I agree that societal instability stem from problems within the elites, but not sure it's due to 'elite overproduction' necessarily. I think it has more to do with divergence of interests within the elites. Even without elite overproduction, if the interests of a significant segment of the elites diverged from the interests of the rest of the elites, then you will have societal breakdown, civil war, etc.
One example is the american revolution where the one group of elites in the british empire wanted good relations with the indians to protect their fur trade while another group of elites wanted to invade native areas and steal their land. Don't think there was an issue of elite overproduction in the british empire in the mid 1700s. But there was an issue of divergent interests and there was no room for compromise as these competing interests directly conflicted with each other.
Another one is the civil war, where the interests of the industrial north ( the desire to protect industry via tariffs ) directly conflicted withe the interests of the agrarian south ( who wanted to remove tariffs ) so they could sell cotton/agricultural goods to foreign markets. Once again, I don't think there was an overproduction of elites in the north or the south in the 1850s.
But I guess if the elite overproduction was severe enough, it could structural conflict of interests. But my guess is that conflicts would naturally arise amongs the elites long before elite overproduction.
> Another one is the civil war, where the interests of the industrial north ( the desire to protect industry via tariffs ) directly conflicted withe the interests of the agrarian south ( who wanted to remove tariffs ) so they could sell cotton/agricultural goods to foreign markets.
Of areas where the north and south’s interests conflicted in the civil war that’s not the one most people call out.
What you say is true but the poster didn’t really draw a connection to the main point that showed why this example was chosen so it’s a pretty random example to draw and kind of odd.
I like this analysis but am missing the next step. What material interests are in play today?
David Graeber argued that the people who controlled the two major parties in the United States, until recently, were into Finance, which benefits from deindustrialization and a weak middle class, and that Trump was different because his interests were in Real Estate, which actually requires domestic consumers -- hence trade war and antiglobalism.
(For someone as "far left" as Graeber, it sounded more apologetic for Trump than I expected.)
Now, I find this theory interesting, but I'm not sure I buy it.
I see a more meaningful split within the elites between industrial and post-industrial magnates. This maps better onto the positions and preferences of the two political parties.
I think ideology plays a strong role in addition to interests. In my mind (from reading about this a lot) there are roughly four political factions at the elite level (there's probably more variation at the grassroots level).
The most interesting is probably the Republican party establishment. I recently read books by two partisans on either side [1] (both prolific authors and MIT PhDs) and they were in almost total agreement historically on the people and timeline. The Republican party starting with Barry Goldwater underwent an internal revolution, and an upstart and more hard-line faction won, driving out the Eisenhowers and Rockefellers. The second author is a member of this group, and he believes strongly in very small government (for example, he is against the post-1950s government and believes America was last America in the 1930s).
The other Republican faction is roughly the Tea Party, which this [2] book goes into more detail. It started being a more major force in politics starting in 2010 after financial crisis. I think Boehner who was the speaker of the house at the time has talked more candidly about this period after leaving office. They are angry at the status quo and lean more to the conspiracy side of things.
On the Democratic side there are the left (Sanders, AOC, etc) and the center-left establishment. They both generally support social-democratic policies so can work together, but the center-left is more market-oriented (maybe you could also say capitalistic or neoliberal) and they also differ in political style. I think people are pretty familiar with Sanders etc but here's [3] an article by a center-left economist talking a little bit about how the nature of this coalition affects what policies are possible.
[1] Krugman's Conscience of a Liberal and Murray's By the People
Nice post and references. This is basically how I see it too. You could increase the symmetry a little by adding to the Democrats the ghost of an FDR/LBJ "New Dealer" faction, corresponding roughly to the displaced Eisenhower/Rockefeller faction of the Republicans. You'd have something like:
- "moderate Trumpists" (if there can be such a thing) : "Progressives" (who, I will add, are somewhat less "left" than Wokeists)
They form a 3x2 matrix. Each column represents a side, and each row the spirit of an age.
I guess you could call the rows: "Institutions", "Markets", "Movements".
Then, breaking the symmetry, the "Progressives" are moderated a little by the ghost of FDR/LBJ, while the ghost of Eisenhower lives on in the Never Trumpers, who... weirdly, might ally with what "respectable" Neocons remain, and turn into some kind of "establishment" figures aligned as much with the center-left market liberals as with anyone. Sort of a "deep state" faction without a party.
> David Graeber argued that the people who controlled the two major parties in the United States, until recently, were into Finance, which benefits from deindustrialization and a weak middle class, and that Trump was different because his interests were in Real Estate, which actually requires domestic consumers -- hence trade war and antiglobalism.
What does “into finance” even mean? And how can you be in real estate without being “into finance”? The real estate business is all financing.
I posted the interview in a sibling post to yours.
But yeah. What does Graeber mean?
The argument would go something like --
Many countries are in debt to the United States (immediate question: Isn't the US in huge debt to China?), which drives up demand for US dollars (since everyone needs to pay those back), which makes the dollar strong. As a result, if you have access to these dollars at low interest rates (i.e, are a bank), you can get lots of stuff from other countries "for free". But a strong dollar also has the effect of destroying domestic industry, because it makes exports too expensive for anyone to buy.
So he's saying "finance" is all these institutions with access to dollars, and "real estate" is a bunch of other institutions that are one more step removed from the Fed.
Something like that.
Like, are you a cloud provider, or do you run a lot of cloud jobs? Either way, you're "into the cloud", but you're on opposite sides.
That's about as much sense as I can make of it.
Or maybe it's all bullshit. Which would be funny, given the other things Graeber has written. I don't know.
I do notice it's weirdly aligned with RT's narrative. Not that that means it can't also be true.
>Many countries are in debt to the United States (immediate question: Isn't the US in huge debt to China?),
The US is in huge debt to the rest of the work because that is how a reserve currency works. You issue currency, in this case USD can only be created through debt, when it leaves the country to enter the world economy there is not enough USD in the US so the government has to do deficit spending or tax cuts (i.e. never retrieve the money it created).
Let's see if I can expand and work through what you wrote. Someone else may need to correct parts.
So the Fed/Treasury passes over the void, and in this vacuum forms a dollar and a T-bill, a particle/antiparticle pair. In this transaction, the Treasury sells a debt obligation (the T-bill), which someone buys with dollars. Then again, and again: We now have a few T-bills and dollars.
There are a few purchasers involved -- a few places to which T-bills flow, and from which dollars flow.
One: A T-bill flows to China. A dollar flows in the opposite direction (they used it to purchase the T-bill).
Another: The Federal Reserve buys a T-bill. This is "quantitative easing", or colloquially "money printing" (as it can be done within the current system). The Federal Reserve gets the T-bill, and the Treasury gets dollars, which then fund US government spending.
The T-bill/dollar current to China is superposed with an opposite current: Simultaneously, a different stream of dollars impinges on China, prompting another current of cargo ships in the opposite direction. These carry iPhones, and flip-flops, and everything else sold at big-box stores.
Enter countries in the US / IMF / World Bank sphere. These have dollar denominated debts (they used the loans to build (hopefully useful) infrastructure). Now they do something to acquire dollars, like accept a stream of tourists, or export coltan or palm oil. In the case of the raw materials, some go to the US (palm oil to food processors), and others to China (coltan to whoever makes tantalum capacitors, which eventually end up in iPhones).
In a net sense, then, dollars flow into the "developing" world, and resources flow out to the West, with those needing industrial steps of the "value chain" traveling via China.
And each of those dollars has a corresponding T-bill "antiparticle", held either in China (or another country), or at the Fed. This prompts another flow of dollars to the holders of all those T-bills, which we call interest. Those dollars now, can come from the sale of yet more T-bills.
Now here I realize that my metaphor is wrong. T-bills and dollars only exist in "pairs" when they are created by a QE transaction. Other T-bills attract dollars from outside (e.g. those sold to China).
Finally, I have left out the commercial banks. I'll need to work fractional reserve banking into this somehow.
This is all becoming pretty complicated. But it still feels like a simplified stock-and-flow model is within reach...
A big part of the issue is because the US effectively controls the world's money printer due to the use of USD as a reserve currency. This necessitates a trade deficit so that other countries can actually have access to USD.
The solution to that problem would be the introduction of regional bancors. The EU needs one for internal use. Technically the euro is a very "shitty" bancor which rather than being used as a unit of account, was directly adopted as a currency in each member state. In theory each country should have had its own branch euro which are then exchanged via the bancor. i.e. regional currencies. The bancor is actually just a barter exchange for currency. I mean that is what it boils down to.
In this context putting money into Finance means investing it through Wall Street via a range of their products such as derivatives/options trading, currency trading, HFT what have you. You could say making money through speculative assets and you won't be far off.
In other words Finance here refers to investing money not directly in real economy, such as building factories, houses etc., but in speculative products such as I listed above. It is possible that the money so invested in Finance somehow eventually makes it to the real economy. But since late 20th century the size of Finance relative to Real Economy has exploded. Multiple trillions of dollars worth of products are traded each day in Financial markets but in real economy (i.e., people buying/selling goods/services) only a fraction of that amount changes hands. So there is a growing disconnect between Finance and Real economy; which is why Wallet Street (Finance) and Main Street (real economy) have grown so much apart.
Coming to Trump and Real Estate. For a real estate builder, their domain expertise is around forecasting future needs and invest in building houses/office spaces. They invest some of their own money, borrow some from banks, build houses, sell for profit, repay banks and pocket some of that profit. So this part is well understood.
A builder can do well only when millions of people are earning well and are able to buy/rent their buildings. Falling wages is a really bad news for real estate firms. As Graeber says in that video, you can not export real estate buildings. So for them to do well the domestic real economy must do well. The Finance sector however has no such constraints. At the shortest of notice they can seamlessly move their money across the border chasing higher returns. There are times when Finance feels the effects of worsening real economy however as we saw in 2008 when falling housing prices (which were artificially inflated to being with, thanks to speculation) lead to Wall Street crisis.
I usually don't trust Wikipedia now a days but it does have good content in this case[1].
One example is the american revolution where the one group of elites in the british empire wanted good relations with the indians to protect their fur trade while another group of elites wanted to invade native areas and steal their land. Don't think there was an issue of elite overproduction in the british empire in the mid 1700s. But there was an issue of divergent interests and there was no room for compromise as these competing interests directly conflicted with each other.
Another one is the civil war, where the interests of the industrial north ( the desire to protect industry via tariffs ) directly conflicted withe the interests of the agrarian south ( who wanted to remove tariffs ) so they could sell cotton/agricultural goods to foreign markets. Once again, I don't think there was an overproduction of elites in the north or the south in the 1850s.
But I guess if the elite overproduction was severe enough, it could structural conflict of interests. But my guess is that conflicts would naturally arise amongs the elites long before elite overproduction.