Friday, March 10, 2017

Demurrage and inequality: modern anthropology affirms another critique of capitalism

Lately I've been working my way through Walter Scheidel's The Great Leveler, an anthropological study of the relationship between inequality and violence. In his discussion of the ancient roots of inequality, Scheidel references a fascinating 2015 paper called "Cereals, Appropriability, and Hierarchy", which argues that
the development of social hierarchy following the Neolithic Revolution was the outcome of the ability of the emergent elite to appropriate crops from farmers. Cereals, for which storage is feasible and required, are easier to confiscate than...[any type of crop which] isn't stored and rots shortly after harvest...
This point of anthropology touches on something deeper, Scheidel argues: "inequality and its persistence over time has been the result of...how suitable [assets] are for passing on to others". If your wealth consists of something that can be endlessly hoarded, and even passed on to subsequent generations, then enduring inequality becomes possible; otherwise, being rich just means having a temporary windfall until your wealth inevitably goes away.

What's interesting about this finding is the way it substantiates a long-held but mostly theoretical critique of the way money works in capitalism. As Gesell wrote in 1913,
Commodities in general...can be safely exchanged only when everyone is indifferent as to whether he possesses money or goods, and that is possible only if money is afflicted with all the defects inherent in our products. That is obvious. Our goods rot, decay, break, rust, so only if money has equally disagreeable, loss-involving properties can it effect exchange...No one can any longer interfere with public monetary administration by putting into circulation or withdrawing private reserves of money.
That last observation is central to Gesell's argument: make money decay just like the commodities that it is exchanged for, and you return the economy to equillibrium by undercutting the incentive to hoard. And the corrolary, it seems, is proven by Scheidel's anthropological argument: the more hoardable your wealth is, the more inequality you get. David Harvey, in Seventeen Contradictions and the End of Capitalism:
While the utopian aim of a social order without exchange value and therefore moneyless needs to be articulated, the intermediate step of designing quasi-money forms that facilitate exchange but inhibit the private accumulation of social wealth and power becomes imperative...With electronic moneys, this is not practicable, in ways that were not possible before. An oxidisation schedule can easily be written into monetary accounts such that unused moneys (like unused airline miles) dissolve after a certain period of time.
Harvey goes on to explain how this approach to monetary policy is still compatible with various social and policy goals we presently achieve through investment - though "moves of this sort would require wide-ranging adjustments of other facets of the economy." Whether the left chooses to pursue demurrage as a policy solution is mostly, in my view, a question of tactics; regardless, it's worth noting how the emerging scholarship about relationships between depreciation and inequality substantiates insights that anticapitalists have maintained for over a century.