Gordon Cook: Highly Recommended Video “Modern Money and Public Purpose – The Historical Evolution of Money and Debt” – Partial Transcription

L. Randall Wray and Michael Hudson present at the Modern Money and Public Purpose seminars. L. Randall Wray is a Professor of Economics at the University of Missouri-Kansas City. Michael Hudson Distinguished Research Professor of Economics at the University of Missouri (Kansas City), and President of the Institute for the Study of Long-term Economic Trends (ISLET).

This video is an hour and three-quarters long — Wray begins, then Hudson takes over at 43:00 — so I suggest you listen to it over your Sunday morning coffee instead of NPR. (And if you’ve been taking note of all the “tally stick” jokes in the threads lately, I’m guessing this video is where that comes from…)

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Transcribed portion below the line.

Here’s an interesting passage that I hope I’ve transcribed with reasonable accuracy from Michael Hudson’s talk. Of Sumer:

[HUDSON 52:10] The original money was a price schedule to enable pepole to pay in kind. And the barley, obviously people did not go around with barley in their pocket because it really doesn’t last very well. People didn’t use money, actually to pay. What they would do during the crop year, they would so essentially what somebody would do in a bar today: They’d run up a tab. And they would run up a tab with the ale women for money that would be due on the threshing floor at the seasonal harvesting time. And in fact almost all the barley debts, and we have the contracts from Mesopotamia were due on the threshing floor at barley time, the silver debts were due at another time, and this was the principal that lasted until about 1200BC.

Time passes, there is a dark age, and until 750BC we to Greece and Rome.

[HUDSON] That’s when civilization began to go down hill. It’s usually considered the start of Western civilization, but what people think is the start of Western Civilization was the falling apart of Near Eastern origins of civilization, of this economy that had been put together in a very well-organized economy, and all of a sudden instead of the public institutions, you had local chieftains occurring, and in Rome, very soon you had the aristocratic families overthrow the kings, and the functions that were in the public sector in the Near East all of a sudden were taken over by private families — let’s call them the Mafia, because that’s basically what the Roman oligarchy was.

And there was a complete change in policy from the Near Eastern Bronze Age to classical antiquity: When a new ruler would come to the throne in Mesopotamia, the first thing they would do, on their first full year on the throne, was to proclaim a clean slate. And that’s because a lot of the debts that were denominated in barley couldn’t be paid. …

And there was a general understanding that the debts tended to grow faster than the means to pay. … [Scribes] had two basic contrasts: The doubling time of debt. …You knew here’s this exponential curve of debt, very rapidly. [T]hey also had curves for the growth of herds, and output, and that was an S curve, just like economics textbooks today …

So the rulers, when they came in, would cancel the debts for a very good reason. … One of the Roman historians was given an explanation by the Egyptians for why the Phatroahs cancelled the debts: They said, if we don’t cancel the debts, then the debtors are going to fall into bondage to the creditors… and then nobody’s going to fight in the army and we’ll be defeated. …

What happened by the time of Rome in 133BC is that you had a Milton Friedman philosophy of free markets by the oligarchy. What they realized, in Rome, was exactly what President Nixon and Hnery Kissinger realized in Chile: You can’t have a free market for creditors if you don’t murder everyone who disagrees with you [laughter]. If you don’t kill everyone who wants to cancel the debts, if you don’t kill everyone one knows history, if you don’t kill the labor leaders, you can’t have a free market, oligarchy style. … So there was a 100 year social war in Rome, and the result was the by the time the empire got going, one quarter of the population was in debt bondage or outright slavery.

History does rhyme, doesn’t it?

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So, this is a great series, I wish them well, and maybe I’ll be lucky enough to make my way down to Manhattan to listen to one or two of them, not least because the very concept of “Public Purpose” seems to alien to most contemporary discourse on political economy.