An Encounter with Occupy Wall Street
If Aristotle were magically transported to contemporary America, he would probably find the distinction between an indebted householder selling himself into slavery and renting himself to work for someone else as kind of a legal technicality. He would conclude that most Americans are, in fact, debt slaves. And would he be wrong?
David Graeber
The Beginning of OWS
When Occupy Wall Street began on Sept. 17, 2011, it started through a call by Adbusters Magazine, a radical, environmental, anti-consumerism publication, and a small group of individuals. Adbusters had attempted to form movements similar to Occupy before, but they quickly fizzled out due to low participation and public interest. The summer of 2011 was different. Occupy struck a chord, and I was fortunate to hear about the first meeting on Wall Street through direct email from Adbusters. Weeks before the event, I received an email titled, “Anonymous Joins #OCCUPYWALLSTREET.” It contained video published by “Anonymous” saying that “on the 17th of September, [we will] flood into lower Manhattan, set up tents, kitchens, peaceful barricades and occupy Wall Street for a few months … Once there, we shall incessantly repeat one simple demand in a plurality of voices.” Another email explained further:
The perpetrators of the massive financial fraud have been allowed to slip quietly from the scene and continue business as usual. Our elected representatives in Washington have become so tightly intertwined with the financiers and bankers that public accountability has all but vanished. On September 17, 20,000 of us will descend on Wall Street, the iconic financial center of America, set up a peaceful encampment, hold a people’s assembly to decide what our one demand will be, and carry out an agenda of full-spectrum, absolutely nonviolent civil disobedience the likes of which the country has not seen since the freedom marches of the 1960s.
Yet another email detailed their goals: “We’ll get down to business and hold several people’s assemblies to decide what our ‘one demand’ will be. Shall we demand that President Obama reinstate the Glass-Steagall Act, outlaw flash trading, [or] impose a one percent tax on all financial transactions?” These were a few ideas out of many possible suggestions. While 20,000 participants were expected on the first day, the true turnout was less; however, Occupy grew within days and spread to more than 95 different cities in the United States and across the globe. What started off as one demand grew into a general set of demands and concerns: ending corporate dominance and influence in politics, the lack of/no representation in government and business, wealth inequality, debt, and the increasing concentration of power and wealth in the United States and around the world.
All of these demands represented the values of Occupy Wall Street’s (OWS) participants and views on democracy that were perceived as not reflected within the current U.S. system, in which any sort of reasonable democratic decision-making seems to be minor. Democracy aims to represent some Lockean sense of the “consent of the governed,” but recent events, apparently controlled by Wall Street and the U.S. government, have been highly unpopular, in both the operation of the monetary system and the appeal of the political system. If a political-economic system is to represent any real promise or agreement of democracy, it must embody a monetary system that will represent democracy as well.
One of the Leaders and his Ideas
Anthropologist David Graeber is one of the original OWS organizers and is often called the “anti-leader” of the movement. A couple of months before OWS began, Graeber published a book titled Debt: The First 5,000 Years, which covered many of Occupy Wall Street’s debt-related concerns. Not only had I subscribed to Adbuster emails before Occupy began, I had also pre-ordered Graeber’s book and read a good deal of it. It was amazing to see Occupy grow from a few emails in an inbox to a popular phenomenon in the U.S. and across the globe.
I eventually became involved in Kansas City’s own OWS movement, participating in rallies, marches, protests, and various other meetings. Along with my involvement in Occupy, I began to understand greater complexities within the socio-economic world through Graeber’s book. Many ideas and concepts that I had partially learned in the heterodox economics department at UMKC became clearer through his work. While some of the ideas taught at UMKC and explored in Debt aren’t entirely controversial, many of them foster fundamentally different attitudes about what is going on in the world.
What is Money?
A major conclusion in Debt, and one also discussed at University of Missouri Kansas City (UMKC), is while many people today believe virtual money (credit money) isn’t really money, history shows credit is actually money’s original form. Some of the oldest known forms of currency are Babylonian tablets that contain contractual agreements (IOUs) that were similar to checks. According to Graeber’s analysis, if history proves correct, we may be entering a new era of virtual money issued as credit, which will put an end to what seem to be 500 to 1,000 year cycles between commodity money (gold, silver, and perhaps barley or other commodities) and virtual money. Many changes occur within these cycles regarding how human beings conduct their economic affairs; for example, virtual money, being more abstract, has a very different social role than hard money, a material “real” thing.
One question that inevitably comes up with such analysis: What is money? Economists debate this question to this day, and while concrete conclusions may be almost impossible to decipher, we can reasonably grasp some complex idea or integration of ideas of what money may be. One possibility Graeber and others believe will become more apparent is money is really just a promise, such as an IOU or contract. Many people interested in economics consider money a debt or an IOU in part because of the Federal Reserve System’s creation of money through debt. A major difference between money today (fiat/virtual/credit money) and commodity money (or commodity backed) is the very ability to “create it out of thin air.” When money is created through putting numbers on a computer in the form of bank loans or made through the Federal Reserve System (or any other central bank) by merely “printing” it, what it contains is always an IOU – a debt and a contractual relationship. In the United States, the presence of large debts has become widespread in households, governments, and corporations, and there seem to be strong correlations between this and Nixon’s decision to release the dollar from the gold standard in 1971. This essentially allowed the creation of more and more debt and money without being limited by a commodity accounting unit, i.e. gold and silver resources. This means debts and monetary transactions can be rearranged and considered on different terms, including debt forgiveness, because money is no longer tied to a direct resource but just embodies a promise.
A Major Theme of OWS: Who has Power?
More debt creation means more promises, but promises can be changed, and IOUs can be made on different terms. This raises the question of who owes what to whom and on what grounds – which is a major theme in OWS. Who pulls the strings in the economy? Who provides the credit and the money, and under what terms? How is justice served? Who has the power, and who are the decision-makers? According to Graeber, “The fact that over the course of human history, it’s probably true that most people who have ever lived have been debtors [and] somehow or other it always seems to happen that a very small percentage of the population [Occupy Wall Street’s ‘one percent’] ends up creditors to everybody else. If you look at world history you see the same thing, over and over again, across Eurasia, certainly, and China, and India, [and] the Middle East: everybody’s a debtor.” Perhaps these matters of creditor and debtor relations can be resolved differently and democratically? Does the majority of the population really need to indebted to a small minority, or could matters of credit and debt be made in terms that provide equal protection and power to each entity (individual or group) involved?
The big problem is debt. Total debt across our economy has skyrocketed in the past 30 years.” This chart demonstrates the increasing debt over the last 50 years. Notice after the year Nixon releases the dollar from the gold standard (1971), debt grows very quickly. This may represent the beginning of another 500 to 1,000-year cycle of credit money as opposed to commodity money.
The almost pervasive presence of fiat-fueled debts is compounded by the current power structure, which determines how debts and money are made. This results in social classes that may behave very differently toward each other; for example, creditors may treat other creditors differently than they would treat debtors, and vice-versa. For instance, consider student loans: “Graduating seniors in 2010 carried an average debt of $25,000, while unemployment for that same group was at 9.1 percent.” This may be considered a promise between two groups (creditor and debtor) that begins from a point of equal exchange, but that is not the case. Not only do unemployment and the job market, which are out of one’s control, affect a student’s ability to stay on equal footing, but fines, fees, interest, and bankruptcy laws can make it almost impossible to repay student loan debt. “It’s very easy for loans to double or triple in a period of ten years – you fall behind on a payment, suddenly there’s this whole chain of fees that is triggered, and you [go] underwater trying to get back, just recovering those fees, and then you start paying the interest, let alone getting to the principal.”
The Burden of College Debt
At a time when many Americans feel “that a college degree has become a prerequisite in a knowledge economy,” student loans have become a burden; it is challenging to have a good job with adequate pay while maintaining the same standard of living you would have had before acquiring the student loan debt. This is compounded by the fact that “college tuition has increased more than 400 percent since the 1980s, with no appreciable increase in wages or inflation; it outstrips inflation.” Student loans also contain unusual creditor protection provided by the U.S. government. Debts such as “hurting someone, killing someone, [and] gambling debts are treated less harshly under our bankruptcy code than the debts associated with trying to educate yourself. Student loans are the most repressive debts under the legal structures that we have.” While the creditors (i.e. Sallie Mae) are almost completely protected from any risk, the student debtors suffer all the risks of a changing economy.
The Roles of Government and Central Bank
If a government and central banking system can provide more promissory notes at will, then, as creditors, what is their role and relationship to debtors, and vice versa? Promissory notes, credit, IOUs, money, and debts are social contracts. So what is the social contract between the people of the United States and their government and Federal Reserve System? “If democracy is to mean anything, it means that who makes promises to who, what promises are kept, and what promises are being negotiated under what circumstances has to be democratically decided. It’s not a process that only one percent of the population can weigh in on.” It is believed by some that the United States is a beacon of democracy in the world. One of the greatest values, culturally, in the United States is a representative democratic system – a social contract between the state and its population through the Lockean “consent of the governed.” This consent implies that government has a moral obligation – a non-monetary debt, or IOU – to its people and must justify use of state power to the very society over which that power is being exercised. This runs through the monetary system as well. The debts that our monetary system creates are social contracts between what is justifiably a debt and what is not. A democratic government, if truly practiced, would theoretically have a democratic monetary system. When money is just a promise, this creates infinite possibilities for how promises can be rearranged, forgiven, forgotten, or fulfilled.
What does it mean to hear that Americans saw their wealth plummet 40 percent between 2007 and 2010? Where did the wealth go? Where did the money go? In the United States, the soil was provided for a movement to grow, as many felt “the perpetrators of the massive financial fraud have been allowed to slip quietly from the scene and continue business as usual.” Between 2009 and 2010, the first year of economic “recovery,” one percent of the population captured 93 percent of the income growth; meanwhile, unemployment remained high, corporate profits maintained record highs, and the rest of Americans lost their wealth. There is a class of individuals in the United States who may never feel the negative consequences of their decisions while continuing to maintain the power to make decisions without democratic accountability: Occupy Wall Street’s “one percent.” They embody the vast disillusionment that many Americans feel toward their “elected representatives in Washington” who “have become so tightly intertwined with the financiers and bankers that public accountability has all but vanished.” This is demonstrated further with the historically low approval ratings of Congress – a sign of a “democracy” that is not working.
All of these circumstances provided the right social space for Occupy to succeed and grow from emails in an inbox to a global movement. OWS still asks the question: when the majority of people are in debt, what is the future going to look like? Is the future one where debt relations and terms are controlled by a small, highly concentrated minority? Will the majority be debt slaves, constantly paying interest fees and fines that become increasingly compounded? If fiat money is now simply a promise, OWS sees a future where the promises can be rearranged, and made justifiably and democratically, to work with the changing social, political, and economic nature of the world.
By: Travis Strawn
Editor: Angela Lutz
Bibliography:
David Graeber, Sarah Jaffe, Brian Kalkbrenner, Mike Konczal, Astra Taylor, and Elisabeth Asher, Debt: A panel discussion. N + 1 magazine, April 30 2012. Retrieved October 8, 2012 from http://nplusonemag.com/debt
Henry Blodget, Okay, Folks, Let’s Put Aside Politics And Look At The Facts… [CHARTS]. Business Insider. June 21, 2012. Retrieved October 8, 2012 from http://www.businessinsider.com/politics-economics-facts-charts-2012-6?op=1#ixzz28lYm8VF8
Photo: vpickering on flickr