our main concern. Such a focus should also be pragmatic: making economy personally meaningful to students or readers, relating it to ordinary people’s practical purposes. ‘Humanity’ is a moral quality, implying that, if we want to be good, we should treat other persons, people like ourselves, kindly. Since theoretical abstraction is impersonal and leaves no room for morality, a human economy would have to pay attention to the personal realm of experience; but it would be a mistake to leave it there. Humanity is also a collective noun, meaning all the people who have existed or ever will. So the human economy is inclusive, in the sense reinforced by our contemporary witness to the formation of the new human universal that is world society.

Anthropologists and sociologists have long rejected the impersonal model of money and markets offered by mainstream economics. Viviana Zelizer (1994), for example, shows that people refuse to treat the cash in their possession as an undifferentiated thing, choosing rather to ‘earmark’ it -- reserving some for food bills, some as holiday savings and so on. Her examples generally come from areas that remain invisible to the economists’ gaze, especially domestic life. People everywhere personalize money, bending it to their own purposes through a variety of social instruments. This was the message too of Money and the morality of exchange (Parry and Bloch 1989). When money and markets are understood exclusively through impersonal models, awareness of this neglected dimension is surely significant. But the economy exists at more inclusive levels than the person, the family or local groups. This is made possible by the impersonality of money and markets, where economists remain largely unchallenged. Money, much as Durkheim (1912) argued for religion, is the principal means for us all to bridge the gap between everyday personal experience and a society whose wider reaches are impersonal.

Money is often portrayed as a lifeless object separated from persons, whereas it is a creation of human beings, imbued with the collective spirit of the living and the dead. Money, as a token of society, must be impersonal in order to connect individuals to the universe of relations to which they belong. But people make everything personal, including their relations with society. This two-sided relationship is universal, but its incidence is highly variable (Hart 2007b). Money in capitalist societies stands for alienation, detachment, impersonal society, the outside; its origins lie beyond our control (the market). Relations marked by the absence of money are the model of personal integration and free association, of what we take to be familiar, the inside (home). This institutional dualism, forcing individuals to divide themselves every day, asks too much of us. People want to integrate division, to make some meaningful connection between their own subjectivity and society as an object. It helps that money, as well as being the means of separating public and domestic life, was always the main bridge between the two. That is why money must be central to any attempt to humanize society. It is both the principal source of our vulnerability in society and the main practical symbol allowing each of us to make an impersonal world meaningful.

Money thus expands the capacity of individuals to stabilize their personal identity by holding something durable that embodies the desires and wealth of all the other members of society. Money is a ‘memory bank’ (Hart 2000), a store allowing individuals to keep track of those exchanges they wish to calculate and, beyond that, a source of economic memory for the community. The modern system of money provides people with a wide repertoire of instruments to keep track of their exchanges with the world and to calculate the current balance of their worth in the community. In this sense, one of money’s chief functions is remembering. If the proliferation of personal credit today could be seen as a step towards greater humanism in economy, this also entails increased dependence on impersonal governments and corporations, on impersonal abstraction of the sort associated with computing operations and on impersonal standards and social guarantees for contractual exchange. If persons are to make a comeback in the post-modern economy, it will be less on a face-to-face basis than as bits on a screen who sometimes materialize as living people in the present. We may become less weighed down by money as an objective force, more open to the idea that it is a way of keeping track of complex social networks that we each generate. Then money could take a variety of forms compatible with both personal agency and human interdependence at every level from the local to the global.

The reality of markets is not just universal abstraction, but this mutual determination of the abstract and the concrete (Hart 2007b). If you have some money, there is almost no limit to what you can do with it, but, as soon as you buy something, the act of payment lends concrete finality to your choice. Money’s significance thus lies in the synthesis it promotes of impersonal abstraction and personal meaning, objectification and subjectivity, analytical reason and synthetic narrative. Its social power comes from the fluency of its mediation between infinite potential and finite determination. To turn our backs on markets and money in the name of collective as opposed to individual interests reproduces by negation the bourgeois separation of self and society. It is not enough to emphasize the controls that people already impose on money and exchange as part of their personal practice. That is the everyday world as most of us know it. We also need ways of reaching the parts of the macro-economy that we don’t know, if we wish to avert the ruin they could bring down on us all. Perhaps this was what Simmel (1900) had in mind when he said that money is the concrete symbol of our human potential to make universal society.

The two great means of communication are language and money. Anthropologists have paid much attention to the first, which divides us more than it brings us together, but not to money whose potential for universal communication is more reliable, in addition to its well-advertised ability to symbolize differences between us. We cannot afford to neglect money’s potential for universal connection, choosing rather to demonize it as the source of our vulnerability to people with a lot more of it. It is high time for anthropologists to return to an earlier philosophical tradition, building on Kant’s (2006) example, but also on the early twentieth-century neo-Kantianism of Durkheim (1912), Mauss (1924) and Simmel (1900). I have been driven to this conclusion by studying how money and markets extend society at our moment in history. This constitutes the most tangible manifestation of the new human universal that is our shared occupation of the planet.

References

Durkheim, E. 1960 [1893]. The Division of Labor in Society. Glencoe, Ill. Free Press.

———. 1965 [1912]. The Elementary Forms of the Religious Life. Glencoe, Ill.: Free Press.

Epstein, Gerald. 2005. Financialization and the World Economy. Cheltenham: Edward Elgar.

Fournier, Marcel. 2006 (1994). Marcel Mauss: A biography. Princeton: University Press.

Gregory, C. 1982. Gifts and Commodities. London: Academic Press.

———. 1997. Savage Money: The anthropology and politics of commodity exchange. Amsterdam: Harwood Academic Publishers.

Hann, Chris and Keith Hart Editors. 2009. Market and Society: The Great Transformation today. Cambridge: The University Press.

Hart, Keith. 1982.  “On commoditization”, E. Goody (Ed) From Craft to Industry, Cambridge, Cambridge U.P.

--------. 2000 : The Memory Bank, London, Profile Books. Republished 2001: Money in an Unequal World, New York, Texere.

--------. 2005 : The Hit Man’s Dilemma : or business, personal and impersonal, Chicago, Prickly Paradigm.

--------. 2007a. Marcel Mauss: In pursuit of the whole. A review essay. Comparative Studies in Society and History 49 (2): 473-485.

--------. 2007b. Money is always personal and impersonal. Anthropology Today 23(5): 11-16.

Hegel, G.W.F. 1967 (1821). The Philosophy of Right. Oxford: The University Press.

Kant, Immanuel. 2006 (1798). Anthropology from a Pragmatic Point of View. Cambridge: The

University Press.

Lévi-Strauss, Claude. 1969 [1949]. The Elementary Structures of Kinship. Boston: Beacon Press.

———. 1950. Introduction à l’oeuvre de Marcel Mauss. In Marcel Mauss: Sociologie et anthropologie. Paris: Presses Universitaires de France, ix–lii.

Malinowski, Bronislaw. 1921. The primitive economics of the Trobriand Islanders. The

Economic Journal 31:1-16.

Marx, Karl. 1970 [1867]:  Capital : the critique of political economy, Volume 1, London, Lawrence and Wishart.

--------. 1973 [1859] : Grundrisse, New York, Vintage Books.

Mauss, Marcel 1990 [1925]. The Gift: Form and reason for exchange in archaic societies. London: Routledge.

———. 1997. Écrits politiques. M. Fournier, ed. Paris: Fayard.

Parry, Jonathan and Maurice Bloch Editors. 1989. Money and the Morality of Exchange. Cambridge: The University Press.

Polanyi, Karl. 1977. Money objects and money uses. In The Livelihood of Man: 97-121.

Sahlins, Marshall. 1974 [1972]. The spirit of the gift. In Stone Age Economics. Chicago: Aldine.

Sigaud, Lygia. 2002. The vicissitudes of The Gift. Social Anthropology 10, 3: 335–58.

Simmel, Georg. 1978 (1900). The Philosophy of Money. London: Routledge.

Smith, Adam. 1961 (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. London: Methuen.

Strathern, M. 1988. The Gender of the Gift: Problems with women and problems with society in

Melanesia. Berkeley: University of California Press.

Zelizer, Viviana. 1994. The Social Meaning of Money, New York, Basic Books.