by
Steve Fraser
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All the highways of global capitalism found their way into the trackless vastness of rural America. Farmers there were not in dire straits because of their backwoods isolation. On the contrary, it was because they turned out to be living at ground zero of the capitalist economy, where the explosive energies of financial and commercial modernity detonated. A toxic combination of railroads, grain-elevator operators, farm-machinery manufacturers, commodity-exchange speculators, local merchants, and, above all, the banking establishment had farmers at their mercy. Their helplessness was only aggravated when the nineteenth-century version of globalization left their crops in desperate competition with those from the steppes of Canada and Russia as well as the outbacks of Australia and South America.
To survive this mercantile onslaught, farmers hooked themselves up to the long lines of credit that stretched back to the financial centers of the East. These lifelines allowed them to buy the seed, fertilizer, and machines they needed to farm; pay the storage and freight charges that went with selling their crops; and keep house and home together while the plants ripened and the hogs fattened. When market day finally arrived, the farmers found out just what all that backbreaking work was really worth. If the news was bad, then those credit lines were shut off and they found themselves dispossessed. The family farm and the network of small-town life that went with it were being swept into the rivers of capital that were heading for metropolitan America. [...]
Facing dispossession, farmers formed alliances and set up cooperatives to extend credit to one another and market crops themselves. As one Populist editorialist remarked, this was the way “mortgage-burdened farmers can assert their freedom from the tyranny of organized capital.” But when they found that these groupings couldn’t survive the competitive pressure of the banking establishment, politics beckoned.
From one presidential election to the next, and in state contests throughout the South and West, irate grain and cotton growers demanded that the government either expand the paper currency supply (“greenbacks,” also known as “the people’s money”) or monetize silver (again, to enlarge the money supply), or that it set up public institutions to finance farmers during the growing season. With a passion hard for us to imagine, they railed against the “gold standard,” which, Democratic Party presidential candidate William Jennings Bryan famously cried, should no longer be allowed to “crucify mankind on a cross of gold.” Should that cross stay fixed in place, one Alabama physician prophesied, it would “reduce the American yeomanry to menials and paupers, to be driven by monopolies like cattle and swine.” As Election Day approached, Populist editors and speakers warned of an approaching war with the money power, and they meant it: “The fight will come and let it come!”
Rumblings about debt servitude could certainly still be heard. Foreclosed farmers during the Great Depression mobilized, held “penny auctions” to restore farms to families, hanged judges in effigy, and forced the Prudential Insurance Company, the largest land creditor in Iowa, to suspend foreclosures on 37,000 farms (which persuaded the Metropolitan Life Insurance Company to do likewise). A Kansas City realtor was shot in the act of foreclosing on a family farm; a country sheriff was kidnapped while trying to evict a farm widow and dumped ten miles out of town. Urban renters and homeowners facing eviction formed neighborhood groups to stop local sheriffs or police from throwing families out of their houses or apartments. Furniture tossed into the street in eviction proceedings would be restored by neighbors, who would also turn the gas and electricity back on. New Deal farm and housing-finance legislation bailed out banks and homeowners alike. Right-wing populists, like the Catholic priest Father Charles Coughlin, carried on the war against the gold standard in tirades tinged with anti-Semitism. Signs like one in Nebraska that said “The Jew System of Banking,” illustrated with a giant rattlesnake, showed up too often. But the age of primitive accumulation, in which debt and the financial sector had played such a strategic role, was drawing to a close.
damn
In our time, the financial sector has enriched itself by devouring the productive wherewithal of industrial America, starving the public sector of resources, and saddling ordinary working people with every conceivable form of consumer debt. The deindustrialization of America, which began in the 1970s and has continued ever since at an accelerating rate, was set in motion by the country’s leading financial institutions. All those mergers and acquisitions, leveraged buyouts, junk-bond acquisitions, and the “lean and mean” asset-stripping that followed saddled the productive sectors of the economy with insupportable debts. These were, on the one hand, lucrative securities for the banks and private-equity and venture-capital firms that issued them. But for ordinary working people, they delivered plant shutdowns, massive layoffs, declining real wages, diminished pensions, and reduced or nonexistent health care. And then came the unconscionably profitable securitizing of the homes where people lived—and in due time could no longer live. Taking on ever greater loads of debt has become, for many, the only way to tread water. Household debt, which in 1952 was at 36 percent of total personal income, had by 2006 hit 127 percent. Even financing poverty became a lucrative enterprise. Taking advantage of the low credit ratings of poor people and their need for cash to pay monthly bills or simply feed themselves, some check-cashing outlets, payday lenders, tax preparers, and others levy interest rates of 200 percent, 300 percent, and more. As recently as the 1970s, a good part of this would have been illegal under usury laws that no longer exist. These poverty creditors are often tied to the largest financiers, including Citibank, Bank of America, and American Express.
Credit has come to function as a plastic safety net in a world of job insecurity, declining state support, and slow-motion economic growth, especially among the elderly, young adults, and low-income families. More than half the pretax income of those three groups goes to servicing debt. Nowadays, however, the company store is headquartered on Wall Street. Debt is driving this system of autocannibalism [...]
It was bad enough for craftsmen to see their own livelihoods and standards of living put in jeopardy by “free” wage labor. Worse still was to watch unfree labor do the same thing. At the time, employers were turning to that captive prison population to combat attempts by aggrieved workers to organize and defend themselves. On the eve of the Civil War, for example, an iron-molding contractor in Spuyten Duyvil, north of Manhattan in the Bronx, locked out his unionized workers and then moved his operation to Sing Sing penitentiary, where a laborer cost forty cents, $2.60 less than the going day rate. It worked, and Local 11 of the Union of Iron Workers quickly died away.
Slaves, artisans, homesteaders, European peasants, small-town storekeepers, Southern hillbillies, and prairie sodbusters weren’t consigned to reservations. But they were the raw material, as were Native American buffalo hunters and subsistence agrarians, of a process of primitive accumulation which drove them to extinction and without which Klein’s miracle is inconceivable. If Native Americans ended up on reservations, all these other refugees from preindustrial ways of life and of making a living ended up as the proletarians of factory and field or as their near relations, toiling away as convict laborers, indebted tenants and sharecroppers, and contract laborers, comprising a whole menagerie of semifree peonage. The miracle of capital accumulation in the Gilded Age depended on a second miracle of disaccumulation happening outside the boundaries of capitalism proper. It proceeded relentlessly, appropriating land and resources both human and natural that had once been off limits because they were enmeshed in alternative forms of slave, petty, and subsistence economies: plantation monocultures, smallholder agriculture both in America and across southeastern and central Europe, handicraft production on both sides of the Atlantic, mercantile activities serving local markets, and an enormous variety of family businesses filling up the arteries of production and distribution. Liberated from these premodern systems of social reproduction, some of their denizens were free (or, rather, were compelled) to take on their fateful role as wage labor or its close facsimile; that is, they became the bone and sinew of the industrial capital accumulation [...]
Deindustrialization laid low the industrial working class and the labor movement. Lamentable, perhaps—but why should it matter, some might ask? That question itself is evidence of how much our world has lost. For a hundred years the labor movement was the bone and sinew of social protest against the iniquities and inequities of industrial capitalism. It is, either solely or in conjunction with other rebellious elements, responsible for the weekend, for the eight-hour day, for the abolition of child labor, for minimum-wage and hour standards, for some semblance of democratic rights in the workplace and civil rights for excluded minorities, for progressive taxation, for protections against the safety and health hazards of industrial work, for old-age pensions, for low-cost public housing, and for health insurance. That is an impressive list of reforms, to be sure: ones that define much that is essential about modern life, a list that could easily be extended.
There is no Tycoon Party in the United States to impose ideological uniformity on a group of billionaires who, by their very nature as übermensch, march to their own drummers and differ on many matters. Some are philanthropically minded, others parsimonious; some are pietistic, others indifferent. Wall Street hedge-fund creators may donate to Obama and be card-carrying social liberals on matters of love and marriage, while heartland types like the Koch brothers obviously take another tack politically. But all of them subscribe to one thing: a belief in their own omniscience and irresistible will.
heh
Sai let go of Jenny’s hand and turned back to Rinn. “Maybe they did use me. But they’re right. You’ve turned the world into a panopticon and all the people in it into obedient puppets that you nudge this way and that just so you’d make more money.”
“You yourself pointed out that we were fulfilling desires, lubricating the engine of commerce in an essential way.”
“But you also fulfill dark desires.” He remembered again the abandoned houses by the side of the road, the pockmarked pavement.
????? thinking undialectically
The other man, dressed in a crisp suit, looked skeptical. “Are you the man who came up with the idea of using a larger flywheel for the old engine?”
I nodded. I took pride in the way I could squeeze more power out of my machines than dreamed of by their designers.
“You did not steal the idea from an Englishman?” His tone was severe.
I blinked. A moment of confusion was followed by a rush of anger. “No,” I said, trying to keep my voice calm. I ducked back under the machine to continue my work.
“He is clever,” my shift supervisor said, “for a Chinaman. He can be taught.”
“I suppose we might as well try,” said the other man. “It will certainly be cheaper than hiring a real engineer from England.”
loool