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While markets are ways of exchanging goods through the medium of money—historically, ways for those with a surplus of grain to acquire candles and vice versa
capitalism for Braudel is first and foremost the art of using money to get more money
capitalists, whether merchant princes, financiers, or industrialists, invariably try to ally themselves with political authorities to limit the freedom of the market, so as to make it easier for them to do so.
Yet at the same time—here I think Gernet is right—this communism became the basis, in turn, of something very much like capitalism. The reason was, above all, the need for constant expansion.
As a result, he argues, divine providence has arranged us to have different abilities, desires, and inclinations. The market is simply one manifestation of this more general principle of mutual aid, of the matching of abilities (supply) and needs (demand)—
Quite the contrary. “If men were equal,” he insists, “they would all perish.” We need differences between rich and poor, he insisted, just as much as we need differences between farmers and carpenters.
How do you compare two things with no common qualities? His conclusion: it can only be done by comparing both to a third thing with no qualities at all. For this reason, he explains, God created dinars and dirhams, coins made out of gold and silver, two metals that are otherwise no good for anything:
Usury was seen above all as an assault on Christian charity, on Jesus’s injunction to treat the poor as they would treat the Christ himself,
The key sticking point is always Deuteronomy 23:19–20:
Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury.
The communism of the Apostles—who pooled all their wealth and took freely what they needed—was thus the only proper model for a truly Christian society.
when these kinds of arrangements began to emerge across the Christian West, did the Church offer any significant objections.108 Former debt peons were gradually transformed into serfs or vassals. In some ways, the relationship was not much different, since vassalage was, in theory, a voluntary, contractual relationship.
agreeing that it would not apply. While both the Torah and the Talmud stand opposed to loans on interest, exceptions were made in dealing with Gentiles—
The argument soon became that if a merchant made a commercial loan even for some minimal period (say, a month), it was not usurious for him to charge a percentage for each month afterward, since this was a penalty, not rental for the money, and it was justified as compensation for the profit he would have made, had he placed it in some profitable investment, as any merchant would ordinarily be expected to do.
It is often held that the first pioneers of modern banking were the Military Order of the Knights of the Temple of Solomon, commonly known as the Knights Templar. A fighting order of monks, they played a key role in financing the Crusades.
Just looking at a yin-yang symbol, it is easy enough to imagine the left and right (sometimes, too, called “male” and “female”) halves of a tally.
Still, the problem took on a peculiar piquancy in the Middle Ages, when the economy became, as it were, spiritualized. As gold and silver migrated to holy places, ordinary transactions everywhere came to be carried out primarily through credit.
Buddhism, unlike Islam, produced something very much like what we now call “corporations”—entities that, through a charming legal fiction, we imagine to be persons, just like human beings, but immortal, never having to go through all the human untidiness of marriage, reproduction, infirmity, and death. To put it in properly medieval terms, they are very much like angels.
we really want to understand the origins of the modern world economy, the place to start is not in Europe at all. The real story is of how China abandoned the use of paper money. It’s a story worth telling briefly, because very few people know it.
Had China in particular not had such a dynamic economy that changing its metallic base could absorb the staggering quantities of silver mined in the New World over three centuries, those mines might have become unprofitable within a few decades.
lies at the very heart of what we now call “capitalism.”
The executives who make decisions can argue—and regularly do—that, if it were their own money, of course they would not fire lifelong employees a week before retirement, or dump carcinogenic waste next to schools.
Yet they are morally bound to ignore such considerations, because they are mere employees whose only responsibility is to provide the maximum return on investment for the company’s stockholders. (The stockholders, of course, are not given any say.)
Capital, then, is not simply money. It is not even just wealth that can be turned into money. But neither is it just the use of political power to help one use one’s money to make more money.
Under the newly emerging capitalist order, the logic of money was granted autonomy; political and military power were then gradually reorganized around it.
Luther began his career as a reformer in 1520 with fiery campaigns against usury; in fact, one of his objections to the sale of Church indulgences was that it was itself a form of spiritual usury.
However, he soon realized that he’d unleashed a genie that threatened to turn the whole world upside-down.
Luther had a sense that matters were spilling out of control and that he would have to choose sides: in that text, he did so. Old Testament laws like the Sabbatical year, he argued, are no longer binding; the Gospel merely describes ideal behavior; humans are sinful creatures, so law is necessary;
The Swiss Protestant reformer Zwingli was even more explicit.
Therefore, God has also given us a second, inferior, human law, to be enforced by the civil authorities.
all moral relations came to be conceived as debts. “Forgive us our debts”—this was the period, the very end of the Middle Ages, that this translation of the Lord’s Prayer gained such universal popularity.
I want to draw particular attention to the underlying notion of “self-interest.”56 It is in a real sense the key to the new philosophy.
story of the origins of capitalism, then, is not the story of the gradual destruction of traditional communities by the impersonal power of the market. It is, rather, the story of how an economy of credit was converted into an economy of interest; of the gradual transformation of moral networks by the intrusion of the impersonal—and often vindictive—power of the state.
Part IV: So What Is Capitalism, Anyway?
All this raises the question of what “capitalism” is to begin with, a question on which there is no consensus at all. The word was originally invented by socialists, who saw capitalism as that system whereby those who own capital command the labor of those who do not.
Just about everyone agrees, however, that
capitalism is a system that demands constant, endless growth.
is the secret scandal of capitalism that at no point has it been organized primarily around free labor.96 The conquest of the Americas began with mass enslavement, then gradually settled into various forms of debt peonage, African slavery, and “indentured service”—that is, the use of contract labor, workers who had received cash in advance and were thus bound for five-, seven-, or ten-year terms to pay it back.
The period from roughly 1825 to 1975 was a brief but determined effort on the part of a large number of very powerful people—with the avid support of many of the least powerful—to try to turn that vision into something like reality.
Chapter Twelve THE BEGINNING OF SOMETHING YET TO BE DETERMINED
can’t “just print money,” because American money is not issued by the Federal government at all, but by private banks, under the aegis of the Federal Reserve System. The Federal Reserve, in turn, is a peculiar sort of public-private hybrid, a consortium of privately owned banks whose Governing Board is appointed by the U.S. president, with Congressional approval, but which otherwise operates autonomously.
the Fed “loans” money to the United States government by purchasing treasury bonds, and then monetizes the U.S. debt by lending the money thus owed by the government to other banks.
Meanwhile, the U.S. debt remains, as it has been since 1790, a war debt: the United States continues to spend more on its military than do all other nations on earth put together,
They don’t work by direct threat, but by creating a political environment defined by knowledge of utterly disproportionate access to the means of violence,
Its national debt has become a promise, not just to its own people, but to the nations of the entire world, that everyone knows will not be kept.
When Saddam Hussein made the bold move of singlehandedly switching from the dollar to the euro in 2000, followed by Iran in 2001, this was quickly followed by American bombing and military occupation.
appear to have been very successful: partly because they demonstrated that the U.S. military was unable to totally overcome far weaker rivals; partly, too, because, to finance them, the United States had to turn not just to its military clients, but increasingly to China, its chief remaining military rival.
CHINA WARNS U.S. ABOUT DEBT MONETIZATION
All that I have said so far merely serves to underline a reality that has come up constantly over the course of this book: that money has no essence. It’s not “really” anything; therefore, its nature has always been and presumably always will be a matter of political contention.
One can see the great crash of 2008 in the same light—
