Posts Tagged ‘history’

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Thomas Piketty, in an interview with the German newspaper Die Zeit, is the latest to recognize an inconvenient historical truth: in 1953, Germany was able to negotiate a large (50-60-percent) reduction in its outstanding foreign debt (owed to many countries, including Greece).

ZEIT: So you’re telling us that the German Wirtschaftswunder [“economic miracle”] was based on the same kind of debt relief that we deny Greece today?

Piketty: Exactly. After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.

Mike Bird argues that there are holes in Piketty’s argument. But his main source, a discussion paper by Timothy W. Guinnane, actually shows that the main principles guiding the 1953 agreement—especially the “the premise that Germany’s actual payments could not be so high as to endanger the short-term welfare of her people or her long-term ability to rebuild a shattered economy and society”—run counter to the austerity measures demanded by the troika in its handling of the current debt crisis in Greece.

There are, of course, significant differences, which Guinnane also explains:

Surely the London Agreement’s relative generosity reflects not abstract notions of justice, which can be applied to any situation on the basis of some sort of “precedent,” but two concrete facts of the German case. First, increasing tension with the Soviet Union had led to a strong desire to rebuild a sound, democratic Germany. Harsh repayment terms would not serve that end. When the U.S. decided to forgive much of Germany’s Marshall plan debt, in effect treating it on a par with other European recipients of that aid, it was just recognizing that what in 1945 had been a defeated enemy was now a valued ally.

A second point was also something Keynes insisted upon as a reason to oppose reparations. Prior to World World I, the German economy was central to the European economy as a whole; a healthy Europe could not exist alongside a sick Germany. The same held true after World War II. The German economy was so important to the world economy, and to Europe in particular, that the country was in a strong position to demand concessions that would enable her to return quickly to her traditional role as the engine of the European economy.

Then as now, the negotiations over the terms of repaying outstanding foreign debt have nothing to do with “abstract notions of justice,” or for that matter economic rationality, but with pure and naked power.

But the fact that Germany was able to successfully renegotiate is external debt in 1953, on terms that assumed “that reducing German consumption was not an acceptable way to ensure repayment of the debts,” demonstrates that historically there have been many ways of repaying debt.

The current hard line on Greece turns out to be the exception to that historical truth.


The other day, I remarked that we appear to be in the midst of a veritable renaissance of research into the history of capitalism.

That post was about the role slavery played in the emergence and development of capitalism in the West. But another aspect of capitalism’s history that seems to be receiving a great deal of attention these days is religion, especially in the United States.

Kate Bowler’s 2013 book, Blessed: A History of the American Prosperity Gospel (to which I responded with a recently published essay called “American Hustle“) was devoted to this topic. Now, there are two new books: The New Prophets of Capital by Nicole Aschoff and One Nation Under God: How Corporate America Invented Christian America by Kevin Kruse.

Capitalism is not a natural phenomenon; it required a great deal of work, historically, to bring it into being, and it requires a lot of ongoing work, socially, to reproduce it over time. And part of that work, historically and socially, has involved the production of a whole set of identities and meanings that celebrates the winners and blames the losers, all the while creating the hope that everyone is a potential winner.

As Elizabeth Stoker Bruenig explains,

Capitalism is a system braced by stories. Consider the rise of the liberal individual, a kind of atomistic personhood, distinct from all other persons. It seems the whole Enlightenment had a hand in creating this particular view of man—yet the concept was unknown to the people of the medieval and ancient worlds. The idea was not intentionally developed as a thread in capitalism’s web of self-justification, but it has been recruited for such purposes, where it underwrites much free-market discourse about the primacy of the individual over the collective. This is only one of the many accounts which have been absorbed into the vast narrative support structure of capitalism—that is, the series of stories that make life under capitalism seem plausible, positive, and even necessary. In the United States, Christianity might be capitalism’s most impressive conscription so far.

Sale Of Slaves

We seem to be in the midst of a veritable renaissance of research on the history of capitalism, especially on the role slavery played in the emergence and development of capitalism in the West.

Two new books on the subject have just received the Bancroft Award: Sven Beckert’s Empire of Cotton: A Global History and Greg Grandin’s The Empire of Necessity.

As Grandin [ht: ja] explains,

Despite all this scholarly work, each generation—from WEB Du Bois’s to Robin Blackburn’s, from Eric Williams’ to Walter Johnson’s—seems condemned to have to prove the obvious anew: slavery created the modern world, and the modern world’s divisions (both abstract and concrete) are the product of slavery. Slavery is both the thing that can’t be transcended but also what can never be remembered. That Catch-22—can’t forget, can’t remember—is the motor contradiction of public discourse, from exalted discussions of American Exceptionalism to the everyday idiocy found on cable, in its coverage, for example, of Baltimore and Ferguson.

Right now, we are living that history—of the spectacular failures of capitalism and the enduring effects of slavery.


Yesterday during my office hours, on the eve of the 2015 NCAA tournaments, I spent some time with a student discussing the “unmistakable whiff of the plantation” associated with major-college athletic programs. I then sent them to read Taylor Branch’s 2011 article in The Atlantic.

It just happens that, today, George Yancy published his conversation with Noam Chomsky about the unmistakable legacy of slavery and “slavery by another name” in the United States. I reproduce the first part of that conversation below.

Here are a few charts to put the current situation (with respect to racial disparities in poverty, unemployment, wealth, and incarceration) in perspective:






George Yancy: When I think about the title of your book “On Western Terrorism,” I’m reminded of the fact that many black people in the United States have had a long history of being terrorized by white racism, from random beatings to the lynching of more than 3,000 black people (including women) between 1882 and 1968. This is why in 2003, when I read about the dehumanizing acts committed at Abu Ghraib prison, I wasn’t surprised. I recall that after the photos appeared President George W. Bush said that “This is not the America I know.” But isn’t this the America black people have always known?

Noam Chomsky: The America that “black people have always known” is not an attractive one. The first black slaves were brought to the colonies 400 years ago. We cannot allow ourselves to forget that during this long period there have been only a few decades when African-Americans, apart from a few, had some limited possibilities for entering the mainstream of American society.

We also cannot allow ourselves to forget that the hideous slave labor camps of the new “empire of liberty” were a primary source for the wealth and privilege of American society, as well as England and the continent. The industrial revolution was based on cotton, produced primarily in the slave labor camps of the United States.

As is now known, they were highly efficient. Productivity increased even faster than in industry, thanks to the technology of the bullwhip and pistol, and the efficient practice of brutal torture, as Edward E. Baptist demonstrates in his recent study, “The Half Has Never Been Told.” The achievement includes not only the great wealth of the planter aristocracy but also American and British manufacturing, commerce and the financial institutions of modern state capitalism.

It is, or should be, well-known that the United States developed by flatly rejecting the principles of “sound economics” preached to it by the leading economists of the day, and familiar in today’s sober instructions to latecomers in development. Instead, the newly liberated colonies followed the model of England with radical state intervention in the economy, including high tariffs to protect infant industry, first textiles, later steel and others.

There was also another “virtual tariff.” In 1807, President Jefferson signed a bill banning the importation of slaves from abroad. His state of Virginia was the richest and most powerful of the states, and had exhausted its need for slaves. Rather, it was beginning to produce this valuable commodity for the expanding slave territories of the South. Banning import of these cotton-picking machines was thus a considerable boost to the Virginia economy. That was understood. Speaking for the slave importers, Charles Pinckney charged that “Virginia will gain by stopping the importations. Her slaves will rise in value, and she has more than she wants.” And Virginia indeed became a major exporter of slaves to the expanding slave society.

Some of the slave-owners, like Jefferson, appreciated the moral turpitude on which the economy relied. But he feared the liberation of slaves, who have “ten thousand recollections” of the crimes to which they were subjected. Fears that the victims might rise up and take revenge are deeply rooted in American culture, with reverberations to the present.

The Thirteenth Amendment formally ended slavery, but a decade later “slavery by another name” (also the title of an important study by Douglas A. Blackmon) was introduced. Black life was criminalized by overly harsh codes that targeted black people. Soon an even more valuable form of slavery was available for agribusiness, mining, steel — more valuable because the state, not the capitalist, was responsible for sustaining the enslaved labor force, meaning that blacks were arrested without real cause and prisoners were put to work for these business interests. The system provided a major contribution to the rapid industrial development from the late 19th century.

That system remained pretty much in place until World War II led to a need for free labor for the war industry. Then followed a few decades of rapid and relatively egalitarian growth, with the state playing an even more critical role in economic development than before. A black man might get a decent job in a unionized factory, buy a house, send his children to college, along with other opportunities. The civil rights movement opened other doors, though in limited ways. One illustration was the fate of Martin Luther King’s efforts to confront northern racism and develop a movement of the poor, which was effectively blocked.

The neoliberal reaction that set in from the late ‘70s, escalating under Reagan and his successors, hit the poorest and most oppressed sectors of society even more than the large majority, who have suffered relative stagnation or decline while wealth accumulates in very few hands. Reagan’s drug war, deeply racist in conception and execution, initiated a new Jim Crow, Michelle Alexander’s apt term for the revived criminalization of black life, evident in the shocking incarceration rates and the devastating impact on black society.

Reality is of course more complex than any simple recapitulation, but this is, unfortunately, a reasonably accurate first approximation to one of the two founding crimes of American society, alongside of the expulsion or extermination of the indigenous nations and destruction of their complex and rich civilizations.


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Clay Bennett editorial cartoon www.usnews