Journal of Cogency

David Graeber speaks at Maagdenhuis occupation, University of Amsterdam, 2015. To his left, political theorist Enzo Rossi. Wikimedia Commons, https://commons.wikimedia.org/wiki/File:David_Graeber_speaks_at_Maagdenhuis_Amsterdam,_2015-03-07_(16740978331).jpg

Economized Spaces

Instead of watching ECON 101 lectures like I should be doing, I’ve been reading articles about Roman coinage, Roman taxation, and European manorialism. In doing that, I haven’t found exactly the information that I wanted to find. That might become clearer as I get further into the blog. Because what I want to do now is develop an idea I’ve been kicking around in my head. With the benefit of the reading I’ve done, I have modified my original hypothesis. There’s probably a lot more refinement to be done, but I feel like we’ll get it on the page first and then go from there.

I’ve spoken briefly about working on a theory of economized and non-economized spaces before. This is where I’m going to explain what I mean by all that. This article is going to be fairly abstract, largely because I have not found the kind of evidence that I really want yet. What I was hoping to find was a document that laid out “this is how taxes were collected, this is how household expenses were used” and so on. I got some good insights but not enough for me to base new ideas on entirely. I’ll put some of the work I read at the end, but I probably won’t be referencing or quoting it.

The first thing to do is to say that this will not actually be a theory of economized and non-economized spaces. The concept behind this theory was that spaces are initially non-economized, then some spaces become economized while others resist economization. To support this, I believe I would have needed to find information showing that institutions such as private estates, the army, etc. operated largely on a non-monetary basis. What the evidence I read (second-hand; I didn’t use primary documents) suggested, however, is that many of these institutions did use monetary relations for many internal matters. To call such spaces “non-economized” didn’t seem correct.

Instead I have shifted the theory to focus on three kinds of spaces: real space, economized spaces, and de-economized spaces. The one quote I will use is from a dictionary, and it is a Wiktionary definition of a space as a noun, the eighth entry under the third heading: a space is “[a] field, area, or sphere of activity or endeavor.” I quote that just to be clear that I’m not talking about a space of any definite size or complexity. A space in these terms is determined by what it consists of. Another important part of our definition of a space is that each space can contain an infinite number of sub-spaces.

Real space (which can be called non-economized space) is the broadest category and it is equivalent to a “natural state”. Every person exists in real space. Relationships in real space are fully unmediated. In these terms, what I mean by “unmediated” is that there is no mediator for these relationships; no one can decide make an authoritative decision on what is an acceptable or unacceptable relationship. If we’re talking about an actual instance of existing in the real space, like a Hobbesian state of nature, this clearly doesn’t mean that relationships are impossible. What it means is that if person A decides to steal from person B, there is no outside form of redress possible. Theft is not illegitimate in real space. It might get individual distaste but there is no organized response that would constitute a deterrent, in the way that we imagine a system of laws and punishments might.

An economized space is one in which relationships are mediated by the principle of debtlessness. Obviously, debtlessness requires the concept of debt, but I do not think it’s accurate to say that the principle of debt is what mediates an economized space. This is because I think what makes exchanges proper is not debt but debtlessness. To clarify, the relation of debt (or indebtedness) is an individual relationship, or a one-to-one relationship. One person to another, one group to another, one person to a group, etc. As Graeber points out in Debt: The First 5,000 Years, many social groups use debt as a way to forge social relations: as most people are in some kind of debt to another, there is a cycle of gifts and reciprocity that continues indefinitely. This does not make such a society an example of an economized space; this doesn’t make it not an economized space, but the existence of debt does not make a space economized.

What turns a space into an economized space is the installment of the norm of debtless exchange: the idea that every exchange should lead to zero debt on both sides, rather than leading to one or the other side holding an indefinite debt (as debts are in real space). Now, this norm does not mean that every single exchange will result in zero debt. Instead, it means that every debt is expected to be settled. This introduces the idea of accounting and, simultaneously, money (as money-of-account). It also demands debt enforcement, to ensure that people cannot simply refuse to engage in the norm of debtless exchange.

Why does a space become economized? This deserves a fuller explanation, one which I haven’t worked out yet, but my hypothesis is this: when a community becomes a state-society and when that state-society grows to being a society of strangers, it will become an economized space. I say “society of strangers” not to discount ideas of neighborliness and solidarity, but to emphasize that such bonds are not inherent beyond a certain size. Originally one neighborhood might make up a state-society but it then grows to encompass several; at a point, they cannot be one big community, but many which are part of the same state-society. This level of strange-ness between relatively common contacts means that conducting business is very difficult. The use of gift and debt in real space is reliant upon other social ties existing; between distant groups, barter is far more common, even though it is not an efficient form of exchange.

To say that barter is inefficient feels like a heavy claim to make, so I will try to support it. When I say this, I don’t mean that the actual economic/accounting losses are significant, though they may be. I see the settlement of debt as requiring three things: the acknowledgement of the debt (by the debtor), the acknowledgement of the payment (by the creditor), and the acknowledgement of sufficient payment (by both parties). It’s this lack in gift exchange which allows the kind of “circulation in favors” that Graeber refers to. That is to say, person A has given something to person B, let’s say a bushel of wheat, and later on person B gives something to person A, let’s say a jar of wine. Depending on the situation, either A or B may claim that the other hasn’t truly given them a gift equal to what they gave. This necessitates a further gift. The one who has given multiple gifts will eventually reach a point where they can reckon they have given more than the other, in which case the flow of gifts reverses. This is what I mean by inefficiency: the transaction, rather than being finally finished, continues for a long time.

Barter nominally dispenses with this by having both parties agree. If we assume a kind of non-monetized barter, where A gives wheat and B gives wine, then whatever issues come out of that exchange are not resolved. If A believes they have not gotten an equal worth for what they gave, however, there is no ready mechanism to redress that. Since barter usually takes place between communities rather than within one, the holding of debt is relatively meaningless. This means that barter will often result in one side (or both) feeling cheated, and that feeling having no recourse. This can lead either to further bartering sessions with added tension or to open conflict, or strained relations, or any number of destructive outcomes. It’s for this reason that barter has largely always been handled in money of account rather than simply on the reckonings of the parties involved.

What money does in the first instance (that is, within the state-society which it is issued) is provide a mechanism to force both sides of the exchange to accept that sufficient payment has been made. It does this by using money-of-account to lay out precisely how much value is reckoned for each item being exchanged, and then by using the instruments of law and law enforcement to ensure no one disrupts this process by refusing to take payment, overcharging, etc. What it does in the second instance (in other societies which it might be used, such as countries pegging their currencies to the US dollar, or the pre-Carolingians using Roman coins) is to provide a steady model for prices etc. which can be accepted. Though the same mechanisms in the first instance are not available for the second instance, it is the existence of the first instance which induces all parties to continue agreeing to the second instance: it is a method which all parties agree has proven to work and which they can continue under on their own.

Hopefully having given you a good understanding of what it means for a space to be economized, we now have to move onto de-economized spaces. The basic definition is straightforward enough: a de-economized space is a subset of an economized space in which the norm of debtless exchange is suspended. What exactly does this mean? This is the thing that trips me up the most. When I looked into how Roman estates were managed, what I saw was that the use of coinage, payment of wages, operation of accounts, and so on were common among them. Similarly, in the English feudal system, it appears that evidence is showing more strongly that peasants and the like paid a significant amount of tax in coin, even to their lords, rather than existing in a kind of “command economy” where the lord simply directed production via tax-in-kind. This meant that I needed a revision.

What stuck out to me then was firstly, the division in treatment between Roman sharecroppers & wage laborers on one hand and the slaves & family on the other; and secondly, the position of the manorial court in England. Though sharecroppers and wage laborers did pay fees in money, were paid in money, and possibly even frequented “company stores”, their accounts were usually not held in a private bank but registered by the landlord themselves as part of household expenses. The manorial courts in England both had principal authority over all lands in their purview but appear to have had the power to issue debt relief for those they governed.

The paradigm of the de-economized space is the household. To call this space non-economized would be a misnomer. Even putting aside the larger households which might have workers to pay, households almost always need to get resources from outside in order to continue existing: food, maintenance materials, clothing, etc. Households are clearly part of the economy. However, within the household, relationships are not mediated by debtless exchange. The head of the household does not give out food, clothing, and shelter based on work done, but (usually) out of a feeling of responsibility and care for those within the household. If the head of house (or someone else with authority) asks or demands a favor of someone junior, this isn’t with the expectation of an equal payout, it is because the junior person is in a subordinate relationship to their senior. Allowances and other payments might be made, but the head of household is at liberty to modify or stop such payments at any time. Similarly, there might be a debt that one person in the house has to another, but the head of household can demand that such debts be considered expunged.

In one of the ECON 101 videos I watched, there was a diagram which opposed Households to Firms. But firms are also a type of de-economized space. It’s more likely that there will be internal accounting for a firm (or business) than for a household, but such numbers are largely moveable. One department could be in debt to another and the debt might never be settled, or it might be ultimately written off. Employees and those within the firm use its resources such as materials and facilities without paying specifically for that privilege. It can be argued that the employees give up much more in labor than they use in resources, but my point is that each operation is not mediated by a direct calculation of effort-to-cash, and there are few internal operations of a firm that could be.

To conclude, I want to bring up a kind of economic de-economized space which is dangerous, but possibly necessary: the interest. Now firstly, I do apologize for using the term “interest” because it’s very common, but it’s the term I’ve used in previous work and it just came about naturally. In terms of spaces, an interest is a de-economized space which controls significant economic value. Keep in mind that just because there is a slight correlation in interest/non-interest and firm/household doesn’t mean that they’re entirely the same. The difference in this case is only about the value. Most households would count as non-interest spaces because they spend roughly as much as they bring in (through wages, production, etc.). A household might save some money but it isn’t hoarding it. Extremely wealthy families with much of their money held privately, however, do count as interests despite being households.

The danger of interests is that they hoard value away from the common supply in an economized system. I have not talked much about value or money in this piece, but that requires its own discussion. Briefly, though, value is an expression of the state’s power-influence. For an interest to keep a great deal of value for itself means that it has control over that amount of power, rather than the power being used freely to lubricate economic activity. This not only slows down economic activity, it grants interests the ability to deploy that power to their advantage as opposed to the advantage of the state-society.

This is also the possible necessity of interests. The state itself of course forms a major interest, usually the most powerful in a state-society. But that doesn’t mean others perform no important functions. The media is an interest, or a collection of interests, and is often seen as indispensable in disseminating ideas and enabling communication. In a capitalist system, banks perform a vital function in pushing up the money supply (but not the value supply, as sovereign value is always 1; another discussion). But to understand how interests are dangerous, how they can hoard wealth to themselves, it is important to understand that interests are de-economized spaces working within an economized space.

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