Money and Relationships Workshop 5: Cash or Credit?

CASH
How do you feel about cash? What is your personal attitude toward it?
Is it good? Bad? Neutral?
"Dirhams and dinars are not created for any particular purpose; they are useless by themselves; they are just like stones. They are created to circulate from hand to hand, to govern and to facilitate transactions. They are symbols to know the value and grades of goods.
They can be symbols, units of measure, because of this very lack of usefulness, indeed lack of any particular feature other than value."
… the same is the case with money--it has no purpose of its own, but it serves as a medium for the purpose of exchanging goods.
From this it also follows that lending money at interest must be illegitimate, since it means using money as an end in itself. "money is not created to earn money.'' …
Money is thus a unit of measure that provides a means of assessing the value of goods, but also one that operates as such only if it stays in constant motion. --Prophet Ghazali (1058-1101AD) Debt, p. 281

Cold cash was employed largely between strangers, or when paying rents, tithes and taxes to landlords, bailiffs, priests, and other superiors. … coins were most likely to be used both by the sort of people who ran the legal system--the magistrates, constables, and justices of the peace--and by those violent elements of society they saw it as their business to control. Debt, p.329




CREDIT
How do you feel about credit? What is your personal attitude toward it?
Is it good? Bad? Neutral?

Community-based credit, community-based market
An example from Britain in the 16-17th century
…those frequenting the local butcher, baker or shoemaker would simply put things on the tab. The same was true of those attending weekly markets, or selling neighbours milk or cheese or candle-wax. In a typical village, the only people likely to pay cash were passing travellers, and those considered riff-raff: paupers and ne'er-do-wells so notoriously down on their luck that no one would extend credit to them. Since everyone was involved in selling something, however, just about everyone was both creditor and debtor; most family income took the form of promises from other families; everyone knew and kept count of what their neighbours owed one another; and every six months or year or so, communities would hold a general public "reckoning," cancelling debts out against each other in a great circle, with only those differences then remaining when all was done being settled by use of coin or goods.
The reason that this upends our assumptions is that we're used to blaming the rise of capitalism on something vaguely called "the market"--the breakup of older systems of mutual aid and solidarity, and the creation of a world of cold calculation, where everything had it's price. Really, english villagers appear to have seen no contradiction between the two. On the one hand, they believed strongly in the collective stewardship of fields, streams, and forests, and the need to help neighbours in difficulty. On the other hand, markets were seen as a kind of attenuated version of the same principle, since they were entirely founded on trust. … at the same time, most seem to have been quite comfortable with the idea of buying and selling, or even with market fluctuations, provided it didn't get to the point of threatening honest families' livelihoods. … lending was considered an appropriate vocation, for example, for widows with no other source of income, or as a way for neighbours to share in the profits from some minor commercial venture. Debt, p.327
The focus of social and moral life was … the sharing of pleasures, the communion of the senses, all the physical embodiment of what was called "good neighbourhood." Society was rooted above all in the "love and amity" of friends and kin, and it found expression in all those forms of everyday communism (helping neighbours with chores, providing milk or cheese for old widows) that were seen to flow from it. Markets were not seen as contradicting this ethos of mutual aid. It was … an extension of mutual aid, and for much the same reason: because it operated entirely through trust and credit. Debt, p.329

Quick clarification of terms:
What is a market?
What is capitalism?
Are they separate concepts? If so, what distinguishes them?

Credit as reputation
"My master then had a full trade of groceries, ironmonger ware, and several other goods, and very much respected and trusted, not only by the people of this own religious profession, but by all others of all professions and circumstances. . . His credit was so much, that any who had money to dispose of lodged it with him to put out to interest or to make use of it."; William Stout, of the tradesman in whose shop he first apprenticed.
In this world, trust was everything. Most money literally was trust, since most credit arrangements were handshake deals. When people use the word "credit," they referred above all to a reputation for honesty and integrity; and a man or woman's honour, virtue and respectability, but also, reputation for generosity, decency, and good natured sociability, were at least as important considerations when deciding whether to make a loan as were assessments of net income. As a result, financial terms became indistinguishable from moral ones. One could speak of others as 'worthies', as 'a women of high estimation' or 'a man of no account', and equally of 'giving credit' to someone's words when one believes what they say, or of 'extending credit' to them, when one takes them at their word that they will pay one back. Debt, p.326-329

Stranger-based credit
The peasants' visions of communistic brotherhood did not come out of nowhere. They were rooted in real daily experience: of the maintenance of common fields and forests, of everyday cooperation and neighbourly solidarity. ... Obviously, rural communities were also divided, squabbling places, since communities always are--but insofar as they are communities at all, they are necessarily founded on a ground of mutual aid.
The same, as we've seen repeatedly, applies to credit. There are always different standards for those one considers friends or neighbours. The inexorable nature of interest-bearing debt, and the alternatively savage and calculating behaviour of those enslaved to it, are typical above all of dealings between strangers. … credit was just as much a matter of honour and reputation as it had ever been. The great untold story of our current age is of how these ancient credit systems were ultimately destroyed. Debt, p.326

Why credit persists as a system
"They will find, that no trading nation ever did subsist, and carry on its business by real stock [that is, just coin and merchandise]; that trust and confidence in each other, are as necessary to link and hold a people together, as obedience, love, friendship, or the intercourse of speech. And when experience has taught man how weak he is, depending only on himself, he will be willing to help others, and call upon the assistance of his neighbours, which of course … must set credit again afloat." charles davenant in 1696, reasoning why a collapse of a credit system would not last long. Debt, p.330


Having read all that, what would you say is the difference between cash and credit?

According to 'Debt', money is theivable, credit is not. Money is an object without a history and credit is by definition a relationship.


Is credit as we practice it today the same as what was described above?
What are the similarities?
What are the differences?


If credit is detached from human relations, then money must have some perceived intrinsic value, which then has to be agreed upon by everyone. Agree or disagree?
Is it possible to agree on an 'intrinsic value of money'?



...and then there was Hobbes
Then Hobbes came along and said something that scandalized everyone. He said that humans were basically machines whose actions could be understood by one single principle: they moved toward pleasure and away from pain.

He also introduced a powerful cynicism. He asked, why is it that even within our families, we lock our most valuable possessions in strongboxes?

And finally his ultimate argument--that humans, being driven by self-interest, cannot be trusted to treat each other justly of their own accord, and therefore that society only emerges when they come to realize that it is to their long-term advantage to give up a portion of their liberties and accept the absolute power of the king. [because the government + threat of force (guns) are the only power strong enough to ensure compliance with agreements in the absence of community] Debt, p.

So, what's your emotional reaction to any of these statements?
Do you agree with any of them?
Do you disagree with any of them?



Concluding Statements:
You can choose to talk about any or all of these statements or questions:

"Your unique human identity lies in the sum of all the relationships to all the other people in your life."
"Self-interest or personal independence is only possible when one is liberated from this maze of human relationships."

How do value arrangements affect relationships?

Does money need relationships to be credible?



Extra:
On page 355, David Graeber makes the following statement:

"We could no longer have a universal world market than we could have a system in which everyone who wasn't a capitalist was somehow able to become a respectable, regularly paid wage labourer with access to adequate dental care. A world like that has never existed and never could exist. What's more, the moment that even the prospect that this might happen begins to materialize, the whole system starts to come apart." Debt, p.355

Do you think this is true, that universal prosperity will tear capitalism apart?
(by 'universal prosperity' i mean, everyone has enough. Enough food, enough medical care, enough to take care of them when they are children, sick, or old.)
Do you think universal prosperity is possible at all? In capitalism, or in another system?

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