#7CheapThings: What Is Cheap Money?

Welcome to the second post in our #7CheapThings blog series! Raj Patel & Jason W. Moore’s A History of the World in Seven Cheap Things focuses on seven areas that are the foundation of modern commerce: nature, money, work, care, food, energy, and lives. How has the cheapening of these things made the world safe for capitalism? Follow along to find out.

If we want to understand the idea of cheap money, we have to first go beyond money and zoom out to take a look at the larger picture. At the core of capitalism is a cycle that expands beyond just money and encompasses commodities as well. Money flows into commodities which then flow back into money. It is here that the authors note:

A peculiar and very modern magic lies here. States wanted the loot of war, but needed money to pay the military. Without war, they couldn’t acquire riches which they needed, in part, to pay for the previous war. War, money, war. Bankers needed governments to repay them, and governments needed bankers to fund them. What’s new about capitalism and its ecology isn’t the pursuit of profit, but the relations between the pursuit, its financing, and governments. The planet was to be remade through these relations, and they are the subject of this chapter.

This cycle is fueled by the cheap money in question, specifically “a secure denomination of exchange that can be relied upon to facilitate commerce, controlled in a way that meets the needs of the ruling bloc at the same time.” Said cheapness includes two major characteristics: the appropriation of a primary commodity such as gold or oil and its regulation that allows interest to remain low and control over the wider cash economy which only states can provide.

In the end, however:

Cheap money means one thing above all – low interest. Even in today’s world of fast-moving container ships and high frequency stock trades, credit is the lifeblood of capitalism. If cheap work, food, energy, and raw materials are the necessary conditions for capitalist booms, cheap credit makes it all possible. Historically, there’s been a virtuous circle of cheap money and new frontiers. When opportunities for profit making contracted in established regions of production and extraction, capitalists took their profits and put it into money-dealing. That’s one reason why, after each great boom in world capitalism – the Dutch in the mid-seventeenth century, the British in the mid-nineteenth century, and the American postwar golden age – there’s been a curious process that scholars call financialization. We’re living in such a time at the moment, and history doesn’t reassure – such cycles of accumulation usually end in war, with the rise of new financial powers, as we’ll see below.

Two movements make financialization attractive and even useful for capitalism. One is that, as we’ve seen, when the world’s economic pie stops growing, leading powers tend to go to war, or at a minimum build up their warmaking capacity. As we will see modern states rarely self-finance their wars. They have to borrow money just like anyone else. The other thing that happens is that capital in the heartlands of the system begin to flow towards the frontiers. In the late nineteenth century, for example, gigantic sums of British capital, in the form of loans, flowed out of London and towards the rest of world, especially to build railroads. Thus the significance of financialization – relatively cheap British capital flowed out to make possible a global railway network, which in turn was central to the next century’s extraordinary food and resource extraction. This worked so long as there were bountiful frontiers, where humans and other natures could be put to work – or otherwise extracted – for cheap. When the boom made possible – in part – by the global railway network went bust, in the 1970s, a new era of financialization began. And though the neoliberal era owed it existence to precisely the inverse of cheap money – the 1979 Volcker Shock – a long era of cheap money followed. As Anwar Shaikh explains, the neoliberal “boom” — such as it was – that began in the 1980s was “spurred by a sharp drop in interest rates… Falling interest rates also lubricated the spread of capital across the globe, promoted a huge rise in consumer debt, and fuelled international bubbles in finance and real estate.” What’s different today is that, where once finance was a bridge to a renewed era of profitability, because of how finance, science, and empire cooperated to make new frontiers of cheap nature, there are no such frontiers today. In the twenty-first, money masks the underlying problems of socio-ecological crisis, magnifying the contradictions in the process.


Raj Patel is an award-winning writer, activist and academic. He is a Research Professor in the Lyndon B. Johnson School of Public Affairs at the University of Texas, Austin and a Senior Research Associate at the Unit for the Humanities at Rhodes University. He is the author of Stuffed and Starved: The Hidden Battle for the World Food System and The Value of Nothing.

Jason W. Moore teaches world history and world-ecology at Binghamton University, and is coordinator of the World-Ecology Research Network. He is the author of several books, including Capitalism in the Web of Life: Ecology and the Accumulation of Capital, and numerous award-winning essays in environmental history, political economy, and social theory.


#7CheapThings: Cheap Nature

Welcome to the first post in our #7CheapThings blog series! Raj Patel & Jason W. Moore’s A History of the World in Seven Cheap Things focuses on seven areas that are the foundation of modern commerce: nature, money, work, care, food, energy, and lives. How has the cheapening of these things made the world safe for capitalism? Follow along to find out.

 

Raj & Jason, in their book, argue that humans in a capitalist system abuse the ecosystems that they are a part of, with the demand for profit outweighing detrimental effects on the environment. In this shift towards profit governing life, a split between the ideas of “Nature” and “Society” needed to occur. What exactly is meant by that is outlined in the excerpt below.

In the English language, the words nature and society assumed their familiar meanings only after 1550, over the arc of the “long” sixteenth century (c. 1450–1640). This was, as we shall see, a decisive period in England’s capitalist and colonial history. It marked the rise of the Spanish and Portuguese empires and their construction of massive New World production systems, worked by coerced Indigenous and African labor. These transformations were key elements of a planetary shift in the global center of power and production from Asia to the North Atlantic. That shift did not come fast. Europe was technologically and economically impoverished compared to civilizations on the other side of Asia, and only after 1800 did that change. China, recall, already had the printing press, a potent navy, gunpowder, and vibrant cities, and it was marked by both wealth and environmental crisis. Where European capitalism thrived was in its capacity to turn Nature into something productive and to transform that productivity into wealth. This capacity depended on a peculiar blend of force, commerce, and technology, but also something else—an intellectual revolution underwritten by a new idea: Nature as the opposite of Society. This idea gripped far more than philosophical minds. It became the common sense of conquest and plunder as a way of life. Nature’s bloody contradictions found their greatest expression on capitalism’s frontiers, forged in violence and rebellion—as the witch killing demonstrates.

We take for granted that some parts of the world are social and others are natural. Racialized violence, mass unemployment and incarceration, consumer cultures—these are the stuff of social problems and social injustice. Climate, biodiversity, resource depletion—these are the stuff of natural problems, of ecological crisis. But it’s not just that we think about the world in this way. It’s also that we make it so, acting as if the Social and the Natural were autonomous domains, as if relations of human power were somehow untouched by the web of life.

This means that we’re using these words—Nature and Society—in a way that’s different from their everyday use. We’re capitalizing them as a sign that they are concepts that don’t merely describe the world but help us organize it and ourselves. Scholars call concepts like these “real abstractions.” These abstractions make statements about ontology—What is?—and about epistemology: How do we know what is? Real abstractions both describe the world and make it. That’s why real abstractions are often invisible, and why we use ideas like world-ecology to challenge our readers into seeing Nature and Society as hidden forms of violence. These are undetonated words. Real abstractions aren’t innocent: they reflect the interests of the powerful and license them to organize the world.

That’s why we begin our discussion of cheap things with Nature. Nature is not a thing but a way of organizing—and cheapening—life. It is only through real abstractions—cultural, political, and economic all at once—that nature’s activity becomes a set of things. The web of life is no more inherently cheap than it is wicked or good or downloadable. These are attributes assigned to some of its relationships by capitalism. But it has been cheapened, yanked into processes of exchange and profit, denominated and controlled. We made the case in the introduction that capitalism couldn’t have emerged without the cheapening of nature; in this chapter we explore the mechanics and effects of this strategy.

Click here to win an Advance Reader’s Copy of A History of the World in Seven Cheap Things on Goodreads. Giveaway ends on September 15th.


Raj Patel is an award-winning writer, activist and academic. He is a Research Professor in the Lyndon B. Johnson School of Public Affairs at the University of Texas, Austin and a Senior Research Associate at the Unit for the Humanities at Rhodes University. He is the author of Stuffed and Starved: The Hidden Battle for the World Food System and The Value of Nothing.

Jason W. Moore teaches world history and world-ecology at Binghamton University, and is coordinator of the World-Ecology Research Network. He is the author of several books, including Capitalism in the Web of Life: Ecology and the Accumulation of Capital, and numerous award-winning essays in environmental history, political economy, and social theory.


Win an Advance Reader’s Copy of A History of the World in Seven Cheap Things

We have a few extra advance reader’s copies of A History of the World in Seven Cheap Things, and one of them could be yours! Entries are free, and all Goodreads members residing in the United States are eligible to win. Just click the link below to enter!

A History of the World in Seven Cheap Things: A Guide to Capitalism, Nature, and the Future of the Planet by Raj Patel and Jason W. Moore

(click for Goodreads giveaway)

Nature, money, work, care, food, energy, and lives: these are the seven things that have made our world and will shape its future. In making these things cheap, modern commerce has transformed, governed, and devastated Earth. In A History of the World in Seven Cheap Things, Raj Patel and Jason W. Moore present a new approach to analyzing today’s planetary emergencies. Bringing the latest ecological research together with histories of colonialism, indigenous struggles, slave revolts, and other rebellions and uprisings, Patel and Moore demonstrate that throughout history, crises have always prompted fresh strategies to make the world cheap and safe for capitalism. At a time of crisis in all seven cheap things, innovative and systemic thinking is urgently required. This book proposes a radical new way of understanding—and reclaiming—the planet in the turbulent twenty-first century.

(Giveaway ends on September 15th.)

Learn more about the book with author Jason W. Moore on the Center for Energy and Environment in the Human Sciences @ Rice podcast. Click here to listen.