How Did Antistatism Get Here?: A critique of David Graeber’s “Debt”

In his book, “Debt: The First 5000 Years”, David Graeber levels the accusation against the Left, that it lacks imagination to see beyond present society. I think Graeber’s accusation is accurate and can be seen in his own antistatist (i.e., anti-political and anti-economic) argument. Contrary to Graeber’s argument that money has no essence, it is precisely because money has an essence that fascist state issued debt monies (treasuries) represent a world historical money-form: this debt-money implies money itself has become obsolete.

Although I have not, as yet, begun reading Graeber’s book, I did turn to chapter 12 to see how the argument he develops in the first eleven chapters was applied to events since 1971. I was taken aback by his argument, which seemed to me more a matter of ideological prejudice than an application of his anthropology scholarship to the problem of money. In particular, I felt compelled to take issue with this statement:

“All that I have said so far merely serves to underline a reality that has come up constantly over the course of this book: that money has no essence. It’s not “really” anything; therefore, its nature has always been and presumably always will be a matter of political contention.”

Graeber’s argument on the content of money and money relations is not particularly unusual, since the questions “What is money?” and “Why must money appear in any particular form?” are also matters of controversy among all variants of communism — Marxism, anarchism and libertarianism — as well as among theoreticians in the larger field of political-economy. However, to say that the form money takes has always been a matter of contention within society does not in the least imply that money has no essence; rather it implies that money itself is an absurdity in which one and the same form is used to as money in various and contradictory functions.

Is money real or a mental conception, a piece of paper or a commodity, a fictitious claim to future value or a present value, a simple means of exchange or a store of value?

The answer to all of these questions, of course, is “Yes”.

What makes money so enigmatic is that it is all of these things and none of them; however, it is one thing to point out the enigmatic character of money and quite another to say that money has no essence — this latter statement is an argument that states money is all form and no content. This might work for monetarism, where the form of money is taken for its essence, but it is useless for a critical theory of society that wishes to peer beneath monetary relations and so apprehend the actual workings of material social forces operating beneath superficial appearances.

Can we understand what has taken place since 1971 by assuming money has no essence? I am pretty sure we cannot and I am pretty sure this is why Graeber has nothing useful to say about events since 1971. The conflicts Graeber cited in the 19th century over what should constitute money were never over the essence of money or money relations (which was never contested or even understood) but over the form this essence should take. If Graeber was going to say something about this struggle it should have been why what serves as money was a matter of social conflict in the 19th century. This contest cannot be explained by the form itself; rather it has to be explained by the content, essence, of money, of which any particular form of money is only the external manifestation.

Fascist state fiat as an administrative unit

If Graeber’s argument that money has no essence is actually the core argument of the book as a whole, I am not sure what the excitement was about; it is just a rehash of mainstream thinking on this issue with a peculiar anarchist twist: the typical anarchist theorist wants to reduce everything to a question of political compulsion and money in Graeber’s argument is just another form of this political compulsion argument applied to money. So, it is no surprise when Graeber states:

“There’s a reason why the wizard has such a strange capacity to create money out of nothing. Behind him, there’s a man with a gun.”

Money, Graeber argues — following the advocates of Modern Money Theory (MMT) like Michael Hudson — is based on government debt; it is merely a token created by government that enters circulation through government spending on commodities. As the advocates of MMT describe it, this form of money is, in reality, not money at all but a policy tool employed by the fascist state to regulate economic activity. The advocates of MMT have it over the monetarists in that they do not pretend state issued tokens have any value, but are simple administrative units of account similar to the old Soviet ruble.

But, does this mean even this money has no essence as Graeber asserts? Clearly not, the essence of this administrative unit is the subordination of society to the law of value, effected, in this case, not by the free movements of prices, but according to the plan of the fascist state. The question is why this money-form has arisen to dominate society? Graeber’s answer seems to be it has always dominated society, but we never noticed it before.

“I have already pointed out that modern money is based on government debt, and that governments borrow money in order to finance wars. This is just as true today as it was in the age of King Phillip II. The creation of central banks represented a permanent institutionalization of that marriage between the interests of warriors and financiers that had already begun to emerge in Renaissance Italy, and that eventually became the foundation of financial capitalism.”

Graeber’s argument here overlooks an important point of difference between the age of King Phillip II and our present circumstances: no state before 1971 could call money into existence out of nothing simply based on its own volition. (I am leaving out of the discussion the period between the collapse of the gold standard within each country and the collapse of Bretton Woods.) Before that year, the state had to borrow gold or another commodity money that had previously been produced by society. It could not simply create this money on a printing press, an entry in an accounting book, computer terminal etc., or issue tokens as payment for its debts. The tokens created by the state were always ultimately redeemable in some commodity money.

While the state had the power to determine what would serve as tokens of money, and could denominate money, it did not have the power to determine what served as money — this was always a power in the hands of society at large. This latter power has never been in the hands of the state until the epoch of capitalism. How, and under what circumstances, the state came to have the power to determine what serves as money cannot be explained by money itself or the state; money is reduced to a mere administrative unit issued by the state because of changes in the society responsible for both the state and money. Graeber misses this when he asserts:

“Nixon floated the dollar in order to pay for the cost of a war in which, during the period of 1970-1972 alone, he ordered more than four million tons of explosives and incendiaries dropped on cities and villages across Indochina—causing one senator to dub him “the greatest bomber of all time.” The debt crisis was a direct result of the need to pay for the bombs, or to be more precise, the vast military infrastructure required to deliver them. This was what was causing such an enormous strain on the U.S. gold reserves.”

This statement ignores the fact that money is simply a reflex of material economic activity of society, not the state. The confusion over this fact forces Graeber to stumble into the silly argument that the fall of the Bretton Woods agreement in 1971 was the result of the merciless war in Indochina, rather than this war being itself the result of the very same economic activity of society. Essentially, Graeber wants us to believe the United States is just another nation that emptied its treasury by pursuing a hopeless military conflict. The problem with this argument is that it might explain why the US was forced off the gold standard but does not explain why the rest of the world market continued to accept these valueless token dollars as before. Rather than seeing both the war and the collapse of the gold standard as resulting from the same cause, he explains one by the other.

In fact, both the militarization of American society and the movement away from the gold standard trace their origins to the overaccumulation of capital that produced the Great Depression. It was during this depression that society, not the state, removed gold from circulation as means of exchange and the state responded to this act by substituting its valueless currency in the place of commodity money. However, since the material relations arising from production play no role in Graeber’s explanation of the history of money, he must rely on the long obsolete anarchist theory that relations of production are ultimately established by the political force of the state. In this argument, military power is retroactively revealed to be the essential nature of money. By 1971, the state borrows money into existence to fight its wars and, because of this world historical event, Graeber asserts all previous money throughout history consisted of state debt.

Graeber’s conflation

Graeber admits these state issued tokens have been severed from commodity money, but argues its previous attachment to gold was never significant in the first place:

“…one could well argue that U.S. military power was now the only thing backing up the currency. In a certain sense this is true, but the notion of “fiat money” assumes that money really “was” gold in the first place. Really we are dealing with another variation of credit money.”

I think Graeber is perhaps confusing two different things here, which must be clarified: First, on the one hand, we have credit money; on the other hand, commodity money as in, for instance, gold. Both of these monies can be said to share the quality that they can be exchanged for commodities, i.e., they carry a “promise” of redemption in the form of commodities. I sell a commodity and receive in return a money that I can later use to purchase another commodity. If you push this idea to its absurd limits, the money can be said to be a mere promissory note, no matter its form; which is to say, insofar as we only think of money in terms of commodity circulation, money, no matter what form it takes, is merely a means of exchange and not an end in itself.

However the term “credit-money” has the opposite implication of commodity money in terms of what precisely is being “promised”: with credit-money the debtor has produced nothing and stands in for his/her product with a promise to pay. The producer appears in this scenario as the creditor and advances his commodity to the debtor, who has produced no commodity to exchange for the first, and only promises to repay the credit by some future act of production. This strict meaning of the term “credit-money” is confused in Graeber’s argument so that even gold is assumed to represent only a promise to pay in the future with something that does not yet exist. In fact, with the exchange of the gold for the commodity the transaction is complete — neither party to the transaction owes the other anything. In the case of commodity money, the money represents a “promise” redeemable by society; in the case of credit money, however, it is the debtor who must redeem it with his/her future labor.

While it is true Graeber was trying to simplify his argument to make it accessible to readers, this is not simplification but conflation. Moreover he conflates the two ideas in the wrong direction: instead of all monies being seen as essentially variations of commodity money, Graeber suggests all commodity monies are essentially forms of credit. Either conflation is a potentially misleading reduction, but at least with commodity money we are led back to production.

But there is an second problem with Graeber’s argument: In the case of modern fascist state issued token, this conflation is compounded by the fact that this token is neither credit money nor commodity money but a complete fiction — a symbolic representation standing in for money when in circulation and absolutely worthless when at rest. It can only be treated as money so long as we consider money only as a means of exchange in transactions. In the case of fascist state issued money since 1971, it has nothing at all to do with money proper and is an administrative unit the fascist state employs to manage the total social capital of a nation as if it were a single capitalist firm. If it is related to anything, it can be related to the imaginary units a typical capitalist firm employs to budget the activities of its various departments.

This post-1971 fiction owes its existence neither to commodity money nor credit money but arises directly from capitalist relations of production as the form necessary to maintain these relations of production. Which is to say, it is superfluous to the needs of society either in the form of commodity money or in the form of credit-money. It is a form of money corresponding entirely to the accumulation of superfluous labor and physical capital. Far from revealing that money has no essence, fascist state issued tokens announce to society that the abolition of money itself is now overdue.

The basic enigmatic character of money results from the fact that it is required to give visible form to value — a relation that is itself absurd and contradictory. In capitalist commodity circulation, this value relation is constantly jumping from one form to another, dividing itself, reconstituting itself, converting its guises, as it successively undergoes various stages of metamorphosis and self-expansion. In this continuous process of movement it is not possible to finally say, once and for all, “This is money”. In circulation all currency looks alike, and it is impossible to state “This token began as a commodity, while this one began as an extension of credit and that one originally started out as keystrokes on Bernanke’s computer terminal”.

To reduce all money to one and the same cause: issuance of new state debt, as, for instance, MMT does, is to not only fall for a fallacy, but to forget the essential nature of money relations themselves: namely, that they conceal from society its own real material relations.

U.S. national debt, or The Federal Reserve as Washington’s Hedge Fund

Graeber writes:

“Contrary to popular belief, the U.S. government can’t “just print money,” because American money is not issued by the government at all, but by private banks, under the aegis of the Federal Reserve System.”

Interestingly enough, Graeber never tests this assumption against common sense. Is it true Washington “can’t ‘just print money,’” but must borrow it from the Federal Reserve System, or is this a legal fiction? First, there is, in fact, nothing that prevents Congress from simply printing the dollars it needs and this was done in the past. (For instance, during the Civil War Congress authorized the creation of greenbacks to fund the war.) Second, the treasuries Washington creates are, in fact, money — they are just a particular form of money created in the form of debt. Since nothing prevents Washington from printing dollars directly rather than in the form of these treasuries, it might be interesting to actually understand why Washington prefers to create this latter form money, i.e., why it prefers to borrow dollars rather than print them directly or pay for its operations through taxes.

Paul Solman provides his own silly answer to the question, “Why Does the U.S. Government Borrow Money Instead of Just Printing More?”

“Interesting question (or “comment”). But don’t you see the difference? Debt is a transfer of accumulated wealth from someone to someone else. New money is wealth created from scratch. New money makes old money worth less. As people rush to get rid of the old money before it loses too much value, those words can fuse into WORTHLESS.

“Suppose we could do as you suggest, and simply take the $8 to $9 trillion that the US owes to anyone besides its own trust funds and pay back all the bondholders, here at home and abroad. Hey, we save the interest payments, which amounted to nearly $400 billion last year! Sounds good, right? And that’s your point.

“Unfortunately, for every actual dollar currently out in the world at the moment, there would suddenly be about four. Now I don’t know about you, but here’s my fear the minute I hear that’s going to happen: that any given dollar would be worth 1/4 of what it had been before the debt-to-currency transformation. In other words, inflation: everything suddenly quadrupled in price. And what would I do the next minute? Figure out how to cash in any dollars I had in exchange for other currencies or assets (houses, cars, foreign stocks) that weren’t poised to plummet in value because the supply of them had suddenly soared, as with U.S. dollars.”

This is just the sort of too-cute-by-half answer one would expect of someone who is trying to sell a concept rather than explain it. Solman is trying to conceal the obvious fact that every time Washington issues treasuries it is in fact printing money — only this money is printed in the form of a debt. But, notice, at no point does Solman suggest Washington cannot simply spend fiat dollars into existence; he only argues that this might lead to hyperinflation if Washington were to suddenly convert its debt into new money — it would reduce the value symbolically represented by the currency already in circulation.

Assuming this is true, the question then becomes: “Where does the money come from that Washington borrows?” This borrowed money must, of course, be money that is not currently in circulation. Why can’t this money simply be taxed away? Why would Washington want to pay interest on dollars when it can simply tax this excess capital? Graeber, since he accepts the argument of the Modern Money school whole hog, does not even begin to raise this question. He simply absorbs an argument put forward by the MMT opponents of anti-statism without any critical analysis. The importation of this specious concept must ultimately undermine his essential anti-statist argument.

It never occurs to Graeber, that the legal fiction — Washington does not just print dollars but borrows it from the Fed — just might serve another function. First, since treasuries are just a particular form of money, the idea that Washington doesn’t print dollars, while true, is entirely beside the point. Second, while Washington can tax, Graeber, or you or I — or even Exxon-Mobil — it cannot tax China, Japan, or Germany. It can, however, get its hands on the surplus value produced by these national capitals in the form of loans that never need be repaid — loans which only need be continually rolled over as Michael Hudson observed. The fiction in this case is not the legal fiction that Washington must borrow the money, but that this mass of accumulated debt ever need be retired.

The money Washington borrows is entirely superfluous to productive employment and ends up under Washington’s management because its owners, — in first place, other national capitals — cannot otherwise employ it. It is a mass of superfluous capital thrown off by the steady improvement of the productive forces, which results (and, moreover, must result), in an ever growing mass of idled capital alongside an idled mass of workers, as Marx wrote:

“The so-called plethora of capital always applies essentially to a plethora of the capital for which the fall in the rate of profit is not compensated through the mass of profit — this is always true of newly developing fresh offshoots of capital — or to a plethora which places capitals incapable of action on their own at the disposal of the managers of large enterprises in the form of credit. This plethora of capital arises from the same causes as those which call forth relative over-population, and is, therefore, a phenomenon supplementing the latter, although they stand at opposite poles — unemployed capital at one pole, and unemployed worker population at the other.”

The result, as Marx explained is the export of capital made necessary by the pressure this excess capital has on the rate and mass of profit in the home markets of these capitals:

“If capital is sent abroad, this is not done because it absolutely could not be applied at home, but because it can be employed at a higher rate of profit in a foreign country. But such capital is absolute excess capital for the employed labouring population and for the home country in general. It exists as such alongside the relative over-population, and this is an illustration of how both of them exist side by side, and mutually influence one another.”

The capital loaned to Washington does not differ qualitatively from capital identified by Marx that is made superfluous by the progress of capitalist production, and which, because of this, must be placed at the disposal of larger capitals. It is loaned to Washington because it cannot be put to productive employment in the home nations, nor anywhere else within the world market, which now, as a whole, is marked by absolute overaccumulation. Which is to say, the Federal Reserve is not an independent entity, but a part of Washington’s mechanism for systematically managing the excess surplus value within the world market as a whole. It is at least superficially accurate to think of the Federal Reserve as a hedge fund run by Washington for national capitals. The functioning of this hedge fund is masked by archaic categories of national accounting, which treats the liabilities accumulated by Washington in this form as public debt for which American citizens are responsible.

Massive waste of labor and destruction of means of production

However, my argument so far only accounts for the mass of money capital placed at the disposal of Washington by national capitals drowning in absolute overaccumulation; it does not account for the mass of real capital existing in the form of an excess mass of variable and constant capital — of workers and means of production.

According to the mainstream explanation of the process, debt accumulation by Washington occurs this way: Washington issues new financial instruments in the form of treasuries, while the Federal Reserve system buys these treasuries, in turn crediting Washington’s account with money raised by selling these issues. This leads Graeber to conclude:

“What is remarkable for present purposes is not so much that American dollars are created by banks, but that one apparently paradoxical result of Nixon’s floating the currency was that these bank-created dollars themselves replaced gold as the world’s reserve currency: that is, as the ultimate store of value in the world, yielding the United States enormous economic advantages.”

I think Graeber misses the point here: the paradoxical result of the system of ex nihilo money creation is that the financial instruments issued by Washington cannot serve as a store of value in the world market. Since the financial instruments created from nothing have no value of their own and rest entirely on Washington’s promise to repay them, the entire system rests on this promise alone. Washington, however, can only repay this promise by issuing more financial instruments or by taxing the dollars in circulation.

Credit money also rests on the promise to repay, but this promise can only be fulfilled when the debtor produces and sells his own commodity. He then uses the proceeds of this transaction to satisfy his debts. Washington, however, never produces anything, so it can never satisfy the debt it has incurred except by taxes, directly printing money, or issuing more debt instruments. By ignoring production and focusing solely on exchange, Graeber misses the most important feature of state issued fiat currency.

What Graeber misses can be seen in this short example: A bond issued by Washington is sold to the Federal Reserve system, who then credits the money that is used to buy a predator drone to kill Afghan, Pakistan or Sudanese citizens. What is concealed in this process is that only the first part of the transaction has been completed: society advanced a predator drone, as well as the credit needed to buy it and, in return, Washington promised to pay its debt at a date certain in the future. But how does Washington pay this debt?

The problem must be answered on two levels: on the money level the debt is satisfied when Washington (assuming it does not simply raise taxes, or print money) issues another bond and uses the proceeds from the sale of the second bond to service the first. From the viewpoint of bourgeois accounting standards and the debt holder, the debt has been satisfied when the dollars promised for the first bond issue are serviced with the dollars raised in the second bond issue. It is clear that Washington has performed the equivalent of using one credit card to pay off another credit card, but for the initial bondholders this is of no concern.

Although from the standpoint of accounting, and to the satisfaction of the bondholders, the debt has been satisfied, in reality something has gone missing — what is it? While the monetary debt has been repaid, the labor time and means of production expended by society to create the drone was never replaced. On the money level the debt has been repaid, the books are balanced; while, on the material, economic, level, resources were used up and never replaced. This transaction is not, by any means, the same as borrowing the King’s gold. To repay the King’s gold would have required some definite expenditure of human labor time in production to replace the value of the labor time and means of production expended on production of the drones.

The “enormous economic advantage” enjoyed by Washington consists entirely of the material resources it can appropriate without actually replacing them in circulation. Another way to state this: Washington can unproductively consume massive quantities of capital simply by accumulating massive quantities of debt. And this debt, as I showed above, is fed by the relentless overaccumulation of capital that must end up in the form of US treasuries. Based on this mechanism, Washington can, in short, create an entirely artificial scarcity of real, potentially productive, capital (both labor power and means of production) in a world overflowing with an excess of real, potentially productive, capital. Why in the world would Washington want to create this scarcity? Why would Washington want to create material shortages where there are none?

It would seem to me that anti-statists would want to know the answer to these questions, since this is what Washington is doing every time it borrows money.

The answer is simple: if Washington did not continuously manufacture material scarcity by unproductively consuming the excess real capital within the world market, the resulting material abundance would make capitalism impossible. Anarchists have never been particularly good at economic analysis, so it is no surprise that Graeber misses this point; however, I want to point out that none of Graeber’s Marxists critics, who pride themselves on the ability to make an analysis of the economic mechanism of capitalist society, ever EVEN ONCE pointed out this defect in Graeber’s argument either.

Far from replacing gold as the ultimate store of value, fascist state fiat are the means by which capital is routinely destroyed by the fascist state. Moreover, because Graeber does not grasp the role the state plays in manufacturing scarcity through its activities in every form, he falsely reduces the problem to just military expenditures. Anti-statists need to understand it is not just military expenditures that create artificial scarcity, but every expenditure of the fascist state, no matter how seemingly benign or even “socially beneficial”.

Graeber’s emphasis on the role military expenditures have for state debt, only serves the cause of those who advocate political reform on the Left.

Debt as the precondition for Empire

Moreover, it leads him to consider the trade deficit circuits as some form of ancient tribute adapted to modern conditions, completely missing their true significance:

“What’s more, over time, the combined effect of low interest payments and the inflation is that these bonds actually depreciate in value—adding to the tax effect, or as I preferred to put it in the first chapter, ‘tribute.'”

As I showed earlier, the trade surplus nations like Germany, Japan or China need US trade and public deficits as much as the US does and no “tribute” of any sort is involved. Without US trade deficits there is no market for the surplus capital created by China, Japan and Germany that must be exported beyond those countries to maintain their rates and masses of profit. This export of capital is a fundamental feature of the capitalist mode of production and is not in any way the results of US military power. Rather, US military power is the beneficiary of the export of capital, not its cause. So the argument Graeber makes that,

“…the most significant overseas buyers of U.S. treasury bonds have tended to be banks in countries that were effectively under U.S. military occupation”,

runs into obvious difficulties when he later discusses the U.S. trade deficit with, and resulting accumulation of US financial instruments by, China — which has never been under US occupation. To finesse this problem, Graeber invites us to consider China’s behavior a hangover from China’s imperial past. Graeber tries to fit China’s role in funding the US military empire into his tribute argument and miserably fails to explain why favorable terms of trade offered some nations before 1971 is replaced by an even more virulent, neoliberal, form after 1971:

“When the United States was far and away the predominant world economic power, it could afford to maintain Chinese-style tributaries. Thus these very states, alone amongst U.S. military protectorates, were allowed to catapult themselves out of poverty and into first-world status. After 1971, as U.S. economic strength relative to the rest of the world began to decline, they were gradually transformed back into a more old-fashioned sort of tributary.”

In fact, Washington has not only maintained “favorable terms of trade” for these nations, it has expanded this to include even China, and pursued a free trade agenda that seeks to breakdown barriers to the free movement of capital throughout the world market. Graeber just needs to accept that his “tribute” model of world trade does not explain what has been happening after 1971.

Related to this, the most glaring incongruity offered by the world market to Graeber’s argment that history consists of “political tussles between creditors and debtors, rich and poor”, is that, by several orders of magnitude, the largest single “debtor nation” on the planet is also the richest. Graeber cannot, on the basis of his thesis of tribute, offer a reason why this occurred, nor answer the question: How does a nation grow richer by running massive and increasing deficits? Instead he offers this silly statement:

“Insofar as overarching grand cosmic institutions have been created that might be considered in any way parallel to the divine kings of the ancient Middle East or the religious authorities of the Middle Ages, they have not been created to protect debtors, but to enforce the rights of creditors. The International Monetary Fund is only the most dramatic case in point here. It stands at the pinnacle of a great, emerging global bureaucracy—the first genuinely global administrative system in human history, enshrined not only in the United Nations, the World Bank, and the World Trade Organization, but also the endless host of economic unions and trade organizations and non-governmental organizations that work in tandem with them—created largely under U.S. patronage. All of them operate on the principle that (unless one is the United States Treasury), “one has to pay one’s debts”—since the specter of default by any country is assumed to imperil the entire world monetary system, threatening, in Addison’s colorful image, to turn all the world’s sacks of (virtual) gold into worthless sticks and paper.”

In this quote Graeber buries his lede: what is new about existing money relations is not that debtors are forced under pain of the harshest possible sanctions to pay their debts, but that the number one debtor on the planet has been excluded from these sanctions: it has been able to erect its empire precisely on the basis of its debt, and the normal operation of the world market, not “global institutions”, protect this debtor from its creditors and even require these creditors to extend additional credit to roll over existing debt. Washington’s creditors have been forced to concede Washington will never make good on its liabilities and could not, under any circumstances makes good on them. What solution does Graeber propose to “protect debtors” when the biggest debtor on the planet is also a global empire resting on debt?

Again, since anarchists are terrible at economic analysis, Graeber’s error is understandable, but why has no Marxist academic identified this irreconcilable contradiction in Graeber’s thesis?

The untenable political foundation of Graebers anti-statist argument

The absence of a Marxist critique of Graeber’s underlying argument is not an accident, it results from the fact that Graeber has chosen to erect his anti-statist argument on the very same foundations as are found in Marxist purely political arguments. For instance, Graeber says of the 2008 crash:

“…on a certain level, it was exactly what it seemed to be: a scam, an incredibly sophisticated Ponzi scheme designed to collapse in the full knowledge that the perpetrators would be able to force the victims to bail them out. On another level it could be seen as the culmination of a battle over the very definition of money and credit.”

He traces the genesis of this scam to the Keynesian era consensus that “banks do, indeed, create money “out of thin air,” and that for this reason, there was no intrinsic reason that government policy should not encourage this during economic downturns as a way of stimulating demand”. He notes that this deal was offered only to a small slice of the world’s population, but stoked demands by the majority for inclusion:

“At some point in the ’70s, things reached a breaking point. It would appear that capitalism, as a system, simply cannot extend such a deal to everyone.”

I want to thank the Marxist academy for this fucking nonsense statement by Graeber. It is they who have continually characterized Keynesian economics as some sort of compromise by the fascist state imposed on capital when it was the opposite. What was this “deal”? The Great Depression forced society to confront absolute overaccumulation in the form of massive unemployment and idled productive capacity. The so-called “Keynesian deal” of which Graeber speaks, was nothing more than the employment of this massive excess of population and capital for the purpose of murdering 80 million people and reducing the productive capacity of Eurasia to rubble. This holocaust gets imported into Marxist critical thought as a class compromise, completely overlooking what this “compromise” entailed. Beyond just employing the working class of every industrial nation in an orgy of slaughter of the workers of every other nation, the “compromise” also avoided reducing hours of labor made necessary by the overaccumulation of capital in every country. So, in return for enlisting in a war of global redivision and slaughter, the workers’ reward for their effort was the possibility of ever longer hours of work at a diminishing real wage.

Some fucking “class compromise” that turned out to be.

Graeber imports this nonsense argument, which appears in the writings of almost all Marxist academics, into his argument wholesale. Thereby importing a failed political (statist) argument made by these fucking stupid Marxists into his anti-statist one. The moment we begin to frame the 1970s as a period when the Keynesian compromise broke down, Graeber argues, “it’s easy to see that the next thirty years, the period from roughly 1978 to 2009, follows nearly the same pattern.” Which is to say, once anti-statists accept the mainstream Marxist political version of events from the Great Depression to 1978, the period from 1978 to 2009 appears to fit the same silly political narrative of the Marxist academy.

This is probably true, but it does not explain why Graeber adopts a failed and obsolete political narrative for his anti-statist argument in the first place. If Graeber’s intent was to offer an anti-statist narrative for the present crisis, he has to begin with an anti-statist premise — and this is not to be found in the mainstream Marxist narrative which is no more than a political critique of capitalism. Which is to say, the narrative Graeber employs is no more than a critique of capitalism from within existing capitalist relations of production — a critique of the capitalist state from the standpoint of labor.

The reason why Graeber, as an anarchist, sees nothing wrong with the importation of this Marxist political argument into his own argument is that both Marxism and anarchism share the common attribute of resting solely on the political critique of present society. Each criticizes the present state as the state of the exploiters and advocates its overthrow, and their criticism goes no further than a political criticism of existing relations. But here they part company, one argues the new relations of production requires another state — a state of the exploited — while the other, who never saw any but a political connection between existing relations and the state, think this overthrow is enough.

How did we get here: The empty character of present antistatism

However, despite this difference between the Marxist and anarchist variants of communism, which can only express itself after the overthrow of the present state, anarchism and Marxism are essentially the same political critique of the state that, because it is simply political criticism, ultimately must collapse once the question turns to what comes next. Here Graeber can be seen to fumble incoherently as he tries to point a way beyond the present state — a state whose existence he somehow vaguely senses has outlived its usefulness to mankind and only represents a threat to its future:

“There is very good reason to believe that, in a generation or so, capitalism itself will no longer exist—most obviously, as ecologists keep reminding us, because it’s impossible to maintain an engine of perpetual growth forever on a finite planet, and the current form of capitalism doesn’t seem to be capable of generating the kind of vast technological breakthroughs and mobilizations that would be required for us to start finding and colonizing any other planets. Yet faced with the prospect of capitalism actually ending, the most common reaction—even from those who call themselves “progressives”—is simply fear. We cling to what exists because we can no longer imagine an alternative that wouldn’t be even worse.

“How did we get here? My own suspicion is that we are looking at the final effects of the militarization of American capitalism itself. In fact, it could well be said that the last thirty years have seen the construction of a vast bureaucratic apparatus for the creation and maintenance of hopelessness, a giant machine designed, first and foremost, to destroy any sense of possible alternative futures. At its root is a veritable obsession on the part of the rulers of the world—in response to the upheavals of the 1960s and 1970s—with ensuring that social movements cannot be seen to grow, flourish, or propose alternatives; that those who challenge existing power arrangements can never, under any circumstances, be perceived to win. To do so requires creating a vast apparatus of armies, prisons, police, various forms of private security firms and police and military intelligence apparatus, and propaganda engines of every conceivable variety, most of which do not attack alternatives directly so much as create a pervasive climate of fear, jingoistic conformity, and simple despair that renders any thought of changing the world seem an idle fantasy. Maintaining this apparatus seems even more important, to exponents of the “free market,” even than maintaining any sort of viable market economy. How else can one explain what happened in the former Soviet U nion? One would ordinarily have imagined that the end of the Cold War would have led to the dismantling of the army and the KGB and rebuilding the factories, but in fact what happened was precisely the other way around. This is just an extreme example of what has been happening everywhere. Economically, the apparatus is pure dead weight; all the guns, surveillance cameras, and propaganda engines are extraordinarily expensive and really produce nothing, and no doubt it’s yet another element dragging the entire capitalist system down—along with producing the illusion of an endless capitalist future that laid the groundwork for the endless bubbles to begin with. Finance capital became the buying and selling of chunks of that future, and economic freedom, for most of us, was reduced to the right to buy a small piece of one’s own permanent subordination.

“In other words, there seems to have been a profound contradiction between the political imperative of establishing capitalism as the only possible way to manage anything, and capitalism’s own unacknowledged need to limit its future horizons lest speculation, predictably, go haywire. Once it did, and the whole machine imploded, we were left in the strange situation of not being able to even imagine any other way that things might be arranged. About the only thing we can imagine is catastrophe.”

Graeber is not alone in his inability to imagine anything beyond a catastrophe in the absence of capitalism — the very same vague and incoherent fumblings can be found in the writings of such first class thinkers as Postone, Badiou, Kurz, and many writings of many lesser thinkers on the problem of anti-politics and anti-economics, once they turn from the question of criticising the existing state to the matter of superceding it. It can also be found onthe Right, with its guns, gold and beans survivalism. Thus when Graeber looks at the bailouts of financial interests on Wall Street that accompanied this crisis, he can get no further than a radical program to wipe out the debts of the mass of society and restart the next cycle of debt accumulation by the mass of society:

“At this point, however, the principle has been exposed as a flagrant lie. As it turns out, we don’t “all” have to pay our debts. Only some of us do. Nothing would be more important than to wipe the slate clean for everyone, mark a break with our accustomed morality, and start again.”

Really? This is the best anti-statists can do? How about, instead, we point out that Washington has built its global empire on debt money, that that debt money is now the precondition for the continued existence of capitalism itself, and that these two facts call into question not just the debt peonage of the mass of society, but money itself, that the debt money financial instruments emitted by Washington are nothing more than monies designed to maintain the mass of the world’s population in abject poverty. Our lack of imagination can be best understood as the inability of antistatists to declare what must be declared forthrightly:

The debt money created by Washington demonstrates that all money has outlived its usefulness and must be abolished.