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MONEY
April 2014 | Volume 27
The New Inquiry Magazine is licensed under
a creative commons license [cc-by-nc-nd 3.0]
thenewinquiry.com
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1
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8
2
ESSAYS
DISGORGE THE CASH BY J.W. MASON / 7
M AND A BY GOLDIN+SENNEBY / 14
THE POSTCAPITAL ECONOMY BY IZABELLA KAMINSKA / 20
BUYING THE FUTURE BY MIKE KONCZAL / 25
NO CHOICE BUT FREEDOM BY STEVE RANDY WALDMAN / 30
THE WORLD ACCORDING TO MODERN MONETARY THEORY
BY REBECCA ROJER / 34
THE PAPER CHASE BY ROB TRUMP / 39
OVER EASY BY MOIRA DONEGAN / 43
NO PURCHASE NECESSARY BY A.E. BENENSON / 50
SERF BOARDS BY JASON HUFF / 56

REVIEW
WE HAVE SEEN THE ENEMY
A REVIEW OF ANDREW ROSSS CREDITOCRACY
BY THE EPICUREAN DEALMAKER / 60
CROSSWORD PUZZLE
POCKET WINDFALL BY JONATHAN ZALMAN / 64
MONEY: free for those who can aford
it, very expensive for those who cant. Te purported mea-
sure of all things and the most powerful of our mass de-
lusions, money is imaginary and unlimited, as any central
banker will tell you. And yet that never seems to help any-
one get their hands on enough of it. Nowhere is the con-
tradiction between something being a socially constructed
fction and material determinant of the world around us so
strong as it is in a dollar bill. Its obviously fake and yet oh
so real.
Tis contradiction wasnt always so extreme: In 1896,
William Jennings Bryan propelled himself to presiden-
tial nominee purely through an impassioned convention
speech likening the gold standard, the original austerity
policy, to a crown of thorns being pressed down on the
brow of labor. But in the ensuing century, the idea of a
monetary policy open to populist debate and democratic
control has become a joke, swinging from a lived reality at
the turn of the 20th century to a weirdo fringe in the 21st
screaming End the Fed.
In the fallout from the 2008 crisis, that fringe has
been moving toward the center. From Modern Mone-
tary Teorists arguing that fat money emerges from the
policemans truncheon to Glenn Beckinspired gold bugs
stacking bullion in their air-raid shelters, money itself, and
not just its distribution, is once again a prominent object
of contention. Te premise of the end of history was that
money had fnally won out over politicsbut the crisis re-
quired a hell of a lot of politics to shore up the monetary
system.
So what is money? Is it the true innovation of state-
craf, the thing that enables and justifes coercion through
taxation, as Rebecca Rojer notes in her account of MMT?
Is it fnancial engineerings raw material, or its necessary
fction? Is it a claim on future production, or does it warp
the future by dragging it into the present? Is it a social
construction that delinks debt from reciprocal social ob-
ligations, making industrialization, massive urbanism,
alienation, and possessive individualism possible? Is the
beginning or the end of trust? Does it remake quality as
quantity, and substitute insecurity and artifcial scarcity for
natural satiety? Is it the root of all evil, or the solution to
Editors Note
all of our problems? Should we redistribute it or abolish it?
Can we have some?
Money doesnt grow on trees, were told, but it does
grow in bodies. Moira Donegan takes us through the world
of paid surrogates in Over Easy, where it turns out its not
good enough to be fertile. To sell your eggs you have to
sell yourself as a success frst and amass human capital.
Mike Konczal details how human capital has a future in
the futures market, in which the lives of graduates might be
subject to the same sorts of detailed scrutiny and specifca-
tion as a delivery of pork bellies. Jason Huf looks at Ama-
zons MTurk service, labor clearinghouse for microtasks in
which workers are treated as largely interchangeable and
human capital becomes negligible, if not extinguished.
Te fate of human capital in crowdsourced labor mar-
kets may mirror the fate of capital itself in what Izabella
Kaminska describes as an increasingly postcapital world,
in which the overabundance of capital demands alterna-
tive approaches to investment and industrial policy, with
China leading the way. In Te Paper Chase, Rob Trump
tours the history of American alternative currencies, fnd-
ing that the value of value can shif with a systems, well,
values. In Disgorge the Cash, J.W. Mason argues that the
fnancial sector isnt about puting value into the economy
but extracting it. And that no mater how difcult radical
struggles are, he argues, its nothing compared to the Si-
syphean task faced by the other side, of constantly trans-
forming the existing organization of production into cap-
italism. Money is a boulder that never stops rolling down
the mountain. It fatens everyone and everything.
Money is ofen mistaken for liberty, when it typically
functions as a mechanism of control. Steve Randy Wald-
man considers its role in linking capitalism to freedom, ar-
guing that the purpose of markets is to nurture illusions of
political choice and depersonalizing the behavioral limits
we place on one another. But of all the illusions sustained
by money, perhaps the most dangerous is that everything
should have a price, even the privilege of being not for sale.
But can we even imagine a priceless object without a world
where no subject has to sell themselves?
J.W. MASON 7
All these people have a sort of parlay mentality, and
they need to get on the playing feld before they can start
running it up. Im a trader. It all happens for me in the
transition. Te moment of liquidation is the essence of
capitalism.
What about the man in Rigby?
Hes an end user. He wants to keep it.
I refected on the pathos of ownership, and the ways it
could bog you down.
Tom McGuane, Gallatin Canyon
IN January 2010, Wall Street Journal columnist Bret
Aronds wrote a peevish article about Apple. Instead of
wasting its money on this stupid tablet thing, he said, the
company should hand it back to its rightful owners.
Te money belongs to stockholders: Give. Indeed Jobs
should go further. Apple shouldgaspstart borrowing,
and hand that money back, too the biggest innovation
wed like to see from Apple this season isnt the iPad or
iSlate or iTablet. Its the iGetsomemoneyback.
Given the spectacular success of the iPad launch a
Disgorge the Cash
By J. W. MASON
Companies used to borrow in the markets as a last resort fnance investment in their
business. Now its a font for shareholder giveaways
8 DISGORGE THE CASH
few months later, Aronds complaint would seem singular-
ly ill timed. But no: It was prescient. In 2012, under the
prodding of activist investor Carl Icahn, Apple announced
it would begin paying dividends for the frst time in its his-
tory. And it began a share-repurchase program to return
capital to shareholders (in the words of its press release)
that rapidly expanded in size. By last year, Apples share re-
purchases had reached a pace of $30 billion per year, on
top of $11 billion in dividends. Tis tribute to sharehold-
ers represents four-ffhs of the companys cash from op-
erations and slightly exceeds its $37 billion reported net
income for 2013, compared with just $8 billion spent on
fxed investment and $4 billion on R&D.
If you read the business press, youre used to these
kinds of stories. A company whose mission is making
something gets bought out or bullied into becoming a
company whose mission is making payments to share-
holders. Apple is only an especially dramatic example. But
the familiarity of this kind of story is a sign of a diferent re-
lationship between corporations and the fnancial system
from what prevailed a generation ago.
Prior to the 1980s, share repurchases were tightly
limited by law, and a frm that borrowed in order to pay
higher dividends would have been regarded as engaging in
a kind of fraud. Shareholders were entitled to their divi-
dends and nothing moreneither a share in any excep-
tional profts, nor a say in the management of the frm. In
the view of Owen Young, the long-serving chairman of
General Electric in the early 20th century, the stockhold-
ers are confned to a maximum return equivalent to a risk
premium. Te remaining proft stays in the enterprise, is
paid out in higher wages, or is passed on to the customer.
In the managerial corporation of the mid-20th centu-
ry, frms did not go straight to the markets for investment
funds. Money for investment came frst from internal
fundsprofts in excess of the standard dividendwhich
were freely at the disposal of management. Tey represent-
ed the lowest-cost source of investment capital and were
exhausted frst before a frm turned to fnancial markets
for additional funds. If the frms investment demand was
strong enough, it turned next to credit markets, seeking
bank loans or issuing bonds. Only those frms with the
most ambitious investment projects and most limited in-
ternal resourcestypically those just startingwould
consider raising funds from the stock market. On the oth-
er side, the supply of funds from markets was limited by
the existence of a partitioned, heavily regulated fnancial
system, so that even the largest frms could fnd themselves
credit-constrained, unable to borrow as much as they
would have wanted at the prevailing interest rates.
Tis hierarchy of investment fnance implied a clear
relationship between corporate investment and cash fow
from operations, and between investment and borrowing.
In 1960, there was a strong link between borrowing and
investment. A frm that was borrowing $1 million more
than a typical frm of that size would usually be invest-
ing $750,000 more. Tis relationship is consistent with a
world where autonomous managers made their own de-
cisions about the use of the frms funds, and the power of
fnancial markets came only from the terms on which they
would make any additional funds available.
Much discussion of corporate fnance, both main-
stream and heterodox, takes it for granted that this is still
the world we live in. But in fact, by the mid-2000s the re-
lationship between investment and borrowing had prac-
tically vanished, and the correlation between investment
and cashfow was less than half as strong as in 1960. Un-
usually heavy borrowing was no longer correlated to high
levels of investment; investment decisions seem almost
unrelated to the funds fowing into corporations from op-
erations and from credit markets.
If borrowing no longer maters for investment, what
is the purpose of it? As at Apple, it is fnancing payouts to
shareholders.
Before 1980, there was no statistical relationship be-
tween borrowing and payouts in the form of dividends and
J.W. MASON 9
share repurchases at the frm level. But since then, a clear
positive relationship emerged, especially at business-cycle
peaks. Firms that borrow more have signifcantly higher
payouts to shareholders.
For example: In the period from 2002 to 2008, net
corporate borrowing rose from 1 percent to 6 percent of
GDP. But unlike in earlier episodes of rising corporate
borrowing, payouts rose point for point with borrowing.
By the end of the boom, corporations were paying out
more than 100 percent of their cash fow to shareholders.
So on net, corporations raised no net funds from fnancial
markets. Te money that fowed in the front door as new
borrowing fowed right out the back as higher dividends
and share repurchases.
It was a common trope in accounts of the housing
bubble that greedy or shortsighted homeowners were ex-
tracting equity from their houses with second mortgages or
cash-out refnancing to pay for extra consumption. What
nobody mentioned was that the rentier class had been
playing a similar game longer and on a much larger scale.
At the top of every boom in the neoliberal era, theres been
a massive round of stock buybacks, which you could think
of as shareholders cashing out their bubble wealth. Its a bit
like the homeowners using their houses as ATMs during
the 2000s, except that the shareholders dont get stuck
with the mortgage payments. Te businesses workers and
customers get to share the pain.
Te transformation in corporate investment fnanc-
ing went largely unnoticed by the economics profession,
but it was widely noted in the fnancial press. In the Fi-
nancial Times, youd read regularly about how Corporate
treasurers are shoveling investment-grade bonds out the
door to raise money to buy back shares, or that U.S. blue-
chip companies from Philip Morris to AT&T are taking
advantage of cheap debt to fnance share buy-backs and
mergers and acquisitions activity at an accelerated pace.
Te change in the use of corporate funds helps ex-
plain one of the outstanding puzzles of the Great Reces-
sion: the lack of any clear connection between the fnancial
crisis and the steep contemporaneous fall in corporate in-
vestment. Even the most sophisticated research fnds that
access to bank credit helps explain the fall in investment
spending only for small frms. But its the largest frms that
are responsible for the large majority of borrowing and
investment. In 2009-2010, investment fell by as much at
the largest businesses, and at debt-free businesses, as at
small bank-dependent businesses. If the fnancial crisis in-
terrupted the fow of credit only to small, bank-dependent
businesses, it can explain at best a small part of the collapse
in business investment afer 2008.
Paradoxically, outside fnance maters less for corpo-
rate investment decisions even as frms rely on it more. If
shareholders efectively exercise frst claim on every dollar
that comes into the frm, it doesnt mater whether bor-
rowing is cheap and easy or hard and expensive. All that
Its a bit like
homeowners
using their houses
as ATMs, except
shareholders dont
get stuck with
the mortgage
payments
10 DISGORGE THE CASH
changes is the amount fowing out the door. Firms invest-
ment decisions, then, dont depend on current earnings or
credit conditions; they depend on whether management
can propose projects with high enough returns to con-
vince shareholders to leave their money inside the frm.
Te challenge is keeping money from fowing out of the
frm, not bringing it in.
Under these conditions, the idea that fxing the fnan-
cial system will boost growth and employment in the rest
of the economy amounts to pouring water into a bucket
that is already overfowing, and is also shot through with
holes.
THE transformation of corporate fnance since
1980 has been driven by changing relations between cor-
porate managers and the owning class. When Marx pub-
lished volume one of Capital, he could speak of the cap-
italist as simply the personifcation of capital without
begging too many questions. But today its harder to ignore
capitals split personality. Capital, afer all, is a process, not
a concrete thingit exists in the exchange of money for
means of production, in the labor process that converts
those means of production into fnished commodities, in
the moment when the value of those commodities are re-
alized through sale, and in the moment where the resulting
money-value begins the process again. And as enterprises
get larger and more complex, those diferent moments in
the circuit of capital become the provinces of diferent spe-
cialistsmanagers, investors, fnancial intermediaries
any of whom can legitimately claim to personify capital.
Already by the end of the 19th century, it was evident
to observers like Veblen that the separation of ownership
from management was creating a new kind of bourgeois
class, less connected to particular enterprises. As Dumenil
and Levy write in Te Crisis of Neoliberalism (probably the
best recent discussion of these issues), afer the 1890s the
concentration of capitalist power within fnancial insti-
tutions and importance of securities in ownership of the
means of production gave ... the capitalist class a strong f-
nancial character. But asset owners are the capitalist class
only in retrospect. Trough much of the 20th century, the
managers of the production process seemed to have the
beter claim to be capitals human embodiments.
Te decades around World War II were the heyday
of the managerial capitalism described by writers from
Berle and Means (Te Modern Corporation and Private
Property) to Alfred Chandler (Te Visible Hand), from
liberals like John Kenneth Galbraith to Marxists like Paul
Baran and Paul Sweezy. In managerial capitalism, the ex-
ecutives responsible for production and marketing were
the real decision makers in the economy, with share-
holders reduced to a passive role as income recipients.
Whether the managerial frm was the soulful corpora-
tion of Galbraith or the soul-crushing monopoly capi-
tal of Baran and Sweezy, it was run according to its own
growth imperatives, not to maximize returns to share-
holders. Te strategic choices in the economy rested with
those who actively controlled the production process,
not those who merely exercised fnancial claims to it. As
Peter Drucker wrote (in 1949, the noontide of manage-
rialism), Where only twenty years ago the bright gradu-
ate of the Harvard Business School aimed at a job with a
New York Stock Exchange house, he now seeks employ-
ment with a steel, oil or automobile company.
Te story of how autonomous management gave
way to todays shareholder dominance has been told many
times. Te best account remains Doug Henwoods Wall
Street, which I draw on here. Initially, this transformation
had a strong element of confict, with organized share-
holders coercively asserting their control over a distinct
group of managers. Over time, the confictual aspect re-
cededthough it has never disappearedand rentier
control came to be asserted more through the adoption by
managers themselves of shareholder value as their over-
riding goal.
J.W. MASON 11
Te idea that corporations exist solely to maximize
shareholder wealth is as old as the corporation itself,
and in the early days of the corporation it was accepted
legal and economic doctrine. But it largely receded from
view during the middle of the century, until the work of
Michael Jensen and his coauthors legitimized the idea of
takeovers and restructurings as tools to put the interests of
shareholders frst. For Jensen, the central task for fnance
was to motivate managers to disgorge the cash rather than
investing it at below the cost of capital or wasting it on or-
ganization inefciencies.
A number of legislative and administrative reforms in
the early 1980s made it more feasible for shareholders to
assert power over management. Te Supreme Court over-
turned state limits on hostile takeovers of corporations
and the Reagan Justice Department revised antitrust rules,
opening up new possibilities for intra-industry mergers
and the breaking up of conglomerates. Financial market
changes made takeovers more feasible by creating new
sources of funds to fnance changes in corporate control.
During the 1980s, the central front in the shareholder
revolution was the hostile takeover. Takeovers, as Marga-
ret Blairs emphasizes, were used to discipline corporate
managers and pressure them to pay out more money to
shareholders and other investors. Over the course of the
1980s, nearly half of U.S. corporations received takeover
ofers, and in several years acquisition volume reached the
historically high level of 10% of total stock market capital-
ization. Among Fortune 500 companies, 28 percent were
the object of takeover atempts, the majority hostile and
the majority successful.
Te era of hostile takeovers did not extend past the
1980s; KKRs takeover of RJR-Nabisco was the last ma-
jor deal of its kind. Afer 1990, the disciplinary aspect of
the rentier-management relationship was more likely to
take the form of shareholder activism, with large outsid-
er investors publicly pressuring management to increase
payouts and adopt value-enhancing policies. As with
the earlier takeover movement, the rhetoric of share-
holder activism highlighted productive efciency, but
the real goal was to get management to disgorge funds to
shareholders.
In the familiar Foucauldian story, a power that was
initially exercised coercively from the outside came to be
internalized by its objects. By 1997, the repudiation of
managerialism was sufciently thorough for the Business
Roundtablerepresenting the CEOs of the 200 largest
American companies, and initially a site of biter criticism
of the shareholder revolutionto change its position on
business objectives to read the paramount duty of man-
agement and the board is to the shareholder and not to ...
other stakeholders.
Today, thanks to new compensation practices, in-
creased executive mobility between frms, and the fact that
top managers can themselves expect to become members
As Keynes
understood,
liquidity is what
stock markets
are for. What
theyre not for is
raising funds for
investment
12 DISGORGE THE CASH
of the wealth-owning class, managers have become less
concerned with the survival and growth of the frm as an
institution and more concerned with maximizing the fow
of money it generates for owners. Dumenil has put it well:
Afer some stormy conficts, fnance and management
have achieved a loving marriage.
ITS hard now to separate the hostile-takeover
wave from the sticky cultural residue of the 1980s. Men-
tion of hostile takeovers conjures images of Gordon Gek-
ko, or Richard Gere in Prety Woman. What was it really all
about?
Its tempting to see productive business and fnance
as separate social actors (and to choose sides between
them). And its tempting to see what theyre fghting over
as moneywho gets it, what it is used for. In this sto-
ry, the fall in the proft share and rising infation of the
1970s created sufcient urgency for the asset-owning
class thatcatalyzed by ideological entrepreneurs
they overcame their coordination problems and asserted
themselves politically.
I think this misses the real content of the shareholder
revolution. A useful way to think management and fnance
is as the embodiment of two diferent moments in the cir-
cuit of capital. Te confict isnt about who gets the money.
Its about the extent to which productive activity should
take the form of money at all. Its about how oriented busi-
ness should be toward the moment of liquidation. If we
want to understand the specifc confict between share-
holders and managementa confict between worldviews
as much as between distinct groups of people we need
to turn to Keynes and the fetish of liquidity.
As Keynes understood, liquidity is what stock mar-
kets are for. What theyre not for is raising funds for invest-
ment. Consider a recent example: Groupon. Teir IPO
raised $700 million. So the people who bought shares are
geting ownership of the company in return for providing
it much needed funds for expansion, right?
Except that, as Reuters columnist Felix Salmon
points out, Groupon has been shouting until its blue in
the face that it doesnt need the IPO cash. Its cash fow
was more than enough to fnance all foreseeable expan-
sion plans. So why go public at all? Because existing in-
vestors want cash. Pre-IPO, Groupon was already noto-
rious for using venture-capital funds to cash out earlier
investors. But the venture capitalists need to be cashed
out in their turn.
And thats what Wall Street is for: to give capitalists
their exit. Te problem fnance solves is not how to allo-
cate societys scarce savings between competing invest-
ment opportunities. Te problem is how to separate the
rents that come from control of a strategic social coordi-
nation problem from the social ties and obligations that go
with it. True capitalists dont want to make steel or restau-
rant deals or jumbo jets or search engines. Tey want to
make money.
Historically, the publicly owned corporation came
into being to allow owners (or more ofen, their heirs) to
delink their fortunes from particular frms or industries. In
her history of the mergers of the 1890s, Naomi Lamoreaux
notes that raising funds for investment was not an import-
ant motivation for adopting the new corporate form. In
contemporary accounts, she says, Access to capital is not
mentioned. Te same point is developed by historians
Tomas Navin and Marian Sears, who note that owners of
the frst frms to go public were motivated by an oppor-
tunity to liquidate part of their investment and thus have
access to immediate liquidity.
Tis preference for immediate liquidity goes back to
the beginnings of capitalism. In the 16th and 17th centu-
ries, Fernand Braudel writes, it was in the sphere of cir-
culation, trade and marketing that capitalism was most at
home; even if it sometimes made feeting incursions on to
the territory of production. Production was foreign ter-
ritory for capitalists, which they only entered reluctant-
J.W. MASON 13
ly, always taking the frst chance to return to the familiar
ground of fnance and long-distance trade.
When Marx frst introduces the circuit of capital,
M-C-P-C-M, were encouraged to think of the whole
thing taking place in a short period. Te capitalist shows
up at the beginning of the year with a bag of money, buys
means of production and labor power, coerces productive
labor out of the labor power; by the end of the year the
means of production are all used up, the commodities are
sold, and the capitalist walks away with a bigger bag of
money. But it doesnt really work that way. Efcient pro-
duction requires some large part of the capital to remain
in the C-P-C stage indefnitely, steadily throwing of mon-
ey but never fully returning to M. Tis is the case as soon
as you have long-lived capital goods; its even more so as
production increasingly happens through large, complex
organizations. You cant have an ongoing business unless
people are oriented toward doing their job for its own
sake; the whole thing will break down if everyone, and not
just the capitalist, is looking for the exit.
Production can only be carried out successfully by
managers who want to make things, and not just to make
money. But profts do still have to take the form of money.
To reproduce itself, capital must alternately be fxed in pro-
ductive activity (and its physical and social requirements),
and liquidated as money. Maintaining this cycle requires
that political agency be exercised sometimes at one point
in the circuit, sometimes at another.
Keyness call for the euthanasia of the rentier to-
ward the end of Te General Teory is typically taken ad
a playful provocation. But as Jim Croty has argued, this
idea was one of Keyness main preoccupations in his po-
litical writings in the 1920s. In his 1926 essay Te End
of Laissez Faire, he observed that one of the most inter-
esting and unnoticed developments of recent decades has
been the tendency of big enterprise to socialize itself. As
shareholders role in the enterprise diminishes, the gener-
al stability and reputation of the institution are more con-
sidered by the management than the maximum of proft
for the shareholders. With enough time, the corporations
may evolve into quasi-public institutions like universities,
bodies whose criterion of action within their own feld is
solely the public good as they understand it. Veblen, ob-
serving the same developments but with a less sunny dis-
position, imagined that the managers of productive enter-
prises would eventually tire of sabotage by the notional
owners and organize to overthrow them, seizing control of
production as a Soviet of engineers.
Te function of fnance is to keep this from happen-
ing. For the individual capitalist, fnance provides liquid-
ityit turns a concrete claim on a particular production
process into an abstract claim on the social product in gen-
eral. For capital as a whole, it does something analogous
-- it ensures that concrete production remains oriented to-
ward profts. Te point isnt to take money away from pro-
ductive enterprises, but to ensure that productive activity
eventually takes the form of money.
At the moment, fnance seems to be doing its job
well. Te idea that corporations will spontaneously social-
ize themselves looks utopian and nave. Te evolution de-
scribed by Keynes, Berle and Means, Galbraith, and other
theorists of managerialism early in the 20th century had
been halted or reversed by its end.
But that doesnt mean it wasnt real. Just look at the
scale of the fnancial apparatus required to keep produc-
tive enterprises focused on proft maximization, and the
fear capitalists have of allowing managers discretion over
corporate resources, even when their incentives have been
arduously aligned. Isnt it testimony to how tenuous and
unnatural production for proft is? In these far from rev-
olutionary times, radicals ofen fret about the difculty
of transforming the existing organization of production
into socialism. But this project is nothing compared with
the Sisyphean task faced by the other side, of constantly
transforming the existing organization of production into
capitalism.
14 M AND A
GOLDIN+SENNEBY, the Swedish artist duo whose
work focuses on fnance, are best known for their ongoing
project Headless. Since it was initiated in 2007, Headless has
involved a series of more and less self-conscious collabora-
tors, among them an ofshore management frm called Sov-
ereign Trust, the mystery writer John Barlow, Angus Camer-
on of the Leicester University department of geography,
Kara Donnelly, Sovereign Trusts client service manager, the
possibly-fctional author KD, Sovereigns lawyers, and Alex
M and A
By GOLDIN + SENNEBY
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GOLDIN + SENNEBY 15
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Provan, the editor of Triple Canopy. Headless defes descrip-
tionto the extent that Provan could write 10,000 words
about it last year only to leave the reader convinced that no
one but a fool would claim to know what it was really about.
Yet Headless is also simply an art project whose aim is to in-
vestigate Headless Ltd. and its possible links with Georges
Batailles socitsecrteAcphale.
Huge sums of virtual money foating ofshore make
an apt metaphor for the symbols and ideas that compel peo-
ple to action and set events in motion, writes Brian Droit-
cour. Goldin+Sennebys endeavors ofen share the qualities
of Headless: Tey implicate multiple collaborators, with un-
certain identities, in an ambiguous authority structure
whose interactions set events in motion. Whether they do
any more than that unclearand the ambiguity is import-
ant. Te recent fnancial crisis has not made anything more
or less clear regarding our investigation into Headless Ltd,
nor regarding our wider research into strategies of with-
drawal and displacement, the artists explained, rejecting a
question posed to them in a 2009 interview.
Like fnance, Goldin+Sennebys work has a
rabbit-duck aspect, shifing with ones perspective. Is their
work created by an uncoordinated cast of characters pursu-
ing independent agendas? Or is it just a mater of generat-
ing the activity a system demands? No mater its guises, f-
nance by defnition shifs risk. Artists make works.
Te following is a speculative scene that Gold-
in+Senneby have had some relationship to producing. It
was authored by the New Zealand playwright Jo Rander-
son as part of an overarching Headless-style endeavor.
Tis one seeks to complete the 18th century work of Au-
gust Nordenskildan amateur alchemist who tried cre-
ate gold with the ultimate aim of devaluing itwithin to-
days fnancial markets. Te performance of the script
below varies in tandem with the performance of a algo-
rithmic trading model created for the artists by a Black-
stone group investment banker and implemented by an
anonymous programmer.
Gallery space.
Tere is a desk with several drawers in it. On the desk is
a large 70s telephone. A machine in the corner.
A rubbish bin nearby.
Te Actor enters the gallery space, in a light gray suit, tie,
with his shirt hanging out. His jacket is hanging of his
shoulder, his shoelace is untied. OR he enters calmly and
suavely, full of confdence. He carries a shiny new briefcase.
He is glancing at his watch.
ACTOR: Sorry, guys, sorry.
On the way in he trips over his untied shoelace, almost falls
and re-gathers his balance. Looks around to see if anyone is
watching.
He takes a bow. He picks up the script and reads his
instructions.
He looks around the room. Surveys it. He knocks and
taps on the walls.
ACTOR: (reading of the script) Tis wall is beter
than this wall. It has a lower value. Today Im going to
show you how to successfully ascertain the value of
something. But things of course could change.
He checks the script again.
ACTOR: Ill put the machine on.
He turns on the machine. Tis is a reliable and interna-
tionally renowned machine for fscal improvement.
ACTOR: It shouldnt take too long. Its very fast
these days. Well get some results through shortly. Ten
you know things will start you know things that were
previously (he gestures downwards) will start (he gestures
upwards).
16 M AND A
He plays with the gesture a litle until it turns into a litle
bit of a dance. He watches his arm happily. Gets lost in the arm
movement (this becomes an Arm Dance to be repeated later).
ACTOR: Sorry, sorry, I dont know why I was doing that.
He takes a deep breath, smiles at the audience, and bows
again. He ficks his coat behind him like a cape.
He lifs his briefcase onto the desk and it spills open:
play texts, magic tricks, sheets of graphs, bouncy balls, clown
noses, a wig, syringes, watches, money, a cape and a rabbit
fall out.
ACTOR: Someone must have given me the wrong bag.
He scrambles to get all the items back in the briefcase.
Tey fall out again, going everywhere, he pushes them into the
case messily then pulls open a drawer in the desk and shoves
everything in there.
He locks the drawer, and swallows the key.
He holds his arm up in a theatrical gesture, staring at
the audience. With great poise and slow, dramatic intent he
approaches someone in the audience and pulls the key out of
their ear. If no-one is watching he pulls it out of his own ear.
He shows it to the audience, if there is anyone watching.
He looks confused.
He checks his script which is lying on the desk. He
returns to the script.
ACTOR: We are currently looking for people who
believe in us. Who believe that what we are doing is
worthwhile. We need brave young men and women who
are prepared to enter into a totally safe and reliable scenar-
io which will see them siting at the top, the t-t-t-top of the
world. Which is where ladies and gentlemen, we all want
to be.
He goes over to the machine which has stopped working
and kicks it. It starts working again.
ACTOR: And now. Ladies and gentlemen, does
anyone have any money? Seriously though, you can totally
trust me. Does anyone have any money?
If someone gives him some money, he puts it in his
pocket, and then tries to pull it out of someones ear. Nothing
comes out.
ACTOR: Sorry, I dont know what happened to that.
Sorry its just the luck of the draw, its beyond my control.
Im not really sorry. Its quite complicated the process, you
probably wouldnt understand it. Does anyone have any
more money?
If anyone gives him more money, he pockets it.
Te gallery atendant comes over and directs his aten-
tion to the script. Te actor reads the script.
ACTOR (of the script): We apologize if the
outcome difers in any way from the intended results.
What does that mean intended? Like that I really
hope something would happen but if it doesnt if it
doesnt, then
Te gallery assistant dials the actors cellphone number.
His cellphone rings. He walks to the corner of the room
and discreetly takes the call, hiding fom the audience.
ACTOR: I cant talk now. Im acting. I dont know.
Maybe another day? (Pause.) How much is it? (Pause.) Im
not interested. Are they American? (Pause.) How much
are they selling? Are they like going up or like going
down? (Pause.) No Im not interested.
He hangs up.
He turns back to the audience did they notice he just
took a phone call? How intelligent are they?
He looks at the phone on the desk.
GOLDIN + SENNEBY 17
He looks at the audience.
He checks his watch.
He looks at the phone.
He looks at the audience.
He smiles and bows.
He sits down at the desk with marvellous physicality, as
if he is a magician doing a trick.
He looks at the audience for 30 seconds.
He acts happy and positive, like things are going well.
He acts sad, like someone has lied to him and he believed
they were being honest.
He alternates between these two expressions several times.
He checks his watch. Sighs.
He opens a few drawers. Tere is nothing in them.
He eventually fnds a black hat.
He taps the hat with a pencil, and swirls his hand
around it as if this will make magic.
With great aplomb, he reaches into the hat for some-
thing, but there is nothing there. His trick has failed.
He tips the hat upside down and taps on the bottom
in case it is stuck but nothing comes out. He is upset.
He cries.
He smiles. He checks the machine.
ACTOR (of the script): We apologize if the outcome
difers in any way from the intended results.
He waves the pencil over himself.
He smiles at the audience. He has regained his confdence.
He bangs his head on the desk, hard.
He takes out a typewriter fom the drawer. He types a
leter, talking what he types in a loud voice.
ACTOR: (typing) Hey guys, how are things going
where you are? Stop. Over here, its mad. Stop. M.A.D.
Stop. We are just run of our feet right now, things are so
crazy busy. Everyone wants us right now. I am just like
totally fat tack. Stop.
He thinks for a few moments.
ACTOR: (typing) Its madness! M.A.D.N.E.S.S.
things sure are totally mad round here right now.
He looks around again.
ACTOR: (typing) How are things going for you? Do
you have any like good ideas? Like does anyone have any
good ideas?
He looks around.
ACTOR: (typing) I mean I have heaps of good ideas.
Heaps of really great ideas.
He takes the Strindberg script out of his drawer. Flicks
through it. Trows it in the bin.
ACTOR: (typing) Yeah, like I say, its really going
great here. Were smashing it! Do you guys need any tips?
Like if you need any help, just let me know. If you want
help to get out of the black and into the red. I mean, sorry,
no, you know, out of the red and into the black. Into the
black, yeah. Black man, thats the side to be on. Black! Not
red. If youre in like red like just try to like fip it over to the
other side. Just like swap it around. Just like start saying the
opposite of how it really is.
He acts positive for 15 seconds.
He acts negative for 15 seconds.
He acts half and half, somewhere in the middle.
He taps the hat again to see if something will come out.
Nothing does.
Te gallery atendant comes over and points at the script
to draw the actors atention back to it.
18 M AND A
ACTOR: (Typing and talking) Hang on I just have to
take a call.
He takes a tube of red paint out of the desk.
He squirts a handful of paint and throws/wipes it on a wall.
OR he draws a graph with it. He steps back and considers it.
ACTOR: Tis wall is now an improved wall. It is
beter, it has a higher value. I mean lower value. It now has
a lower value. (Pause.) OR higher.
He squirts another handful of paint and wipes it on a
diferent wall. OR he draws another graph. He steps back and
squints at it to see if it is working. He is not sure if it is working.
He checks the machine to see if it is working.
Te gallery assistant dials the actors cellphone number
so that his cellphone rings.
ACTOR: Arrrgghhhh.
He goes to the corner of the room to take the call, again
trying to hide fom the audience. He tries to avoid geting red
paint on the phone but it is difcult.
ACTOR: (answering the cellphone) What? I told you
not to call me. Im acting. (Pause.) I dont know.
He looks at the desk-phone.
ACTOR: I just do it until they tell me to stop.
(Pause.) I dont know! Another three days? A week?
(Pause.) No-one knows how long its going to last. Its an
experiment. (Pause.) Is it a main part? (Pause.) I have to
think about it. Is it proft share? Are they like going well or
badly at the moment? (Pause. He looks at the audience and
gestures to show sorry, almost fnished.)
ACTOR: I realize its a great opportunity but Im in the
middle of a paid job. (Pause.) No I cant commit, I cant
fucking commit to anything right now. Teyre paying me!
Dont you get it? Tey are actually paying me.
He hangs up.
ACTOR: Sorry, guys, sorry.
He goes back to the typewriter, typing as he talks again.
He reads of the script.
ACTOR: (typing) You remember when we talked
last time. You were saying something important.
Over the next few sentences he gradually stops typing on
the typewriter but keeps miming with his fngers while he
talks, so the miming becomes like a weird physical tick.
ACTOR: (typing) that you I was talking to? Tat
night? You were telling me something but I couldnt hear it
properly. Something about like some kind of advice like
when to how to make good choices? Like when is a
good time to like when is a good time to do some-
thing like or even like what is worth doing?
He starts doing the Arm Dance fom earlier, and is
intrigued by the movement.
ACTOR: I couldnt quite get the hang of it. but
like maybe how to get more like get things more (he
gestures up as he did earlier) ? I couldnt really hear it at the
time but it felt like Like somehow like a totally reliable
way to like to be able to stop worrying? Like to make
things secure? Or an end to all my worries or something?
He is standing up by now.
ACTOR: Haha not that I have any worries! Like I
say, things are going great here, just super super like great.
GOLDIN + SENNEBY 19
Im just not sure exactly how much longer they will be
going on for like it could be any day now things
might have to change
He looks at the phone on the desk. He reaches towards it.
He stops himself. Looks around to see if anyone saw.
He reaches towards it again, then stops.
Ten he quickly puts another red paint mark/graph at
the top of the third wall, and traces a line down the wall with
his hand, so there is a red splotch with a long tail that reaches to
the foor. On the foor below the tail, he squirts a litle splotch of
paint in a pool.
ACTOR: (Talking to the paint.) Im just searching for
a very important piece of information that might be the
clue to everything. Something that will lead to success. Like
a secret code or something. Any help you can give will be
rewarded.
He quickly runs over and pulls the desk-phone plug out of
the wall.
He goes to a corner of the room, crouches like a sprinter.
He does the Arm Dance.
He checks his watch.
He waits for 5 seconds, then he starts running and crashes
into the frst wall, connecting his head exactly with the red mark.
Te momentum of this crash sends him fying over to the
second red paint mark, where he again bangs his head.
Tis crash rebounds him into the third red paint spot
which he hits with his head and then keeping his head on the
wall he trails the paint line down to the foor, placing his head
carefully next the litle pool of paint at the botom, so it looks
like it has come leaking out of his head.
Pause.
Te gallery atendant dials the actors cell-phone number.
His cell phone rings. He grabs it.
ACTOR: Hello? Yes? Yes? High or low? Great. D-d-d-
debt? Great. And good valuation? Great! Yes! Do it! Right
now! Were on! Oh my God, its happening, its fnally hap-
pening! Tis is the part I was waiting for!
A small hole in the wall opens and a huge pile of coins
comes spilling out, like out of a casino machine.
An alarm bell goes of at the same time.
Te actor quickly pulls a balaclava out of his pocket, puts
it on and picks up all the money. He moves fast, like a robber,
looking around, and when he has most of the money he runs
quickly out of the space.
END
Gallery is re-set. Actor cleans himself up, has a quick
break and then begins again.
No I cant commit,
I cant fucking
commit to anything
right now. Teyre
paying me! Dont
you get it?
20 THE POSTCAPITAL ECONOMY
FOR years, Chinas countrys growing spare
capacity and rising investment have worried outsiders
like me about the sustainability of its growth model. Te
idea that Chinese demand for resourceswhich were
ultimately being used as much for manufacturing for the
export market as domestic-based consumptionwas in-
dicative of a competitive and sustainable global bid for
goods and output seemed to me unconvincing. Especially
without evidence that any rebalancing from investment
and export-driven growth to consumption-based growth
was really happening.
Two things have since led me to adjust my opinion.
Te Postcapital Economy
By IZABELLA KMINSK
Chinas command economy may be beter suited to cope
with technologically driven abundance
IZABELLA KAMINSKA 21
Te frst was an encounter with a Chinese fund man-
ager in Geneva about two years ago. Ever mindful of not
being brainwashed, I came prepared with what I consid-
ered an extremely convincing argument for the case against
the Chinese investment case. But rather than have my case
knocked down, the fund manager never hesitated to agree
with every point. It was confusing.
How can you justify the case for Chinese investment
when excess capacity in the building sector is running at the
rates it is? I would ask. Analysts have anecdotally reported
overcapacity in Chinas industrial, building and manufac-
turing areas since the crisis began.
You cant, he would answer.
And what about the untold volumes of encumbered
commodities masquerading as demand? Ofcial data
is hard to come by, but Chinese fnancialized commod-
ity stockpiles, mostly used to raise cheap collateralized
funding that is then reinvested in higher yielding Chinese
wealth-management products, have been reported in ev-
erything from copper and aluminum to coton and con-
sumer goods.
Yes, this is defnitely happening, he would agree.
And investments in risky Chinese wealth-man-
agement products and overall credit intensity in the
economy?
Yes, all of this is true, hed happily agree.
So how do you justify the case for China? Why dont
you think it will overheat or sufer a dangerous credit im-
plosion? I volleyed back.
Te answer, which at the time seemed to me uncon-
vincing, was simply, Because China is diferent, and for-
eigners dont really understand how. It is a diferent men-
tality you are dealing with.
Tis corresponds with the second incident that
led me to adjust my opinion: a research note by James
White, a litle known Australian analyst at Colonial Asset
Management.
His argument was simple: What western investors
forget about China is that it doesnt operate according to
the standard rules of capitalism. It is to some degree a post-
capital or proto-post-capital economy. Tis one fact helps
China defy doomsayers predictions time and time again.
His research arrived as I was re-evaluating my under-
standing of my causation of the 2008 global fnancial cri-
sisdistancing myself from the idea that subprime loans
were to blame and moving toward a more general thesis
that the roots of the crisis lay in the dotcom bust of 2001,
a surplus of investible capital, and the Western capital sys-
tems general struggle with technological abundance.
One need only to think about how you put a value
on abundant air to understand the problem. Values in the
capitalist system are set by marginal availability, not utility.
As technology leads to greater abundance of goods and re-
sources and displaces the need for conventional labor with
it, this has the habit of devaluing capital. At this point, the
more capital is invested in capacity, the more the system is
fooded with goods and output that cant be fought over in
the traditional competitive manner that drives prices. It is
consequently only by spreading wealth around without any
return conditionality atached to it at all, or investing with-
out a fear of loss or even break-even return as can be done
in China, that you can stimulate the sort of consumption
that can keep prices supported.
What White was saying ft that picture perfectly.
China was able to succeed where Western economies
couldnt precisely because it valued and understood capi-
tal diferently. For China, capital was just one component
of a much bigger economic game that was ultimately fo-
cused on raising living standards of all households irre-
spective of capital returns.
Overinvestment and default risk were for China by
and large irrelevant. Indeed, China could tap spare capital
by the 1990s, because conventional return to capital in the
West was already lacking and the Peoples Republic, unlike
Western economies, was prepared to deploy and under-
write investment without fear of any risks of unproftabil-
22 THE POSTCAPITAL ECONOMY
ity. Chinas epic stimulus programs afer the 2008 crisis,
enacted without hesitation, show the nations readiness to
socialize losses when it maters for the economy.
Some judged what followed as China being able to
look beyond the needs of today to the very long term. As
long as China was patient, the investment-led growth would
be justifed on account of the sheer number of people that
could stand to beneft from the urbanization. Yes, there are
stacks of empty houses, buildings and ghost towns in Chi-
na. But the rationale is that unused capacity will eventually
be demanded by Chinas inland populations once they be-
gin to beneft from urbanization and development.
But there is possibly more to it than just very long-
term thinking.
Consider John Maynard Keyness coalmine exper-
iment. On the theory that having people employed for
no purpose at all can help to stimulate economic activity
during times of demand collapse or output shock, he pro-
posed having a government fll old botles with banknotes,
bury them in coal mines, and encouraging private enter-
prise to compete to dig them back up again. Te process
would employ many more people in jobs, albeit pointless
ones, and thereby spread wealth around. Keynes argued it
would naturally be more sensible to have these people em-
ployed in building houses or something else more useful.
But the economic efect would be the same.
In many ways, what White is arguing is that Chi-
na is actually running the greatest Keynesian coal-mine
thought experiment of all time, building and producing
not for the sake of what was produced but rather to take
advantage of a global capital surplus. Tis gave China the
opportunity to empower its citizens on the condition
that underwriting the capital could woo it in the frst
place through this massive social experiment. It did so, of
course, by means of foreign-exchange manipulationan
important precursor to the quantitative easing (QE) used
by the U.S. Federal Reserve postcrisisthat ensured that
every dollar invested in China would ofer a beter pay-
of than a dollar invested at home. It could guarantee this
because not only would there always be a superior Chi-
nese bid for the capital in question but it would be coming
from the government directly.
It is only because the government is puting up the
bid rather than private enterprisewhich in emerging
markets is thought of as risky and sufering from corrup-
tion and other principal-agent problemsthat the capital
suddenly becomes free-fowing to the country in question.
If it wasnt the government providing the bid, it would be
In many ways,
China is actually
running the
greatest Keynesian
coal-mine thought
experiment of
all-time, building
not for the sake of
what is produced
IZABELLA KAMINSKA 23
seen as too risky to invest. But since the government can
print money ad infnitum, and this is what Chinese cur-
rency manipulation really consists of (buying dollars with
newly printed yuan), that bid remains competitive for as
long as the Chinese government wants it to be.
Te Western version of QE sees the Federal Reserve
printing money in order to absorb underperforming as-
sets and U.S. Treasury bonds into its cofers in a way that
efectively underwrites their performance no mater what
and squeezes the market at the same time. Te Chinese
FX manipulation version of QE saw the government print-
ing money in order to absorb abundant dollars out of the
global system, in a way that efectively kept the dollar over-
valued no mater what. Tis meant investors could be sure
that their dollar denominated investments in China would
always result in real returns.
Te reason the Chinese government felt comfortable
underwriting bids for foreign investment, meanwhile, is
probably because its socialistic disposition allowed it to see
what the West couldnt: namely, that in the West, capital
was no longer scarce enough to justify a truly competitive
bid for it and all China had to do was provide some sort of
guarantee in order to beneft from it.
AT the end of the day, the much discussed savings
glut is just another way of saying capital surplus. For years
nobody really understood what was fueling it, but more re-
cently Larry Summers speculated that it was the frst clear
symptom of secular stagnation, a trend that arguably
started in the early 1980s. In a secular-stagnated economy,
we end up with a capital rather than labor bias, which sees
rents and returns fow to owners of capital in favor of labor,
to the detriment of the wider economy.
Unless that surplus could be redistributed to new
pockets of demand, all roads consequently lead to a de-
mand collapse, because eventually all wealth becomes con-
centrated in the hands of technology and capital owners
rather than in labors hands. Tis creates a vicious demand
circle that impoverishes the economy overall.
For China to beneft from that capital surplus, all it
needed to do was draw the capital over and keep it there,
creating a self-enforcing capital scarcityor savings glut
for the world. With its socialistically minded economy that
didnt mind investing capital for public purposes regard-
less of return, China prevented that capital from returning
to the West. Tis is important, because if the capital was
allowed to fow back to the West, it would have less of a
distributive wealth efect than it would in China, where
it would make more people feel more rich. In the West, it
would more than likely end up concentrating in the hands
of capital owners, who would be ever keener to employ ro-
bots than human beings.
In that sense, China became to the world what
the Doozers are to the Fraggles in Jim Hensons Fraggle
Rock: building and producing raddish-based construc-
tions not out of personal or even global need but rather
because it gives them purpose. Hence when the Fraggles
come and consume that production, the Doozers dont
mind at all. The destruction provides them with an ex-
cuse to build some more. The more the Fraggles con-
sume, the happier the Doozers get. The less the Fraggles
consume, the more the redundant constructions the
Doozers build and the more likely they are to question
the point of their existence.
This is something the West, and its scarcity-focused
value system, has failed to understand. Capital abun-
dance created an investment paradox, which dictated
that an economy could benefit just as much from giving
capital away to anyone, be it through public investment,
government spending, credit expansion through overin-
vestment, or even squandering capital completelyas
it could do from allocating it wisely and proportionally.
Those who were prepared, like China, to deploy capital
for public purposes rather than have it serve the compet-
itive bid exclusively were much more likely to stimulate
24 THE POSTCAPITAL ECONOMY
their economies than those that dont.
As White argues, this is why its wrong to assume that
China is pursuing capitalism as we know it. Its real aim is
to create a hybrid model of public investment and very ag-
gressive market-based competition with the hope of creat-
ing consumer surpluses rather than economic rents. Tis
would distribute wealth more widely than if it was passed
exclusively to rent seekers alone.
Capital is allocated consequently not on the basis of
whether the asset created can provide a return but wheth-
er it serves a greater social purpose. Te Chinese govern-
ment will consequently fund contractors to develop public
infrastructure and other massive social projects, as well as
backstop private enterprise that has potentially overinvest-
ed in private developments. Even if the projects dont yield
a monetary return, they improve the social infrastructure,
Chinese mobility, and the general standard of life. By con-
trast, in the United States, the lack of guaranteed returns
has created a major underinvestment problem in public in-
frastructure, which is now falling apart or becoming ever
more dangerous as a result.
As White notes in a more recent report:
Success at the national level will generally come with fail-
ure at the micro level. Te lack of a return in certain assets
is ofset by faster productivity growth which encourages
activity growth. As such the returns on investment fow
away from the individual capital allocators towards more
productive labor enjoying faster wage growth and the
government capturing the benefts of higher levels of eco-
nomic activity through taxation.
Tough there are a few factors to bear in mind.
First, the strategy depends on there being concen-
trated pools of surplus capital in the frst place. Second,
the strategy only works for as long as the West doesnt
fgure out it too can beneft from socializing capital loss-
es and thereby beat China at its own game. Tird, capi-
tal controls and a fxed currencywhich block direct
investment into China, and Chinese investment outside
of Chinaare necessary to prevent the misallocated cap-
ital being (de-)valued according to Western standards.
Te appointment of Janet Yellen as U.S. Federal Reserve
chairman and recent policy action to widen the currency
band by the Peoples Bank of China suggest some of these
factors are potentially being disrupted already. If that is
the case, it stands to reason the benefts of unconditional
capital distribution could soon start fowing to the West
in lieu of China.
Te consequences of such a transition would likely be
stimulative and thus infationary for Western economies.
Tey might also end up having a profound and counter-
intuitive efect on commodity prices. Infation, afer all, is
generally a symptom of an output shortage and thus some-
thing which makes investing in new capacitynot com-
moditiesextremely proftable and low risk. Tis raises
the question: Why would a rational investor forgo such an
opportunity to take an unhedged position in commodities
in a genuine infationary environment? Why would you in-
vest in commodities that change in value and can lose you
money when you can invest in a bond that guarantees you
your money back plus some?
If that reluctance stems from the idea that Western
capacity would end up competing with Chinese capac-
ity for a finite amount of resources, it appears logical.
But if you consider that new commodity-using ven-
tures would signal their commodity needs to the mar-
ket directly anyway, that could instead provide a com-
pelling cash-out option for opaquely hoarded Chinese
commodity inventory. Western resurgence might then,
instead of bidding up commodities, tempt Chinese fi-
nancialized players back into Western marketswhere
they become much more visible and price-impactful
knocking commodity prices and/or global commodity
production significantly in the process.
Ironically, this would augment the argument for yet
more unconditional investment in China. Tis new invest-
ment would continue to expand one of the biggest social
experiments in economic systems in history.
MIKE KONCZAL 25
WITH the fnancialization of the economy has
come a revolution in the ability to buy and sell the future.
One of the most important instruments is called a future
exactly for this reason. Futures allow people to buy and sell
a specifc quantity of a product now for cash, with the prod-
uct delivered at some point in the future. Firms can lock in
raw materials and mitigate the risk of unanticipated price
rises (like airlines when they use futures to manage fuel
purchases), while speculators can bet on the demand, sup-
ply, and price of everything from apples to wood.
Finance can go beyond bringing the future of raw
commodities into cash value in the present. A wave of
mathematical modeling and computer simulations allows
investors to predict the likely value of everything from
apartment rentals to sovereign crises to human beings, and
a elaborate contractual infrastructure lets them lock down
their bets. Tese fruits of fnancial engineering will increas-
ingly play a role in our economic lives.
But are these fruits poison? Where will this sort of
predictive fnancial engineering lead, and can anything be
Buying the Future
By MIKE KONCZAL
Financialization depends on
a standardized product. What
happens when its applied to
people?
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26 BUYING THE FUTURE
done to alter the path? Tis system of buying and selling
the future requires a level of control over far beyond the
normal standardization and commodifcation that comes
with capitalist societies. To specify the future in the ways
that futures contracts demand means locking down its
forms in advance, with an abstract conception suitable to
fnancial exchange positing what will become lived reality.
Knowledge of the future breaks down, while fnancial mar-
kets overwhelms areas of everyday life once fully separate
from what has been traditionally seen as fnance. Te con-
sequences of this domination by fnance have already begun
to unfold and may only intensify as fnances realms expand.
It might be useful to start with an old philosophical
debate: about the relationship between universals and spe-
cifc objects. As Marco dEramo notes in his book Te Pig
and the Skyscraper: Chicago: A History of Our Future, that
back during the medieval period, philosophers fought over
whether the names of things resulted from social conven-
tions and the everyday reality of their existence, or whether
the names of things existed in a reality independent of the
actual objects that represent them in everyday lives. Are
there only particular, individual, material things out there,
with generic names arising only from social conventions?
Or are there ideal Platonic universal entities, which exist
separately from individual iterations of them? Te fnancial
system that has evolved in the past 150 years alongside cap-
italism in part atempts to resolve this question.
Lets go to the Chicago Mercantile Exchange and see
the terms under which live catle are traded in the future.
Contracts for the future delivery of catle have existed since
at least the 1850s, when farmers met in Chicago agreed to
buy and sell corn. Tats nothing compared with the mil-
lions of contracts that are traded each now at the exchange.
Te problem with trading future goods immediate-
ly presents itself: How do you know that you arent going
to get screwed on delivery? If you agree to buy new catle
years from now, whats to say that you wont get the weak-
est, malnourished catle available? Its especially problem-
atic because the catle in question dont exist yet.
At smaller volumes, overlapping and deep networks
of trust could at least in theory do much of the heavy work
for exchanges between people living in the same region. But
when it comes to global fnance and very deep markets, such
trust cant be traded upon as a given. Hence the contract.
Lets look at the Chicago Mercentile Exchanges rule-
book for a Live Catle Future, specifcally the legal content
for what qualifes as a deliverable catle. First of, No in-
dividual animal weighing less than 1,050 pounds or more
than 1,500 pounds shall be deliverable as a catle. Un-
merchantable catle, such as those that are crippled, sick,
obviously damaged or bruised, are not acceptable. Graders
are on standby to ensure that these judgments are satisfac-
torily made.
Pick any other commodity, and youll fnd the con-
tract that similarly marks what the ideal form of it should
be. Buter futures, for instance, stipulate that it has to be
packaged to meet the requirements outlined by the Com-
modity Credit Corporation as contained in the rules of
Announcement Dairy-6, Purchase of Bulk Dairy Prod-
ucts. Lumber to be deliverable in the future must not ex-
ceed 19% moisture meter readings, in accordance with the
Standard Method of Tests for Moisture Content of Wood,
Section 9, Method B of the American Society for Testing
Material Standard, D2016-65.
Tis standardization is necessary for the futures mar-
ket to function. In the market for options to purchase fu-
ture catle, the only thing that can be diferent is the date.
Traders will look at a contract to purchase catle in June
2015 and compare it with the August contract. If the price
diference is too greatif they are cheap in June and pricey
in Augustthey may try some arbitrage and play the two
contracts of each other, perhaps purchasing the June catle
and storing them until August to be delivered at the much
higher price they can nail down in a contract.
Making catle indistinguishable from one another for
commodity-trading purposes is not as easy as the volume
MIKE KONCZAL 27
of futures trading would suggest it should be. Catle are liv-
ing creatures, prone to diversity, variation, and a range of
all kinds of diferentiable characteristics. Of course, catle
that dont ft the relatively wide characteristics arent tossed
aside. Tey are discountedsold at a loss for a smaller
percentage of the contract. Tis discount is meant to penal-
ize the grower while reducing immediate waste of unsell-
able merchandise.
For this to work, of course, you need to presuppose
the ideal cow, buter or lumber, can be embedded in the
contract. Tose contract guide those who then breed the
cows, make the buter, and grow the wood that turns into
the lumber. Deviations from these ideals, deviations that
show up in living things, are penalized fnancially to reduce
their possible real existence.
Te system of standardization in futures contracts re-
solved the particular into the general and came to be her-
alded as a major fnancial innovation. Te name of the thing
produced the thing, rather than the thing producing the
name: nominalism vs. realism solved. As William Cronon
documents in Natures Metropolis, once people began to
know and trust the new grading systems, it made commod-
ities interchangeable not just between elevator bins but
between cities and continents as well. With the problem
of the actual form objects will take setled, this allowed a
broader capitalist revolution, as new technologies like the
telegraph could send around the world prices for standard-
ized goods. Tese prices were suddenly universally signif-
icant, since everyone could conceive of the standard unit
they were pricing. You didnt need to know the character of
farmers to properly value their livestock.
But for these contracts to actually work, the people
who write them and carry them out need to be fair and
disinterested. And the contracts themselves must be able
to actually control the contingency and randomness of the
futurean apparent contradiction. In practice, the only
thing that has been consistent has been self-interested capi-
talist greed, which has been put the service not of broaden-
ing networks of trust but instead hoodwinking one another
with increasingly complicated sets of contracts and guess-
work that try to make gambles appear safely rationalized.
Tat way others will indulge in them, to the traders beneft
as facilitator.
Tus, fnancial engineers atempted to turn unpredict-
able mortgage payments from overburdened homeowners
into a predictable instrument capable of creating consistent
28 BUYING THE FUTURE
revenue streams. Tese instruments were thought to be
so reliably consistent that they could be used as collateral
for further fnancial activity, as if they were safe as holding
money itself.
But those tasked to make sure the mortgages in these
instruments were as specifedthey were healthy and
properly weighed catle or otherwise discounted accord-
inglywent corrupt as the volume of exchanges took pre-
cedence over their integrity. Even worse, there was more
money in trading sick mortgages then healthy ones. Bankers
found they did best by puting people into the worst sorts
of mortgagesthe most exploitive to homeownersso
they went out and purposely make more bad mortgages. In-
vestors, believing bankers have solved how to measure and
control the future, demanded as much of these high-yield
instruments as they could get.
Not only were these contracts designed to make the
bad-mortgage future, they were also ill-prepared for the
contingencies they pretended to tame and master. When
the housing market collapsed, the creators of these con-
tracts lacked the thorough knowledge of the mortgage
contracts within themhighly individualized relations
between lenders and borrowers, each with their own nu-
ancesthat would have been necessary to recover some of
their value. However, the fy-by-night operations responsi-
ble for modifying these contracts never had the resources
or infrastructure necessary. Tey proved to be farmers who
couldnt tell cows from cow shit. In their wake a disastrous
housing future of abandoned development projects, mass
foreclosures, and blighted neighborhoods was forged. Its
reworked entire neighborhoods and cities as much as the
most power-hungry urban planner, but without any logic
other than the belief that the future was under control.
Te same process is repeating itself in the rental mar-
ket, where the latest craze is turning rental properties into
securitized objects. Here, the landlord isnt just a guy look-
MIKE KONCZAL 29
ing to turn down the heat on tenants to save money. Te
landlords are fnancial engineers trying to cash in right now
on a building manager turning the heat down on you in the
future. Demand to fnd rentals from the future and pack-
age them for today are fueling the skyrocketing rental rates
weve seen in the past several years. Once again, though, the
fnancial sector will need to rely on a level of knowledge
about particular owner-rental situations that contracts will
be able to convey the false impression of without actually
being able to generate it. Already there are concerns that
the contracts could lead to mass evictions, as people will
be kicked out to sell properties to meet a need for cash if
they dont pay enough. Landlords will be stuck in a helpless
middleman role, unable to make meaningful accommo-
dations to the contracts demands and facing Wall Streets
pressure to become slumlords.
Given how fnance has been able to convert the fu-
ture of raw materials, corporations, and land into tradable
instruments, what about human capital? University of
Chicago economist Gary Becker defnes human capital as
investments people make in themselves, including their
own education, skills and health. As with land and raw
resources, people cannot be separated from their knowl-
edge, skills, health, or values in the way they can be sepa-
rated from their fnancial and physical assets, so they cant
just count as capital the way money in their bank account
does. It resides in the human, as opposed to capital in the
form of property, which exists due to a dense network of
property law and customs.
Te most likely route for human-capital futures is
standardizing through funding for individual education.
Startups are trying to turn young college students into
cows or mortgages by trying to render predictable the fu-
ture salaries theyll earn based on their higher education,
which comes with current known cost. A combination of
state disinvestment, an exploding managerial class, and a
grouping of elite schools that can drive up tuition have all
combined to make a huge amount of upfront capital neces-
sary for the sort of college degree that can secure employ-
ment. Finance will have to jump into the picture. If it proves
a lucrative investment, it may food people into higher ed-
ucation, assuming they can compel work and proft later.
Tis could send so much money into higher education that
its prices will spiral, as with the housing bubble.
What else could go wrong with a society where, as
Malcolm Harris described it, a sizable portion of our
young workers are partly owned by other peopleat least
the ones who can fnd buyers? Te element of control
over what students learn will become tantamount. Te ide-
al graduate will have to be embodied in the contract itself,
just like for healthy cows. Otherwise, students will simply
learn rather than valorize their human capital at the inves-
tors expected rate. Whereas most fnancial engineering has
tried (and at times catastrophically failed) to value con-
tracts by extrapolating from past data, there will most likely
be demand to directly control human capital more directly.
You cant bully a cow into avoiding hoof-and-mouth dis-
ease, but you can bully an 18-year-old into doing its organic
chemistry homework.
Absolute control would technically be illegal under
the 13th Amendment of the U.S. Constitution, which pro-
hibits indentured servitude. But one can imagine contracts
that would mark using your degree for certain kinds of
low-paying social work as undeliverable on the promise
of your human capital, with your debt burden being adjust-
ed accordingly. Finance would, in turn, create the subjectiv-
ity in citizens necessary for its own proft making.
From mail-order catalogs to digital formating, capi-
talism has always involved standardization. But the exten-
sion of this to the future was a major break, and its endless
extension is a remarkably new phenomenon. Its ruined the
economy, prioritizes fnance over any potential counter-
vailing force like democracy, and homogenizes all market
transactions while creating incentive and knowledge prob-
lems that they wont overcome. And it is going to continue
to be the future of our economic lives.
30 NO CHOICE BUT FREEDOM
MILTON Friedman famously argued that
there is a link between capitalism and freedom. A society
which is socialist, he wrote in Capitalism and Freedom,
cannot also be democratic, in the sense of guaranteeing
individual freedom. As an empirical mater, that statement
remains as roughly true now as Friedmans related claim
that there is no example in time or place of a society that
has been marked by a large measure of political freedom,
and that has not also usedsomething comparable to a free
market to organize the bulk of economic activity. A social-
ist might quibble that the assertion is crafed to elide very
stark distinctions between societies, hiding some important
dimensions in which politically free Sweden, for example,
diverges in economic policy from the laissez-faire Anglo-
sphere. But even in the social-democratic Nordics, much of
economic life, the bulk perhaps, plays out through mon-
ey-intermediated arrangements between nonstate actors.
Tat is, in markets.
No Choice But
Freedom
By STEVE RNDY WALDMAN
Markets enact social control while
making it seem to disappear
STEVE RANDY WALDMAN 31
Te interesting question is why. Why does there
seem to be a relationship between capitalism and political
freedom? Friedman emphasizes the role of competitive
and decentralized market actors in checking the concen-
tration of power that political authorities might use to
prevent freedom and dissent. If one is fred by a private
employer for expounding unpopular views, there is always
another private employer who may have diferent views. If
employment is directed by a hierarchical state, the cost of
dissidence may be penury or starvation.
Friedman argues that economic freedom, in consti-
tuting the individuals ability to engage in whatever volun-
tary activities they wish to pursue, including exchanges of
goods or services for money, is not only a means toward,
but is freedom itself. But what is freedom, itself ?
Tere is another way of accounting for the apparent
coincidence of political freedom and market economies.
Consider the quantity of entropy that must be managed if
a human society is to successfully function. Given the vast
potential of an individual human body, it is astonishing how
much control is exercised in the most ordinary of human
actions and interactions. Te most unconventional or un-
disciplined people you will ever encounter still restrict their
motions, facial expressions, behavior, and activity to an as-
tonishingly narrow a range of the possibilities of which their
bodies is capable. As we increase the number of human bod-
ies interacting, the potential degrees of freedom in behavior
explode exponentially. Te entropy that must be controlled
if an interdependent society of millions is to functionto
keep its members alive, to transform the material world for
succor and shelter, to defend itself against external shocks
and competing societiesis unfathomable.
Viewed against a standard of perfect choreography,
of zero deviation from predetermined activity, there may
appear to be a great deal of freedom in ordinary human in-
teraction. An individual may choose to eat in today or eat
out, and still successfully complete their day without caus-
ing social unrest. A society may tolerate uncertainty over
whether an individual will become a freman or a physi-
cian. But viewed against the full space of possible behaviors
among millions of interacting humans, the overwhelming
requirements of survival and prosperity are constraint and
bias. By some combination of instinct, socialization, and
social control, bodies must be organized into intricate and
interlocking dances that would be exceedingly unlikely if
there were uniform probabilities of action on almost any
level. Te freest society would be populated by humans
bounding and barking and shiting randomly, and surviv-
ing very briefy. Te truest expression of liberty, in a statis-
tical sense, is a seizure.
Obviously, when we talk about human freedom,
then, we mean something very diferent than mere entropy
or unpredictable behavior. Even in a relative sense, com-
paring ranges of behavior within diferent societies, unpre-
dictability fails to capture what we mean. Te winter-day
activities of a North Korean farmer may be less predeter-
mined or choreographed than the work day of a New York
ofce manager, yet wed say the New Yorker enjoys more
freedoms than the North Korean. So what precisely do we
mean when we say that people are free?
Here is a conjecture that I think accords with our ac-
tual usage of the term: Freedom represents a state of co-
incidence between what one is constrained or compelled
or allowed to do and what a person subjectively determines
she legitimately wishes to do. Sure, a person who may
choose among a number of desirable actions with no con-
straint is free. But so too is a ballerina bound to perform
and not deviate from an intricate set of actions that she is
nonetheless glad to perform. And so too is a soldier march-
ing in lockstep in a parade of thousands, if some passion
or ideology has persuaded her that marching is what she
wishes to do, among the possibilities it might be legitimate
for her to want.
A person may be free because she can choose among
a broad range of possibilities, or she may be free while she
undertakes some action about which she has no choice at
32 NO CHOICE BUT FREEDOM
all, but whose compulsion she deems legitimate. Or she
may be free when she faces a range of options, one of which
is clearly superior to the alternatives, so that her behavior is
perfectly predictable despite a formal freedom to choose.
Freedom is not, at botom, about the range of possibilities
one faces but about the degree of consent one ofers for the
action to be taken or the circumstance to be endured.
A free society then is not one that maximizes the
range of actual behavior that people ultimately exhibit.
A successful mass society limits and choreographs ag-
gregate human behavior to astonishing degrees. A free
society is one that (to steal from Herman and Chomsky)
effectively manufactures consent for the tremendous
constraint it must impose. Its not that people do what
they choose, but that they, in aggregate, freely choose
to do what they must.
All large-scale societiesones that you might con-
sider good and virtuous along with ones you would con-
sider oppressive and corruptrequire means of reducing
the entropy of human behavior and directing action toward
ends useful to maintaining social continuity. If you start
from the premise that constraining behavior efectively is
the core challenge a society must solve, Milton Friedmans
observation of the coincidence between market economies
and political freedom appears in a new light. Rather than
challenging authority with outside centers of power or of-
fering some sort of ipso facto freedom, markets may instead
be seen as functioning so efectively to shape aggregate be-
havior that alternative approaches like suppressing speech
become unnecessary. Political freedoms are luxuries that
can be enjoyed once not-explicitly-political means of social
control (like markets) have adequately supplanted inferior
technologies of suppression.
Markets are free even though the range of choices
they ofer participants may be less than ideal (would you
like to work at McDonalds or at Wal-Mart?), because the
menu of options emerges from a faceless, decentralized,
voluntary, even natural process. A free adult accepts the
limits of an imperfect world in a way she might not accept
restrictions imposed by identifable humans. Means of
control atended by some degree of choice, the limitations
of which appear as facts of nature, may amount to a more
pleasant and less disruptive way of being told what to do
than, well, directly being told what to do.
Tis is a useful trick. No, really! Perhaps it is Or-
wellian, disturbing. But if you accept the premise that a
tremendous amount of constraintshall we call it disci-
pline?is a prerequisite to the successful fourishing of a
large society, institutions capable of imposing constraint in
a manner that, subjectively, does not engender feelings of
injustice or oppression, and that, objectively, dont provoke
political confict or even violence are incredibly useful. As
As instruments
of discipline,
markets may
simply be
technically
superior to
alternatives like
hierarchical control
and direct coercion
STEVE RANDY WALDMAN 33
instruments of discipline, markets may simply be techni-
cally superior to alternatives like hierarchical control and
direct coercion.
So when people claim that the free market system
outproduced Soviet Communism, what they are saying is
that markets more efectively produced discipline. It was
more successful at imposing paterns of human action and
restriction conducive to military and economic production
than a command economy was capable of imposing. It is
fashionable (and perhaps not wrong) to interpret this su-
periority in Hayekian terms and claim that markets solved
an information problem that bureaucracies of centralized
control were incapable of solving. Markets were beter at
determining how behavior needed to be shaped and con-
strained, despite the Soviets secret police and the gulags.
Capitalist superiority may have been a mater of more ef-
fective, less disruptive means of controlling and motivating
useful behavior. Market incentives may simply have been a
beter instrument of control, because of the conficts and
political resistance they crucially fail to engender.
Free markets are a fction, unless one adopts the
cynical and unconventional defnition of freedom Ive em-
ployed above. But they are fctions we are capable of per-
forming very well or that we are incapable of failing to per-
form, even in our own heads. Even if, even afer, we have
seen through them in some intellectual sense, they contin-
ue to compel us.
Milton Friedman, whether as propagandist or true be-
liever (probably both), praised market coordination with
unmixed admiration, but it is hard to be quite so enthusi-
astic when one recognizes and characterizes it as an unri-
valed instrument of control. In actual fact, the control over
behavior exercised by impersonal markets prety clearly
benefts some persons much more than others in ways we
might consider illegitimate. We may dispute whether the
order imposed continues to constitute a successful or de-
cent society. If not, there is no virtue in the ability of mar-
kets to misdirect us with a velvet glove.
Actual market outcomes are based upon near infnite
artifciality. Te money we trade for goods and services
is made of mere tokens invented and defned in a system
operated by banks in a very specifc sort of collaboration
with states. Te markets that most grandly shape social out-
comes do not directly touch goods and services at all. Fi-
nancial markets determine what we collectively build and
do, and who bears what risk, by virtue of trade in claims on
wholly abstract entities that almost incidentally transact in
human labor and operate on the physical world. Once one
is seduced by the capacity of markets to exercise control
without appearing to do so, one is lef with the neoliberal
temptation to play sorcerers apprentice by rejiggering con-
tracts and defnitions or taxes and endowments in hopes of
retaining the clever system of free and voluntary coercion
that markets provide but geting beter outcomes from it.
It is easy to dismiss the neoliberal impulse and call
atention to its unimpressive history. But it is hard to imag-
ine an instrument of social control with more Vaseline than
free markets. Surely Friedman is right that a society with
the perceived freedoms a market order can permit is supe-
rior to more direct authoritarianism. Perhaps what is wrong
with the neoliberal approach is not the atempt to embrace
markets while redefning the terms on which they operate,
but the degree to which technocratic rearrangements in
practice operates as a (well-compensated) substitute for
non-market political action.
It may in fact be possible to rejigger the context in
which markets operate in ways that meaningfully im-
prove the shape of society. But it wont be possible with-
out overcoming the objections of those who most bene-
fit from current arrangements. It is naive to imagine that
operating in ways rewarded by existing market arrange-
ments will be sufficient to reshape those arrangements
in ways likely to harm those doling out the rewards.
Control without conflict is the virtue of markets, but
to redirect that control, a bit of hardscrabble, old-fash-
ioned fighting might be necessary.
34 THE WORLD ACCORDING TO MODERN MONETARY THEORY
TOO ofen the origins of our economic ills are
cloaked by a mystical reverence for some autonomous
money spirit. Te economists behind Modern Monetary
Teory (MMT) seek to lif moneys veil by studying the
specifc actions that occur as money is created, circulated,
and destroyed.
For those seeking a grand, unifying sociopolitical eco-
nomic theory, MMT will disappoint. But as an analytic tool,
MMT clarifes who holds genuine powersovereignty
within society, and how they organize the money system to
serve their interests. Unsurprisingly, this is ofen a story of
tremendous cruelty and exploitation.
But the revelation that the rules of money are not im-
mutable laws of nature but are instead created and constant-
ly modifed by people opens up possibilities beyond the
scope of our current political imagination. Te questions
become: What sort of society do we want? Do we have the
physical resources to support that society? And fnally, how
the hell do we muster the political will to get there?
First, we must understand the source of modern
Te World According to
Modern Monetary Teory
By REBECCA ROJER
Looking past money to the sovereign power
that makes it valuable
REBECCA ROJER 35
moneys valueand contend with the violence of its
origins. Imagine you have just invaded an island. The
populace leads a leisurely life of hunting and subsistence
farming, and natural abundance ensures nobody needs
to work too hard. But beneath the fertile soil are pre-
cious minerals that will make you very richprovided
you can get the people of the island to do the backbreak-
ing work of mining for you.
Guns will work for this purpose, but slavery has fallen
out of social acceptability. What if, instead of each day forc-
ing workers into your mines at gunpoint, you created your
own money system? You could print your face on a bunch
of plastic tokens and pay miners with them, while imposing
a mandatory token tax at the end of each month. To avoid
imprisonment or death, they will have to make sure they
work enough to have tokens at the end of the month. Now
you need to take out your gun only once a month, when
you go door to door demanding your token. Te natives
remain ostensibly free. But the mining still gets done.
A sovereign (you, in this scenario) becomes a money
creator not by fguring out how to carve their faces into a
coin, but by having the strength to enforce taxes denomi-
nated in their own coins. As the economist Hyman Minksy
famously said, Anyone can create moneythe problem is
geting it accepted.
Your tokens would be totally worthless without your
threat of violence, but with it, they become an overriding
factor in your subjects lives. Subjects must refocus their
society around earning and holding tokens. Some people
will work in your mines; others will perhaps sell goods and
services to those with jobs. You, in the meantime, will have
transformed an entire economy for your proft, with only
the periodic use of force.
Forcing people to pay their taxes in a money that is
otherwise worthless creates demand for money and gives
it its value. Tis idea, called chartalism, is one of the core
building blocks of Modern Monetary Teory. Modern
money is fat money, state-issued currency not backed
by precious metals or any other commodity. Its as arbi-
trary as your islands plastic tokens. You cannot trade in
fat money with the state for a fxed quantity of gold or bar-
ley, but you still need it to pay taxes. Te United States has
functioned on a fat system since 1971, when Nixon ended
Breton Woods, the international system of fnancial re-
lations established afer World War II that had permited
U.S. dollars to be converted into gold. Te euro, the Brit-
ish pound, and the Japanese yen have since become fat
currencies. But even in commodity-backed systems, state-
issued moneyif acceptable as payment for taxestends
to trade at above its strict commodity value. According to
Keynes, money systems have been modern for the past
4,000 years at least.
Variations of the modern-money narrative are found
repeatedly throughout history. Te levying of monetary
taxes to create waged labor was a nearly universal expe-
rience throughout Africa in the colonial era, explains
economist Randall Wray. Hut taxes, coupled with extreme
violence and racial segregation, forced unwilling migrant
laborers into the gold and diamond mines of South Afri-
ca. Bernard Magubane, an anthropologist, described the
purpose of these taxes as being to increase the econom-
ic pressure on the African peasants to force them into
waged work.
Even earlier, in the 8th century, Anglo-Saxon kings
had struck their names and titles into coin that they used
as payment for things they wanted and accepted in lieu of
in-kind payment of rents and obligatory tributes, writes
Christine Desan, whose research overturns the mythical
barter story of introductory economics textbooks that
claims money was invented only afer trading became com-
plex. According to Desan, money is created when a stake-
holder uses his or her singular location at the hub of a com-
munity to mark the disparate contributions of individuals
in a common way
Desans explanation of moneys origins reminds me
of the points system used in the student co-ops I lived
36 THE WORLD ACCORDING TO MODERN MONETARY THEORY
in during college. We enjoyed a home-cooked meal each
night, and the houses only rarely succumbed to squalor
despite their inhabitants tendency for heavy loads of
c ourses and drugsbecause the points system imposed
work on us. Points could be earned by doing household
chores (the more time-consuming the task, the more
points you earned), and every member of our co-op owed
the house 30 points per week. Point balances were kept on
a paper chart or online spreadsheet (no ones face was mint-
ed on any point tokens), and if your point defcit exceeded
a certain threshold, you risked geting kicked out.
Its not a huge leap to imagine a co-op choosing to run
a defcit by issuing more points than it collects and permit-
ting them to be traded. Tis would allow individuals to save
points to exchange on private markets for tutoring, home-
grown, or whatever else co-opers have the means and incli-
nation to produce. A local farm might even be willing to sell
food for points, provided they could use the points to em-
ploy co-opers during the harvest. Like colonially imposed
money, points would have value as long as co-opers needed
them to fulfll their obligation to the house, and the house
had punitive means at its disposal to enforce it.
Te point, like the token, is an arbitrary unit that has
value because of an imposed debt burden. But the resem-
blance suggests that the logic of modern money can also be
put in the service of collective, as opposed to exploitative,
political aims.
SOVEREIGNS create mon-
ey as a tool to obtain the labor and other resources they need
to fulfll their political goals. Te sovereign steers the ship, at
least initially, not some money god. If sovereignty lies with
the people, money can be used to serve the common good.
If people lack formal political power, more democratic layers
of sovereignty may be possible in the shadow of the ofcial
sovereign, provided the means of production exists within
a community. An understanding of modern money, and its
relationship to sovereignty, would be necessary but far from
sufcient to bring about such transformations.
When studying sovereign fnances, our instincts
tend to betray us. Sovereigns create money by spending
it into existence. And taxes and fees paid to the sovereign
destroy money. Consider our hypothetical colonial gov-
ernment: Tere is no fxed limit on the amount of tokens
it can issue. It imposes a tax burden to create a demand for
tokens and give them value. But the only way for anyone
else but the government to have its fat money is for the
government to run a defcitit must issue more tokens
than it collects in taxes.
In making such issues, sovereigns are not constrained
by the budgetary concerns of individuals. If we spend more
than we earn, we will eventually have our credit cut of and
will no longer be able to buy things or meet tax obligations.
But as money issuers, sovereigns have no need for their
own tokens and thus no need to close their defcits. Be it
an Anglo-Saxon king or a democratic state, the sovereigns
concern is how it can run up its requisite defcitshow it
can use its money to purchase the goods and labor neces-
sary to fulfll its political aims.
One of MMTs most useful insights is that not all gov-
ernments are sovereign. A government that does not issue
its own currency or has debts denominated in some others
currency is not monetarily sovereign. Tus it is rarely useful
to compare the fnances of Greece (which uses the euro,
a currency it has almost no control over) to the United
States. A beter comparison might be between Greece and
the state of Michigan, which is also a currency user.
In the U.S., dollars are created when the federal gov-
ernment spends. Congress allocates spending and deter-
mines taxation. Te state enforces taxation through the
IRS, the courts, and, eventually, the penal system. Just as
the co-op can never run out of points, the U.S. govern-
ment can never run out of dollars. As long as principal and
interest are both denominated in U.S. dollars, the U.S. can
always pay by printing money or issuing reserves. Te dif-
REBECCA ROJER 37
ference between issuing sovereign debt and straight-up
creating money out of nothing is just timing and some
extra money created in the form of interest.
Money scarcity is basically a political decision, as with
Congresss imposition of an arbitrary limit, the debt ceil-
ing, on the amount of money that the federal government
borrows. Its largely motivated by those who would like
to keep wealth concentrated in the hands of a few (who can
personally beneft from the metaphorical printing press via
government spending or direct access to the Fed).
Tis is not to say there are no other constraints on
public spending. Infation is a real constraint. If the gov-
ernment spends dollars into existence faster than the pri-
vate demand for holding money, prices will rise. Savings
will lose value, while debt burdens become less onerous.
If workers wages fail to keep pace with other prices, they
will sufer.
Luckily, the sovereign has tools other than arbitrary
debt limits for managing demand for money: taxes. Rais-
ing taxes makes money more scarce and in demand. But if
the private sector loses too much spending power because
the government taxes too much (or spends too litle), com-
merce freezes up.
HOW do we know when to tax, who to tax, and
how? Tis is as much a question of political values as macro-
economics, but MMT helps us weigh our choices. Te pre-
scriptive side of MMT typically focuses on achieving the
dual goals of maintaining full employment and price sta-
bility (incidentally the same two goals the Fed is supposed
to uphold). Rather than focusing on economic growth as
a good in and of itself, MMT directly seeks the promised
outcome of such growth: that everyone who wants a job
can fnd one, and that goods and services remain afordable
in relationship to income.
To achieve price stability, MMT rejects the infation
paranoia that pervades conventional wisdom in favor of a
more nuanced diagnosis. If prices for certain goods and ser-
vices are rising, is it because there is too much money going
around, or is it because of genuine scarcity? What feels like
infation may actually be wage defation combined with ar-
tifcial scarcity imposed by monopolists, speculators, and
rent seekers. Te efects of those ills will not be fxed by
tweaking the size of the money supply. If food prices are
rising because of speculation, it is beter to regulate com-
modities markets than raise taxes.
But even in cases of genuine scarcity, sometimes more
spending is warranted. If energy prices are rising because of
shortages, it is beter to lower demand for energy by spend-
ing on alternatives like expanding public transportation
and insulating homes than to raise demand for money by
cuting spending.
Conventional economics considers full employment
to be infationary, because when labor markets are tight,
workers can demand a bigger share of the wealth they cre-
ate. A reserve army of the unemployed keeps labor cheap.
Te unemployed serve as a bufer stock to anchor prices,
or as Randall Wray puts it, to fght infation through their
desperation as they try to bid jobs away from the employed
by ofering to work at miserable wages.
MMT, however, argues that prices can be anchored
not through the misery of the unemployed but through
the government ofering a job to anyone unemployed who
wants to work. Tis guaranteed job, set at a living wage with
benefts, would set a foor on wages and give workers the
choice to refuse exploitative or unconscionable private-
sector work. A job guarantee would counteract the booms
and busts of the private sector, stabilize the economy, and
ensure workers have income regardless of the whims of the
capitalist class.
If the government can aford to employ everyone, it
can also aford to simply pay a basic income to every cit-
izen, regardless of whether they worked. A basic income
could make the labor market more competitive if enough
people chose not to work. But it does not in and of itself
38 THE WORLD ACCORDING TO MODERN MONETARY THEORY
set a foor on wages. Even with a basic income, if there are
more job seekers than available jobs, employers will not be
pressured into improving working conditions and wages.
Research by Pavlina Tcherneva and Rania Anto-
nopoulos indicates that when asked, most people want
to work. Studying how job guarantees afect women in
poor countries, they fnd the programs are popular large-
ly because they recognizeand more fairly distribute and
compensateall the child- and elder care that is now ofen
performed by women for free (out of love or duty), of the
books, or not at all.
Bill Mitchell warns that giving away money is more
infationary than purchasing labor; a basic income would
have to be balanced by more vigilant taxation for its value
to not be rapidly infated away. He also believes that a job
guarantee is more transformative in expanding our notions
of work and political participation. While the imple-
mentation of such a program will no doubt be messy and
imperfect, excessive fears of make work suggest a lack of
imagination. If we run out of trees to plant and day cares to
staf, everyone can just work fewer hours.
Job and income guarantees are complementary poli-
cies. One ensures that those who want to participate in soci-
ety can do so and be formally recognized and compensated
for their contribution. Te other ensures that no one is com-
pelled to work if they dont want to. MMT sees the former as
the most direct path to both full employment and price sta-
bility, but the programs are by no means mutually exclusive.
Many MMT advocates see the job guarantee as a tran-
sitional program to keep workers productive and skilled
until the private sector fnds a place for them. But a job that
serves the public good, provides ample leisure time, and
supports a low-consumption lifestyle is itself appealing.
For those that value strong community and a healthy envi-
ronment, the job guarantee could be a chance to opt out of
the work hard, consume hard lifestyle to do much need-
ed public service, while keeping the private sector open for
those with heavier ambitions and appetites.
MMT encourages us to conceive of money as
a claim on the resources of society, a promise that entitles
one to a bit of whatever resources are for sale. Te money
system is then an imperfect sort of scoreboard for keeping
track of claims on resources. Money only maters to the ex-
tent that it can be redeemed for real wealth. But what is
real wealth? Wealth is a subjective, messy term for things
humans care about and depend upon. It includes things we
are good at counting, like smartphones and soybeans, as
well as things we sometimes prefer not to believe require
counting, like clean water and soil fertility. Wealth also in-
cludes things which defy easy measurement, such as educa-
tion, political infuence, and health.
Government defcits, the money supply, and GDP
are abstractions that obscure the issues of power and dis-
tribution of wealth that are the consequence of a given po-
litical system. Tese abstractions make no sense as ends in
themselves. A public defcit just means that a sovereign has
spent money into the economy that it hasnt taxed back.
It doesnt say whether that money was spent on bombs or
schools or pure graf. A country can have a high GDP be-
cause a small subset of the population sells tons of luxury
goods and fnancial instruments to each other while every-
one else starves. Ultimately, what maters is the quality and
distribution of resources.
Tose at the very tip of our economic pyramid un-
derstand that fat money is unlimited, but most everyone
below believes it to be scarce. We live under austerity and
debt. But it doesnt have to be this way. Te idea that we
dont have the money to supply essential public goods
to everyone is a pernicious myth that can only be main-
tained so long as we remain ignorant of how money actual-
ly functions. But this myth is merely justifcation for pow-
er structures that are ultimately backed by guns and the
vastly unequal distribution of our fnite planets resources.
Knowledge is no substitute for political power. It is merely
somewhere to start.
ROB TRUMP 39
THE recent speculative euphoria on Bitcoin has
been accompanied by a wave of media reports on crypto-
currency, most of which seem to assume that the existence
of non-government-issued currency is unprecedented. In
one sense, they are correct and Bitcoin certainly is some-
thing new: Of all the alternative and local currencies that
have circulated in the U.S. and beyond, none of them have
ever connected so many geographically distant individuals
or fuctuated so wildly in price. But its simply wrong to
imagine that the history of alternative currency begins with
Bitcoin, and its potentially harmful to ignore the much
more progressive, community currencies that preceded it
and continue to be in use.
Antebellum America was awash in local currencies,
some of them government-backed notes issued by states
but many simply published by privately owned banks. For
Te Paper Chase
By ROB TRUMP
Online cryptocurrencies are all the rage, but other alternate
money systems can do more than help you hide
40 THE PAPER CHASE
the most part, these currencies were functionala conse-
quence of the rarity of precious metalsrather than im-
bued with political motives, though this rule certainly had
its exceptions. A proper history of formally political alter-
native currencies in the United States, for example, proba-
bly starts with 19th century anarchist Josiah Warren and his
Cincinnati Time Store, a sort of swap shop that issued la-
bor notes, denominated in hours of work, in exchange for
goods and services. Te Time Store skimmed a few percent-
age points of the top for its own operating costs, but oth-
erwise facilitated a near direct exchange of hours between
workers, creating through the system an equivalence of the
value of diferent types of labor in adherence with Warrens
belief in the labor theory of value. Also built into the Cincin-
nati Time Store was the idea of community support through
currencythose who shopped there were not only buying
local, they were paying local too, and by circulating the cur-
rency encouraging others to do the same. Considered a suc-
cess, the Time Store nevertheless only ran for three years,
from 1827 to 1830, afer which Warren moved on to more
rural areas of Ohio to explore other experiments in anarchist
and socialist societies.
Te Civil War and the rise of the U.S. dollar as legal
tender put an end to many regional currencies, both state-
issued and not. But alternative, community-based com-
munities have never been prohibited by law, and Warrens
legacy lived on in spirit. As recently as 1991, the Cincinnati
Time Store was explicitly cited as a direct inspiration for
another local currency, the Ithaca Hour. Like the Cincin-
nati Time Store, the Ithaca Hour was created with labor in
mind: one Ithaca Hour is usually said to exchange for either
10 U.S. dollars or one hour of work. And like the Cincin-
nati Time Store, the Ithaca Hour was largely built on the
evangelizing eforts of one personin this case, the activist
Paul Glover. Under Glovers guidance, the currency, which
came with a newsleter and ofered free Hours to anyone
joining in or making mutual deals in the Hour, grew to be
accepted at more than 500 local businesses. No- interest
loans denominated in the Hour were ofen extended to
those businesses as well. Of course, spending Ithaca Hours
was much easier to do at an Ithaca farmers market than at
a Chipotle, but keeping money in the community and out
of the cofers national conglomerates was part of the idea.
Nowadays, the popularity of Ithaca Hours has stagnat-
ed, become outmoded as paper generally has been by sup-
planted by plastic. Plus, as with the Time Bank, its had trou-
ble keeping adherents since the departure of its magnetic
founderGlover now lives in Philadelphia. But the surpris-
ing success of Ithaca Hours has inspired a number of other
currencies with varying track records: Traverse City, Michi-
gan, has the Bay Buck; Great Barrington, Massachusets, has
the BerkShare (named for the Berkshire Hills). But perhaps
the most interesting application of local currency goes even
smaller, to a handful of classrooms at a few universities: the
University of MissouriKansas City and Denison University.
It was through reading the work of some University of
MissouriKansas City professors that I learned of the ex-
istence of local currencies in the frst place. Te academic
hub of a certain brand of lef-Keynesianism (post-Keynes-
ianism to the initiated) known as Modern Monetary
Teory, professors at UMKC emphasize in their work the
monopoly power of government on the issuance of a giv-
en currency, the relationship between government defcits
and private sector balances, and ways to achieve the tradi-
tional Keynesian goals of full employment and price sta-
bility through government action. Teir work has received
coverage as of late from both mainstream (the Washington
Post) and more lefist publications (the blog Naked Cap-
italism regularly features MMTers). And they have their
own currency, created both to encourage student commu-
nity service and as a pedagogical tool.
UMKCs Buckaroo has a much smaller reach than
Bitcoin, or even the Ithaca Hour in its early-2000s heyday.
Conceived originally as a vehicle for service learning, in a
program that would have required every student at the uni-
versity to perform some community service, the propos-
ROB TRUMP 41
al was whitled down until now only a handful of classes,
mostly in economics, remain, and inclusion in the program
is at the discretion of a given classs teacher. (Professor Ran-
dall Wray, for instance, told me that he includes a Buckaroo
requirement for every economics class he teaches, with the
exception of fully online courses.)
Te Cincinnati Time Store, created by an anarchist,
had built into its DNA an aversion to governments and tax
systems. (Te Ithaca Hour, whatever political stripe one as-
sociates with it, has no such luck: Salaries and sales paid
in the Hour are still subject to state and federal tax law.)
Te Buckaroo, by contrast, embraces the concept of tax as
a facilitator, though its a tax imposed by the school rather
than the government. Professors incorporating the Bucka-
roo into their class announce at the start of a semester that
a tax, denominated in Buckaroos, will be levied on the class
at the end of the semester. Payment is required for students
to receive their grades. To earn Buckaroos, students can
perform a variety of university-approved community ser-
vice activities, or simply buy circulating Buckaroos from
other students who have done more than the required
amount of service.
When I asked Wray about the stability of the Bucka-
roo, his response at frst seemed glib to me. Value of Buck
= one hour of labor, he e-mailed, Absolutely constant. But
in a very real way, this is a fundamental truth to the system
and worthy of contrasting with Americas economic system
as a whole. As with Cincinnatis labor notes and Ithacas
Hours, it is always possible to convert time into any of these
local currencies as long as youre willing to work. Any stu-
dent with a list of approved community-service programs
can turn an hour into a Buckaroo. Te state of the current
American economy, with its 7 percent unemployment,
means that its much more difcult to turn an hour of time
into an amount of dollars. Tis is, naturally, part of what the
Buckaroo program is meant to emphasize: Te unavailabil-
ity of work is a constraint on the system. Accordingly, many
professors on the UMKC staf propose a federal job guar-
antee to make the U.S.s system more like theirs by ofering
to pay anyone willing to exchange their time through labor.
Wray also said that in dollar terms, the Buckaroo
fuctuates quite a bit, becoming more valuable closer to
the end-of-semester tax day. Tis was more or less what I
was looking for and expected; professor Fadhel Kaboub, a
graduate of UMKC who runs a similar program at Denison
University, said the same was true of his Denison Volunteer
Dollars (DVDs). Which is, of course, what you might ex-
pect: When a currency is not actively used for most of the
year, a deadline and the risk of a percent loss in grade (as
both Kaboubs and Wrays program impose) will bring the
price of that currency up. Te Buckaroo and the DVD are,
however, freely exchangeable at any point in time, and the
limits of who they may be sensibly exchanged with are a fea-
ture rather than a bug. Ithacas Hour was designed to sup-
port local farmers at the expense of national chains; DVDs
foster exchange-based relationships between students at
the expense of outside relationships. Kaboub told me that
he always asks students for anecdotes about how DVDs
were exchanged among themresponses vary wildly but
have included for a ride to the airport and for extensive
lecture notes from a zealous volunteer who hadnt been
quite as enthused about taking good notes during class.
If the Buckaroo and the DVD seem like propaganda for
42 THE PAPER CHASE
a certain economic worldviewand as teaching tools, they
both certainly areconsider the question I asked Kaboub,
wondering whether it would be possible to institute a con-
servative local currency. Kaboub replied that these possibil-
ities are discussed in class: What if, for instance, consultants
were called in to advise Denison on the stability of its cur-
rency and told them that the level of debt they carry is un-
sustainably high. One obvious consequence might be un-
employmentan inability of the school to pay students
who were willing and able to do the volunteer work.
Tis sort of framing highlights the way MMTers think
about the economy. While certainly not the only econo-
mists reacting to a depressed economy by prescribing full
employment, their means of achieving that goal are mark-
edly simpler than many others: a job guarantee. Tats ex-
actly what it sounds likethe vast majority of economists
associated with the MMT school support a federal program
to give jobs to anyone seeking employment. Where main-
stream economists see the solvency of the federal budget as
the major constraint, MMTers see the constraint simply as
the governments willingness to employ. Kaboub told me
that when the Reinhart-Rogof paper Growth in a Time
of Debt, alleging a link between high debt levels and low
growth, infamously imploded last year, his reaction was a
complete lack of shock. Come look at our economy, he
said of the DVD. Our debt is over 200 percent of our GDP
and were doing fne.
Tis atracts plenty of Econ 101 criticism from the
ideological right. Te stock question is, What about infa-
tion? Te stock answer is that infation is one of the only
two things MMTers do care about. UMKCs Center for Full
Employment and Price Stability, a policy research institut-
ed associated with Wray and the other MMTers, lists its
goals quite transparently in its name. Te more complicat-
ed answer is that tying a currency to an amount of labor it
may be traded for at a fxed rate would stabilize the U.S. dol-
lar just as it stabilized the Ithaca Hour and the labor notes
at the Cincinnati Time Store, preventing runaway infation.
Without training that I dont have, and probably even
with it, its difcult to say how well this theoretical check
on infation would fare. Detractors doubt the ability of an
unwieldy federal program to employ labor productively;
others point to the unconvincing record of the postulat-
ed Phillips Curve relating employment to infation. And
of course, there is a major question as to whether or not
the old Keynesian prescription of government-enabled full
employment, or more radically, basic income, will really
solve the more important structural and social problems of
global capitalism.
Besides, theres nowhere near the level of support
a job guarantee would need to pass through Congress.
Kaboub lamented the noble eforts of Dennis Kucinich,
who, with UMKC professor Michael Hudson as his eco-
nomic advisor, tried to evangelize MMT ideas during a
presidential campaign, to no avail. Even when Paul Krug-
man addresses MMT, which he does, rarely, he oscillates
between caricaturing it as unaware of infation and forcing
it into the framework of neoclassical ideas in order to pro-
visionally agree.
If currencies operated with a goal of full employment
are, for now, restricted to the local leveland it looks like
they arethe next step is to grow the concept and use them
to their fullest extent. I cant shake the thought of of mil-
lions of microcurrencies, each circulating in efectively Bal-
kanized communities, each powered by work that the com-
munity has collectively decided is important. Advanced
technology could easily make transfers between such cur-
rencies low-friction and inexpensive. But it will require a
rediscovery of the social purpose of money, conspicuously
absent in cryptocurrencies like Bitcoin. Really, the most
disheartening thing about Bitcoin is that any sense of pur-
pose at all is absent. If money is, ultimately, a tool rather
than an end to itself, then a reinvention of money requires
a rethinking of what that tool is and should accomplish. A
more secretive version of the money we already have isnt
going to cut it.
MOIRA DONEGAN 43
REPRODUCTIVE
Medical Associates of New York, a fertility clinic associated
with Mount Sinai Hospital, maintains separate websites for
egg donors and egg buyers. Te home page of the donors
site features a large stock photograph of a young woman
holding schoolbooks. Behind crossed arms the prety bru-
nete model is clutching what looks like but is not a copy of
Lauren Berlants Cruel Optimism, along with a white three-
ring binder. She wears a zippered velor jacket in the same
shade of blue as the graphic that emerges from behind her
head in an oversize font: Become an Egg Donor.
Beneath is an embedded YouTube video of Dr. Geor-
gia Witkin, a partner at Reproductive Medical Associ-
ates, who grins into the camera and delivers a poorly ed-
ited four-minute pitch to visitors interested in donating.
Dr. Witkin is a woman who has undergone thorough and
ambitious plastic surgery. Her stretched skin exposes the
contours of her skull around glassy, saucer-size eyes, and
she speaks to her audience of young women from behind
Over Easy
By MOIR DONEGAN
Elite education may impoverish women and do litle to get them a job,
but at least it makes their eggs valuable
44 OVER EASY
sheaths of feathered blond hair. Te DNA in your eggs
contains genetic material from your entire gene pool, she
says, speaking in a heavy Long Island accent. Dr. Witkin
smiles, and blinks heavily at the camera.
Reproductive Medical Associates recruits women
between the ages of 18 and 30 and ofers each donor a fat
rate of $8,000 per cycle. By market standards, this isnt bad.
Donors who are contracted directly through clinics tend to
receive somewhere between $2,000 and $10,000 per dona-
tion, a process that takes, between the time that a donor is
matched with a couple and the moment when she awakes
from her anesthesia afer the retrieval procedure, anywhere
from two to six months. Donors who sign up not with
clinics but via independent donor recruitment agencies
sometimes called concierge servicesare ofen paid more.
It is understood but never stated that this compensation is
the primary motivation for many young women who sign
up. It is also assumed that most of the women who donate
their eggs to clinics like RMA have or are working toward
a college degree. In many instances, at least some college is
required of those interested in donating.
Signing up is no guarantee that a donor will be paid
in full: Ofen, compensation is issued in installments or at
the end of the process, and it is only afer a match has been
made, a hormone regimen completed, and the eggs har-
vested that an egg donor will be able to cash her check. Te
barriers to entry can be high. Reproductive workersand
egg donors in particularneed to prove that they are the
right candidates for the job. As with other kinds of job ap-
plications, a lot of this is done online. In their personal pro-
fles on clinic websites, would-be ovum donors advertise
themselves to potential buyers with all their DNAs appeal-
ing features. Tere are a number of determining factors, but
appearance, in particular facial resemblance to the egg buy-
er, tends to take precedence. But without educationhigh
test scores, strong grade-point averages, and a completed
degreea candidate is much less likely to make the cut.
For the buyers, harvested eggs are usually a last resort.
Couples struggling to conceive fnd that ovum donation
is one of the most expensive and least desirable options
available. But ofen, initial reproductive treatments
using sperm and eggs exclusively from the intended par-
entsdont work. Tere are many reasons a hopeful het-
erosexual couple may be unable to conceive on their own:
hereditary diseases, damage from past medical treatments,
or one of the unlovely conditions that clinic websites have
referred to as intimate dysfunctions. But most ofen
among the industrys primarily white, wealthy, and edu-
cated clientelethe reason is that the womans eggs have
aged beyond viability.
Most artifcial reproductive technology clinics that
ofer third-party services have psychiatrists on staf. Many
also employ PR experts. Tese professionals describe the
procedures to both donors and consumers in terms that
emphasize the relation of the fetus to the woman who in-
tends to be its parent. It is her embryo. Te aim with this is
to stretch the particulars of biology into a useful emotional
technicalitydistinctions are made between genetic pat-
ents and biological parents, between families and con-
tributors. Donors are assured, correctly, that they are not
becoming mothers. But to calm donors fears is not really
the point. Instead, the aim of this rhetoric is to assuage the
consumer, the mother who will take the child home, and to
grant her moral credit for the work that she has outsourced
to a younger body. Tis anxiety of possession and kinship
awkwardly marks the way that clinics advertise the services
of reproductive workers across all the industrys varying
sectors. In egg donation, pregnancy is the decisive factor in
granting a woman the ethical authority of motherhood. In
surrogacy arrangements, the consumers genetic legacy is
emphasized. In cases where both a surrogate womb and a
third party egg are used, it is remembered, awkwardly, that
it is love that makes the baby hers.
It is unclear to what extent this ambiguity bothers the
ovum donors themselves. Available indicators show that it
doesnt, at least not very much. But for consumersthose
MOIRA DONEGAN 45
couples who foot bills the size of private college tuitions for
the screenings, hormone treatments, and extraction pro-
cedures that donors undergo, and who eventually gestate
the embryos that donations make possiblefor them, it
maters a great deal. And so it is that the egg donor market
becomes a site at which the always thin curtain separating
psychology and consumption is torn down. In selecting a
woman whose DNA they are willing to purchase, the con-
sumer couple displays their prejudices, aspirations, and in-
securities with uncommon frankness. Tis is not just any
purchase: Wealthy women who buy eggs to conceive chil-
dren are selecting, afer all, the vehicle of their future famil-
ial happiness. As a commodity, the ovum comes to carry an
afective signifcance that few others do.
THE banner above the online profle of do-
nor #60395 has pictures of eight diferent women, posed
around the donor agencys large-type logo. Te image
has four blondes and four brunetes, all white and wear-
ing brightly colored tops. Below them are 13 photos that
#60395 has provided of herself, both as a child and as an
adult. Te photos show that the Caucasian Brooklynite has
high cheekbones, straight dark hair, a large but not Semitic
nose, and pale blue eyes. Below the photos is a series of tabs
labeled General Info, Medical & Genetic, Education
& Employment, and Traits & Characteristics. Potential
buyers of #60395s eggs can learn that her paternal grand-
father was French Canadian, and that she volunteers with
a nonproft advocating for womens rights in rural India;
they can see that she jogs, and has no history of psychiat-
ric hospitalization. Te profles, with their abundance of
fnely curated personal information and prominent em-
phasis of standardized test scores, look almost like college
applications. In the lengthy questionnaires provided by the
donor agencies, young women blend half-hidden boasts
of overachievement with a cheerfully ingratiating, please-
pick-me eagerness. I am a model and ofen am stopped in
46 OVER EASY
the street and asked about whether I do modeling or not,
says #60395. I want to bring happiness to others. Its so
heart-warming to see a family completed. Under the Ed-
ucation & Employment tab, potential buyers can see that
she graduated with honors from a private liberal arts col-
lege in the northeast (annual tuition: $47,180) and has re-
cently applied to medical school.
Even among physicians and counselors, physical
traits are discussed with prominent emphasis: their pro-
fessional conversations about egg donation slip from the
sterile vocabulary of medicine into that of sof eugenics
faster than you can say natural blonde. In this context,
perhaps it should not be surprising that so many of the
pictures that these would-be reproductive workers post of
themselves are clearly meant to be sexy. Te donor agencys
profle search tools are unusually specifc, and using them,
potential donors can search for the profles of women with,
say, postgraduate degrees, heights of over 5-foot-6, and red
hair. When they hit enter they will be directed to a pho-
tograph of such a womandonor #61688with her arm
lifed in a triangular tilt toward her pouting face and one
hand running through a mass of orange curls. Tere are a
lot of high-angle selfes, the sort that one would fnd on a
dating site, and many full-body shots, ofen showing do-
nors in athletic poses or bikinis, displaying the slender or
voluptuous physiques that will be passed on to future in-
heritors of genetic material. On most sites, prices will vary
according to demand. In one profle photograph, a donor
sits cross-legged in a short black dress with a low neckline,
and angles one thigh toward the camera. Te expression on
her heavily lined eyes says, Purchase my ova.
But whats most striking about the donors profles
is how hard these women are trying to be likedliked, in
particular, by the educated, wealthy couples whose DNA
they hope to substitute for their own. Because of the in-
dustrys high costsartifcial reproductive technology is
usually not covered by health insurancecouples in the
market for a donor egg tend to be successful, credentialed,
Professional
conversations about
egg donation slip
fom the sterile
vocabulary of
medicine into that
of sof eugenics
MOIRA DONEGAN 47
and ambitious people, positioned at the end of youth and at
the top of the middle class, with the sorts of priorities and
values that incline them to start a family. Tese are couples
who, despite having the unenviable problem of being child-
less when they dont want to be, are in the enviable position
of being able to buy their way out of it.
For the donors, the situation looks diferent. Teres
not a lot of candor on the donor profleswomen speak in
benign dishonesties about their motivations for donating,
citing altruistic impulses and their love of childrenbut
enough information is put forth that a discerning observer
can read between the lines. When a donor lists, say, that she
was the frst member of her family to atend college, that her
mother has worked for 20 years as a leter carrier in Florida,
and that she has recently been accepted to law school, it is
not hard to infer that this person might be looking for a way
to fnance her ambitions.
In the profles, donors list their aspirationsthey
want to be doctors, lawyers, and veterinarians, and very of-
ten, they want to one day have children of their own. In the
questionnaires, the donorscollege students and recent
graduatesdescribe their future selves as the sort of wom-
en who would work long hours in competitive felds, wom-
en who would live in large cities, conscientiously diversify
their retirement portfolios, and marry at 35. Perhaps some
of these presentations are cynical, litle more than work-
ers performative strategies to game the industrys biased
system. Wealthy couples, afer all, want to buy the eggs of
someone like themselvesor, rather, of someone who re-
sembles the beter version of themselves that they would
like to be. If this were not the case, Ivy League campus pa-
pers like the Yale Daily News would not regularly run ads
from rich couples ofering enormous sums for prize eggs,
describing their ideal donors as Asian geniuses or women
with 36-24-36 measurements and a love of Mozart.
But some of the donor profles bourgeois afecta-
tions are sincere. Afer all, these are young women, wom-
en who are either in college or newly out of it, and their
profles show that they decided to shell out the money to
put themselves through Vanderbilt or Wellesley. Like shop
girls, made to dress like their customers, potential egg do-
nors who solicit clients online embody an aspirational ideal
that some older couplesolder womenare able to pur-
chase. In the bright-faced photographs and chipper person-
al statements that adorn their online profles, egg donors
advertise an imaginative universe of future happiness that
they, too, have been sold, but in which they have now found
themselves not reaping the rewards but doing the work.
It may be useful, here, to take a moment to explain
precisely what the egg donation process involves. Te
technologystill new, fairly complex, and faintly colored
with alarmist stigmais poorly understood by many, even
the women who sign on to participate. Afer a donor is se-
lected by a couple, she undergoes a series of examinations,
lasting an hour or more, conducted by the supervising clin-
ic. She is tested, among other things, for the sickle-cell trait
and for any genetic predisposition to produce mentally
handicapped children. She is asked about her familys eth-
nic and medical histories, and whether she has multiple sex
partners. She is given a blood test and a pap smear, and is
dismissed if found to be unduly overweight. If everything is
found to be satisfactory, the donor will be presented with a
liability waiver and a set of birth control pills, in a regimen
designed to sync her menstrual cycle to the buyers. Several
weeks later, she will be told to inject herself daily, for a pe-
riod of one to three weeks, with hormones that will tempo-
rarily suppress her ovarian function. Finally, she is put on a
third round of drugs, follicle-stimulating hormones, which
cause her ovaries to develop and release an uncommonly
high number of mature eggs. During this process, she is
contractually barred from drinking alcohol, having sex, or
exercising, and she is monitored by clinic staf to insure her
compliance. We have an active and hands-on approach to
all maters concerning the donor, an agency called Elite
Egg Donors assures its clients, and will do anything we
can to make things go according to plan.
48 OVER EASY
When a doctor decides that the timing is right, the
donor will take a day of to undergo the outpatient retriev-
al procedure. While she is under general anesthesia, a very
long needle, equipped with a suctioning device, is inserted
into each of her ovaries through her vaginal wall. It is only
then that anyone will know for sure how successful the hor-
mone regimens of the past months really were. Usually, a
donor will produce between 10 and 15 eggs in one cycle.
Rarely, women have been known to produce as many as
three dozen. Afer harvesting, some of these eggs will likely
be frozen. Others will be fertilized, cultured, and inserted,
in numbers of no less than two and no more than fve at a
time, into the buyers uterus.
In the days following the procedure, a donor can ex-
pect to experience pelvic soreness. In addition, she may
sufer abdominal pain, sometimes severe, along with swell-
ing of the stomach, dehydration, diarrhea, and vomiting.
Tese are most likely caused by an occupational hazard
known as Ovarian Hyperstimulation Syndrome, which is
Donors are barred
fom drinking
alcohol, having
sex, or exercising,
and are monitored
by staf to insure
compliance
MOIRA DONEGAN 49
more or less what it sounds like. In OHS, one or both ova-
ries become dangerously swollen. Like pregnancy, ovarian
hyperstimulation syndrome is a condition that inspires
medical sources to list spherical objects. Aficted ovaries
swell to the size of ping-pong balls, fgs, tennis balls, grape-
fruits. Te condition can become more complicated if an
ovary bursts, and it may require surgery. Available data re-
garding the long-term medical impact of fertility hormones
on egg donors isnt comprehensivemost studies tend to
focus on egg recipientsbut other known side efects in-
clude liver failure, infertility, and an increased risk of repro-
ductive cancersovarian, uterine, cervical, breast. Tere
are donors, many of them, who experience none of these
symptoms, and enough women decide to donate again that
clinics generally establish a maximum limit of fve cycles
per donor. But the risks to reproductive workers health are
not negligible either. Tell your gynecologist that you want
to become an egg donor and she will tell you to reconsider.
Like many of the jobs that young women are recruit-
ed for, the egg retrieval process, though undeniably strenu-
ous, is not a task that requires a college degree to perform.
Following a doctors orders to inject themselves with hor-
mones every night and enduring the pain and discomfort
of the donation process does not draw upon the skills that
donors went to school to cultivate.
Tat educated women are in demand for this service
is one thing. Tat they are willing to provide it is anoth-
er. But the job market, afer all, is sluggish, even for those
who have invested heavily in their own credentials, and the
combination of climbing costs of living with stagnant wag-
es and substantial debt liabilities means that smart young
women setle for opportunities that do not call upon the
full scope of their talents. It is not hard to understand that
having a degree is no longer any guarantee of a livable in-
come, and that for many it has instead provided a debt
obligation that precludes much material comfort. Whats
more confounding is the way that the student debt bur-
dens that lead many women to egg donation are the result
of the same elite educations that make their eggs desirable,
and the way that many egg donors, in their aspirations and
experiences, so closely resemble the people who are pur-
chasing their services.
Te idea that womens reproductive functioning
can be classifed as work is not a new one. Tat carrying,
birthing, and rearing children are activities that should be
credited as labor has been an implicit or explicit demand
in the writing of thinkers from Engles to Firestone to Fed-
erici. In the 1970s, Italian feminists sought to atack char-
acterizations of womens domestic activities as naturally
preordained by assigning them monetary value. Wages
for housework, went one slogan. Every miscarriage is a
work accident, was another. At the time, this was all just
theoretical; more than anything, the demand to conceive
of reproduction as work was a rhetorical device aimed at
destroying habitual paterns of thought. Money is trans-
formative that way. It can change an act of love into an act
of work, and it can also change an infertile woman into a
mother-to-be, or a promising student into a woman inject-
ing her abdomen with hormones. In her recruitment video,
Dr. Witkin afects a staccato punctuation when she speaks
of the charitable motives for egg donation. To be an ovum
donor means that you are helping somebody to have their
own. Biological. Child, she says. She pauses half a beat be-
fore adding: Not to mention the $8,000 compensation.
Her eyes dont wink, but her voice does.
Under the Why I Want to Donate tab on their pro-
fles, young women profess altruism. In the 500-character
box provided, egg donors write optimistic, loving, and
imprecise declarations of how much it means to [them]
to help someone else realize their dream of having a fam-
ily. Sara Ahmed has called this sort of gesture happiness
work. Tis is the job of being happy for the successes of
other people, even when such successes come at ones own
expense. Donors do not say, at least not out loud, that they
want to donate because I need the money. It would be
professionally dangerous to do so.
50 NO PURCHASE NECESSARY
Campbell SOUP Company
CAMDEN 1, NEW JERSEY
May 19, 1964
Mr. A. Warhol
1342 Lexington Avenue
New York, New York
Dear Mr. Warhol:
I have followed your career for some time. Your work has
evoked a great deal of interest here at Campbell Soup
Company for obvious reasons.
At one time I had hoped to be able to acquire one of
your Campbell Soup label paintings - but Im afaid you
have goten much too expensive for me.
I did want to tell you, however, that we admired your
work and I have since learned that you like Tomato
Soup. I am taking the liberty of having a couple of cases
of our Tomato Soup delivered to you at this address.
We wish you continued success and good fortune.
Cordially,
William P. MacFarland
Product Marketing Manager
HERE comes a whole shipping palette
stacked high with Tomato Soup into Warhols apartment
on 94th and Lex (10 cents a can), while down at the Stable
Gallery, there goes box afer box painted Campbells, each
one $400 a pop, tucked under the arms of fnely tailored
suits and furs. Te whole thing is a giant alchemical con-
veyor belt, turning mass-market dross into high-culture
gold. Of course MacFarland admires Warhols workat 36
cans a case, whats that, a 11,000% markup? Tat makes the
artist the most successful brand manager in the history of
the profession. And whats more, hes doing it all for free.
Pro- bono ad work. MacFarland could weep with joy. Like
tomato soup?the man must love it!
No Purchase Necessary
By A.E. BENENSON
Is liking brands ironically on social media
a form of click faud?
S
t
i
l
l

f
r
o
m

C
a
m
p
b
e
l
l

s

9
6
A.E. BENENSON 51
What Warhol liked about these products was at a level
of abstraction once removed from what MacFarlands ges-
ture of sending free soup implied. I wanted to paint noth-
ing, the artist confded to his friend Bert Greene about his
reasons for choosing the Campbells can in 1962. I was
looking for something that was the essence of nothing,
and that was it. A fellow ad-man should have known beter
than anyone: A brand doesnt sell a thing, it sells a feeling,
an image of a way of being.
Warhol had spilled advertisings eternal secret: per-
sonality, no purchase necessary. Tat litle begrudging bit of
legal fne print on every mail-in rebate and contest was, in
fact, the most basic truth of the whole commercial universe.
Te tomato soup MacFarland gave Warhol could feed his
silk-screening speed freaks or go straight into the trash. Te
point is, it didnt mater; no one actually wanted the thing,
what they wanted was all there on the surface, free for the
taking to anyone with eyes and an imagination. Buying the
product was never going to let you inside the fantasy be-
cause there was no insidebeneath the label was nothing
but watery tomato paste. In this way, Pop Art was an exper-
iment with the mass-marketed mechanics of surfacesa
glib extension of the Modernists high-concept fatness
into the dimensionless feld of advertising and taste.
But even as early as 1964, at his Stable Gallery exhibi-
tion, Warhol had begun to push the genre into other, strang-
er territory. His show had been titled Te Personality of
the Artist. Viewers confronted a gallery flled with dummy
cartons of Brillo, Campbells, Heinzs like the derelict
prop room for some supermarket movie set except here it
was all supposed to add up to a kind of self-portrait: person-
ality, no purchase necessary. It barely made sense at the time;
reviewers ignored the exhibitions name. Maybe it was sup-
posed to just be another one of Warhols put-ons, maybe it
wasnt even his idea. But looking back, the title has an eerie
prescience about the future of self-branding. It suggested
that the mechanisms of advertising could also become the
mechanisms of self-representation and communication;
that brands not only insinuated themselves into our lives
but that the logic of their circulation could become the logic
of our whole social existence. In other words, the exhibition
title now looks like an answer that was waiting for the right
question to arrive: What exactly is social media?
WARHOLS show might pro-
vide the simplest model for describing to, say, a gallery
goer of 1964 how a social media profle works today:
Youve got this big blank container, and inside theres a
bunch of logos and brands that you can move around at
will building up a commercial constellation that amounts
not quite to a person but to a personality. And its all free:
personality, no purchase necessary.
Anytime between Warhols exchange with Campbells
and the arrival of social media, if you wanted to build a per-
sonality with brands, that meant spending money on some-
thing like a T-shirt with a big swoosh on it. But sometime
in the 2000s, it was as if digital consumers everywhere had
collectively goten the equivalent of MacFarlands leter
to Warhol: We admire your work and we wish you continued
success and good fortune. On social-media platforms, brands
were disconnected from their presence qua products that
needed buying, suddenly skinned la Pop Art, and made
available on the house.
To its champions, social media means greater connec-
tivity among people and perhaps soulsit grows social life
horizontally and enables revolutions. Maybe. Whatever the
case, our current FacebookTwiterGoogle universe is ma-
terially based on the insight that a new digital advertising
model could be extracted from a culture already obsessed
with representing itself through brand afliations. It im-
plicated an entire generation of people who already gladly
paid for the privilege of adorning themselves with logos
and ads in what amounted to a long con. Te mystique
that once came atached to stuf would now be freeyou
could choose Nike, Louis Vuiton, Ferrari with a costless
52 NO PURCHASE NECESSARY
click. Whats more, you could forget the wan aura of be-
longing you could cop from liking some brand in public
by faunting goods they sold; now you could show of that
a brand liked you.
As in all versions of this con, the magnanimity was
only apparent. Te providers of connection had hit on an
ingenious way of administering customer preference sur-
veys, a way of inside-outsourcing the historically tedious
but all too necessary work of fguring out what you per-
sonally were most likely to buy. Today your social-media
self can kit itself out gratis because, the idea is, that this
bundle of brands (personality) can be sold in form of tar-
geted advertising.
For Facebook, the dominant business model is an echo
of its beginnings at Harvard as Facemash, which a pimply
love-spurned M. Zuckerberg started as a way to compare
peoples pictures with those of farm animals. Now were
all a kind of livestock: a constellation of brand afliations,
tracked, sorted, corralled, through the algorithmic analysis of
your likes, keywords in posts and comments, and search and
pageview logs. Google, for its part, now makes over 98% of
its revenue by selling targeted adsits Google+ is a kind of
Potemkin social network built simply as a pretense to mine
and monetize users activity across the companys various
properties from Gmail and Google Drive, to Google Maps
and YouTube. Its usefulness to customers is totally uncon-
nected to its real function, furthering the kind of persistent
tracking necessary to sustain the economy of targeted ads.
Personality has become short-hand for a probabilistic model
of consumption habits, a speculative commodity bought and
sold out the back door of every social media platform.
OUT of this feld of networked self-presentation
and targeted advertising comes a commensurate new form
of Pop Art. Te new work exploits formal afnities between
digital image manipulation and lifestyle advertisingboth
emphasize perpetual self-improvement as a mater of mal-
leability of surfaces; for both customization is the organiz-
ing principle. Te contemporary version inverts Warhols
analogical leveling of fne art and commercial aesthetics:
Warhol glorifed the vacuous sameness of mass production
through repetitive modes of artistic production (super-
durational stationary flms, silk screens, factory manufac-
ture), while contemporary artists engage the commercial
logic of self-customization through the infnitely variable
and unfxed processes of digital rendering (digital video
production, Photoshop editing, on-demand printing).
Te main purveyors of this art have been websites,
most conspicuously the art and culture site Dis magazine.
Under the sub-header Dystopia, Dis hosts artists collabo-
rations like the 2011 project Contemporary Internet Life-
styles with the artist Parker Ito, which featured Photoshop -
collaged images of a bikini-clad woman using various forms
of exercise equipment and cosmetic and relaxation gadgets
while simultaneously interfacing with digital screens that
displayed stock images of other screen-based devices. Each
image lists the brands on display: Sharper Image, Body-
Form Total Fitness, Eres, etc.
Last winter, Dis magazine produced a fashion spread
featuring the liminal Internet teen star Madison Beer
whose career was created ex nihilo from a Justin Bieber
tweet that linked to one of her YouTube performances.
A typical image (Faded Glory for IKEA Linnmon/Jegging
Work Desk [Back2School Must Have]) shows Beer with an
iPad splayed on top of a desk re-skinned in jeggings, a bot-
tle of Hidden Valley ranch dressing wedged in the heel of
her kicked-up shoes. Here, as in Contemporary Internet
Lifestyles, the strategy of product placement is exagger-
ated to permit an unreasonable proliferation and concate-
nation of an ever-changing cast of brands, evoking a self de-
fned by its feeting commercial afliations. Evenmaybe
especiallywhen they dont feature human models, such
images remain portraits rendered in the social media style
that Warhols Stable show inadvertently predicted. Tis
goes a ways to explaining the repetition of certain other
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A.E. BENENSON 53
visual tropes borrowed from computer rendering in these
images, toogradients, the glowing difusion of neons,
blank white environs. Jeggings, spandex digitally printed
with tromp doeil denim paterns, are something of a pla-
tonic object for dis in this sense, having been featured in
four spreads in the past year alone. Te low-bro pants pro-
vide maybe the most convincing example of the genres
atempt to relocate digital manipulation in material meta-
phor, the skin-tight simulations standing in for the skin-
ning function of computer rendering where a fat texture is
wrapped around an underlying skeletal object. In concert,
all these references work to funnel representation down
into that part of the virtual uncanny valley where identity
exists in a vacuum populated by labels and logos, and ruled
by the tools of digital manipulation.
Te new aesthetic vision of personality as a mutable
bundle of branded interests refects todays online com-
mercial universe, seen from the perspective of its creators
and its profteers. It need not be afrmative. Embedded in
the new Pop Art is a blueprint for subverting social medias
business model. If advertisers typically describe the pro-
cess of moving a user from a targeted ad to a sale as a refer-
ral, the aesthetics of the Neo-Pop suggest a deferral instead,
a tantric game of revisable digital self-reinvention.
TO understand the destabilizing possibilities latent
in Neo-Pop, we can look to the cyber-crime of click fraud.
Click fraud takes advantage of the basic payment structure
of digital advertising called pay per click (PPC), wherein an
advertiser agrees to pay a small fee to a publisher every time
one of their ads is clicked, a kind of on-demand advertising
fee. Web publishers quickly realized that they could artif-
cially infate the number of clicks either by using automated
programs or by paying fractional wages to people to click on
the ads that appeared on their site. A particularly exotic favor
of PPC scam involves surreptitiously installing malware on
users computers that follows their online purchasing habits
and then ex post facto generates fake clicks on ads that could
have but in fact didnt lead the consumer to their point of
conversion. Experts estimate that between 10 percent and
15 percent of all advertising clicks may be fraudulent, though
those publishers who rely on PPC underplay this fgure.
Te publishers of targeted ads have an obvious vested
interest in both under-reporting and under-policing Click
Fraud and have been forced to pay out hefy setlements to
advertisers because of it. In 2006, both Yahoo and Google
paid millions of dollars in click fraud setlements, the later
upwards of 90 million. In the process of their 2006 legal
proceedings, Google commissioned the so-called Tuzhil-
in Report on click fraud, which remains the canonical text
on the problem. Te report concluded, Tere is no con-
ceptual defnition of invalid clicks that can be operation-
alized. Elaborating the reasoning behind Tuzhilin in blog
post around the same time, Google further disclaimed, al-
though our servers can accurately count clicks on ads
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54 NO PURCHASE NECESSARY
we cannot know what the intent of a clicking user was when
they made that click.
Tat social networks may remain freeboth costless
and infnitely fexibledepends on an assumption similar
to the one that underlies PPC: that your digital engage-
ment indicates commercially viable interest. Tat is, social
media platforms presume a link between ones purported
interests as expressed in ones connections to a brand and
ones vulnerability to consuming a similar real product. (In-
deed your friends have no diferent status, as dataunder
the assumption that these links are uniformly meaningful,
they too can help predict what you might buy.) Te cost
efectiveness of targeted ads is measured by their ability to
make such conversions. Tats the rapturous fnale of tar-
geted advertising, the end of the long con: the Conversion.
Faith in the Conversion had been passed down through
generations of ad men, held over from a pre digital consumer
culture when it was a given and self- evident truth because
the only ways to engage with a brand was by consummating
its advertorial promise. In the end, it didnt even really mater
why someone wanted to truck with a brand, what matered
was that to do so they had to buy something frst.
But the assumption that the Conversion follows in-
evitably from brand engagement begins to dissolve under
the logic of Neo-Pop: Understand that the digital self can
be customized ad infnitum and for free, and every shade of
interest in a brand can be played with perpetually, isolated
from the need for its consummation. Contemporary artists
mastery of these rules does not amount to an i nvention
like Warhols work, it is merely a disclosure and its intensi-
fcation. Neo-Pop artists lay bare the basic paradox of their
contemporary advertising milieu simply by enlarging the
fne print of its underlying premise through aesthetic play.
Personality: no purchase necessary.
On a certain well-known artists Facebook profle, among
the predictable smatering of likes of arts nonprofts and es-
oteric philosophers are as series of anti-sophisticate brands:
Doritos Locos Tacos, Hot Topic, Monster Energy Drinks. If
this data were visualized as art, it would belong in Dis. But to
the algorithmic eyes of targeting advertising it simply stands as
a cue to push coupons for Taco Bell. Might the artist in ques-
tion use an e-coupon for Taco Bell? Its as pointless as asking if
Warhol ever actually ate the soup MacFarland gave him. What
this artist is playing at is the treasonous endgame of personali-
ty: no purchase necessary, wherein the system built to monetize
free, branded self-customization begins to falter under the ex-
treme extension of its premise. If users are willing to engage in
this kind of promiscuous self-representation, there is no telling
what they actually want to buy in the end, no way for advertis-
ers to target them efectively.
Social media platforms inability to distinguish be-
tween nonconvertible from convertible interest in brands
is essentially the same problem faced by a Web publisher
trying to police fraudulent clicks. A users actual intent is
submerged beneath a profusion of indeterminate clicks. At
some point the resulting cost of mistargeted advertisements
may outstrip their value.
HISTORICAL modes of
anticapitalist resistance were predicated on refusal. If you
didnt want to be exploited in the churn of surplus value
then you refused to enter the factorystrikeand if you
didnt like some product, then you didnt buy itboycot.
Refusal as staying out made sense when it lef large parts
of your life unafected. But the difusion of social life into
commercial digital platforms and vice-versa makes exercis-
ing such refusal more difcult. You could be a social media
asceticwe all know onebut ambiguous brand engage-
ment models a way of staying in that might present the
most expedient form of resistance.
Tis strategy is reminiscent of la perruque, Michel de
Certeaus cake-and-eat-it-too scam from Te Practice of Ev-
eryday Life (1984) by which workers continue to go to their
jobs rather than renounce them, but surreptitiously substi-
tute their real work for personal work. (A perruque is a wig,
A.E. BENENSON 55
a disguise, a trick.) Just as la perruque reverses the labor-value
equation by fooling the employer into paying for laborers to
generate their own good rather than corporate surplus, the
social media game of deferrals relies on hyper-participation
to upend the consumers supposed false consciousness.
In the thick of the post-WWII boom, Herbert Mar-
cuse wrote that capitalism sustained itself through a culture
industry that stimulated desires for consumer goods that we
neither really needed nor could aford. Played out over so-
cial media, no-charge personalization grabs hold of the pro-
liferation of artifcial desires and uses them freely literally
and metaphorically. Trough a kind of short- circuit manu-
factured desires start to drain value rather than add it. False
consciousness turns out to be a problem for the system, not
its subjects. With all these computers running full speed
trying to fgure convertible desires from passing jokes, er-
rant clicks, voyeurism, curiosity, and full-on deception, false
consciousness turns into a slur for artifcial intelligence.
GIVEN enough time, though, any system
will wise up. Anything can become predictable. Tis will
be soothing for a digital marketing executive to refect on
in such troubling times. Let a place like Dis spin its wheels
long enough, and ideally their specifc antitaste will setle
into a trough of predictability. Ten its only a mater of
time before the algorithms catch up. Smirnof didnt care
if people were buying drinks to mock the stupidity of the
brand, and digital advertisers care even less why some set of
interests map onto some set of consumption behaviors as
long as they can make that map and rely on it. As soon as a
promiscuous aesthetic idiom limits itself to a certain cluster
of references or (anti-)tastes, it becomes identifable as style
and recuperable as marketable data. Connections cease to
appear subversive and arbitrary and become reliably con-
vertible as status signifers. Tanks to Dis et al., jeggings ads
are probably already being swapped out for MacBooks.
Something like this happened when a New York maga-
zine fashion editorial popularized a compact theory based on
personality: no purchase necessary that the artists/brand con-
sultants at K-Hole came up with. Tey called it normcore,
the freedom that comes with non-exclusivity Norm-
core capitalizes on the possibility of misinterpretation as an
opportunity for connection. Te idea was that embracing
mass taste might actually represent an enlightened resistance
to the demand to seek out innovative ways to be diferent.
Spirited play in the cultural mainstream could lead an end
run around personality as symbolized social diference. Ten
New York magazine went to work on it. Te codifed version
that emerged, a proper style, basically just meant white kids
showing up to gallery openings looking like Jerry Seinfeld:
outr Nike gear, L.L Bean feeces, khakis with white socks.
A set of specifc tastes marketed for those in-the-know. A
heady theory streamlined for Internet aerodynamics, a
cakewalk for targeted advertising.
MAYBE weve started Spam World WarII
without even realizing it. Te frst war is still raging between
a dark army of venal engineers and our white knight gate-
keepersGoogle, Facebook, Twiter. Te former spends
all its time trying to come up with algorithms that mimic
human speech and behavior well enough to sidle up against
the real thing and hock fake Viagra and Nikes, while the lat-
ter keeps trying to build beter and beter flters to keep the
Turing Testing rif-raf out.
Tis second war is like a crazy fever-dream version
of the frst where everything has goten screwed up and
turned inside out. Weor our prosthetic personalities
become the spambot army pushing nonsense brand names
any which way. Soon enough our social media guardians
will realize theyve got mutiny on their own ship. Teyve
spent so much time and money on trying to keep your dig-
ital life spam free, because thats what you said you wanted
and now youre churning it out from the other direction.
Tis is why you cant have nice things goddamit.
56 SERF BOARDS
Serf Boards
By JASON HUFF
Are crowdsourcing platforms like Amazons Mechanical Turk
as bleak as the companys shipping warehouses?
IN the summer of 2009, the U.S. economy lost 9mil-
lion jobs: between April and October of that year, the na-
tional unemployment rate would rise to 10 percent as the
stock market plummeted to nearly half its value.
Money stood at the forefront of collective anxiety: ev-
ery day seemed to generate new tales of friends geting laid
of or of more companies having closed up shop. Tat sum-
mer, I discovered people were resorting to making money
online using a service called Amazon Mechanical Turk, or
MTurk as its colloquially known. MTurk was started in
2005 by Amazon CEO Jef Bezos and director of Amazon
Web services Peter Cohen as a way to solve problems with
Amazons ever-expanding data set. Te premise was that a
distributed crowd of humans could easily complete tasks
that computers found too challenging. Te jobs, called Hu-
man Intelligence Tasks (HITs) on the service, might be to
match the name of an itemsay a 95-ounce box of Tide
JASON HUFF 57
detergentto the correct product image. Te typical pay
for HITs like this range from $0.01 to $0.20 and ofen need
to be completed within a limited amount of time.
With my curiosity piqued, I began surveying workers
on MTurk, asking them to tell their stories through short
memoirs. What started as research about a tool I might use
in my artistic practice became a much deeper experience.
Te stories I heard were parables of everyday life, success,
and struggle. Now, fve years later, I came back to them to
see if the story of crowdsourced labor has changed.
MTURK drew its name and conceptual
model from the 18th- entury invention created by Hungar-
ian nobleman Wolfgang von Kempelen, who created a me-
chanical chess-playing automaton that supposedly defeat-
ed nearly every opponent it faced. In truth, it was a hoax:
A real, human chess master was hiding inside the machine.
To extend this conceit to Amazons platform, Bezos
coined a clever, glossy euphemism, describing the service
as artifcial artifcial intelligence. Looking through the
FAQ page for MTurk gives a beter sense of what this artif-
cial artifcial intelligence might entail:
When we think of interfaces between human beings and
computers, we usually assume that the human being
is the one requesting that a task be completed, and the
computer is completing the task and providing the
results. What if this process were reversed and a comput-
er program could ask a human being to perform a task
and return the results? What if it could coordinate many
human beings to perform a task?
At frst, MTurk seemed appealing as a tool that could
complete work like any other sofware with the unique ex-
ception of being powered by an unnamed, globally distrib-
uted group of people. I envisioned doing a kind of concep-
tual exploration of this virtual workspace, which could then
lead to future collaborative projects with the platform. But
soon, I found myself preoccupied by a truly basic question:
Who were the people fulflling these requests? Who were
the chess players within the machine?
My hunch was that the workers using MTurk were
middle-class skilled workers like myself. To test this hy-
pothesis, I used MTurk to hire some of them to tell me why
they were on it. Since MTurk tasks needed to take only
minutes to complete, I requested a brief, 250-word account
and let them know that I would share their story on a Tum-
blr, which I titled Te Mechanical Turk Diaries. I decided
to pay $0.25 per story, which at the time seemed like a high
rate relative to other HITs on the platform.
Soon afer I posted, answers started coming in:
How many synonyms can you name for the word
broke? Here are a few: unemployed; poor; desperate;
discouraged. Yep. Being a displaced housewife afer
raising the kids is not fnancially healthy in this economy.
Even when I worked at a bookstore (now closed), I didnt
quite make enough money to pay the bills. So, I started
trying to make a litle extra cash through MTurk.
Te answers that followed had variety but hewed to
a consistent theme. It was true; some of the unemployed
were turning to MTurk to keep them going through the
pains of fnding a new job and surviving the crisis. In the
323 stories I received, people mentioned money, cash,
dollars, and bucks more than 600 times.
Te service also seemed to ofer some kind of emotional
reprieve from job hunting for those hit hard by the recession.
It relived loneliness, and boredom at work for those who still
had a job. One woman shared a story about how her husband
introduced her to MTurk while she was in the hospital being
treated for cancer and how it helped her keep [her] sanity
during a very hard time and helped [her] to stay busy.
By the end of the summer, I had come to understand
the Turking community as composed of pragmatists who
preferred to be productive in lieu of being bored. For many,
MTurk was simply a place they could work online from
home without geting scammed.
I wondered, however, about the sustainability of a
full-time income pegged to pennies, far from minimum
wage. What would happen to workers who started to de-
pend on MTurk, like the unemployed student and mother
58 SERF BOARDS
living in Los Angeles who described herself as desperate
for work? While initially glad to fnd an awesome web-
site dedicated to helping people fnd legitimate online work
without being ripped of, she also highlighted the stress of
having MTurk as one of her only sources of income, adding
that well-paying HITs were hard to fnd. Meanwhile, she
was struggling to pay [her] late car note and get a tank of
gas, rent a textbook for the summer session and buy bread.
As more stories came in, I noticed more workers rais-
ing interesting questions about the platform and their abili-
ties to subsist on far less than a living wage. Toward the end
of the summer, on August 21, 2009, a worker posted:
Te main thing I want to say is, why cant there be a place
like this that actually ofers the chance of making fve
or seven or ten dollars an hour? A place where some of
these real clerical jobs, performed for a penny or a nickel,
could be done for a quarter and moms and dads and sin-
gles and jobless teens and retirees and all of us Americans
could actually make Turking into the wad of gum that
patches the hole in the dike. I did this HIT even though
it is late, because it pays a quarter. And I appreciate that.
Keep on Turkin and stay well.
Amazon makes no efort to set a fair wage on MTurk.
In fact, their Terms of Service clearly spurn liability for what
requesters post as a HIT or what workers submit when the
HITs are completed. At best, a worker can fag a request that
violates the sites policies. Outside of providing tax informa-
tion to set up an account as a worker, Amazon is free of any
tax implications for the payment, no mater how small or
great. Perhaps even more surprising is that a requester can
take the workers submission and refuse payment without
any consequence. Te system frequently puts workers at
a disadvantage. Lilly Irani, a professor at UC San Diego,
rallied workers in 2008, which eventually led to a browser
plugin called Turkopticon to address some problems, but
change seems like a long-term batle.
Te mother in L.A. fnished her story by saying she
hopes Amazon appreciates their Turks because we so are
not geting any love in our inbox. No thanks for remotely
accessing the sweatshop at a cost higher than I can aford.
Oh well back to Turking, Turking, Turking day and night.
Her complaint was real. It costs more to have an In-
ternet connection in your house per month than the casu-
al worker on MTurk can make in 30 days. She also wasnt
the frst to describe the service as a sweatshop: In a 2006
essay about MTurk, Salons Katharine Mieszkowski asked
if the service was a boon for the bored or a virtual sweat-
shop? More recently, Te Nation declared Turkers one of
the most exploited workforces no one has ever seen.
It wasnt supposed to be like this. Journalist Fred
Howe, who coined the term crowdsourcing, imagined that
part of the innovation of crowdsourcing would be the abil-
ity for communities to form out of shared interest, a shared
passion for a hobby, a craf, an art. In reality, because work-
ers and requesters are anonymous on MTurk, it seems to
lack a key component for community nurturing.
In a 2010 panel on crowdsourcing, Lukas Biewald,
CEO of MTurk competitor CrowdFlower, highlighted this
aspect of the platforms relationship to workers, reframing
it as an atractive feature for employers: With technology
you can fnd them, pay them the tiny amount of money,
and then get rid of them when you dont need them any-
more, he said.
RECENTLY, I resumed collect-
ing memoirs from MTurkers. Had the people working
on the platform changed since 2010? I found my original
survey from fve years ago, logged back into my MTurk ac-
count, and posted a few HITs. Were people still thinking
about the economy?
My frst batch of HITs returned nothing. I set the pay
to $0.50, double the original rate, which many workers had
thought was generous. Ten, looking at the confguration
I noticed default setings that restricted the workers lev-
el to Master Qualifcations. Tis was new. According to
Amazon, Masters are workers who have demonstrated ac-
curacy on specifc types of HITs on the Mechanical Turk
marketplace. Tis was part of a change Amazon made in
JASON HUFF 59
2012 to improve the pay for work on the site and prevent
beter workers from exposure to scammers. If it works, its
a bright spot for experience Turkers, but also a potential
barrier to higher quality HITs for new workers.
My experience tracks the fndings of Panos Ipeirotis, a
business professor at NYU, about the changing nature of the
MTurk workforce. In 2008, he conducted a survey on the
platform to disprove common beliefs about crowdsourcing.
He discovered the workforce on MTurk was predominantly
U.S.-based and, surprisingly, almost 60% of the users were
from 21 to 40 years old and female. Only about 13% of the
HITs were completed by workers outside the U.S.: 8% from
India, and a litle more than 5% from the U.K. and Canada.
In 2010, Ipeirotis updated his demographic study to
reveal some interesting shifs. He discovered that the per-
centage of U.S. workers had dropped below 50% while
workers from India had risen to 34%. He also found that
the Indian workers ofen considered their work on MTurk
a primary source of income. Since Indias minimum wage is
around $0.28 per hour, as reported by Business Insider last
year, the shif from it being a source of extra money to a pri-
mary source of income wasnt too surprising. As platforms
like MTurk proliferate, the nearly invisible microtasks that
underpin so many sites on the Internet are being outsourced
to the now more accessible and cost- efective crowd around
the globe. Tis made the stories about minimum wage from
workers on MTurk in the U.S. ring even louder.
Afer raising my rate to $1.00, I was able to get re-
sponses to my requests and more stories from the workers
on MTurk. Tey were very diferent this time around:
It was four years ago when the economic crisis hit the
world badly and it was at the same time that the Telan-
gana Agitation hit our state (Andhra Pradesh, India)
very badly. Market in general in our state touched its
lowest point as people were very wary about what
would happen next. There were continuous strikes,
boycotts, agitations etc. to the extent that all that had
become an order of the day. I am into real estate and
this is the sector which was largely affected by the on-
going agitation and world economic crisis. I was vig-
orously searching for any part time job which would
support my finances and take care of my overheads
during the period of this agitation. I happened to find
an ad in the newspaper highlighting WORK FROM
HOME and I immediately contacted the person who
published the ad.
I had never thought of crowdsourced work on MTurk
as way to continue working while coping with economic
and civil unrest. It seemed the platform had turned into a
way to become telepresent in the global economy when
conditions were too rough to leave the house. But other
stories from the new survey felt similar to the ones in 2009:
people fnding ways to make small amounts of extra cash or
build up hope to get through to the next big job.
Te conversation around these platforms is only go-
ing to grow louder as more people all over the world turn to
them as a primary source of income. In a recent article for
Te Nation, Moshe Z. Marvit interviewed struggling work-
ers on MTurk and mentioned an upcoming and critical
class action lawsuit against CrowdFlower. Early initiatives,
like Iranis Turkopticon, are still helping draw atention
to the ethics of paid microlabor. Yet the future of crowd-
sourced labor still looks strange. More mobile apps are con-
necting to crowdsourcing platforms, puting microtasks at
your fngertips in your idle time. Imagine a future wherein
an app like Candy Crush Saga is a way to earn money for
anniversary presents while simultaneously working in the
global labor market for pennies.
Since my frst survey, newer platforms had emerged
on which people completed tasks for money. I surveyed
workers on TaskRabbit, which promises to allow users to
Get just about anything done by friendly, trustworthy
people. I quickly found a woman who was using the ser-
vice as her primary source of income. She chose to remain
anonymous but said her days start by checking TaskRab-
bit, Craigslist, and Voices.com for gigs. She said she tries to
do mostly virtual tasks on TaskRabbitdata entry, tran-
scription, research, etc. Shes an actor and has been on the
platform for three years. Her only complaint: Te hiring
process has become so lax. Tere are way too many of us
competing for jobs now.
60 WE HAVE MET THE ENEMY
Creditocracy (n.)
governance or the holding of power in the
interests of a creditor class
a society where access to vital needs is
through debt
Andrew Ross
IF the book currently under review is any indication,
Andrew Ross, a professor of social and cultural analysis at
New York University, has never (or very, very rarely) met a
creditor he really liked. Tis reader, no stranger to debt or
creditors himself, is quite certain that similar atitudes are
held by approximately 99.27% of all human beings extant
who have undergone the experience of borrowing money.
Accordingly, Professor Ross, a social activist who was in-
strumental to the creation of Occupy Student Debt and the
Strike Debt forgiveness program, should have a very recep-
tive audience for his message, which basically boils down to
the assertion that debt is very, very bad.
What makes Rosss tome diferent from advice dis-
pensed by Suze Orman and dozens of other personal-f-
nance mavens of greater or lesser credibility is his charac-
terization of the socioeconomic institution of credit and his
prescription for it. With respect to the former, he spends a
great deal of time and efort outlining how debt and credit
are inextricably intertwined with our lives and society, in-
cluding personal consumption, housing, labor, climate, and
long-term growth. As for his prescription for it, his message
is bracingly simple: repudiate it.
Did I mention that Professor Ross thinks debt is very,
very bad?
For if I did not, or if you forget between reading this
article and picking up the book, you will recall it very quick-
ly once you do. Ross is no fan of debt. He sees the current
pervasiveness and economic and political power of what
he has termed the creditocracy to be corrosive of our so-
REVIEW
We Have Met the Enemy
BY THE EPICUREAN DEALMAKER
To fnd the villainous creditor class,
we only have to look in the mirror
Andrew Ross, Creditocracy and the Case for Debt Refusal, OR Books, 2014, 280 pp,
THE EPICUREAN DEALMAKER 61
cial fabric, destructive of participatory democracy, and
particularly oppressive of the working poor. For the later,
he contends the current system of consumer and person-
al debt is but the newest incarnation of compulsory social
and economic indebtedness for the poor that extends from
and encompasses feudalism, indentured servitude, slavery,
sharecropping, company scrip, and loan sharking. He has
bad things to say about Wall Street, banks, hedge funds,
payday lenders, the IMF, the World Bank, the Troika, the
Club of Paris, advocates of austerity, politicians, lobbyists,
Sallie Mae, Fannie Mae, college administrators, unpaid in-
ternships, student debt, revolving credit, compound inter-
est, economic growth, Kenneth Orr, for-proft higher edu-
cation, securitization, and colonialism. Did I mention debt?
Now lest you think I sport with Professor Ross or
your intelligence, let me reassure you, I found his book
an interesting and, in places, a compelling read. He takes
pains to declare that he is neither an economist nor an ex-
pert in all things credit or fnancial, and he makes no ef-
fort to ofer up specifc policy prescriptions or economic
analysis to back up his arguments. He does cite reasonably
extensive secondary sources throughout, which should
enable diligent readers to check his facts and draw their
own conclusions about his evidence. He leavens his nar-
rative with the occasional fact or fgure, some of which are
well chosen to drive home his point. He employs a ser-
viceable and not unpleasant writing style, which makes his
book more readable than a run-of-the-mill polemic. He
does shoehorn the intermitent lef-wing shibboleth like
monopoly capitalism, high interest loans, high carbon
industrialists (the Koch brothers), and Wall Street into
the fow of his text, but, as one would expect, these throw-
away non sequiturs seem mostly placed to remind his read-
ers of his (and their) political bona fdes rather than carry
any argumentative weight.
Ross also ofers up interesting historical background
on the use of debt as an instrument of political control by
the IMF and the World Bank in developing economies, the
development of the housing mortgage market in the Unit-
ed States afer World War II, and the source and growth of
the student loan market for higher education. He avoids
many basic mistakes of fact or emphasis, and the occasional
sliplike the comparison of stocks (bank assets) to eco-
nomic fows (GDP)is usually not so serious as to derail
his arguments. He fubs the central premise of his chapter
contra economic growth, contending that lending requires
growth to function. (Tat this is not so can be illustrated
with a simple auto loan.)* He ofers an entire chapter on
what he titles climate debt to those of you who fnd such
topics interesting. Sadly, this reviewer is not one of them.
However, he does make a compelling argument that
the struggle between debtors and creditors has, for most
people, replaced or superseded the struggle between labor
and capital:
in societies that are heavily fnancialized, the struggle
over debt is increasingly the frontline confict. Not
because wage confict is over (it never will be), but be-
cause debts, for most people, are the wages of the future,
to which creditors lay claim far in advance. Each new
surrender of a part of our lives to debt- fnancing further
consumes the fruit of labor we have not yet performed in
the form of compensation we have not yet earned. Now
that this condition has become inescapable, it is easier to
imagine that the struggle between creditor and debtor is
much older than the face-of between capital and labor
that Marx proposed as a common sense explanation for
economic life. Afer all, exploitation through debt long
predates the era of wage tyranny, and its recent resto-
ration as the most efcient means of wealth accumulation
suggests that credit is a more enduring, all-weather organ
of economic power.
His description of the endless treadmill of high in-
terest, predatory lending sufered by the poor and less
* Should, for example, Ross decide to purchase a new Honda Accord
for $22,000, he could fnance it for 48 months at 4% interest for 48
level monthly payments of $495 each. Self-amortizing debt at fxed in-
terest rateswhich comprises a very large percentage of consumer and
housing debtdoes not require or depend on incomes or anything
else growing. In fact, in general, creditors tend to prefer a static or even
defationary economic environment, since infation, which is usually
associated with growth, erodes the real value of their fxed claims.
62 WE HAVE MET THE ENEMY
fortunate is believable and harrowing, and his descrip-
tion of the student loan market and its parasitic for-proft
segment is eye-opening, and not in a good way. Tere is
much to praise here.
AND yet, given all these positives, this review-
er cannot help but feel that Ross has missed the mark. His
foreground focus on the instruments and practices of debt
has blinded him to an essential, incontrovertible fact: Debt
is merely an instrument of economic interrelationships. A
careful reader can see that Ross dances around this revela-
tion every now and then, and even nods in its direction and
alludes to its implications, but he retreats too soon to tack-
le the thorny fact directly. Missing this fact puts too much
emphasis on the mechanism and history of the use of debt
to sustain consumption in the face of stagnant or declining
real wages for the majority of Americans, rather than the
reason for it. Which, this reviewer believes, is ineluctably
tied up with the issues and mechanisms of income distribu-
tion in the past several decades. (But that is another essay
for another time.)
Ross is also not the frst to confuse banks, which have
increasingly taken on the role of intermediaries and origina-
tors of loans, with the holders of wealth who actually lend
it out. But this is not true. Look at any banks balance sheet,
and you will observeas Ross correctly does at other plac-
es in his textthat banks borrow the lions share of what
they lend out from other people: depositors, bondhold-
ers, other banks, the Federal Reserve. Its not their money.
Banks are conduits for transforming certain kinds of assets
(money, investable funds) into others (loans, securities).
More ofen than not, they transform short-term loans they
borrow from their creditors into long-term loans to their
debtors. Tis key bank function is called maturity transfor-
mation, and it is a critical, highly valuable socioeconomic
service lending banks perform.
Te real holders of wealth in the economy are not
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THE EPICUREAN DEALMAKER 63
banks, which are only servants. Te real holders of wealth
are rich individuals, corporations, and institutional inves-
tors which manage trillions of dollars of their own and oth-
ers wealth. Te lions share of such wealth is and has always
been invested in the fxed-income markets: sovereign debt,
corporate loans, high-yield debt, municipal debt, and, yes,
individual consumer debt in the form of securitized cred-
it-card, auto, and student loans and mortgages. Te com-
plication, which Ross ignores, is that much of the institu-
tional investment in fxed income is done by and on behalf
of pension funds, retirement accounts, and mutual funds
managed for individuals. Individualspeople, usare the
creditors we fear and loathe. Even someone with a simple
passbook savings account is a lender: directly to the bank
she deposits at, and indirectly to the debtors who borrow
from her bank.
Tis is a critical point to understand. For it means
that its not always so clear just whose ox is going to get
gored if we go about repudiating debt wholesale. Ross
makes a big deal about the retired city workers of De-
troit being asked to reduce their pension benefts in the
restructuring of the citys debt. But Detroits municipal
debt has been bought for years by, among others, profes-
sional fund managers on behalf of frefghters, policemen,
nurses, and other public and private workers to support
their pensions. By the same token, non-wealthy individ-
uals have directly and indirectly purchased the loans and
securitized debt of other individualsi.e., made loans
to provide sources of income for their own futures. Who
gets screwed if we start repudiating our credit card debt,
student loans, home mortgages, and auto loans? Firefght-
ers? Teachers? Our parents? Ourselves?
And waving ones hands and saying the government
should pick up the tabas Ross suggests in the case of
debt incurred for public higher educationjust begs
the question in another way. For who both lends mon-
ey to government and pays taxes to pay its bills? We do,
of course, directly and indirectly, in a thousand ways. Of
course, we all have diferent exposures, both as creditors
and debtors, to our governments. Tat, plus the fact we
have diferent economic and political interests and pref-
erences means we will have diferent opinions as to what
debt, if any, should be repudiated and for whom. In other
words, by focusing on the allegedly inherent evil of debt
instruments, Ross elides the critical point that what needs
to happen in our society is a political debate about power
and inequality, not a technical debate about the mechan-
ics of a debt jubilee.
Tis is the Gordian Knot we face when it comes to the
problem of debt. I am sympathetic to the plight of the poor,
I am outraged at the behavior of predatory lenders, and I
am a frm believer in heavy regulation of consumer fnance
and a much heavier hand in prosecution of fnancial chica-
nery than we have yet seen. But the threads of debt shoot
through our society and economy in such myriad paterns
and interlinkages that it would be practically impossible for
anyone to trace them all. Ross wants citizens to audit lend-
ers for bad or illegitimate debt. But is he truly sure he
or we can tell the diference? Is he truly certain repudiating
bad debt will be good for everyone except lenders? Does
he truly know who the lenders are? Who is going to pick
up the tab?
Ross states he wants a moral economy of debt. He
wants the privatization and fnancialization of basic hu-
man wants and needsshelter, education, health care
reversed and taken out of the hands of private lenders, pre-
sumably to be put in the hands of government or, what is
another word for the same thing, our common hands. But
this is not a moral decision. Tis is a political decision.
And the last time I checked, we made those decisions
through the ballot box. If Ross intends his book to be a call
to action and a spur to political discussion of the transfor-
mation of our economy, all the beter. We need more in-
dividual citizens involved. But he and they might fnd the
answers they seek are not quite as obvious or acceptable to
the rest of us as he contends they are.