Category Archives: Occupy Wall Street

No foreclosure from gift debt


Thomas Meaney, recently reviewed David Graeber’s DEBT: The First 5,000 Years for the NYT Book Review.  [Graeber helped inspire the Occupy Wallstreet movement.]

Meaney writes:

In 1925 the French anthropologist Marcel Mauss published his classic essay “The Gift,” which argued that contrary to the textbook account of primitive man merrily trading beaver pelts for wampum, no society was ever based on barter. The dominant practice for thousands of years was instead voluntary gift-giving, which created a binding sense of obligation between potentially hostile groups. To give a gift was not an act based on calculation, but on the refusal to calculate. In the societies Mauss studied most closely — the Maori of New Zealand, the Haida of the Pacific Northwest — people rejected the principles of economic self-interest in favor of arrangements where everyone was perpetually indebted to someone else.

Picking up where Mauss left off, Graeber argues that once-prevalent relationships based on an incalculable sense of duty deteriorated as buying and selling became the basis of society and as money, previously a marker of favors owed, became valuable in its own right….

So what, then, is to be done? Graeber finds reasons for hope in some unexpected places: corporations where elite management teams often operate more communistically than communes; in the possibility of a Babylonian-style Jubilee for Third World nations and students saddled with government loans; and from his own study of the Malagasy people of Madagascar, who he claims were adept at evading the snares of consumer debt encouraged by the state. But there is a sizable gulf between Graeber’s anthropological insights and his utopian political prescriptions. “Debt” ends with a paean to the “non-industrious poor.” “Insofar as the time they are taking off from work is being spent . . . enjoying and caring for those they love,” Graeber writes, they are the “pioneers of a new economic order that would not share our current one’s penchant for self-destruction.”

It’s an old dream among anthropologists — one that goes back to Rousseau. In 1968, Graeber’s own teacher, Marshall Sahlins, wrote an essay, “The Original Affluent Society,” which maintained that the hunters and gatherers of the Paleolithic period rejected the “Neolithic Great Leap Forward” because they correctly saw that the advancements it promised in tool-making and agriculture would reduce their leisure time. Graeber approves. He thinks it’s a mistake when unions ask for higher wages when they should go back to picketing for fewer working hours.

Michael from the Front Porch Forum (FPF) in Burlington, VT writes in response to Meaney’s quote that he loves that others in his FPF community in Burlington have undertaken a voluntary life of ‘favor debt’ (owing someone a favor) in place of monetary debt:

“Perpetually indebted to someone else”… this sums up so much of what I love about my community life in Burlington, VT right now….

I was raised to value making my contribution to others while taking great pains to avoid accepting the same from others.  So were lots of folks here.  But that’s a recipe for setting yourself apart, for isolation.  As my family has learned to accept favors from those around us, it’s made our contributions to others that much more meaningful and personal.

Now, through Front Porch Forum, MealTrain, our church, school, neighborhood and other means, we ask and offer favors daily from hundreds of friends, neighbors and acquaintances.  Each request works against isolation and lays down another thread in the web of community that supports our life.  This is a crucial asset… as much as our house, my job, the kids’ college savings.

My brother and his family are planning a holiday visit to see us in Vermont this month.  We could all jam into our house, but I know they would sleep better if we had more space for the two families.  Hotels are expensive and distant… B&Bs too.  So, I put the word out to neighbors and got several offers of empty houses that we could use on our block.  These neighbors are traveling out of state and are glad to share their home while they’re away.  We’ve done this a dozen times over the past few years… offering or asking for empty-house guest lodging.  Make that hundreds of times if we include other favors… meals, rides, tools, advice, kids stuff, labor, baby/pet sitting, on and on.

This is incredibly generous and trusting of all involved… but it’s also keeping each of us “perpetually indebted to our neighbors” in a way that makes our community stronger with each exchange.

It’s a wonderful description of generalized reciprocity of the sort that undergirds social capital as discussed in Bowling Alone.

See somewhat related earlier post “Economists ignore a critical third of economy: the social economy

Hat tip to Lew Feldstein for spotting the FPF post.


Growing inequality in the news; point of no return?

The Congressional Budget Office (CBO) issued a report early this week that outlines factoids known to scholars of inequality for some time — that over the last 30 years the share of income captured by the top has grown at the expense of those in the middle or low-end of the income hierarchy.

After-tax incomes for the top 1% grew 265% over the roughly three decades from 1979-2007 while those with incomes in the bottom 20% of the distribution saw after-tax income rise a paltry 18% over roughly 30 years (or about half of 1% per year).

The top 1% now capture 17% of the nation’s income, more than double the 8% they captured back in 1979.  The bottom 80% of households (most of us) saw their share of income decline 2-3 percentage points over this period.  [CBO points out that part of this trend toward increasing inequality was the result of higher-income households capturing a higher share of wages in the market and part was government doing less than 3 decades ago to redistribute and even out this market-based inequality.]

While these factoids are known by some, what may be new is: 1) that general unrest and anger/frustration at this inequality is growing, as evidenced by the Occupy Wall Street protests; and 2) even mainstream believers of capitalism, like PIMCO bond-fund investment chief Mohamed El-Erian (also former manager of the Harvard endowment) or Harvard pre-eminent labor economist Larry Katz (former chief economist for the department of labor under Clinton) believe that we have drifted into economically deleterious levels.

Mohamed El-Erian, another pillar of the financial world … is sympathetic to aspects of the Occupy movement. He told me that the economic system needs to move toward “inclusive capitalism” and embrace broad-based job creation while curbing excessive inequality.

“You cannot be a good house in a rapidly deteriorating neighborhood,” he told me. “The credibility and the fair functioning of the neighborhood matter a great deal. Without that, the integrity of the capitalist system will weaken further.”

Lawrence Katz, a Harvard economist, adds that some inequality is necessary to create incentives in a capitalist economy but that “too much inequality can harm the efficient operation of the economy.” In particular, he says, excessive inequality can have two perverse consequences: first, the very wealthy lobby for favors, contracts and bailouts that distort markets; and, second, growing inequality undermines the ability of the poorest to invest in their own education.

“These factors mean that high inequality can generate further high inequality and eventually poor economic growth,” Professor Katz said. [quoted from “Crony Capitalism Comes Home” by Nick Kristof, NYT Op-Ed 10/27/11]