Global Problems and the Culture of Capitalism

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Global Problems and the Culture of Capitalism

Sixth Edition

Richard H. RobbinsState University of New York at Plattsburgh

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Library of Congress Cataloging-in-Publication DataRobbins, Richard H. (Richard Howard) Global problems and the culture of capitalism / Richard H. Robbins.—6th ed. p. cm. ISBN-13: 978-0-205-91765-5 (alk. paper) ISBN-10: 0-205-91765-8 (alk. paper) 1. Economic history—1990– 2. Social problems. 3. Capitalism. 4. Consumption (Economics) 5. Poverty. 6. Financial crises. I. Title.HC59.15.R63 2014330.12'2—dc22


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Brief Contents

Part 1 Introduction: The Consumer, the Laborer, the Capitalist, and the Nation-State in the Society of Perpetual Growth 1

Chapter 1 Constructing the Consumer 12

Chapter 2 The Laborer in the Culture of Capitalism 35

Chapter 3 The Rise and Fall of the Merchant, Industrialist, and Financier 57

Chapter 4 The Nation-State in the Culture of Capitalism 99

Part 2 The Global Impact of the Culture of Capitalism: Introduction 127

Chapter 5 Population Growth, Migration, and Urbanization 133

Chapter 6 Hunger, Poverty, and Economic Development 168

Chapter 7 Environment and Consumption 197

Chapter 8 Health and Disease 220

Chapter 9 Indigenous Groups and Ethnic Conflict 248

Part 3 Resistance and Rebellion: Introduction 275

Chapter 10 Peasant Protest, Rebellion, and Resistance 282

Chapter 11 Anti-Systemic Protest 306

Chapter 12 Religion and Anti-Systemic Protest 329

Chapter 13 Solving Global Problems: Some Solutions and Courses of Action 353

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Preface xiii

Part 1 Introduction: The Consumer, the Laborer, the Capitalist, and the Nation-State in the Society of Perpetual Growth 1

A Primer on Money: The Philosopher’s Stone 3

The Development of Commodity Money 5

The Shift from Commodity to Fiat or Debt Money 7

The Consequences of a System of Debt Money 8

Chapter 1 Constructing the Consumer 12Remaking Consumption 14

Marketing and Advertising 15

The Transformation of Institutions 17

The Transformation of Spiritual and Intellectual Values 19

The Reconfiguration of Time, Space, and Class 21

Kinderculture in America: The Child as Consumer 23

The Role of Children in Capitalism 23

The Social Construction of Childhood 25

Exporting the Consumer 31

Conclusion 34

Chapter 2 The Laborer in the Culture of Capitalism 35A Primer on the Elements of Capitalism 36

The Baptism of Money 39

The Construction and Anatomy of the Working Class 40

Characteristics of the Working Class 40

The Growth of Overseas Assembly Plants 45

The Creation of Free Labor 48

The Segmentation of the Workforce 49

Control and Discipline 52

Resistance and Rebellion 54

Conclusion 55

Chapter 3 The Rise and Fall of the Merchant, Industrialist, and Financier 57The Era of the Global Trader 60

A Trader’s Tour of the World in 1400 60

The Economic Rise of Europe and Its Impact on Africa and the Americas 65

The Birth of Finance and the Tulip Bubble of 1636–1637 70

viii Contents

The Era of the Industrialist 74

Textiles and the Rise of the Factory System 77

The Age of Imperialism 78

The Era of the Corporation, the Multilateral Institution, and the Capital Speculator 83

The Rise of the Corporation 83

Bretton Woods and the World Debt 86

The “Second Great Contraction” 92

Conclusion 97

Chapter 4 The Nation-State in the Culture of Capitalism 99The Origin and History of the State 101

The Evolution of the State 101

The History and Function of the Nation-State 102

Constructing the Nation-State 104

Creating the Other 105

Language, Bureaucracy, and Education 106

Violence and Genocide 109

Spin, Free Trade, and the Role of Energy in the Global Economy 113

Manufacturing Consent: Spin 114

Markets and Free Trade 118

Energy and Technology 120

Conclusion 124

Part 2 The Global Impact of the Culture of Capitalism: Introduction 127

A Primer on Market Externalities: Polanyi’s Paradox 129

Chapter 5 Population Growth, Migration, and Urbanization 133The Malthusians Versus the Revisionists 135

The Case of India and China 136

The Issue of Carrying Capacity 138

The Ideology of Malthusian Concerns 138

Demographic Transition Theory 141

A Primer on the Determinants of Population Growth and Decline 143

Some Examples of Demographic Change 145

Population Growth in the Periphery 148

Wealth Flows Theory 149

The Social Implications of Wealth Flows Theory 151

The Question of Gender and Power 152

Issues of Immigration 154

Contents ix

History of Migration 156

The Economics of Immigration 158

Understanding Illegal Immigration 160

Urbanization and the Growth of Slums 162

Conclusion 167

Chapter 6 Hunger, Poverty, and Economic Development 168The Evolution of Food Production: From the Neolithic

to the Neocaloric 169

From Gathering and Hunting to the Neolithic 170

Capitalism and Agriculture 171

The Neocaloric and the Green Revolution 173

The Politics of Hunger 176

The Anatomy of Famine 177

The Anatomy of Endemic Hunger 179

Solutions and Adaptations to Poverty and Hunger 184

Economic Development 184

The Nature and Growth of the Informal Economy 188

The Nature and Scope of the Informal Economy of Drugs 191

Conclusion 196

Chapter 7 Environment and Consumption 197The Case of Sugar 202

Sugar Origins and Production 202

Uses of Sugar 202

The Development of the Sugar Complex 203

The Expansion of Sugar Production 203

The Mass Consumption of Sugar 204

Modern Sugar 205

The Story of Beef 206

Creating a Taste for Beef 207

The Emergence of the American Beef Industry 208

Modern Beef 212

The Impact of Production on the Environment: The Effects of Climate Change 213

The Environment, Sustainability, and the Nation-State 217

Conclusion 219

Chapter 8 Health and Disease 220A Primer on How to Die from an Infectious Disease 225

The Relationship between Culture and Disease 229

Gathering and Hunting to Early Agriculture 229

Cities: “Graveyards of Mankind” 230

x Contents

Diseases of Environmental Change 233

Diseases of Human Ecology: Chickens, Pigs, and Wild Birds 235

The Origin of Influenza: Avian Flu and H1N1 235

Aids and the Culture of Capitalism 238

How Did the Disease Spread? 240

Who Gets Infected with AIDS? 243

Who Gets Blamed? 245

Conclusion 246

Chapter 9 Indigenous Groups and Ethnic Conflict 248The Fate of Indigenous Peoples 251

Some Characteristics of Indigenous Peoples 251

The Process of Ethnocide 252

The Guaraní: The Economics of Ethnocide 259

History and Background 260

Contemporary Development and Guaraní Communities 262

Disadvantaged Majorities and Their Revenge 264

Leveling Crowds 266

Genocide as an Externality of the Market 267

Conclusion 273

Part 3 Resistance and Rebellion: Introduction 275

A Primer on Terrorism 277

Chapter 10 Peasant Protest, Rebellion, and Resistance 282Malaysia and the Weapons of the Weak 283

Malaysian Peasants and the Green Revolution 284

Fighting Back 286

Obstacles to Resistance 287

Protest and Change 288

Kikuyu and the Mau Mau Rebellion 289

The British in East Africa 289

The White Highlands 291

The Roots of the Rebellion 292

The Rebellion 294

“State of Emergency” 295

The Oath and the Detention Camps 297

Independence 298

The Rebellion in Chiapas 299

Poverty and Inequality in Chiapas 301

The Rebellion and the Global Economy 302

Contents xi

The Revolt and the Reactions of the Mexican Government 303

The Future of Peasants 304

Conclusion 305

Chapter 11 Anti-Systemic Protest 306Protest as Anti-Systemic: The Two World Revolutions 307

The Revolution of 1848 308

The Revolution of 1968 310

The Protests of Labor: Coal Miners in Nineteenth-Century Pennsylvania 311

The Coal Industry and the Worker’s Life 311

Worker Resistance and Protest 314

Destroying Worker Resistance 316

Global Feminist Resistance 317

Gender Relations in the Culture of Capitalism 319

Strategies of Protest 321

Direct Action and Occupy Wall Street 323

Anarchism and Direct Action 325

Conclusion 328

Chapter 12 Religion and Anti-Systemic Protest 329Indigenous Religious Movements as Anti-Systemic Protest 331

The Ghost Dance 331

The Cargo Cults 332

Zionism in South Africa 334

The Global Challenge of Anti-Systemic Religious Protest 336

Islamic Fundamentalism 338

Islamic Fundamentalism in Iran 339

Protestant Fundamentalism in North America 340

“Terror in the Mind of God” 345

Some Examples of Religious Violence 346

Understanding Religious Violence 351

Conclusion 351

Chapter 13 Solving Global Problems: Some Solutions and Courses of Action 353The Central Dilemma of Growth 354

The Depletion of Natural Capital/Wealth 357

The Depletion of Political Capital/Wealth 358

The Depletion of Social Capital/Wealth 363

Things We Could Do 372

The Debt Strike 375

Conclusion 376

xii Contents

References 379

Name Index 392

Place and Culture Index 398

Subject Index 401



Over the past 400 to 600 years, a culture and society, originating for the most part in Europe and dedicated to the idea of trade and consumption as the ultimate source of well-being, began to expand to all parts of the globe. In many ways it is the most successful culture and society the world has ever seen, and its technology, wealth, and power stand as monuments to its suc-cess; however, accompanying its expansion have been problems—growing social and economic inequality, environmental destruction, mass starvation, and social unrest. Most members of this society and culture perceive these problems as distant from themselves or as challenges for them to meet. However, there is the possibility that these problems, which threaten to negate every-thing this culture has accomplished, are intrinsic to the culture itself. That is the possibility to be explored in this book.

The outline of this book emerged when, a few years ago, my colleagues at the State University of New York at Plattsburgh, James Armstrong and Mark Cohen, and I began developing a course on global problems. We wanted to create a course that would help students understand the major global issues that they confront in the mass media—problems such as the so-called population explosion, famine and hunger, global environmental destruction, the emergence and spread of new diseases, so-called ethnic conflict and genocides, terrorism, and social protest. We learned quickly that to make the course successful, we had to overcome the often-ethnocentric perspectives of the students, perspectives that were often reinforced by media coverage of global affairs. We needed also to compensate for the students’ lack of backgrounds in anthropology, history, and economics, all crucial for understanding the roots of the problems we were to examine. Finally, we needed to illustrate that the problems we examined were relevant to them, that the problems would affect them either directly or indirectly, and that their actions now or in the future would determine the extent to which the origins of these problems could be acknowledged, let alone ever addressed. The form of this book emerged from our efforts at deal-ing with these pedagogical issues and the classroom interactions that these efforts stimulated.

The Focus oF This Book

We can summarize our approach in this book as follows: There has emerged over the past five to six centuries a distinctive culture or way of life dominated by a belief in trade and commod-ity consumption as the source of well-being. This culture flowered in Western Europe, reached fruition in the United States, and spread to much of the rest of the world, creating what some anthropologists, sociologists, and historians call the world system. People disagree on the critical factors in the development of this system and even whether it was unique historically, although most agree on certain basic ideas. Among the most important are the assumptions that the driving force behind the spread of the contemporary world system was industrial and corporate capital-ism, and that the spread of the world system is related in some way to the resulting division of the world into wealthy nations and poor nations or into wealthy core, developed, or industrialized areas and dependent peripheral, undeveloped, or nonindustrialized areas.

The spread of the capitalist world system has been accompanied by the creation of distinctive patterns of social relations, ways of viewing the world, methods of food production, distinctive diets, patterns of health and disease, relationships to the environment, and so on. However, the spread of this culture has not gone uncontested; there has been resistance in the form of direct and indirect actions—political, religious, and social protest and revolution. How and why capitalist culture developed and the reasons why some groups resisted and continue to resist its development are among the questions posed in this book.

The answers to these questions are based on specific assumptions. First, a central tenet of anthropology is that personal, social, cultural, and historical factors determine the point of view

xiv Preface

any person might have regarding a certain phenomenon. No less is true of those participating in the culture of capitalism who have created a view of global events that we share. Consequently, these views tend to be, to one extent or another, ethnocentric; that is, they describe, evaluate, and judge events solely from a specific cultural perspective. Among the major purposes of anthro-pology is to teach ways to avoid ethnocentrism and appreciate the importance of understanding the beliefs and behaviors of others from their perspectives rather than from our own, a view anthropologists refer to as cultural relativism. To some extent ethnocentrism is unavoidable, and the job of the person who interprets global events—whether a journalist, economist, sociologist, or anthropologist—is to make the event comprehensible to those people for whom that person is writing. Our assumption is that to minimize cultural bias we must recognize that our views of events are partially influenced by our culture and, for that reason, we must make our own culture an object of analysis.

Second, we assume that an understanding of global events requires us to recognize that no contemporary culture or society exists independent of what anthropologists refer to as the world system, and that each falls within either the core or the periphery of that system. Using this terminology to refer to different parts of the world permits us to avoid the more value-laden distinctions implicit in the use of terms such as developed or undeveloped, modern or traditional, and First, Second, or Third World. World system theorists often include a third category, semi-periphery, to denote those nation-states or regions that are moving toward the core or that have moved out of the core. These distinctions recognize that countries can move from one category to another. For example, the three nation-states that world system theorists consider to have been dominant in the past four centuries—the Netherlands, the United Kingdom, and the United States—all began as semiperipheral to the world system.

Third, we assume that global events and actions cannot be adequately understood with-out considering the events that preceded them; we must develop a historical perspective. For example, we live in a period of human history largely defined by a sequence of events that began some four to five hundred years ago, loosely termed the Industrial Revolution. Because each of us has lived during only a particular phase of that history, we tend to take it for granted that the world has always been as it is today. Yet the modern industrial world order is, in historical terms, a very recent event. We are deceived by our biology, by our limited life span, into think-ing of sixty, seventy, or eighty years as a long time, but in the perspective of human history it is a fleeting moment. Human beings have for most of their existence lived as bands of gatherers and hunters, for a shorter time as agriculturists and farmers, and only recently as industrialists and wage laborers. Yet the Industrial Revolution has transformed the world and human societies as has no other event in history. We cannot understand the events, issues, and problems of today’s world without understanding the how’s and why’s of the Industrial Revolution.

It will be clear that the emergence of capitalism represents a culture that is in many ways the most successful that has ever been developed in terms of accommodating large numbers of individuals in relative and absolute comfort and luxury. It has not been as successful, however, in integrating all in equal measure, and its failure here remains one of its major problems. It has solved the problems of feeding large numbers of people (although certainly not all), and it has provided unprecedented advances in health and medicine (but, again, not for all). It has pro-moted the development of amazingly complex technological instruments and fostered a level of global communication without precedent. It has united people in common pursuits as no other culture has. Yet it remains to be seen when the balance sheet is tallied whether capitalism repre-sents the epitome of “progress” that some claim.

NeW To The sixTh ediTioN

Since the publication of the fifth edition of Global Problems and the Culture of Capitalism, we have experienced significant global upheaval as well as heightened concerns over global immigration, urbanization, climate change, and regional conflict, as well as levels of protest,

Preface xv

all of which are addressed in this, the sixth, edition of the book. Specific changes include the following:

• Additionaldiscussionofmoneyasdebt,themovementofmoney,andtheconsequencesand the importance of perpetual growth.

• Materialonadvertisingtargetedtochildrenandthescopeofthepractice.• Coverageofimmigration,itshistory,anditssocial,political,andeconomicimpact.• Coverageofurbanizationanditsimpacts• Discussionofclimatechangeanditsimpactontheeconomyandsocietyasawhole.• TimelyinformationonOccupyWallStreetandthephilosophyandtechniquesofDirectAction.• Anew,comprehensiveChapter13discussinghowtoaddressmanyoftheissuesraisedin

the book.

Throughout this edition, I have tried to make the nature and origin of complex problems acces-sible to general readers and undergraduates without oversimplifying the gravity of the problems.

As always, I welcome comments and communications from readers and can be reached by email at In addition, readers are encouraged to use the Web resources, including readings, online videos, and references created especially for the book, at

This text is available in a variety of formats—digital and print. To learn more about our programs, pricing options, and customization, visit


Many people have contributed to the writing of this book. I have already mentioned my colleagues James Armstrong and Mark Cohen. Others include Alfred Robbins, Michael Robbins, Rachel Dowty, Tom Moran, Philip Devita, Gloria Bobbie, Douglas Skopp, Edward Champagne, Vincent Carey, Larry Soroka, Ellen Fitzpatrick, Ann Kimmage, Michael Miranda, John Hess, Jan Rinaldi, Tina Charland, Tim Harnett, Daphne Kutzer, Monica van Beusekom, Russell Kleinbach, Peggy Lindsey, Dan and Mary Abel, Amy Weisz Predmore, Mark White, Barbara Harris, Art Orme, Sam Baldwin, and Mary Turner, along with the many students who helped me better articu-late important issues. I also thank members of the email list H-World, particularly its moderator Patrick Manning; Richard Winkel, moderator of the email list Activ-L (, and its many contributors; and many of the students who used one or another version of this book and who provided invaluable feedback. I would also like to thank the book’s reviewers.

Reviewers of the first edition were John L. Aguilar, Charles O. Ellenbaum, Cynthia Mahmood, Richard Moore, Jon Olson, and Dave Winther. Reviewers of the second edition were Elliot Fratkin, Smith College; James Loucky, Western Washington University; Luis A. Vivanco, University of Vermont; and Vaughn Bryant, Texas A&M University. Reviewers of the third edition were Eric Mielants, Fairfield University; William Leggett, Middle Tennessee; Nancy McDowell, Beloit College; and Benjamin Brewer, James Madison University. Reviewers of the fifth edition were George Esber, Miami University, Middletown; Suzanne Scheld, California State University, Northridge; James Sewastynowicz, Jacksonville State University; and Miguel Vasquez, Northern Arizona University.

I owe a special debt of gratitude to Sylvia Shephard for her initial support of the project; to Sarah Kelbaugh, Dave Repetto, Nancy Roberts, and Barbara Reiley of Pearson and Jennifer Jacobson and Dan Vest of Ohlinger Publishing Services for guiding the project through to its present edition; as well as to Shiny Rajesh, who managed the latest edition, and Sayed Zakaullah, whose copyediting will make reading the book far easier than it would have been otherwise. And special thanks go to Amy, Rebecca, and Zoey, who tolerated with unusual understanding my periods of self-imposed isolation. Needless to say, the final form of the book, for better or worse, is the result of my own decisions.

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[W]hat difference it would make to our understanding if we looked at the world as a whole, a totality, a system, instead of as a sum of self-contained societies and cultures; if we understood better how this totality developed over time; if

we took seriously the admonition to think of human aggregates as “inextricably involved with other aggregates, near and far, in weblike, netlike, connections.”

—Eric Wolf, Europe and the People without History

On or about December 1910, wrote novelist Virginia Woolf, human character changed.1 On his repeated visits to the United States, Frenchman André Siegfried (1928; see also Leach 1993:266) noted much the same thing: “A new society has come to life in America,” he said. “It was not clear in 1901 or 1904; it was noticeable in 1914, and patent in 1919 and 1925.” Samuel Strauss (1924, 1927; see also Leach 1993:266), a journalist and philosopher writing in the 1920s, suggested the term consumptionism to characterize this new way of life that, he said, created a person with

a philosophy of life that committed human beings to the production of more and more things—“more this year than last year, more next year than this”—and that emphasized the “standard of living” above all other values.

It is obvious, he continued,

that Americans have come to consider their standard of living as a somewhat sacred acquisition, which they will defend at any price. This means that they would be ready to make many an intellectual or even moral concession in order to maintain that standard.

Introduction: The Consumer, the Laborer, the Capitalist, and the Nation-State in the Society of Perpetual Growth

P a r t O n e

1 The quote, which has been widely used (see, e.g., Fjellman 1992:5; Lears 1983), appeared in an essay, “Mr. Bennett and Mrs. Brown,” in The Captain’s Death Bed and Other Essays, but was originally part of a paper Woolf read to the Heretics, Cambridge, on May 18, 1924. “On or about December 1910 human character changed … The change was not sudden and definite … But a change there was nevertheless, and since one must be arbitrary, let us date it about the year 1910” (Woolf 1950).

2 PartI • Introduction

There is no question that in America, the half-century from 1880 to 1930 marked a major tran-sition in the rate and level of commodity consumption—the purchase, use, and waste of what comedian George Carlin called “stuff.” Food production grew by almost 40 percent from 1899 to 1905; the production of men’s and women’s ready-made clothing, along with the produc-tion of costume jewelry, doubled between 1890 and 1900; and glassware and lamp production went from 84,000 tons in 1890 to 250,563 tons in 1914. In 1890, 32,000 pianos were sold in the United States; by 1904, the number sold increased to 374,000 (Leach 1993:16).

During this period, the perfume industry became the country’s tenth largest; at one depart-ment store, sale of toiletries rose from $84,000 to $522,000 between 1914 and 1926. The manufacture of clocks and watches went from 34 million to 82 million in ten years. By the late 1920s, one of every six Americans owned an automobile.

Of course, these figures are dwarfed by what Americans and others around the world consume today. World and national consumption expanded at an unprecedented pace during the twentieth century, with household consumption expenditures reaching $37 trillion in 2010, three times the level of 1975 and six times that of 1950. In 1900, real consumption expenditure was barely $1.5 trillion (United Nations Development Programme 1997). Today there are as many cars in the United States as the number of people with drivers’ licenses, and the rest of the world is doing everything that it can to catch up. China and India, alone, have added at least half-a-billion middle-class consumers in the new century demanding everything that consumers in the West desire.

However, although consumption rates were not nearly as high as they are today, the early twentieth century is notable because it marked the early phase of what Ernest Gellner (1983:24) called the society of perpetual growth and the creation of a new type of culture: consumer capitalism.

The emergence of the society of perpetual growth and the culture of capitalism marked a new stage in an ongoing global historical process that began (to the extent that it can be said to have a beginning) anytime from the fifteenth to the early nineteenth centuries. The creation of the human type that characterizes this stage, the consumer, followed soon after the emer-gence of two other historically unique categories of human types: the capitalist and the laborer. Merchants had existed, of course, for thousands of years, and people had always labored to produce goods and liked to consume what they’d produced. But never before in history has there existed a society founded on three categories of people: the capitalist, whose sole purpose is to invest money to earn more; the laborer, whose sole means of support comes from the sale of his or her labor; and the consumer, whose sole purpose is to purchase and consume ever-increasing quantities of goods and services.

At some point in their lives, virtually everyone plays the roles of consumer, laborer, or capitalist: as consumers, they buy goods and services; as laborers, they work for wages; and as capitalists, they invest money in banks, insurance policies, pension plans, stocks (slightly more than half of American families participate in the stock market, either directly or through investment accounts), education, or other enterprises from which they expect to profit. What ties together these roles, and indeed the entire culture, is money.

Thus, we can perhaps best conceptualize the working of the culture of capitalism as sets of relations between capitalists, laborers, and consumers, tied together by the pursuit of money, each depend-ing on the other, yet each placing demands on, and often conflicting with, the others. Regulating these relationships is the fourth element in our scheme, the nation-state. In this cultural scheme, the nation-state serves as, among its other functions, a mediator, controlling the creation and flow of money and setting and enforcing the rules of interaction. (Figure I.1 is a highly simplified model, but it serves to underline the key features and unique style of the culture of capitalism.)

Nation-State Nation-State


$ $



Figure i.1Patterns of Relations in the Culture of Capitalism

PartI • Introduction 3

However, money is, obviously, the key to understanding this culture. Jacob Needleman (1991:40–41) wrote that, in another time and place, not everyone has wanted money above all else. People, he said,

have desired salvation, beauty, power, strength, pleasure, prosperity, explanations, food, adventure, conquest, comfort. But now and here, money—not necessarily even the things money can buy, but money—is what everyone wants.… Therefore, if one wished to understand life, one must understand money in this present phase of his-tory and civilization.

People require money as a means of exchange and, for the modern capitalist system to function, money must constantly increase in supply—that is, it must perpetually grow. Why this is so is not immediately apparent, even to many economists, but should the money supply fail to expand, the whole system could collapse in economic, political, and social ruin. Thus, virtually all of the issues discussed in this book relate in one way or the other to money and people’s efforts to acquire it or compensate for the lack of it.

Part I of the book describes the emergence of the consumer, the capitalist, the laborer, and the nation-state and outlines how each must function for our society to work. In Part II, we examine what economists call market externalities—that is, some of the mostly unintended consequences that follow from the interaction between the consumer, the laborer, the capitalist, and the nation-state. Finally, in Part III we explore the range of resistance to these externalities.

But first, given its central role in the working of the entire society, let’s begin with a brief primer on the nature of money and an exploration of how money has assumed its importance and how it determines how we live our lives.

A Primer on money: The PhilosoPher’s sTone

Commonly we consider money simply as a standardized means of exchange—that is, as a sub-stance with which the value of goods and services can be compared and traded, a tool, so to speak. But to view money only in that way is to misunderstand its true importance. To better explain, think, instead, of the philosopher’s stone. Magicians or alchemists sought the philoso-pher’s stone because it was thought to have the magical power to transmute base metals into gold, which implies taking something that was considered worthless and converting it into something of value. Money is the modern-day equivalent of the philosopher’s stone.

To appreciate the magic of money, the most important thing to consider is that the prime directive of the culture of capitalism is that it must maintain economic growth. People must buy, produce, invest, and profit more this year than the last and more next year than this in perpetuity. Failure to maintain growth would threaten the economic, social, and political foundations and stability of our entire society. People would be unable to repay debts, banks would fail, millions would lose their jobs, and millions of businesses would go bankrupt, to name only a few of the obvious consequences. Aside from a few notable periods of economic contraction, such as the periodic depressions

Alchemists believed that the philosopher’s stone could convert something worthless into something of value, namely, worthless metal into gold. By adopting paper money as a medium of exchange, the culture of capitalism has invented a new philosopher’s stone—one every bit as powerful as that sought by magicians of another time. (Mary Evans Picture Library/Alamy.)

4 PartI • Introduction

of the nineteenth century, the great worldwide depression of the 1930s, the recession of the early 1980s, the Asian financial collapse of 1997, and the economic crisis of 2007–2008, the economy has grown reasonably well worldwide, although some parts of the world have historically done a better job than others.

Economic growth is traditionally measured by the growth of gross domestic product (GDP)—a measure of the money value of all goods and services produced and sold in a given time period. Table I.1 and Figure I.2 portray the yearly growth of global GDP during the past two millennia.

Over the long term, but particularly over the past two centuries, the growth of GDP in the global economy, especially among European offshoots (e.g., the United States and Australia)

TAble i.1 Level and Rate of Growth of GDP per Capita: World and Major Regions, a.d. 1–1998

1 1000 1820 1998 1–1000 1000–1820 1820–1998


Level of Growth (1990 International

Dollars)Annual Average Compound

Growth Rate

Western Europe 450 400 1,232 17,921 -0.01 0.14 1.51

Western Offshoots (e.g., United States, Australia)

400 400 1,201 26,146 0.00 0.13 1.75

Japan 400 425 669 20,413 0.01 0.06 1.93

Latin America 400 400 665 5,795 0.00 0.06 1.22

Eastern Europe and Former USSR

400 400 667 4,354 0.00 0.06 1.06

Asia (excluding Japan) 450 450 575 2,936 0.00 0.03 0.92

Africa 425 416 418 1,368 -0.00 0.00 0.67

World 444 435 667 5,709 -0.00 0.03 0.95

Source: Adapted from Maddison (2003:28)








1 1000 1820 1998

Western Europe

Western Europe Offshoots


Latin America

Eastern Europe and Former USSR

Asia (excluding Japan)



Figure i.2 Rate of per Capita GDP Growth by Region from a.d. 1 to 1998

PartI • Introduction 5

and Japan, has been spectacular: a 300-fold increase in the amount of goods consumed, the num-ber of goods produced, and the fortunes that have been made. A global citizen of today is almost nine times as wealthy as his or her counterpart some 200 years ago; in some parts of the world, the average citizen has increased his or her wealth almost 25 times over the same period.

To put perpetual growth into perspective, imagine that in the year 2010 you earned and spent $30,000 a year (or that some corporation earned $300,000,000). A growth rate of about 3 percent a year is necessary to maintain a healthy economy. Consequently, by 2015, you (or the corporation in this case) must earn and spend $34,855 (or $348,550,000) and by 2035, earn and spend $63,507 (or $635,070,000). If we factor in an inflation rate of 3 percent on top of our neces-sary growth rate, the figures are even higher (see Table I.2).

These increases, of course, could occur only with a steady increase in the money supply. Without the increase, people would not have the means to buy more, employers would not have the means to pay more, and capitalists would not be able to profit more. But how does the money supply increase? Where does money come from and what or who provides its magical power?

The Development of Commodity money

The use of objects as a medium of exchange is likely as old as trade. Thus the use of shells, furs, and other items of value as money are known in small-scale societies throughout the world (see Graeber 2011). The use of precious metals as a medium of exchange can be traced back 5,000 years to Mesopotamia and coins to the seventh century b.c. These are examples of com-modity money. Commodity money is money that has some value in itself beyond its exchange value. Thus, precious metals used for making coins can be used for making jewelry or other objects of art. Generally, the value of the coins is equal to the value of the metals used. As such, the use of coins for trade involves the exchange of one thing of value (e.g., a shirt) for another thing of equivalent value (e.g., an equal amount of gold).

But coins had a big disadvantage: They were difficult to store and to transport. Furthermore, it was not uncommon for people to melt the coins and use them for some other purpose, thus preventing them from circulation. This is where the first bit of magic comes in; people began to substitute paper for coins. “Exchange” or “demand” notes—paper certificates that could be exchanged for a valuable commodity, generally gold or silver—were first used in China in the twelfth century and became common in Europe in the fourteenth and fifteenth centuries (Williams 1997). Thus, a trader in Milan might buy textiles from someone in Bruges and pay with a paper note backed by gold that the seller could retrieve from a third party. Generally, banks or governments issued exchange notes or paper money, but virtually anyone could do it.

TAble i.2 Required Growth in Income and Spending over a Twenty-Five-Year Period

Required Income Growth 3 Percent (with 0% inflation)

Required Income Growth at 6 Percent (with 0% inflation) or Income Growth at 3 Percent

and Inflation at 3 Percent

Year Individual Corporate Individual Corporate

2010 $30,000 $300,000,000 $ 30,000 $ 300,000,000

2015 34,855 348,550,000 40,494 404,940,000

2020 40,495 404,950,000 54,661 546,661,000

2025 47,048 470,048,000 73,783 737,830,000

2035 63,507 635,070,000 134,434 1,344,340,000

6 PartI • Introduction

Theoretically, these notes represented a specific amount of some valuable metal—usually gold or silver—that could be retrieved on demand by the holder of the note.

The issuing of paper money was a huge step in helping to accelerate economic growth because there was potentially no limit to the amount of money that could be created. This was the first step in money magic: Paper, which was essentially worthless, now had the same value as gold, silver, or other precious metals. In a wonderful book, Money and Magic: A Critique of the Modern Economy in the Light of Goethe’s Faust, economist Hans Binswanger (1994) describes how Johann Wolfgang von Goethe, who served as finance minister at the Weimar court, used his classic work Faust (published in two parts in 1808 and 1832) for a commentary on the industrial economy, and, more specifically, on the nature of money. The original Faust, on whom the story is based, was a magician, an alchemist. In Goethe’s book, Faust makes a bargain with Mephistopheles—a devil—and together they create a new society based on paper money. Binswanger suggests the alchemist’s attempts to convert lead into gold were abandoned

not because they were futile, but because alchemy in another form has proved so suc-cessful that the arduous production of gold in the laboratory is no longer necessary. It is not vital to alchemy’s aim, in the sense of increasing wealth, that lead actually be transmuted into gold. It will suffice if a substance of no value is transformed into one of value: paper, for example, into money. (Binswanger 1994:9)

There was, however, a big loophole with commodity money. Banks or other entities that issued money were under no legal obligation to have on hand an amount of gold or silver equiva-lent to the deposits they held or the amount of paper money they issued. Banks practiced what is called fractional reserve banking; this means simply that they had to keep on hand only a fraction of the money or gold deposited assuming that not everyone would demand their gold deposits at the same time. They settled on about a 1:10 ratio; that is, for every dollar deposited, they could lend out ten paper dollars, even though they did not have on hand the gold on which the money was based. This gave to banks, and other private financial institutions, the power to literally create money out of thin air. On the one hand, banks profited from the interest on the

The issuing of paper money was a huge step in helping to accelerate

economic growth. (Rafael Ben-Ari/Fotolia.)

PartI • Introduction 7

loans, and people had more money to spend. On the other hand, problems occurred when, after an economic boom, the economy slowed down and depositors demanded their gold. Unable to pay all their depositors because they had issued notes in excess of the amount of gold they had on hand, banks failed and people lost their savings.

In 1913, the U.S. government tried to address some of these problems by creating the Federal Reserve Bank to control and stabilize the money supply. The Federal Reserve Bank, a private corporation, creates money by lending it to the federal government. The debt assumed by the government becomes an asset (i.e., money owed to the Federal Reserve) that the Federal Reserve then distributes to member banks who, following the fractional reserve requirement, can lend it out or invest it at a 10:1 ratio to earn interest and/or dividends. Money simply represents debt. It is lent into existence (see Brown 2010; Hallsmith and Lietaer 2012). Paper money was still tied to gold, and a person could retrieve paper for gold, but the Federal Reserve could ensure that banks had enough money on hand, or could quickly acquire it, to honor withdrawals. In that way, banks could honor requests for gold but be able to create new money by making loans. But the Federal Reserve could still not address the limitations imposed on economic growth by tying money to a fixed commodity. Solving that problem required another bit of magic in the form of another government decree.

The shift from Commodity to Fiat or Debt money

The next stage in the evolution of money occurred in 1931 when the United States stopped allowing people in the country to convert paper money into gold. The value of money was still tied to the value of gold, and exchanges with foreign governments still occurred in gold. Then in 1971, the U.S. government declared that its currency would no longer be backed by gold, or anything else for that matter. This marked the final shift from commodity to fiat or debt money—paper that was used as evidence of a claim to economic value but that, legally, was not redeemable for anything.

As might be expected, with dollars backed by nothing, the money supply could rap-idly grow, and theoretically could then match or exceed the growth or potential growth of the economy. More importantly, the Federal Reserve in the United States (which serves as the U.S. central bank) and central banks in other countries could develop ways to control the money supply, ensuring that it grew fast enough to keep up with economic growth but not so fast that inflation resulted. Inflation would occur when the amount of money exceeded the value of goods and services that people demanded, thus driving up the prices as buyers competed for scarce resources. If, however, the supply of goods and services exceeded the money supply, prices would decline as sellers competed for limited dollars, which would lead to deflation. Thus, bal-ancing the amount of money in circulation with the goods and services that could be purchased was a major challenge for central banks, such as the U.S. Federal Reserve.

When we think of money, we think of bills and coins. But that is only a small part (5 percent to 10 percent) of the money supply. The rest exists only as figures on paper (or in computers) in banks and in the records of other financial institutions. Debt money, for example, simply repre-sents a promise by the borrower of money to repay it at some future date.

Table I.3 and Figure I.3 show the kinds of money, or money stocks, in circulation in the United States along with their growth since 1959.

In sum, the money supply in 2007 was more than forty-six times larger than it was in 1959. You can perhaps begin to see why money represents a magical process. Because fiat or debt money is backed by nothing other than the legal power of the nation-state, but can be converted into all kinds of goods and services, we have further succeeded in the alchemist’s goal of taking something that is essentially worthless (paper) and turning it into objects of value (whatever we can obtain with this paper).

But, as Faust learned in his bargain with the devil, there is often a price to pay for access to the philosopher’s stone.

8 PartI • Introduction

The Consequences of a system of Debt money

The key thing to remember about debt money is that every dollar that is created is someone’s debt. Money is lent into existence. Consequently every dollar, euro, or pound must earn inter-est. The interest it earns goes to the bank and the people who buy the debt. This is not the only way to create money; money can be distributed, or given as a reward for some action. Think about airline miles; when people travel they get bonus miles that they can use to purchase airline tickets, or a host of other things such as gas gift certificates. Lending money into existence has advantages—theoretically only people who are capable of paying it back will get it; and, lending money with a requirement that it be repaid with interest disciplines people to work. However, debt money also concentrates wealth in the hands of a few, and, perhaps most importantly, it also exerts constant pressure for economic growth at any cost in order to maintain the interest payments on the money lent. Put another way, the money supply can grow, and continue to do so only if there is a corresponding amount of economic activity. That is, when money is lent into existence it must earn itself and the interest. But, how does the money continue to grow?
































Total Supply—M3




Figure i.3 U.S. Money Supply by Type, 1959 to 2008

TAble i.3 Increase in U.S. Money Supply from 1959 to 2009 (in billions)

Years Currency M1 M2 M3 Non-M2 M3Percentage of Change in M3

1959–1970 416.1 1,959.1 5,074.2 5,256.1 202.0 —

1971–1980 731.6 2,910.3 10,252.8 11,905.2 1,652.6 127

1981–1990 1,661.3 6,102.2 24,088.3 31,002.9 6,916.4 160

1991–2000 3,681.8 10,550.1 37,696.1 49,151.9 11,428.7 59

2001–2009 6,175.0 11,896 58,268.5 140,701.31 31,993.32 186

M1 = Currency, traveler’s checks, demand deposits, and other checkable deposits

M2 = M1, retail MMMFs, savings, and small-time deposits

M3 = M1, M2, large time deposits, RPS, Eurodollars and institutional money funds, available at The Federal Reserve stopped publishing M3 data in 2006. The data from 2006 to 2009 is estimated with information available at This includes estimated data from 2006 to 2009.

PartI • Introduction 9

To answer this question economist Barbara Garson deposited $50,000 (a publisher’s advance on the book she was writing) in a small rural bank, the Bank of Millbrook, New York, and asked them to help her trace what happened to her money. The bank couldn’t just hold it, because they had to pay interest on the deposit. The money had to keep moving and growing. So while giving Garson 2½ percent interest, they immediately sold it to Chase Bank at 4½ percent; but Chase, of course, had to move it out at a still higher rate. As Garson said,

I thought of my money as the raw material that banks need and want in order to make more money. But I was beginning to sense, however fuzzily, that it could also be a hot potato that Millbrook passed to Chase and Chase had to pass quickly to the next guy. Whoever held it, even for a second, had to pay interest. Which means he had to be able to collect interest. If he couldn’t, he got burned. (Garson 2001:39–40 emphasis added)

Thus Chase lent money to a Brooklyn fish company, among others, which, Garson discovered, got much of its fish from East Asia, and to an oil company in Malaysia that was building a new refinery. Marveling at the power of money to mobilize people and resources, Garson traveled to Malaysia to see how her money was at work and discovered that thousands of people were getting jobs directly and indirectly through the money invested in the refinery. She also spoke to the fishermen in the area, some of whose catch may have been going to the Brooklyn fish market and discovered that the oil refinery polluted coastal waters and forced the fishermen to go farther out to sea for their catch. They talked to Garson about the good old days and the catches they used to bring home and the amount of work they have to do today to succeed.

“Some fisherman are lazy,” one of the fishermen commented, “If they caught a lot today, they don’t go out tomorrow. But I think differently. If we catch a lot today we go out tomorrow, catch more.”

But another man, says Garson, politely disagreed. “You’re free to do what you want. You can go out three day a week or twenty days a month. You stop when you have enough.”

While she says that she didn’t realize it at the time, she later thought it was the most sub-versive thing she heard in all her travels: “The one thing my money could not do,” she says, “was stop”(Garson 2001:105–106).

Thus for economic system to work, the money that is lent into existence must keep work-ing, in perpetuity, to earn more. But, as Garson found out, it continues to grow only at a cost, in this case to coastal environments. And this highlights another problem with debt money—the limit on things into which money can be converted. Although the money supply might be unlim-ited, the goods and services that people can buy with their money are not. But if economic growth (and the supply of money) must increase every year (and must increase at a rate of at least 3 per-cent to maintain a healthy economy), then so must the things that money can buy. When money was tied to and limited by a commodity such as gold, the money supply was constantly trying to keep up with the goods and services available. However, once money was uncoupled from any-thing of value and could infinitely grow, the situation was reversed and goods and services began to chase the money supply. Thus, where we used to have a situation where we needed more and more gold to grow, now we simply need more and more stuff. In other words, the money supply must grow if the economy is to remain healthy, and for the money supply to grow, there must be a steady increase in the goods or services that money can buy. It is from this simple fact that many of the problems we discuss in this book derive.

Consequently, for the economy to grow, there must be a constant conversion of things that have no monetary value into things that do—that is, there must be constant commodification, because money can only grow through a process whereby nonmonetary wealth, goods, or values are converted into things of monetary worth (see, e.g., Bourdieu 1986:243). In this conversion process lies the genius of capitalism. In it also lies the secret of our Faustian bargain. Through the operation of a myriad of rules, regulations, values, and laws, the culture of capitalism encourages

10 PartI • Introduction

the conversion of items and activities that have no intrinsic monetary worth—but that are never-theless valuable and even necessary in other ways—into items and activities that can be bought and sold in the marketplace. Thus, trees, lakes, and mountains must be converted into things that can be sold in the marketplace; activities once associated with family life and given freely, such as child care, food preparation, and education, must be converted into monetary activities; and freedom itself can be exchanged for money as powerful corporations use their money to gain political access and power (see Figure I.4).

We discuss this process of capital conversion in more detail in Chapter 13, but for now it is sufficient to appreciate why this conversion is necessary to fulfill the prime directive of per-petual economic growth.

In sum, then, our culture works largely on a magical principle in which money, an item of no intrinsic value, perpetually increases in quantity by being lent into existence while we work to convert more and more nonmonetary capital into goods and services that this money can buy. Of course, this is a simplification of everything that must be done to keep the system working. In the next four chapters, we describe how the consumer, the laborer, the capitalist, and the nation-state operate to maintain this magic act. In Part II we’ll examine what economists term the externalities of the working of the market, such as the environmental damage witnessed by Barbara Garson, and in Part III we’ll explore the ways that groups of people have found to resist the sometimes-negative consequences on their lives from these externalities. The final chapter will propose some of the actions that are necessary to remedy the problems we will explore.

Natural CapitalSocial Capital

• Reciprocity

• Social Networks

• Community and Family Functions (e.g., education, child care, entertainment)

Political Capital

Economic Capital(Money)

• Access to Information

• Access to Government

• Freedom of Expression

• Forests

• Water

• Minerals

• Air

Figure i.4 The Conversion of Natural, Political, and Social Capital into Money

PartI • Introduction 11

This book does suggest that what we term capitalism has been distorted by a financial sys-tem that requires perpetual growth, and that this growth is unsustainable. Not everyone agrees; some, including most mainstream economists, argue that sustained economic growth can solve many of the problems that we’ll be examining. Consequently much of this book is designed to explain how we got where we are and weigh the evidence of whether the harms done by a com-mitment to perpetual economic growth are greater or lesser than the good. For example, there seems to be a split globally of how to respond to the economic collapse of 2007–2008 and the debt problems faced by many countries. On the one side are those who want to cut govern-ment spending, and on the other those who look to government to compensate for the decline in consumption. There is also a split between those who think that government debt is the major problem, and others who feel that growing economic inequality is the major issue. One thing this book will attempt to do is put those sentiments in perspective and show how each side has a point; nevertheless, the problems stem from the distortions that have arisen in our economy.


The culture of capitalism is devoted to encouraging the production and sale of commodi-ties. For capitalists, the culture encourages the accumulation of profit; for laborers, it encourages the accumulation of wages; and for consumers, it encourages the accumula-

tion of goods. In other words, capitalism defines sets of people who, behaving according to a set of learned rules, act as they must act.

There is nothing natural about this behavior. People are not naturally driven to accumulate wealth. There are societies in which such accumulation is discouraged. Human beings do not have an innate drive to accumulate commodities; again, there are plenty of societies in which such accumulation is discouraged. People are not driven to work; in fact, contrary to popular notions, members of capitalist culture work far more than, say, people who live by gathering and hunting (see, e.g., Schor 1999). How does culture, as anthropologists use the term, encourage

The consumer revolution is a strange chapter in the ethnographic history of the species. For what may have been the first time in its

history, a human community willingly harbored a nonreligious agent of social change, and permitted it to transform on a continual

and systematic basis virtually every feature of social life.

—Grant McCracken, Culture and Consumption

The … metamessage of our time is that the commodity form is natural and inescapable. Our lives can only be well lived (or lived at all) through the purchase of particular commodities. Thus our

major existential interest consists of maneuvering for eligibility to buy such commodities in the market. Further, we have been taught that it is right and just—ordained by history, human nature, and God—that the means of life in all its forms be available only as

commodities.… Americans live in an overcommodified world, with needs that are generated in the interests of the market and that can

be met only through the market.

—Stephen Fjellman, Vinyl Leaves

Constructing the Consumer1C h a p t e r

Chapter1 • ConstructingtheConsumer 13

people to behave in some ways and not in others? Specifically, how does the culture of capitalism encourage the accumulation of profit, wages, and commodities? How does it, in effect, encour-age perpetual growth and what amounts to perpetual change?

It is not easy to describe the effects of culture on people’s lives; anthropologists have noted that culture consists of all learned beliefs and behaviors, the rules by which we order our lives, and the meanings that human beings construct to interpret their universes and their places in them. Yet, using these abstract descriptions, it is difficult to understand how pervasive our culture can be in determining our view of the world. It may help, therefore, to provide a meta-phor for culture in the form of a practice of another culture: the sandpaintings of the Navajo of the American Southwest.

Among the Navajo people there is a healing practice in which a curer, using colored sand, cornmeal, or other bits of material, draws on the ground a miniature representation of the universe. Although there are perhaps a thousand versions of these drawings, each contains vital elements of what, for the Navajo, define the general conditions of existence. Navajo con-ceptions of space are indicated by symbols of the world’s directions and that of social life by the distribution of Navajo houses (hogans) and mythic beings; values are represented in the stories and chants associated with each sandpainting. Material items critical to Navajo existence (e.g., horses or ritual items) are also portrayed. Once the work is completed, the patient sits on or in the sandpainting, and a curing ceremony, accompanied by chanting and prayer, proceeds. Illness, the Navajo claim, is the result of persons’ losing their proper place in the world; the aim of the ceremony is to restore the patient to that place. When the ceremony is completed and harmony restored, the sandpainter destroys the painting.

Navajo sandpaintings serve as therapeutic stages on which a person’s place in the universe is defined and ritually enacted. (Chuck Place/Alamy.)

14 PartI • TheSocietyofPerpetualGrowth

Navajo sandpainting contains all the elements of what anthropologists often mean by the term culture. Like the sandpainting, a culture serves to define the universe as it is supposed to exist for a people. The sandpainting contains the key elements and symbols that people use to locate themselves in physical and social space. It affirms the place of the person in the cre-ated world and the values that govern people’s lives. Like the sandpainting, particular cultural representations serve as therapeutic frames that communicate to us who and what we are and how we figure in the larger order of things. These representations are therapeutic because they help people resolve the contradictions and ambiguities that are inherent in any cultural definition of reality and self.

Furthermore, every society has its sandpainters, those individuals who are given or who take responsibility for representing the universe to others and who have the power to define those elements that are essential for others in locating and defining their identities. In some societies, as among the Navajo, it is the curer, shaman, mythmaker, or storyteller; in others, it is the priest, poet, writer, artist, singer, or dancer. In capitalism, the sandpainter works in churches, synagogues, or mosques; in theaters; through television sets; at sporting events; or in the shopping malls that reaffirm the vision of abundance central to the consumers’ view of the world. Contemporary sandpainters, who include marketing specialists, advertisers, government agents, corporate public relations specialists, entertainers, and journalists, create a vision of the world designed to maxi-mize the production and consumption of goods. They have helped to create a culture in which the prime elements are commodities and in which the consumer’s first duty is to buy (or “Shop till you drop,” as a popular bumper sticker advises). It is a culture in which virtually all our everyday activities—work, leisure, the fulfillment of social responsibilities, and so on—take place in the context of commodities, and in which shopping, like the sandpainting cure, serves as a therapeu-tic activity. These contemporary sandpainters construct for us a culture in which at one time or another every individual assumes the identity of consumer. The question we need to explore first is, How was the universe of the consumer and the consumer her- or himself created?

Remaking Consumption

The consumer did not, of course, appear full blown in the early twentieth-century United States. Mass consumption of certain goods—notably addictive substances such as tobacco, opium, rum, gin, coffee, and tea—arguably fueled the Industrial Revolution and even Europe’s colonial domination of Asia, Latin America, and Africa. This consumption also defined the methods by which later commodities were produced, distributed, and consumed (see, e.g., Trocki 1999). But, since these items were physically addictive and required little marketing, merchants generally paid little attention to how these and other goods were marketed or displayed, assuming that when people needed their products, they would buy them. It was this attitude in the United States of a century ago that was to undergo a profound change.

The change did not occur naturally. In fact, the culture of nineteenth-century America emphasized moderation and self-denial, not unlimited consumption. People, workers in particu-lar, were expected to be frugal and save their money; spending, particularly on luxuries, was seen as “wasteful.” People purchased only necessities—basic foodstuffs, clothing, household utensils, and appliances—or shared basic items when they could. If we look at a typical inventory of the possessions of an American family of 1870–1880, we find a pattern very different from that of today. In 1870, 53 percent of the population lived and worked on farms and produced much of what they consumed. One Vermont farmwife recorded making 421 pies, 152 cakes, 2,140 doughnuts, and 1,038 loaves of bread in one year (Sutherland 1989:71). Household items were relatively simple—a dinner table, wooden chairs, beds, and perhaps a carpet or rug. There were a few appliances to aid housework—cookstoves, eggbeaters, apple parers, pea shellers, and coffee mills—but most other housework required muscle; even hand-cranked washing machines were not available until the late 1870s. Although most people, except the poorest or most iso-lated families, did buy some ready-made clothing, most of the items people wore were made

Chapter1 • ConstructingtheConsumer 15

at home and were largely functional. Furthermore, because the vast majority of American families lived on farms, most of the family capital was invested in farming tools and implements. There were, of course, exceptions. The wealthy members of society competed with each other in the ostentatious display of wealth and luxury, as they had for centuries. But they repre-sented a small percentage of the population.

Of course, Americans did not yet have electricity, the automobile had yet to be invented, and the money supply was far more limited than it is today. Nevertheless, to transform buying habits, luxuries had to be transformed into necessities. In America, this was accomplished largely in four ways: a rev-olution in marketing and advertising, a restructuring of major societal institutions, a revolution in spiritual and intellectual values, and a reconfiguration of space and class.

marketing and advertising

First, there was a major transformation of the meaning of goods and how they were pre-sented and displayed. For most of the eighteenth and nineteenth centuries, retailers paid little attention to how goods were displayed. The first department store—Bon Marché—opened in Paris in 1852, allowing people to wander through the store with no expectations that they make a purchase. Enterprises such as Bon Marché were devoted to “the arousal of free-floating desire,” as Rosalind Williams put it (McCracken 1988:25). The display of commodities helped define bourgeois culture, converting the culture, values, attitudes, tastes, and aspirations of the bourgeoisie into goods, thus shaping and transforming them (Miller 1994).

But Bon Marché was an exception. In stores in the United States, most products were displayed in bulk, and little care was taken to arrange them in any special way. Prepackaged items with company labels did not even exist until the 1870s, when Ivory Soap and Quaker Oats appeared (Carrier 1995:102). Shop windows, if they existed, were simply filled with items that had been languishing in back rooms or warehouses for years. Even the few large depart-ment stores of the mid-nineteenth century, such as that of Alexander Turney Stewart, the Marble Palace in New York, paid little attention to display. It was not until the 1890s and the emergence of the department store in the United States as a major retail establishment that retailers began to pay attention to how products were presented to the public.

The department store evolved into a place to display goods as objects in themselves. When Marshall Field’s opened in Chicago in 1902, six string orchestras filled the various floors with music, and American Beauty roses, along with other cut flowers and potted palms, bedecked all the counters. Nothing was permitted to be sold on the first day, and merchants in the district closed so that their employees could visit Field’s. Later, elaborate theatrical productions were put on in the stores, artworks were exhibited, and some of the most creative minds in America designed displays that were intended to present goods in ways that inspired people to buy them. The department store became a cultural primer telling people how they should dress, furnish their homes, and spend their leisure time (Leach 1993).

Advertising was another revolutionary development that influenced the creation of the consumer. The goal of advertisers was to aggressively shape consumer desires and create value in commodities by imbuing them with the power to transform the consumer into a more desirable person. Before the late 1880s, advertising was looked down on and associated with P. T. Barnum–style hokum. In 1880, only $30 million was invested in advertising in the United States; however, by 1910, new businesses, such as oil, food, electricity, and rubber, were spend-ing $600 million, or 4 percent of the national income, on advertising. By 1929, advertising was an $11 billion enterprise, and by 1998, the amount spent globally on advertising reached









The United States

16 PartI • TheSocietyofPerpetualGrowth

$437 billion. By 2012, global advertising expenditures reached $498 billion (Lee 2012), or more than the GDP of Sweden.

By the early twentieth century, national advertising campaigns were being initiated and celebrities were being hired to offer testimonials to their favorite commodities. Advertising cards, catalogs, and newspaper ads became a regular feature of American life. Outdoor adver-tising—billboards, signs, and posters—appeared everywhere. Electrical advertising—neon and flashing signs—were marketed, and Broadway became famous as the “Great White Way.” Today, advertising plays such a ubiquitous part in our lives that we scarcely notice it, even when it is engraved or embroidered on our clothing.

Another boon to merchandising was the idea of fashion: the stirring up of anxiety and restlessness over the possession of things that were not “new” or “up-to-date.” Fashion pressured people to buy not out of need but for style—from a desire to conform to what others defined as “fashionable.”

It is hardly surprising, then, that the garment industry in America led the way in the creation of fashion; its growth in the early 1900s was two or three times as great as any other industry. By 1915, it ranked only behind steel and oil in the United States. Fashion output in 1915 was in excess of $1 billion; in New York alone, 15,000 establishments made women’s clothes. New fashion magazines—Vogue, Cosmopolitan, and the Delineator—set fashion stan-dards and defined what the socially conscious woman should wear, often using royalty, the wealthy, and celebrities as models. In 1903, the fashion show was introduced in the United States by Ehrich Brothers in New York City; by 1915, it was an event in virtually every U.S. city and town. Relying on this popularity, the first modeling agency was founded in New York by John Powers in 1923 (Leach 1993:309). The entertainment industry contributed by making its own major fashion statements as American women of the 1920s sought to imitate stars such as Clara Bow.

The importance of fashion hasn’t changed, and fashion magazines remain, as film critic Manohla Dargis (2009) put it, “temples of consumption.” Reviewing the documentary, The September Issue, about the creation of a single issue of Vogue, she notes that the glossy images, expensive clothes, and accessories displayed in its pages are about creating desires and trans-forming wants into needs. The magazine, of course, wants to sell the stuff that adorns its pages; but, more than that, it wants to instill in the reader sets of aspirations. It seeks to define tastes using attractive models and celebrities to define what the well-dressed woman is supposed to wear.

Another addition to the marketing strategy was service, which included not only consumer credit (charge accounts and installment buying) but also a workforce to fawn over customers. Customers became guests.

William Leach suggested that service may have been one of the most important features of the new consumer society. It helped, he said, mask the inequality, poverty, and labor con-flicts that were very much a part of the United States at this point in its history. If one wanted to understand how consumer society developed, Leach said, one could look at the rise of service. As economic inequality rose in America, and as labor conflict increased, Americans associated service with the “promise of America.” Service conveyed to people the idea that everything was all right, that they had nothing to worry about, and that security and service awaited them. Service expressed what economists then and now would refer to as

the “benevolent side” of capitalism, that is, the side of capitalism that gave to people in exchange for a dependable flow of profits—a better, more comfortable way of life. In this view, capitalism did not merely “strive for profits” but also sought “the satisfaction of the needs of others, by performing service efficiently.” “Capital,” said one turn-of-the-century economist, “reigns because it serves.” (Leach 1993:146–147)

Chapter1 • ConstructingtheConsumer 17

the transformation of institutions

The second way in which American buying habits were changed was through a transformation of the major institutions of American society, each redefining its function to include the promotion of consumption. Educational and cultural institutions, governmental agencies, financial institu-tions, and even the family itself changed their meaning and function to promote the consumption of commodities.

Before 1900, the contributions of universities to the capitalist economy largely dealt with how to “make” things—that is, with the production of commodities. Virtually no attention was paid to selling or keeping track of what was sold. For example, there was no systematic examina-tion of mass retailing, credit systems, or banking offered by America’s schools or universities. In the twentieth century, however, that began to change. For example, in New York City there was the good-design or arts-in-industry movement; schools, such as the Pratt Institute and the New York School of Fine and Applied Arts (now Parsons School of Design), developed and began to prepare students to work in the emerging sales and design industries and in the large department stores. The University of Pennsylvania’s Wharton School for Business and the Harvard School for Business introduced programs in accounting (virtually nonexistent before then), marketing, and sales. In 1919, New York University’s School of Retailing opened; in the mid-1920s, Harvard and Stanford established graduate business schools as did such schools as Northwestern and other universities in Michigan, California, and Wisconsin soon after. Today, there are virtu-ally no two-year or four-year colleges that do not offer some sort of business curriculum.

Museums also redefined their missions to accommodate the growth of the consumer culture. The American Museum of Natural History and the Metropolitan Museum of Art in Manhattan, the Brooklyn Museum, and the Newark Museum—all heavily endowed by wealthy patrons such as J. P. Morgan—began to make alliances with business. Curators lectured to designers on Peruvian textiles or primitive decorative art. The head of the American Museum of Natural History, Morris D’Camp Crawford, assisted by the head of the anthropology department, Clark Wissler, urged businesspeople and designers to visit the museum. Special exhibits on the history of fashion and clothing were arranged, and Wissler even borrowed the window-display techniques of New York department stores for his exhibits (just as window-display designers had borrowed the idea of the mannequin from anthropologist Franz Boas’s exhibit of foreign cultures at the 1893 World’s Columbian Exposition in Chicago). The editor of Women’s Wear magazine praised the museum for being “the most progressive force in the development of the designer” (Leach 1993:166).

The second set of institutions to aid in the development of consumer culture comprised agencies of the local and federal governments. The state, as an entity, had long taken a lively interest in commerce within its borders (as we’ll see when we examine the history of global capitalist expansion in Chapter 3). But prior to the twentieth century, the state’s concerns focused largely on the manufacture of commodities, the organization of business, the control of labor, and the movement of goods. It wasn’t until the twentieth century that state agencies began to concern themselves with the consumption end of the business cycle. In fact, it may not be an exaggeration to say that the government did more to create the consumer than did any other institution.

Nothing better represents the increasing role of the federal government in the promotion of consumption than the growth of the Commerce Department under Herbert Hoover, who served as its head from 1921 until his election as president in 1928. When the Commerce Building opened in Washington in 1932, it was the biggest office structure in the world (and was not surpassed in size until the Pentagon was built a decade later). At the time, it brought together in one building virtually all the government departments that had anything to do with business, from the Patent Office to the Bureau of Foreign and Domestic Commerce (BFDC), then the most important agency of the department. From 1921 to 1930, the congressional appropriation for the BFDC rose from $100,000 to more than $8 million, an increase of 8,000 percent. The number of BFDC staff increased from 100 to 2,500.

18 PartI • TheSocietyofPerpetualGrowth

Hoover clearly intended the Department of Commerce to serve as the handmaiden of American business, and its main goal was to help encourage the consumption of commodities. For example, between 1926 and 1928, the BFDC, under Hoover’s direction, initiated the Census of Distribution (or “Census of Consumption,” as it was sometimes called) to be carried out every ten years. (It was unique at that time; Britain and other countries did not initiate government-sponsored consumer research until the 1950s.) It detailed where the consumers were and what quantities of goods they would consume; it pointed out areas where goods were “overdeveloped” and which goods were best carried by which stores. The Commerce Department endorsed retail and cooperative advertising and advised merchants on service devices, fashion, style, and display methods of all kinds. The agency advised retail establishments on the best ways to deliver goods to consumers, redevelop streets, build parking lots and underground transportation systems to attract consumers, use colored lights, and display merchandise in “tempting ways.” The goal was to break down “all barriers between the consumers and commodities” (Leach 1993:366).

Hoover also emphasized individual home ownership. In his memoirs, he wrote that “a primary right of every American family is the right to build a new house of its heart’s desire at least once. Moreover, there is the instinct to own one’s own house with one’s own arrange-ment of gadgets, rooms, and surroundings” (Nash 1988:7). The Commerce Department flooded the country with public relations materials on “homebuying” ideas, producing a leaflet entitled Own Your Own Home, along with the film Home Sweet Home. They advocated single-dwelling homes over multiunit dwellings and suburban over urban housing. The leaflet recommended a separate bedroom for each child, saying it was “undesirable for two children to occupy the same bed—whatever their age.” Regardless of the reasons for these recommendations, the materials produced by the Commerce Department all promoted maximum consumption. Thus, the govern-ment responded, as much as did educational institutions, to the need to promote the consumption of commodities.

Another step in creating a consumer economy was to give the worker more buying power. The advantage of this from an economic perspective is not easy to see. From the point of view of an industrialist or an employer, the ideal situation would be to pay as low a wage as possible to keep production costs down and increase profits. However, each producer of goods would prefer other producers to pay high wages, which would allow the other producers’ workers to buy more products. The idea that higher wages would serve as an incentive for laborers to work harder or that higher wages might allow the worker to become a consumer occurred relatively late to factory owners and investors. The working class, they assumed, would work only as hard as they needed to get their basic subsistence, and to pay them more would only result in their working less. And when an occasional economic boom gave workers the spending power to consume at a higher level, the middle and upper classes would condemn them for their lack of thrift.

The economic power derived from turning workers into consumers was realized almost by accident. As industry attempted to increase efficiency, it developed new methods. Henry Ford introduced the assembly line, one of the apparently great innovations, to the manufacturing of automobiles. Workers occupied positions on the line from which they did not move (“Walking,” Ford said, “is not a remunerative activity”) and from which they would perform a single task. It was a process that required almost no training and that “the most stupid man could learn within two days,” as Ford said. In essence, each worker had to repeat the same motion every ten seconds in a nine-hour workday.

Workers resisted this mind-numbing process. When Ford introduced his assembly line, absenteeism increased and worker turnover surged. In 1913, Ford required 13,000 to 14,000 workers to operate his plant, and in that year 50,000 quit. But Ford solved the problem: He raised wages from the industry standard of two to three dollars per day to five dollars, and he reduced the working day to eight hours. Soon labor turnover fell to 5 percent, and waiting lines appeared at Ford hiring offices. Furthermore, production costs for Ford’s Model T fell from $1,950 to $290, reducing the price to consumers. Most importantly, the rise in wages made Ford workers consumers of Ford automobiles, and, as other manufacturers followed suit, the automobile

Chapter1 • ConstructingtheConsumer 19

industry grew. By 1929, there were 23 million automobiles in the United States; by 1950, there were more than 40 million. Today, including light trucks, there are 1.3 cars for every individual.

In addition to the money coming from higher wages, buying power was increased by the expansion of credit. Credit, of course, is essential for economic growth and consumerism, because it means that people, corporations, and governments can purchase goods and services with only a promise to pay for them at some future date. Buying things on credit—that is, going into debt—has not always been acceptable in the United States. It was highly frowned upon in the nineteenth century. It was not fully socially acceptable until the 1920s (Calder 1999), at which time it promoted the boom in both automobile and home buying.

The increased ease of obtaining home mortgages was a key to the home-building boom of the 1940s, 1950s, and 1960s, a boom that in turn fueled subsidiary industries—appliances, home furnishings, and road construction. By 1960, 62 percent of all Americans could claim to own their own home—up from 44 percent in 1940. By 2008, U.S. homeowners owed more than $10 trillion in mortgages. Home mortgages had the further function of disciplining the workforce by forcing it to work to make credit payments. At the same time, homeowners gained a capital asset that served as a hedge against inflation. Automobile loans also added to consumer debt and, similarly, fueled subsidiary economic growth—malls, highways, vacation travel, and so on. Credit cards gave holders a revolving line of credit with which to finance purchases. U.S. house-hold debt reached over $13 trillion in 2008, before falling to $11½ trillion in 2012 as a result of the 2007–2008 recession, while 20 percent of American households have more debt than assets, or 40 percent when real estate is factored out. This debt represents enormous confidence in the future of the economy because this money does not exist. Lenders in our economy simply assume that the money will exist when it comes time for people to repay their debts.

None of this would have been possible without a government financial policy that put limits on interest rates (“usury ceilings”), passed “truth-in-lending” laws, made it easier for cer-tain groups (women and minorities) to borrow, and offered subsidized student loans. Thus, credit increased consumer debt while creating a “mass market” for consumer goods, which served further to stimulate economic growth (see Guttmann 1994).

In addition to changes in the way workers were viewed and the expansion of credit, there had to be a change in the way retail establishments were organized. The emergence of the con-sumer was accompanied by an enormous growth in retail chain stores. Until this point, people shopped in small stores or large family-owned department stores. The 1920s saw the rise of the large retail conglomerates. In 1886, only two chains operated more than five stores; in 1912, 177 companies operated 2,235 stores; by 1929, nearly 1,500 companies were doing business in 70,000 outlets. In 2012, Wal-Mart alone had over 8500 stores worldwide, and, with over 2 million employees, is the largest employer in the world (Copeland and Labuski 2013).

the transformation of spiritual and intellectual Values

In addition to changing marketing techniques and modifying societal institutions to stimulate consumption, there had to be a change in spiritual and intellectual values from an emphasis on such values as thrift, modesty, and moderation toward a value system that encouraged spending and ostentatious display. T. J. Jackson Lears argued that, from 1880 to 1930, the United States underwent a transformation of values from those that emphasized frugality and self-denial to those that sanctioned periodic leisure, compulsive spending, and individual fulfillment (Lears 1983). This shift in values, said Lears, was facilitated in American life by a new therapeutic ethos, an emphasis on physical and psychological health. This shift was promoted in part by the growth of the health professions and the popularity of psychology, along with the increas-ing autonomy and alienation felt by individuals as America ceased being a land of small towns and became increasingly urban. Advertisers capitalized on these changes by altering the way products were advertised; rather than emphasizing the nature of the product itself, they began to emphasize the alleged effects of the product and its promise of a richer, fuller life. Instead of

20 PartI • TheSocietyofPerpetualGrowth

simply being good soap, shoes, or deodorant, a product would contribute to the buyer’s psycho-logical, physical, or social well-being (Lears 1983:19).

Clothing, perfumes, deodorant, and so on, would provide the means of achieving love; alcoholic beverages would provide the route to friendship; and the proper automobile tires or insurance policy would provide the means of meeting family responsibilities. Commodities would be the source of satisfaction and a vital means of self-expression. Ponder, for example, the following description by a forty-year-old man of the relationship between himself and his expensive Porsche:

Sometimes I test myself. We have an ancient, battered Peugeot, and I drive it for a week. It rarely breaks, and it gets great mileage. But when I pull up next to a beautiful woman, I am still the geek with glasses. Then I get back into my Porsche. It roars and tugs to get moving. It accelerates even going uphill at 80. It leadeth trashy women … to make pouting looks at me at stoplights. It makes me feel like a tomcat on the prowl.… Nothing in my life compares—except driving along Sunset at night in the 928, with the sodium vapor lamps reflecting off the wine-red finish, with the air inside reeking of tan glove-leather upholstery and the … Blaupunkt playing the Shirelles so loud that it makes my hairs vibrate. And with the girls I will never see again pulling up next to me, giving the car a once-over and looking at me as if I was a cool guy, not worried, instead of a 40-year-old schnook writer. (Belk 1988:148)

In the late nineteenth century, a series of religious movements emerged that became known as mind-cure religions. William James, in his classic 1902 book Varieties of Religious Experience, drew attention to the mind-cure movements, although he was not the first to use the term. These movements—New Thought, Unity, Christian Science, and Theosophy, among others—maintained that people could simply, by an act of will and conviction, cure their own illnesses and create heaven on earth. These movements were, as William Leach (1993:225) phrased it, “wish-oriented, optimistic, sunny, the epitome of cheer and self-confidence, and completely lacking in anything resembling a tragic view of life.” There was no sin, no evil, no darkness, only, as one mind curer said, “the sunlight of health.”

These movements held that salvation would occur in this life and not in the afterlife. Mind cure dismissed the ideas of sin and guilt. God became a divine force, a healing power. Proponents argued that Americans should banish ideas of duty and self-denial. As one early twentieth-century advocate said,

If you want to get the most out of life, just make up your mind that you were made to be happy, that you are a happiness machine, as well as a work machine. Cut off the past, and do not touch the morrow until it comes, but extract every possibility from the present. Think positive, creative, happy thoughts, and your harvest of good things will be abundant. (Leach 1993:229)

These new religions made fashionable the idea that, in the world of goods, men and women could find a paradise free from pain and suffering; they could find, as one historian of religion put it, the “good” through “goods.”

Popular culture also promoted the mind-cure ideology. As examples, there were L. Frank Baum’s The Wonderful Wizard of Oz, which Leach characterized as “perhaps the best mind cure text ever written,” and the Billikens doll, a squat Buddha-like figure, sometimes male and some-times female, that represented the “god of things as they ought to be.” Its success was without parallel in the toy trade and helped incite the doll craze in America. Billikens, it was said, would drive away petty annoyances and cares. One contemporary put it this way: “An atmosphere of gorged content pervades Billikens. No one can look at him [or her] and worry.”

Chapter1 • ConstructingtheConsumer 21

The popularity of the Billikens doll signaled change in spiritual values: It was now permissible to seek self-fulfillment in this life and find elements of satisfaction in manufactured commodities. The world was a good place: There was no misery; poverty, injustice, and inequities were only in the mind. There was enough for everyone.

These changes were not unique to America. Many of the same changes occurred in other nations, most notably Great Britain, Germany, and France (Carrier 1995), and are occurring now all over the world. The consumer revolution of the early twentieth century was not the first of its kind either—it evolved with great intensity and rapidity in America.

Thus, by the 1930s, the “consumer” as a category of person had, as Lizabeth Cohen (2003) points out, replaced the “citizen,” adopting a spiritual and intellectual framework that glorified the continued consumption of commodities as personally fulfilling and economi-cally desirable—a moral imperative that would end poverty and injustice.

the Reconfiguration of time, space, and Class

The creation of the consumer did not stop in 1930. Since that time, the institutions of our society, particularly those of corporate America, have become increasingly more adept at creating sandpaintings in which people inhabit worlds whose very nature requires the continuous con-sumption of goods. The need to consume has reordered our organization of time, reconstructed our living space, created new spaces for the encouragement of consumption, and altered the ways that we view one another.

Into the early nineteenth century in the United States, holiday celebrations—most reli-gious, but some secular—marked each year. Washington’s Birthday, for example, was one of the most important (see, e.g., Schmidt 1995:47). But holidays were not generally times for gift giving and consumption. In fact, most people, particularly merchants and trades people, viewed holidays and festivities as impediments to work discipline, and they made an effort to reduce their number.

By the late nineteenth century, however, retailers began to recognize the commercial potential of holidays. In 1897, the trade journal Dry Goods Economist mocked those who viewed holidays as “an interruption of business” instead of an opportunity for “special sales and attrac-tive displays.” The modern retailer, they said, knew that there was “never a holiday” that did not make for increased business. Thus, as Leigh Eric Schmidt observes, “holidays, rather than being impediments to disciplined economic advancement, were seen as critical for consumption and profit” (Schmidt 1995:37).

Valentine’s Day is a good example. Until the fourteenth century, St. Valentine was known largely for his “steadfastness in the face of torturous martyrdom.” English poet Geoffrey Chaucer is generally credited with laying the foundation for the pairing of St. Valentine with lovers when, in his Parliament of Fowls, he wrote that birds were said to choose their mates on St. Valentine’s Day (Schmidt 1995:40ff.). Thus, St. Valentine became the patron saint of lovers. On St. Valentine’s Day in Scotland, young women would try to divine their future mates, while among the elites it became a day for romantic poetry and gift giving, gloves being a popular item. By the 1840s and 1850s in the United States, the practice of exchanging cards became

Pillow Pets, the latest craze in stuffed toys, are a direct descendent of the Billikens doll, a figure designed to drive away worries and cares and convince people that the world is a good place with plenty for everyone. (Yumeto Yamazaki/AFLO/Newscom.)

22 PartI • TheSocietyofPerpetualGrowth

widespread. By the late nineteenth century, the meaning of the term valentine had changed. Instead of referring to a person’s sweetheart or betrothed, it came to refer to a commodity, a commercial product that could be consumed like any other. By the end of the nineteenth century, department stores were filling their windows with love missives, jewelry, and other sugges-tions for gifts. In 1910, a traveling salesman by the name of Joyce C. Hall began a postcard business specializing in Valentine missives that would evolve into Hallmark Cards. By the 1990s, Hallmark had 40 percent of the American greeting card business (Schmidt 1995:100). Of course, other holidays, such as Christmas, soon followed Valentine’s Day as occasions for mass consumption, and by the early 1920s, flowers for Mother’s Day became firmly fixed in the holiday firmament. Thus, our organization of time, our calendar of festivities, became redefined to promote consumption.

The need to create consumers also redefined our conception of space. Home ownership, for example, particularly of the product-greedy single-family home, cast people out from city centers into the sprawling suburbs, which necessitated new roads and more cars, and, in the end, virtually destroyed public transportation. Retailers and developers quickly realized the possibili-ties inherent in these new communities; people, they reasoned, had an endless desire to consume. “Our economy,” said Macy’s board chairman Jack Isodor Straus, “keeps on growing because our ability to consume is endless. The consumer goes on spending regardless of how many posses-sions he or she has. The luxuries of today are the necessities of tomorrow” (Cohen 2003:261). But it was also believed that suburbanites were growing reluctant to travel to urban centers to shop. The solution was to bring the market to the people, and retailers and developers relo-cated shopping areas from city centers to spacious shopping centers and malls. Consumers gave various reasons for shifting their shopping from downtown to shopping centers, but the most important issues seemed to involve convenience—easy accessibility (malls and shopping centers were always constructed adjacent to new highways), easy parking, improved store layouts, increased self-service, simplified credit with charge plates, and greater availability of products. Market researchers concluded that shoppers were attracted to the ease and “progressiveness” of mall shopping. Consumers seemed to share the developers’ sense that shopping centers were the modern way to consume (Cohen 2003:268).

The new ease of shopping, however, came with some costs. Shopping centers and malls were, unlike city centers, private spaces in which owners could control political activities. They were also easily accessible only to people with automobiles, thus removing from the suburban landscape those shoppers at the low end of the social ladder. In addition, they redefined the nature of social interaction; shopping malls. Bauman (1998:25)

are so constructed as to keep people moving, looking around, keep them diverted and entertained no end—but in no case looking too long—by any of the endless attractions; not to encourage them to stop, look at each other, think of, ponder, and debate something other than the objects on display—not to pass their time in a fashion devoid of commercial value.… Hence a territory stripped of public space provides little chance for norms being debated, for values to be confronted, to clash and to be negotiated.

In addition to defining the times and spaces in which we live and shop, marketers also redefined categories of people. In the early days of advertising, and up until the 1960s, manufacturers and retailers pitched their products and services to the mass market, continually stimulating demand by offering new products, changing styles, and so forth. But in the 1950s, a new theory of marketing gained acceptance; rather than marketing products and services to a vast, undifferentiated middle class, sellers would differentiate or segment the market, appeal-ing to the desires and needs of each special group. A new field, psychographics, emerged that became so sophisticated that the chief executive of Spiegel Company would boast that armed to the teeth with information, the marketer was “the friend who knows them [consumers] as

Chapter1 • ConstructingtheConsumer 23

well as—perhaps better than—they know themselves” (Cohen 2003:299). Target marketing singled out children and minorities for pointed appeals; marketers used “lifestyle branding”—selling products by attracting consumers to a particular way of life rather than the good itself. Advertisers segmented by class and income, and then by gender and then age. They categorized consumers with statistical precision and gave them labels such as “blue blood estates,” “shoguns and pickups,” and “[H]ispanic mix residents,” singling these groups out for direct marketing, telemarketing, and Internet shopping solicitation. “Rather than sell commodities in as much volume as possible to the masses,” says Lizabeth Cohen (2003:299), “modern-day marketers, equipped with advanced psychographic tactics, identify clusters of customers with distinctive ways of life and then set out to sell them idealized lifestyles constructed around commodities.” Today, of course, there are companies that scour the internet for personal information that enable advertisers to customize the ads that appear on people’s Facebook pages (Tynan 2010).

Magazines probably represent the clearest example of segmentation—note the shift from the dominant magazines of the 1930s, 1940s, and 1950s (Life, Look, Saturday Evening Post) and examine a typical magazine rack today. We might ask ourselves to what extent has the market segmentation created or exaggerated social and cultural divisions that might otherwise not exist, leaving people with less and less to share.

As Lizabeth Cohen (2003:318) points out, if any kind of segmentation epitomized the goals of marketers and advertisers, it was segmenting by age. First targeting teenagers and then children, they succeeded, with the help of governments, schools, and other institutions, in rede-fining childhood itself.

kindeRCultuRe in ameRiCa: the Child as ConsumeR

the Role of Children in Capitalism

Anthropology teaches us that, much like the rest of our culture, childhood is socially created—that is, childhood and the ways it is defined vary from society to society and from era to era. Childhood in nineteenth-century America was very different from what it is today. Prior to the nineteenth century, the major role of children in a capitalist economy was as workers (Lasch 1977:14ff.). There were few industries that did not employ children at some level, and there were few families whose children did not contribute economically through either farm or factory labor. In twentieth-century America, this began to change. Social movements that for decades worked to restrict child labor finally convinced state and federal legislatures to pass laws making child labor illegal. These developments signaled a transformation of children from workers to consumers. Although this may not have been the intent of the reformers, children were to contribute far more to the national economy as consumers than they ever did as laborers.

It wasn’t until the beginning of the twentieth century that retailers began to target children as a discrete group of consumers. As late as 1890, there was not a children’s market worth con-sidering; children ate, wore, and played with what their parents made for them. Germany was by far the largest producer of children’s toys, and there were few, if any, factories in the United States producing children’s clothing. Nor was there any market for infants’ or children’s foods. Yet by 1915, the baby clothing industry was one of the largest in the United States, with seventy-five factories operating in New York State alone. Toy production increased by 1,300 percent between 1905 and 1920. One reason was the destruction of the German toy industry during World War I. Another was the development of new toys in the United States that became inter-national sensations, such as the racist Alabama Coon Jigger, a laughing, prancing, mechanical black male. But, most importantly, retailers were beginning to appreciate the profits that could be made from children’s commodities.

Retailers also began to take note of psychologists’ discovery of the “natural desire” of “little people” for goods and toys, heeding the psychologists’ advice that “every attention shown the child binds the mother to the store,” or the observation that if they cultivated consumers “as

24 PartI • TheSocietyofPerpetualGrowth

kids [they would] have them as customers for a lifetime.” Santa Claus became one of the major vehicles for selling toys; his commercialization hit its peak in the 1920s.

Child psychologists and home economists also advised parents that children needed toys for exercise and toys to relax; children, they said, should have their own playrooms. These same experts lectured at department stores, advising parents of the educational values of toys. With this new emphasis on the child as consumer, by 1926, America had become the greatest producer of toys and playthings in the world. There were toys for the backyard, camping, the beach, and the “little private room which every child desperately needs to fulfill his or her individuality.” Play, said the experts, “is the child’s business; toys the material with which he works” (Leach 1993:328).

The federal government played a major role in redefining childhood. In 1929, Herbert Hoover sponsored a White House Conference on Child Health and Protection. The conference report, The Home and the Child, concluded that children were independent beings with particu-lar concerns of their own. The child, the report said,

is often an alien in his home when it comes to any consideration of his special needs in the furnishings and equipment of the home. He belongs nowhere. He must accom-modate himself to an adult environment—chairs and tables are too big and too high for him; there is no suitable place for his books and his toys. He moves in a misfit world with nothing apportioned to his needs. Often this results in retarding his physi-cal, mental, and social development. (White House 1931)

The report advised parents to give their children their own “furniture and eating equip-ment” suitable to each child’s age and size; it further advised parents to provide playrooms inside the house and to fill the backyard with “toys, velocipedes, sawhorses, wagons, wheel-barrows, slides, and places to keep pets.” The report noted that “Generally a sleeping room for each person is desirable.” As a child grows “older and becomes more social he wants games and toys that he can share with his friends.” When the family decides on “the purchase of a piece of furniture or a musical instrument” of common interest, it is important to consult the children. Take them shopping for their own “things and let them pick them out by themselves.”

Through such experiences personality develops.… [These] experiences have the advantage also of creating in the child a sense of personal as well as family pride in ownership, and eventually teaching him that his personality can be expressed through things. (White House 1931 [emphasis added]; see also Leach 1993:371–372)

Thus, in the span of some thirty years, the role of children in American life changed dramatically; they became, and remain, pillars of the consumer economy, with economic power rivaling that of adults. Children have become a main target of advertisers; as one marketing specialist told the Wall Street Journal, “even two-year-olds are concerned about their brand of clothes, and by the age of six are full-out consumers” (Durning 1992:120). Marketing researchers estimate that children ages two to fourteen directly influence $188 billion of parental spending, indirectly influence another $300 billion, and spend themselves some $25 billion. Teen spending alone jumped from $63 billion in 1994 to $94 billion in 1998, to some $175 billion by 2003, and to over $200 billion in 2007 (see Market Research Portal 2006; McNeal 1999; Zollo 1999). Children see about 40,000 ads a year on TV alone, not to mention those delivered to them on their cell phones, music devices, instant messaging, and video games, and spend almost as much time on media as they do sleeping. (see Rideout, Roberts, and Foehr 2010:1).

Advertisers and marketing specialists, including anthropologists and psychologists, devise all sorts of campaigns to appeal to children and are often criticized for the messages they com-municate. But some advertising executives are quite candid in their objectives. As one said, “No one’s really worrying about what it’s teaching impressionable youth. Hey, I’m in the business

Chapter1 • ConstructingtheConsumer 25

of convincing people to buy things they don’t need” (Business Week, August 11, 1997:35). Advertisers work on such things as the “nag factor,” explaining to clients that children’s nagging inspires about a third of a family’s trips to a fast-food restaurant, video store, or children’s clothing store (Ruskin 1999). Advertisers explicitly work on a child’s desire to be accepted and on their fear of being “losers.” As one ad agency president put it,

Kids are very sensitive to that. If you tell them to buy something, they are resistant. But if you tell them that they’ll be a dork if they don’t, you’ve got their attention. You open up emotional vulnerabilities, and it’s very easy to do with kids because they’re the most emotionally vulnerable. (Harris 1989)

As colleges and universities adapted to the need to persuade people to consume with new academic courses and programs, primary and secondary schools were adapting by providing marketers with access to children. Channel One is a marketing company that delivers ten minutes a day of TV news to some 8 million students in 12,000 schools, provided students also watch two minutes of advertising. “The biggest selling point to advertisers,” says Joel Babbit, former president of Channel One, lies in “forcing kids to watch two minutes of commercials.” As Babbit (Ruskin 1999) put it,

[T]he advertiser gets a group of kids who cannot go to the bathroom, who cannot change the station, who cannot listen to their mother yell in the background, who cannot be playing Nintendo, who cannot have their headsets on.

the social Construction of Childhood

In the early part of the twentieth century, retail establishments, particularly the new depart-ment stores, took the lead in redefining the world of children. They produced their own radio programs for children and put on elaborate shows. Macy’s, which by the late 1920s had the largest toy department in the world, put on playlets for children in makeshift theaters or in store auditoriums. The most popular department store show was The Wizard of Oz; when the show was put on at Field’s in Chicago, the children wore green-tinted glasses to better appreciate the “Emerald City.”

In this era, the event that most symbolized the reconstruction of childhood was Christmas. Christmas became a time of toy giving in America in the 1840s. By the 1870s, this holiday was appropriated by retail establishments as a way to sell goods; people at that time had already begun to complain that Christmas was becoming overcommercialized (Carrier 1995:189). But it wasn’t until the early twentieth century that retail establishments turned Christmas into a spectacle that appealed to children especially. By the mid-1920s, nearly every city in America had its own “radio” Santa Claus. Gimbel’s in New York received thousands of letters addressed to Santa Claus; each was carefully answered by staff and signed “Santa,” with the name of each child carefully indexed for future use (Leach 1993:330). In 1924, Macy’s inaugurated its Thanksgiving Day parade, which ran from 145th Street to West 34th Street and culminated with the appearance of Santa Claus standing on Macy’s 34th Street marquee waving to the throngs below.

Thanksgiving also came to mark the beginning of the Christmas buying season, a time when Americans spend some 4 percent of their income on Christmas gifts and when depart-ment stores sell 40 percent of their yearly total of toys and 25 percent of their candy, cosmetics, toiletries, stationery, greeting cards, and books. (By the early 1990s, Americans were spending about $37 billion on Christmas gifts, a sum greater than the gross national product [GNP] of all but forty-five countries in the world [see Restad 1995:160]. By 2006, Americans were spending over $700 a person, a total of $457.4 billion, during the “winter holidays,” including Christmas [Roysdon 2006].) The government did its part in defining the Christmas buying season when

26 PartI • TheSocietyofPerpetualGrowth

Fred Lazarus Jr., who was to become president of Ohio’s Federated Department Stores, per-suaded President Franklin Roosevelt in 1939 to move Thanksgiving Day from November 30, its traditional date, to November 23 to add one more week to the Christmas buying season. Congress made that official in 1941 when it moved the Thanksgiving celebration from the last Thursday in November to the fourth Thursday. The government thus assured that it could fall no later than November 28, guaranteeing a minimum four-week shopping spree (Restad 1995:162).

Santa Claus represents one of the more elaborate ways in which the culture of capital-ism shields its members, particularly children, from some of its less savory features. The story of Santa Claus represented a world in which consumer, capitalist, and laborer were idealized: Commodities (toys) were manufactured by happy elves working in Santa’s workshop (no factories at the North Pole, and certainly no Chinese assembly plants) and were distributed, free of charge, to good boys and girls by a corpulent, grandfatherly male in fur-trimmed clothes. It is perhaps ironic that when political cartoonist Thomas Nast created what has become the contem-porary image of Santa Claus in 1862, he modeled Santa’s costume after the fur-trimmed clothes worn by the wealthy Astor family (Carrier 1995:189).

Nast also created Santa’s workshop, perhaps in nostalgic remembrance of prefactory production. Writers as early as the 1870s recognized the irony of this idealized version of Christmas and toy production. One magazine editorial in 1873, commenting on a picture of Santa’s elves working gaily in some magical workplace, turning out dolls, boats, tops, and toy soldiers, compared it with the reality of the poor, working six days a week in factories (Restad 1995:149). William Waits, in his book The Modern Christmas in America (1992), suggested that Santa’s major role was to “decontaminate” Christmas gifts, removing the stigma of factory industry (Waits 1992:25).

Others, of course, played a major role in transforming childhood, but we can do no better than to trace the trajectory of this transformation from its beginning in the stories of L. Frank Baum and his Emerald City to its logical culmination in Walt Disney World.

Walt Disney World (Ian Dagnall/Alamy.)

Chapter1 • ConstructingtheConsumer 27

the appRopRiation of Childhood, paRt i: Baum’s emeRald City Pre-1900 children’s stories were very different from those common today. The most famous were the stories of Jacob and Wilhelm Grimm. The Grimm brothers took traditional European folktales, most of which contained fairly gruesome and bizarre plots (cannibalism, incest, murder, etc.), and rewrote them so that they could be used as tools for the socialization of children. Each rewritten tale contained a moral lesson. But, as with nineteenth-century religion, government, and economic institutions, these stories lacked the power to produce the necessary mind-cure impulse to consume. Consequently, there emerged new kinds of stories in which the world was cleansed of the darkness of the Grimm’s stories and presented as a happy place full of desirable things. The leader in this reconstruction of the child’s universe was Baum.

Baum came from a well-to-do New York state family and had moved with his wife, Maud Gage (whose mother, Matilda Joslyn Gage, was a prominent nineteenth-century femi-nist leader), in the late 1880s to Aberdeen, South Dakota, where he opened a large retail store (Baum’s Bazaar). In 1891, economic depression hit Aberdeen, and Baum went broke. He moved his family to Chicago, where he began to write the stories that would make him famous. In addi-tion, he took a lively interest in the art of window display, becoming an advisor to some of the largest department stores in the city.

Baum had always loved the theater, and he combined that with his interest in business to make window displays into theatrical productions, showing off retail goods to their best advan-tage. The quality of the goods mattered little to Baum; how they looked, their “selling power,” was what mattered. He soon founded the National Association of Window Trimmers and devel-oped a manual and later a journal, The Show Window, devoted to window displays. (The journal changed its title to Display World in the 1920s; it exists today as Visual Merchandising.) Baum’s general message was to “use the best art to arouse in the observer the cupidity and longing to possess the goods” (Leach 1993:60).

Baum’s personal philosophy was compatible with the various mind-cure movements of the late nineteenth and early twentieth centuries. “People do not sin and should not feel guilt,” he wrote in 1890 in the Aberdeen Saturday Pioneer. “[T]he good things in life are given to be used.” The “rainy day” theory of saving was all right, according to Baum, as long as it wasn’t used as an excuse to deny oneself comforts. Who, he asked,

will be the gainer when Death calls him to the last account—the man who can say “I have lived!” or the man who can say “I have saved? … To gain all the meat from the nut of life is the essence of wisdom. Therefore, “eat, drink, and be merry—tomorrow you die.” (Leach 1993:247)

Baum’s books were filled with goods and mechanical inventions and landscapes of edible fruits, cakes, cookies, all intended to assure readers that the world was a good place. They were, said William Leach, affirmative, Americanized fairy tales. In fact, Baum’s explicit goal was to revolutionize children’s literature. In his introduction to the first edition of The Wonderful Wizard of Oz, Baum wrote,

The time has come for a series of newer “wonder tales” in which the stereotyped genie, dwarf and fairy are eliminated, together with all the horrible and blood- curdling incidents devised by their authors to point to a fearsome moral to each tale.… The Wonderful Wizard of Oz was written solely to please children of today. It aspires to being a modernized fairy tale, in which the wonderment and joy are retained and the heartaches and nightmares are left out. (Leach 1993:251)

The story of The Wizard of Oz can be interpreted as a tribute to our ability to create illusions and magic, to make people believe in spite of themselves. In Baum’s stories, the Wizard is exposed as a charlatan, a “common man” with no special powers; but he is powerful because he can make

28 PartI • TheSocietyofPerpetualGrowth

others do what he wants, make them believe in the unbelievable. He is a confidence man. People adored him even as he escaped from Oz in a balloon and was remembered as the man who “built for us this beautiful Emerald City.” Baum, said William Leach, created a benign trickster, consumer society’s version of the capitalist. The Wizard of Oz represented a new spiritual–ethical climate that modeled itself on a version of the child’s world in which dreams of self-fulfillment through consumption were legitimized and any negative consequences of consumption were banished. In brief, Baum’s work represented but one of the sandpaintings of capitalism, one that appropriates childhood to represent a world in which the purpose of life is to consume.

Yet, as sophisticated as Baum was in creating an ethos that encouraged people to buy, the master of the art was to be Walt Disney.

the appRopRiation of Childhood, paRt ii: Walt disney and the CReation of disney WoRld It is difficult to say when the child’s universe, created to turn children into consumers, began to be used to entice adults. Perhaps the glorification of “youth” in adver-tising and the upward extension of childhood to include the teens were manifestations of this phenomenon. Regardless, the appropriation of childhood as a vehicle to encourage consump-tion at all ages and rationalize capitalism culminated in the creation of Walt Disney World. Disney and other major American corporations have created what Shirley Steinberg and Joseph Kincheloe (see Kincheloe 1997) call kinderculture, the promotion of an ethos of pleasure for the purpose of enticing adults as well as children to consume.

Walt Disney World is the ultimate sandpainting of the culture of capitalism. Instead of a single sandpainter using bits of colored sand and grain to create a picture barely large enough to contain a single person, a corporation has used millions of tons of concrete, wood, plastic, and glass to create the “home of childhood,” a miniature universe that promotes innocence and trust, that allows people to leave the “real world” behind, and that encourages (in fact, insists) that par-ticipants put themselves in the hands of Disney. However, as Stephen Fjellman (1992:13) warned,

these hands bear watching, for in their shaping of things lies danger. It is not just that our movements are constrained with the promise, usually fulfilled, of rewards. What is important is that our thoughts are constrained. They are channeled not only in the interests of Disney itself, but also in the interests of the large corporations with which Disney has allied itself, the system of power they maintain, and the world of commodities that is their life’s blood.

If we look beyond the pleasantries, said Fjellman, we find that the environment is totally controlled and that there is a degree of discipline at work in this model world that rivals the discipline of a fascist state. And the control is real. In creating Walt Disney World, the Disney Corporation secretly bought forty square miles of Central Florida real estate (twice the size of Manhattan) and was granted almost feudal powers over the land by the state. Disney World has its own government, it sets the rules, and it controls the message. But what is the message of the Disney World sandpainting? To answer this question, let’s examine two aspects of Disney World: its depiction of American history and its representation of progress and the future.

History, or distory, as Mike Wallace (1985) called it, is everywhere at Walt Disney World, appropriated, like childhood, in the service of the Disney message. The history, of course, is highly idealized. At Disney World, historical figures such as Thomas Edison, Davy Crockett, Benjamin Franklin, and Mark Twain are used as spokespersons for Disney, lending their authority to the Disney message. Fragments of Abraham Lincoln’s speeches, most often taken out of context, are read to us by robots; and Leonardo Da Vinci, the Disney model of the prophetic visionary, is everywhere. At Disney World, there is a conscious attempt to pres-ent the history of capitalism without the warts. Disney World designers are quite forthright and unapologetic about their intent. As one Disney spokesperson explained, “We are not tell-ing history like it really was but as it should have been” (Fjellman 1992:31). Another Disney

Chapter1 • ConstructingtheConsumer 29

“imagineer,” as the designers are called, explains “Disney realism” as a “sort of utopian nature, where we program out all the negative, unwanted elements and program in the positive ele-ments” (Wallace 1985:35).

The center of Disney World (and the original Disneyland in California) is Main Street, a highly idealized, turn-of-the-century remodeling of life as it should have been, a consumer’s para-dise, scaled down to five-eighths of actual size. The street or square is filled with shops and taverns; people are defined by what they sell. Main Street cultivates a nostalgia for an imagined past without classes, crime, or conflict—a time of continuous consumption, “a supermarket of fun.”

On one level, Disney World is an extension of the shop windows designed by L. Frank Baum in the 1890s; on another it serves as an explicit model for the modern shopping mall. Urban planner James Rouse based a number of his town designs and historical shopping malls (Faneuil Hall in Boston, Harborplace in Baltimore, and South Street Seaport in New York) on Disney’s Main Street (Wallace 1985:42; see also Kowinski 1985).

At the Hall of Presidents, Disney takes viewers through U.S. history in twenty-nine min-utes flat. Disney does recognize, in a fashion, that U.S. history was not all that perfect. After all, the average adult visitor to Disney World is a well-educated professional who could not have been ignorant of the historical injustices in the United States’ past. Consequently, Disney World provides Frederick Douglass to speak to the oppression of blacks, Chief Joseph represents indig-enous peoples, Susan B. Anthony speaks about the concerns of women, and John Muir serves to remind visitors that progress often came at the expense of the environment. However, each is a highly sanitized symbol of opposition to racism, sexism, and environmental devastation. In “distory,” these figures do not remind us of persistent problems in the social fabric; rather they are presented as opportunities to overcome barriers. This is also bad, if not outright false, history.

For example, Disney appropriates for its version of indigenous people in American history the story of Chief Joseph and the Nez Percé. In 1877, the U.S. government, largely at the insis-tence of settlers who wanted the land, unilaterally revised previous treaty commitments and attempted to resettle all Nez Percé in the Walla Walla Valley of Washington on smaller reserva-tions. One group, led by Chief Joseph and the war chief Looking Glass, refused and, after some young warriors killed a trader accused of selling bad whiskey to the Indians, fled the area, head-ing east into Idaho, Wyoming, and Montana in an attempt to reach Canada. They were pursued by the command of General Oliver O. Howard, whom Joseph’s band defeated in battle after battle or consistently outmaneuvered. The campaign, one of the most bloody and heroic of the Indian wars, ended when Joseph and the remnants of his band were finally surrounded by one of the three army commands that had set out to intercept them. In blizzard conditions on October 5, 1877, only forty miles from the Canadian border, Joseph met with the army’s commanders to surrender. His surrender speech, among the most famous speeches in American history, was written down by an army lieutenant. At Walt Disney World, Chief Joseph, in robot form, once again delivers his speech; the Disney version is as follows (Fjellman 1992:104):

Enough, enough of your words.Let your new dawn lead to the final sunset on my people’s suffering.When I think of our condition, my heart is sick.I see men of my own race treated as outlaws, or shot down like animals.I pray that all of us may be brothers, with one country around us, and one govern-ment for all.From where the sun now stands, I will fight no more forever.

However, except for the famous final line, that was not what Joseph said. Here is the origi-nal speech as recorded that day in 1877 (Beal 1963:229):

Tell General Howard I know his heart. What he told me before I have in my heart. I am tired of fighting. Our chiefs are killed. Looking Glass is dead. The old men are

30 PartI • TheSocietyofPerpetualGrowth

all killed. It is the young men who say yes or no. He who led the young men is dead. It is cold and we have no blankets. The little children are freezing to death. My peo-ple some of them have run away to the hills and have no blankets, no food; no one knows where they are, perhaps freezing to death. I want time to look for my children and see how many of them I can find. Maybe I will find them among the dead. Hear me my chiefs, I am tired; my heart is sick and sad. From where the sun now stands, I will fight no more forever.

There is a significant difference between the Disney version and the one recorded on the battlefield. Instead of freezing children, the death of the elderly, and a military campaign that ended only after the deaths of hundreds of American soldiers and Nez Percé warriors, Joseph’s surrender speech has been turned by Disney into a testimonial to brotherhood and the nation-state.

In telling history “as it should have been,” Disney paints a picture of an American past of which people can be proud, while subtly justifying whatever excesses may have been committed. As in the land of Oz, everything has happened for the better.

Epcot (Experimental Prototype Community of Tomorrow) is a more adult attraction than Fantasyland or some of the other venues of Disney World. Epcot was Walt Disney’s pet project at the time of his death in December 1966. It was to be a utopian city of 20,000-plus residents that would attract urban planners and experimenters from all over the world. But Walt Disney died, and corporate Disney turned the project into a gigantic, corporate advertisement, using the 1939 World’s Fair in New York as its guide and having pavilions depict the corporate version of the history of progress. Thus, at Epcot, Exxon presents the history of energy, while AT&T does communications. Transportation is presented by General Motors, the land by Kraft, the home by General Electric, and imagination by Kodak. Perhaps even more interesting, at the heart of each corporate pavilion is a ride, a setting much like a sandpainting, in which seated passengers travel through tunnels that open to huge dioramas filled with robots, videos, holograms, and other technological marvels.

Throughout the Epcot pavilions there is this message: Technology equals progress, and progress is natural—and perhaps even American. There have been some problems along the way, the corporate exhibits tell us. “We” have made mistakes—but “we” (corporations) are working to solve those problems. “We” polluted the air, “we” abused the environment. Thus, the imagineers admit that there were problems in the past but reject corporate responsibility for them, putting the corporations at the forefront of the ecology movement. History is defined for us as “a record of the invention of commodities which allow man to master his environ-ment” (Wallace 1985:44). Progress is defined as the availability of emancipatory consumer goods. The World of Tomorrow promotes capitalist development as inevitable, spreading the message that history was made by inventors and businesspeople and that the corporations are the legatees of this past. It tells us, as Mike Wallace (1985:47) observed, that “citizens can sit back and consume.”

But who is Disney World for? It is supposed to be for children, but it really represents the appropriation of childhood to encourage the consumption of commodities and, more impor-tantly, once again to shield the consumer from the negative side of corporate capitalism. Walt Disney World is now the single biggest tourist attraction in the entire world. Approximately one-tenth of the population of the United States travels there each year. But it is not a universal attraction. By and large, it attracts people of relatively high incomes, 75 percent of whom are professionals or managers. Only 3 percent are black and 2 percent Hispanic. Seventy-one per-cent are from outside Florida. As Wallace (1985:53) said,

A process of class self-affirmation seems to be at work. Certainly, Disney World seems intent on providing reassurance to this class, on presenting it with its own pedigree. EPCOT’s seventies-style liberal corporatism seems tailor-made for

Chapter1 • ConstructingtheConsumer 31

professionals and technocrats. It’s calibrated to their concerns—nothing on labor, heavy on ecology, clean, well-managed, emphasis on individual solutions, good restaurants—and it provides just the right kind of past for their hippier sensibili-ties. Perhaps, therefore, professionals and managers (many of whom, after all, function as subalterns of capital) flock there because it ratifies their world. Perhaps they don’t want to know about reality—past or present—and prefer comforting and plausible stereotypes. [emphasis added]

Or as O’Toole Fintan (1998:21) put it,

Places like Disney World grapple with the problem of an audience that already knows about the exploitation and violence that its way of life requires for mainte-nance, but that needs, for its own well-being, to maintain a civilized distance from that knowledge.

Walt Disney World is only one manifestation of the tendency or necessity in capitalism to mask the unpleasant side effects of capitalist production and consumption. People may choose to do something that is harmful to others, but they do so according to a cultural logic that makes it the “right” choice. Our culture makes choosing even easier by masking the sometimes-devastat-ing consequences of our choices. Thus, the process of insulating the consumer from truths that might reduce consumption is built into the culture of capitalism; this denial determines in many ways how we view the world. Put another way, the world as seen from the consumer’s point of view is very different from the world as seen from the perspective of worker, capitalist, or people of other cultures around the world. One of the tasks of this book is to try to help the reader appre-ciate these other points of view.

expoRting the ConsumeR

The construction of the consumer in the Western industrial countries took a century to accom-plish. In the rest of the world it is taking less than a decade. According to recent studies, some 1.7  billion people, 27 percent of the world’s population, can be counted as members of the consumer society—270 million in the United States and Canada, some 350 million in Western Europe, and 120 million in Japan. The rest live in developing countries—240 million in China, and 120 million in India alone. In 2006, China became the world’s number two automobile market and in 2011 a total of 14.5 million sedans, sport utility vehicles, and multipurpose vehicles were shipped to dealers.

The Chinese government fully supports this development (as it bulldozes ancient city cen-ters to construct broad avenues to accommodate the automobile) and is planning a countrywide highway network. If growth continues at that pace, by 2015 China will have more automobiles on the road than the United States (Gallagher 2006; Halweil and Mastny 2004:xvii, 3).

Capitalism, writes William Leach (1993:388), “had achieved a new level of strength and world influence, especially in the wake of the collapse of communism.” It also, he concluded,

appears to have a nearly unchallenged hold over every aspect of American life, from politics to culture, so much so that the United States looks like a fashion bazaar to much of the rest of the world. For some Americans the continued power of con-sumerism has led to further degradation of what it means to be an American or of what America is all about. For others, this evolution has only enhanced the country’s appeal, making it appear more than ever an Emerald City, a feast, a department store to which everyone is invited and entitled. Just as cities in the United States once operated as generators of consumer desire for internal markets, today America func-tions similarly on a global scale.

32 PartI • TheSocietyofPerpetualGrowth

The phenomenon by which people around the world want to emulate consumer capitalism represents what Joseph Nye (2003) calls “soft power.” We see this power in Hollywood, which dominates the cultural industries. Countries such as India and Hong Kong try to emulate Hollywood’s style while modeling for their audiences’ lifestyles and values that they seek to acquire. Information industries around the world are dominated by Anglo-American news. People know what happens in the world because they get the news from AP or Reuters, CNN or NBC (Sisci 2002). We also see this power in the increasing popu-larity of American sports figures around the world: Michael Jordan, LeBron James, and Tiger Woods are often more familiar names to residents of China or Indonesia than are the countries’ leaders (see, e.g., LaFeber 1999).

The rapidity of this global consumer transformation is most evident in India and China, the two most populous countries in the world, with more than one-third of the total global population. Take the case of Rajesh Julka, a thirty-four-year-old resident of the Indian city of Kolkata. In 1996, Julka couldn’t afford to replace his ten-year-old television. His father had just retired, and his mother was trying to run a beauty parlor from one of the rooms in their congested ground-floor apartment. Julka was unemployed and trying to establish a sari-making operation. But by 2003, within the span of seven years, he had turned into what Indrajit Basu (2003) calls an “Indian yuppie.” He married, had a child, and

has since acquired a $100,000 condominium while replacing his cell phone every three months. He bought three new cars during the past four years and recently bought a $2,500 notebook PC during his July holiday to Singapore. “I can’t resist buying newer models of electronic goodies,” he says. He now also owns three televisions.

Rajesh Julka represents a burgeoning consumer-conscious Indian middle class that has grown to some 445 million people, larger than the entire population of the United States. This middle class is developing new spending patterns; from 1999 to 2002, they spent 4 percent less of their income on groceries and almost 5 percent more on eating out and taking vacations. Spending on personal care went up 2.5 percent during the same period, whereas saving and investing went down almost 7 percent. And because more than 45 percent of India’s population is under nineteen years of age, consumption levels are likely to increase at a far faster rate than in industrial countries. In 2011 consumer spending in India reached almost $1 trillion and is expected to increase to $3.6 trillion by 2020, and India’s share of global consumption will more than double to 5.8 percent (Bidwai 2003; FirstPost 2011).

And the most prominent symbols of consumer culture are the glitzy, air-conditioned, chrome-and-glass malls, replete with boutiques, restaurants, discos, bars, and theaters that are appearing in India. In addition to the twenty already existing, some 240 megamalls are under construction, forty-three of them in one of the wealthy suburbs of Delhi (Bidwai 2003).

The strategies that created the consumer in the United States were used to equal effect in India. Harold Wilhite (2008:148) notes that in Trivandrum, the capital of the Indian state of Kerala, almost every home is equipped with three things: a mixmaster (mixie), a designated place for prayer, and a television. Since 1995, when cable television became available in Trivandrum, everyone has taken to watching the evening soap operas. TV has replaced cinema as the most popular entertainment, and women, he notes, watch on average about four hours a day. In India

The Wonderful Wizard of Oz, similar to the

store display windows that Baum designed, was filled with all the

good things in life, assuring the reader

that the world is full of things to consume and

enjoy. (Bettmann/Corbis.)

Chapter1 • ConstructingtheConsumer 33

in 2009, the court granted a woman a divorce on the grounds that her husband refused to let her watch her favorite soap opera (BBC 2009). And television, as it did in the United States, vastly increased the amount of advertising peopled watched.

Television may be one of the most important contributors to the export of consumption to countries in the periphery. In the United States, Juliet Schor’s (1999) research found that for every hour of television people watched, they spent an additional $200.

While it is difficult to measure the effect that television watching has in India, Wilhite notes that the principal sponsor of one soap opera saw its sales rise 300 percent in the two years the series was shown. And, says Wilhite, people watch and enjoy advertisements, citing them as reasons for buying products. As in the United States, television in India has targeted children, who claim to want 75 percent of what they see advertised on television.

What is happening in India is also happening to the most populous country in the world, China. China has averaged GDP growth from 8 percent to 10 percent for more than a decade. GDP for 2011 was US$7.2 trillion, slightly less than half of the United States’ $15 trillion economy. And growth and consumer spending continue to soar. Retails sales in 2008 totaled $1.59 trillion, almost 22 percent higher than the previous year, but have been declining slightly because of the global recession.

The same tools that functioned to construct the consumer in the United States are at work in China. In 2010, $120 billion was spent on advertising in China, up from $57 billion in 2006, and $11 billion in 2002 (Ng 2010). Chinese are becoming homeowners, as Americans did in the 1950s. Housing reforms turned over vast amounts of state-owned housing to the people who lived in them at discounts of up to 80 percent. Other laws ensured private property ownership. Home ownership is transforming asset-poor renters into homeowners and driving the purchases of refrigerators, stoves, air conditioners, and cars.

As in the United States, the Chinese consumer is being leveraged through mortgages, auto loans, credit cards, and consumer finance. Credit cards are in their absolute infancy. In 2003, about a million credit cards had been issued—one for every 1,300 people; in 2008, there were 140 million to 150 million credit cards and the rate was increasing at over 97 percent a year. Mortgages were made available only in 2000, auto loans in 2001. Auto ownership, fueled by credit, exploded upward: China had only two cars per 1,000 people in 1997; by 2010 it has reached forty cars per 1,000 persons (compared to 765 per 1,000 in the United States). And perhaps there is no better evidence of the spread of consumerism in China than the mushrooming of fast-food restaurants. There are almost 500 McDonald’s in China, and the company plans on doubling that number over the next few years. New restaurants will even have drive-throughs to accommodate the rapid growth of cars in China. The restaurants have become so ubiquitous in Asia that when Chinese, Korean, Japanese, or Taiwanese kids visit America and spot a McDonald’s they exclaim that “They have our kind of food here!” (Watson 2000:131).

In the cases of both China and India, one factor in the rising wave of consumption is the same baby boomers (people born at the end of World War II) who fueled consumption in the United States, except that in the case of Asia there are 1 billion of them. In addition, just as children began to move from their parents’ homes after 1950 in the United States, they are leav-ing their parents in Asia. These new households require refrigerators and stoves, pots and pans, and toasters and stereos (Berthelsen 2003; Wilhite 2008).

The responses to these trends are the same as they were in the United States; emerging economies have encouraged the growth of consumer spending and the spread of supermarkets, chain stores, and malls. Wal-Mart and the French Carrefour chain now have nearly fifty stores
























34 PartI • TheSocietyofPerpetualGrowth

in China, a phenomenon that is already beginning to wreak havoc on mom-and-pop operations across Asia. Thailand has begun to experience protests against big-box operators such as Wal-Mart, similar to the protests the United States experienced for a decade (Berthelsen 2003).


A couple of days after al Qaeda operatives crashed two planes into the World Trade Center and another into the Pentagon on September 11, 2001, U.S. congressional members met to plan a message to the stunned public. “We’ve got to give people confi-dence to go back out and go to work, buy things, go back to the

stores—get ready for Thanksgiving, get ready for Christmas,” said one member of Congress, echoing the message of the president. “Get out,” he said, “and be active, participate in our society” (CNN 2001). The fact that after one of the most shocking events in U.S. history, government officials were urging citizens, above all, to shop and work is ample testimony of the significance of consumption in the effective working of our economy, and, indeed, for our whole society. It is to the consumer that government and business look to supply the impetus for the continued expansion of the economy and the accumulation of capital.

We mentioned earlier that consumption on the scale evident in capitalist culture is unprec-edented and is not natural—that is, there is no innate desire in human beings to acquire an ever-greater quantity of stuff. In truth, not everyone agrees with this assumption. Scholars such

as James B. Twitchell (2002, 2004) argue that human beings, throughout history, have sought material luxury and that although overconsumption does indeed have its dark side, it has its light side as well—“getting and spending,” as he puts it (2004:17), “have been the most passionate, and often the most imaginative, endeavors of modern life.” By emulating the consumption-driven lifestyle of capitalist culture, he says, people around the world are being drawn closer together.

Twitchell’s defense of luxury is well argued and, insofar as luxury is attainable by all, perhaps something to be considered. But that is a problem: Can the level of wealth enjoyed by members of capitalist culture (remembering that it is twenty-five times greater, on average, than that enjoyed by citizens of two centuries ago) be attained by all but a very few? And if it can be attained, what is the cost of everything else that we must sacrifice? Francesco Sisci (2002) expresses the dilemma well:

The American victory in the soft war creates the desire of the citizens of the world to become American, with its values, wealth and security umbrella. However, it is impossible for America to grant the American dream to all people who dream it, either in the U.S. or abroad. The danger of creating a desire that cannot be satisfied—whether desire for a certain product or a certain civilization—is the backlash that will follow: waves of protest and dissatisfaction that will translate into a wish to return to one’s own history.






















The consumer may drive the culture of capitalism, but without the laborer, there would be no commodities to consume. Yet the emergence of the laborer—the person who survives by selling his or her labor—is a recent historical phenomenon. In past centuries

most people had access to land on which to grow their own food, selling whatever surplus they produced, or they owned tools (implements for weaving or metalworking, for example) for pro-ducing other objects for sale or trade. Thus, to understand capitalism, it is necessary to examine why people choose or are forced to sell their labor. Before we examine this, it is essential to have a fundamental understanding of the workings of the capitalist economy.

Capitalism is not an easy term to define. Pierre Proudhon, who first used the term in 1861, called it “an economic and social regime in which capital, the source of income, does not generally belong to those who make it work through their labor” (Braudel 1982:237). The term capitalism does not appear in the writings of Karl Marx and did not gain currency until 1902, when the German economist Werner Sombart used it to denote the opposite of socialism. But

C h a p t e r

2 The Laborer in the Culture of Capitalism

I have read in E. P. Thompson’s The Making of the English Working Class that the first man who attempted to establish a labor union in England at the end of the 18th century was arrested, tried for

sedition, found guilty, drawn and quartered in a public square by attaching draft horses to each of his arms and legs and pulling him apart. He was then disemboweled and his guts were burned. Then they hanged what was left of him. One gathers from this that the

propertied classes were slow to accept the idea of organized labor.

—Robert Hass, Washington Post, September 5, 1999

The capitalist system makes it very much easier for people not to realize what they are doing, not to know about the danger and

hardship, the despair and humiliation, that their way of life implies for others.

—Edmund Wilson, The Shores of Light

36 PartI • TheSocietyofPerpetualGrowth

definitions alone won’t help us to understand fully the dynamics of something as complex as a capitalist econ-omy. We need to understand the major characteristics of capitalism to appreciate how it has permeated our lives as an economic and a cultural system.

Few people will deny that the genius of capital-ism lies in its ability to produce goods—commodities for people to buy and consume. Let’s start our excur-sion  into capitalism with a product, beginning with something  nearly all of us buy at one point or another—sneakers—and examine, briefly, the larg-est manufacturer of sneakers, Nike, Inc. Today most of the sneakers—and clothes—we wear are assembled overseas because large corporations, such as Nike, have increasingly relocated assembly factories from their home countries to countries on the periphery. Consequently, the clothes we wear; the TVs, stereos, and compact discs (CDs) we listen to; and the comput-ers we use are at least partly produced by a person in another part of the world. This situation creates a clash of cultures that can be illuminating for what it tells us

about other cultures and what it may tell us about ourselves. The effects that these factories have on other countries highlight the distinctive features of the capitalist economy and per-haps approximate the impact of early capitalism on our own society. But first let us digress briefly to an understanding of the economic logic of capitalism and, particularly, the role of labor within this economic system.

A Primer on the elements of CAPitAlism

Let’s run through a quick primer on the economics of capitalism and its development. Briefly stated, the economics of capitalism grew out of the interactions of the following five items:

1. Commodities (C). There are basically two types of commodities: capital goods and con-sumer goods. Capital goods, such as land, raw materials, tools, machines, and factories, are used to produce consumer goods (e.g., television sets, VCRs, computers, and houses) to be sold to others.

2. Money (M). Money is, among other things, a standardized means of exchange. It serves to reduce all goods and commodities to a standard value. By putting a monetary value on something (e.g., a forest), it can be compared with any other commodity (e.g., government bonds). Money, thus, greatly facilitates the exchange of commodities.

3. Labor power (lp). Labor power is the work that is needed to transform one type of com-modity into another (e.g., steel into an automobile).

4. Means of production (mp). Another term for capital goods—that is, the machines, land, and tools with which other commodities are produced.

5. Production (P). The combination of lp and mp to produce commodities.

In precapitalist societies or noncapitalist production, as in capitalist production, people either make or obtain commodities—food, clothing, shelter, and the like—to use. These com-modities have what economists call use value. If someone needs a shirt, they make it; if they need food, they gather, hunt, or grow it. Occasionally, they may trade for what they need or even buy it. Thus, a farmer might barter some corn (C) in exchange for a shirt (C=) or use money to

Part of the genius of the culture of capitalism is

its ability to produce vast quantities of

goods, such as these Nike products that

consumers all over the world clamor to buy.

(Hugh Threlfall/Alamy).

Chapter2 • TheLaborerintheCultureofCapitalism 37

purchase it, but the object is always to obtain something for use. We can diagram this type of exchange as follows:

C S C= or M S C=

In capitalism, people produce or obtain goods not for their use, but for the purpose of exchange—that is, their object is to produce or obtain commodities (C), not to obtain another commodity (C=) but to get capital or money (M). The goods have what is called exchange value. Thus, in a business transaction, when a person buys a commodity at one price and sells it at a higher price, the commodity is said to have an exchange value.

M S C S M=

Some people might argue that this exchange is capitalism, although most would call it mercantile exchange, suggesting that the formula for capitalism is incomplete. You still need one more development: to combine labor and the means of production in a unique way. From this perspective, fully developed capitalism looks like this:

M S C S P S C= S M=


M S C S mp

lp S C= S M=

Thus, a manufacturer or producer has money (M) to buy commodities (C; e.g., raw mate-rial, machines, and labor) that are then combined (mp/lp) to manufacture commodities that carry a value greater than C (C=). The sale of these commodities permits the producer to receive a sum of money greater than M (M=) that constitutes profit. Note that at this point, labor is considered a commodity to be purchased or rented, in the same way that raw materials, machines, factories, or land are purchased or rented. Labor becomes a factor of production in the same way that raw materials, land, or machines are factors of production. In addition, at this point the accumu-lation of wealth comes to consist increasingly of productive capital (raw materials, machines, and factories).

Let’s apply the formula to our sample capitalist enterprise, the Nike corporation. Nike invests money (M) to buy commodities (C) consisting of such things as leather, rubber, machines to make textiles, and factories (mp), which they combine with labor (lp) and the people who design, produce, and assemble the commodity—sneakers—[C=] that they then sell for money [M=]. The object of this entire process is to get M= to exceed M as much as possible. That consti-tutes the profit—the bottom line, so to speak.

Furthermore, Nike doesn’t simply keep M=—it reinvests it in commodities and recombines it with mp and lp in order to repeat the process and earn/accumulate still more money and profits. (Figure 2.1 is a diagram of the cyclical nature of capitalist production.)

However, in the real world of finance, there are other factors to consider. For example, producers of commodities do not often have the money (or capital) to start the production cycle on their own; they have to borrow money from banks or sell stock to investors to raise money to obtain the means of production and pay the labor power to produce goods. Consequently, some of the profits take the form of principal and interest to repay investors’ loans. The higher the rate of interest that the manufacturer offers investors, the easier it is to obtain loans. Moreover, the producer (Nike, for example) doesn’t have to put its profits back into producing more sneakers. It may invest that money elsewhere with the possibility of earning greater profits; in other words, the manufacture and sale of sneakers may produce a profit of 10 percent, but if those profits can be reinvested elsewhere at 12 percent, so much the better.

This reveals one dilemma that Nike and other producers of commodities face: Making a profit is not enough. They must give their investors (the banks, stockholders, and so on) who

38 PartI • TheSocietyofPerpetualGrowth

supplied the money or capital to start the cycle of production enough of a return on their money so that they do not take it elsewhere. If they go elsewhere (and investors in today’s world, as we shall see, have an enormous number of investment options), Nike may find it harder to locate investors and put together the money necessary to restart the cycle. Consequently, they may have to pay higher interest rates and charge more for their products. In that case, however, they might not sell as many units, especially if Adidas or Reebok can sell their sneakers for less.

In order to make a profit, it is imperative to keep the money spent on factories, machines (mp), and labor (lp) as low as possible. In fact, according to some economists, the ability to minimize the production costs of mp and lp will determine the success or failure of the company. (We will return to that in a moment.)

Parenthetically, it is noteworthy that corporations that do not issue stock, and, hence, don’t have to worry about satisfying investors, are able to offer workers better incomes, benefits, and working conditions than corporations that are more dependent on investors and banks for working capital. For example, among the present giants of the chocolate industry, only the Mars Company, though a formidable competitor in the market, has the most ethical standards in the business. It remains a family business and, despite having a turnover bigger than McDonald’s, has never been quoted on the stock exchange. The founder of the company, Forest Mars, insisted on generosity to the workforce and service to customers; Mars aims to make only a 3 percent return after taxes, and the salaries of employees, or “associates” as they are called, are higher than those in comparable firms, while directors earn less (Fernandez-Armesto 2002:199).

Regardless, it is clear that the capitalist production process is very much a money-making game: Investors and manufacturers put money in at one end of the production process and get more money out of the other end in the form of profits or interest. It is very much like a hypo-thetical device that engineers call a black box. Engineers assume that the black box produces something, but for the purposes of design and planning, they do not concern themselves with how things are produced—that is, with the internal functioning of the box. They simply assume that if they put something into it—fuel, electricity, and so on—they will get something out (e.g., power and movement).

For most capitalist producers or investors, capitalism or capitalist enterprises such as corporations, banks, bonds, or stocks are like black boxes: You put money in one end and get more money out the other (see Figure 2.2).

It is, of course, a highly complex business to know where to put the money, how much to invest, and so forth. But it is the amount of the return rather than the way it is generated that is of utmost importance.

C ( lp )(Production)

C = Commodities (capital goods)C′ = Commodities (consumer goods)M = Money investedM′ = Money invested plus money earned (profit)

C′ (Product)M


M′ (Sale)


figure 2.1 Cycle of Capitalist Production

Chapter2 • TheLaborerintheCultureofCapitalism 39

Nevertheless, it is in the black box that commodities are produced and consumed. It is also in the black box that we find the patterns of social, political, economic, ecological, and ideologi-cal life that either promote or inhibit the conversion of money into more money.

Thus, capitalism is more than an economic system; its operation has far-reaching con-sequences for almost all aspects of our existence. Most of us order our lives in some way to produce and consume commodities that generate the profits and interest that make the capitalist system work. But although most people who invest money do not concern themselves with how it is produced, others who are affected by this almost magical transformation often conceptualize the process in profound ways. For example, peasant farmers in Colombia have a way of con-ceptualizing capitalist exchange that may help us understand its essential elements and its cost.

the Baptism of money

After losing their land to large farmers and being forced to supplement their farming activities with wage labor, peasants in the lowlands of Colombia developed the practice of illicitly baptiz-ing money in a Catholic Church—instead of baptizing a newborn child. When presenting a child to the priest to be baptized, a person would hold a peso note that he or she believed received the priest’s blessing instead of the child. The note, thus magically transformed and given the name of the child, would, it was believed, continually return to and enrich its owner by bringing with it other notes. In other words, the note would become interest-bearing capital that continued to generate more and more money. Peasants tell stories of such notes disappearing from cash reg-isters, carrying with them all the other notes, and of the store owner who saved his money only because he heard two baptized notes fighting for possession of the drawer’s contents.

The idea that money is animate, that it can magically bring back more money, may at first seem strange to us, but Michael Taussig (1977) argued that the Colombian view of money is very close to our own—the major difference having to do with their conception of the black box.

The major feature of capitalism is that money can be used to make more money. To do so, the money must be invested in goods that must be sold, or invested in factories in which people work to make goods to be sold, and so on. Yet, we often talk as if it is the money itself that makes the money, or as if money somehow has a life of its own. We speak of “the sagging dollar,” “cash flows,” or “putting our money to work.” The news will report that “earnings have surged ahead” or that we have “climbing interest rates.” Factories are even referred to as “plants” where our “money grows.”

In other words, our language conveys the notion that capital has an innate property of self-expansion. It is talked about as if it were a living being that reproduces itself (just as the Colombian peasant believes baptized money has a life of its own and can reproduce itself).

The belief that money has a life of its own is beautifully illustrated in Benjamin Franklin’s classic letter Advice to a Young Tradesman (1748). Here is Franklin’s advice:

Remember, that money is of the prolific, generating nature. Money can beget money, and its offspring can beget more, and so on. Five shillings turned is six, turned again it is seven and three pence and so on, till it becomes a hundred pounds. The more there is of it, the more it produces every turning, so that the profits rise quicker and quicker. He that kills a breeding-sow, destroys all her offspring to the thousandth generation. (Taussig 1977:140)

Money (M) More Money (M′)

The Black Box

Investments (Input) Profits (Output)

figure 2.2 The Black Box

40 PartI • TheSocietyofPerpetualGrowth

The attitude expressed by Benjamin Franklin and expressed daily in our own lives is one that Karl Marx called commodity fetishism. Fetishism attributes life, autonomy, and power to inanimate objects—dolls, sticks, places, or, in capitalism, money or other commodities. But commodity fetishism also performs another function. By attributing animate life to money, by speaking of it as if the money itself produces money, we mask and hide the actual manner in which money begets money—the exploitation of labor, land, and people. In this magical way of thinking, we begin to perceive money as being able to generate value and yield interest in the same way that pear trees bear fruit or pigs bear piglets. The whole process of capital investment, making a profit, finding the cheapest labor, and so on, comes to appear natural because the real source of profits and the noneconomic consequences of capitalism are largely hidden from view.

Money, however, does not produce money by itself. It requires other things, and this is where the Colombian peasant belief about the baptism of money is quite profound. Colombian peasants’ practice of baptizing money so that it brings back more money is a rational interpreta-tion of our own view of money but with one addition: For the Colombian peasant, the process is immoral. It is immoral because it is money rather than the child that is baptized; profit can come only at the cost of the child’s soul. In this way, the Colombian peasant is offering a critique of  the capitalism that has been imposed on his society in the past century by the expanding world system.

These peasants are also posing key questions: How does capitalism perform its magic, converting money into more money, and do we pay a price for that conversion?

the ConstruCtion And AnAtomy of the Working ClAss

As noted in the introduction to Part 1, capitalism involves interactions among three sets of people—consumers, laborers, and capitalists—each doing what it is supposed, indeed has, to do. The construction of the consumer took place largely in the twentieth century. The nine-teenth century witnessed the development of the working class. Although the flowering of the consumer occurred largely in the United States, the laborer was mainly a creation of the British economy, a creation that gradually migrated from Great Britain to the rest of the world.

Characteristics of the Working Class

The new working class was unlike any that had existed before. Four characteristics of this new category of persons stand out: (1) Members of this class were by necessity mobile, free to move to wherever workers were needed, unhampered by property or family connections; (2) they were segmented or divided by race and ethnicity, age, and gender; (3) they were subject to new kinds of discipline and control; and (4) they were militant, often protesting the conditions in which they were placed. Let’s examine each of these characteristics in turn.

lABor moBility First, the new laborers were remarkably geographically mobile, moving temporarily or permanently to sources of employment. Most were mobile because they had been forced off their land or because the products they produced were no longer in demand. Take the situation of the Italian worker, for example. Beginning in the 1870s, the sale of public domain and church lands created a situation that allowed large landholders to add to their land, whereas small landholders were squeezed out as prices for agricultural products declined, in part because of the importation of Russian wheat. A blight destroyed many vineyards, and cheap imported goods disrupted local handicrafts. In the 1860s, some 16,000 people emigrated permanently; in the 1870s, the number grew to 360,000; and between 1881 and 1901, the number rose to 2 million, 80 percent of whom had been agricultural laborers.

The countries to which these Italian migrants scattered, including Australia, Canada, and most often the United States, quickly utilized the cheap labor in factories, railroads, mines, stock-yards, and oil fields. In the period between 1820 and 1860, the main contingents of immigrants

Chapter2 • TheLaborerintheCultureofCapitalism 41

came from Ireland (2 million), southwestern Germany (1.5 million), and the British Isles (750,000). More English, Swedes, and Germans arrived between 1860 and 1890; again they were mainly displaced agriculturists driven off their land by the importation of cheap American and Russian wheat (as Mexican farmers are currently being displaced by the importation of cheap American corn).

In 1890, the source of the new immigration shifted to southern and eastern Europe and consisted largely of dis-placed peasants from Italy, the Austro-Hungarian Empire, the Balkans, and Poland, along with Jews from Russia.

Coal miners in Pennsylvania had been British, Irish, and German prior to 1890, but after that time they were increasingly Polish, Slovakian, Italian, and Hungarian. After 1890, the textile mills of New England that had been run by French Canadians, English, and Irish were run by Portuguese, Greeks, Poles, and Syrians. In the garment trades, Russians, Jews, and Italians replaced Germans, Czechs, and Irish.

Some 90,000 indentured Chinese laborers were sent to Peru between 1849 and 1874; more than 200,000 were sent to the United States between 1852 and 1875, where they were employed in fruit growing, processing and panning for gold, and railroad construction. Some 10,000 to 14,000 Chinese were used in the construction of the Central Pacific Railroad of California. Thus the nineteenth century saw the greatest migration of human beings that the world had ever seen as millions, no longer able to support themselves, relocated in an effort to sell their labor.

segmentAtion A second characteristic of the working class was that they were divided, or segmented, by race, religion, ethnicity, age, and gender. The new working class split into two broader categories: a labor aristocracy better able to defend its prerequisites through union organization and political influence, and workers who had to accept lower wages and less secure jobs. These divisions were often reinforced by the use of gender, racial, or ethnic distinctions that relegated certain groups such as blacks and, earlier in the century, the Irish to only the lowest-paying jobs. Capitalism did not create these racial and ethnic distinctions, but it did help in defining and reinforcing them and their economic consequences (Wolf 1982:380).

Ironically, the ethnic identities of new immigrants rarely coincided with their self- identification. They first thought of themselves as Hanoverians or Bavarians rather than Germans; as members of a village parish (okolica) rather than Poles; as Sicilians, Neapolitans, and Genoans rather than Italians; and as Tonga or Yao rather than “Nyasalanders.” In effect, migrants had to be socialized to see themselves as members of particular ethnic groups. They were, as Wolf (1982:381) said, “historical products of labor market segmentation under the capitalistic mode.”

The ethnic or racial groupings created or reinforced by capitalist culture often came into conflict with each other as they competed for scarce jobs and resources. The case of the Irish in England and the United States is telling. In the mid-nineteenth century, Karl Marx (1972:293–294) made the following observation about the relationship between English workers and newly arrived Irish laborers:

Every industrial and commercial center in England now possesses a working class divided into two hostile camps, English proletarians and Irish proletarians. The ordi-nary English worker hates the Irish as a competitor who lowers his standard of life. In relation to the Irish worker he feels himself a member of the ruling nation and so

Geographic mobility is one characteristic of the laborer in the culture of capitalism. Here, Chinese boys await medical examinations at Angel Island immigration station in San Francisco around 1910. (The Granger Collection, NYC.)

42 PartI • TheSocietyofPerpetualGrowth

turns himself into a tool of the aristocrats and capitalists of his own country against Ireland, thus strengthening their domination over himself. He cherishes religious, social, and national prejudices against the Irish worker. His attitude towards him is much the same as “poor whites” to the “niggers” of the former slave states of the USA. The Irishman pays him back with interest in his own money. He sees the English worker at once the accomplice and the stupid tool of the English domination in Ireland.… This antagonism is the secret of the impotence of the English working class, despite their organization.

In the United States, the same degree of ethnic antagonism developed, particularly between the Irish and blacks. Irish leaders in the early nineteenth century generally were strong crit-ics of slavery and supporters of its abolition. However, once the Irish emigrated to the United States, they, who in their own country were treated almost as badly by British rulers as African Americans were in the United States by whites, became strongly proslavery and antiblack. What accounted for this change in attitude?

Noel Ignatiev (1995), in his book How the Irish Became White, maintained that during the first half of the nineteenth century in America, free African Americans competed successfully in the North for relatively good jobs. Before the Irish arrived in large numbers in the United States, the distinction between freedom and slavery was blurred by such intermediate conditions as chattel slavery, indentured servitude, and imprisonment for debt. But the American Revolution had eliminated these intermediate economic categories and reinforced the tendency to equate slavery with blackness and freedom with whiteness. If blacks, then, were allowed to work in the same jobs as the Irish, the Irish would be assigned to the same social category as blacks. In fact, the Irish risked being considered lower in status than blacks, largely because as slaves, blacks had value that the Irish did not. As one official of an Alabama stevedoring company put it, “The niggers are worth too much to be risked here; if the Paddies are knocked overboard, or get their backs broke, nobody loses anything” (Ignatiev 1995:109). Consequently, the Irish did all they could to distance themselves from blacks, including supporting slavery. But the major task of the Irish was to ensure that blacks did not have access to the same jobs that they did.

Gradually, by taking the menial jobs that had been done by blacks, as they were encouraged to do by priests, the Irish began to dominate the ranks of the unskilled laborer—by 1855, the Irish made up 87 percent of New York City’s 23,000 unskilled laborers. In 1851, The African Repository, a magazine devoted to African American concerns, wrote (Ignatiev 1995:111) that

in New York and other Eastern cities, the influx of white laborers has expelled the Negro almost en masse from the exercise of the ordinary branches of labor. You no longer see him work upon buildings, and rarely is he allowed to drive a cart or public conveyance. White men will not work with him.

“White men will not work with him,” became the rallying cry of labor in elbowing out blacks from jobs that were then taken over by Irish; as Frederick Douglass said, “In assuming our avocation [the Irishman] has assumed our degradation.”

The key to the distinction between white and black became work; white meant doing “white man’s work,” whereas black meant doing “black man’s work.” The distinction was arbitrary because many jobs that became white man’s work when reserved for the Irish had been performed by blacks earlier. “White,” Ignatiev pointed out, was not a physical description, but rather a term of social relations. This distinction resulted, then, in a situation in which to be “white” the Irish had to work in the jobs from which blacks were excluded (Ignatiev 1995:111). Thus, a division of labor was hardened into a distinction of race and ethnicity.

Of course, the workforce was segmented in other ways, most notably by gender and age, with women and children assigned to the lowest-paying and most menial jobs, a development we will explore below.

Chapter2 • TheLaborerintheCultureofCapitalism 43

disCiPline The new working class was mobile and divided by race, ethnicity, gender, and age. In addition, it had to be disciplined. Central to this process was the factory. The factory is a relatively recent historical phenomenon, having developed largely in the late eighteenth and early nineteenth centuries in Europe (although factory production in textiles may have existed as early as the fifteenth century). Prior to its development, most work (e.g., weaving, spinning, and pottery making) was done in homes or small shops. But with the work scattered from town to town and house to house, manufacturers had difficulty maintaining product standards and supplying the workers with raw materials. Factories solved these problems.

The first factories were modeled on penal workhouses and prisons. Spinning mills were built and installed in brick buildings four or five stories high and employed several hundred workers. The iron and cast-iron mills of the metal industry brought together several blast furnaces and forges and a large workforce (Beaud 1983:66). These settings may have increased the efficiency of production, but the new job discipline required of workers also created tensions between workers and their employers that, at various points in the years to follow, would result in situations approaching civil war.

The factory setting, for example, necessitated workers being disciplined to accept a new conception of time. Time, another of the things we take for granted, is subject to cultural definition. Our time is dictated, by and large, by our means of measuring it—clocks and watches. Time in other societies tends to be task oriented or dictated by natural phenomena: In Madagascar, it might be measured by rice cooking (about one-half hour); in seventeenth-century Chile, the time needed to cook an egg was the time it took to say an Ave Maria aloud; in Burma, monks rose when there was enough light to see the veins in their hands; in oceanside communities, the social patterning of time depended on the ebb and flow of tides. In his classic account of the life of the Nuer of the Sudan, British anthropologist E. E. Evans-Pritchard (1940:103) noted that

the Nuer have no expression equivalent to “time” in our language, and they cannot, therefore, as we can, speak of time as though it were something actual, which passes, can be wasted, can be saved, and so forth. I don’t think they ever experience the same feeling of fighting against time because their points of reference are mainly the activities themselves, which are generally of a leisurely character. Events follow a logical order, but they are not controlled by an abstract system, there being no autonomous points of reference to which activities have to conform with precision. Nuer are fortunate.

Historian E. P. Thompson (1967) noted that until the emergence of modern notions of time, work patterns were characterized by alternating bouts of intense labor and idleness, at least whenever people were in control of their own working lives. He has even suggested that this pattern persists today but only among some self-employed professionals, such as artists, writers, small-farm owners, and college students.

This is not to say that preindustrial work was easy. Thompson (1967:58) described the typical day of a farm laborer in 1636: He rose at 4:00 a.m. and cared for the horses, ate break-fast at 6:00 a.m., plowed until 2:00 or 3:00 p.m., ate lunch, attended to the horses until 6:00 in the evening, ate supper, did other chores till 8:00 p.m., cared for the cattle, and then retired. However, this was during the height of the laboring year on the farm, and it was probably the laborer’s wife, says Thompson, who labored the hardest.

It is difficult to say precisely when the Western concept of time and work began to change. Clocks were not widespread in Europe until the seventeenth century, although most towns prob-ably had a church clock. But by the early 1800s, our present sense of time was well established.

Time was an entity that should not be wasted. “Time,” as Benjamin Franklin wrote in Poor Richard’s Almanac, “is money.” At about the same period, the idea that idleness was wicked began to gain currency. As Youth’s Monitor phrased it in 1689, time “is too precious

44 PartI • TheSocietyofPerpetualGrowth

a commodity to be undervalued.… This is the golden chain on which hangs a massy eternity; the loss of time is insufferable, because irrecoverable” (Thompson 1967:58). Leisure time, in general, was attacked; in some religious circles, seeking amusement was considered to be sinful. Anything that did not contribute to production was discouraged.

At about the same time, the school was being used to teach a new time and work discipline. Social reformers in the late eighteenth century suggested that poor children be sent at the age of four to workhouses where they would work and be given two hours schooling each day. As one person said,

There is considerable use in their being somehow or other, constantly employed at least twelve hours a day, whether they can earn their living or not; for by these means, we hope that the rising generation will be so habituated to constant employ-ment that it would at length prove agreeable and entertaining to them. (Thompson 1967:84)

Thus, by the middle of the nineteenth century, through the supervision of labor, fines, bells and clocks, money incentives, preaching, and schooling, a new time discipline was imposed on society at large and on the laborer in particular.

resistAnCe Finally, in addition to its mobility, segmentation, and discipline, the new working class was characterized by a new militancy that would lead to the closest thing the world has seen to a “world revolution.” Early in 1848, the French political thinker and chroni-cler of American democracy Alexis de Tocqueville addressed the French Chamber of Deputies, saying what many Europeans feared. “We are sleeping,” he said, “on a volcano.… Do you not see that the earth trembles anew? A wind of revolution blows, the storm is on the horizon” (Hobsbawm 1975:9).

At about the same time, the thirty-year-old Karl Marx and his twenty-eight-year-old friend Friedrich Engels were drafting the Manifesto of the Communist Party, which appeared in London in February 1848. Perhaps within days, revolutionaries in France declared the estab-lishment of a new republic; by March, the revolution had moved into Germany, Hungary, and Italy; within weeks, the governments of an area today encompassing France, Germany, Austria, Italy, Czechoslovakia, Hungary, part of Poland, Belgium, Switzerland, Denmark, and the old Yugoslavia were all overthrown. However, within six months of the outbreak, the movement faltered, and within eighteen months, only the new government of France remained, and it was trying to put distance between itself and the insurrectionists. The only long-lasting change was the abolition of serfdom in what had been the Hapsburg Empire.

Although the rebels had the support of moderates and liberals in the various countries, their movements were, nevertheless, “social revolutions of the labouring poor,” as Hobsbawm (1975:15) put it. The revolutions were an expression of developing patterns of conflict between the rich and poor, each group developing its spokespersons. On the one side were people such as Jean-Baptiste Say in France and David Ricardo and Thomas Robert Malthus in England who argued that the poor had only themselves to blame for their condition. On the other side were those such as Karl Marx, Friedrich Engels, Robert Owen, Henri Saint-Simon, and Charles Fourier who blamed the exploitation of labor for poverty. The debate is not unlike the ones still being argued over such issues as welfare and the role of the state in alleviating poverty. Malthus argued, for example, that

it is not in the power of the rich to supply the poor with an occupation and with bread, and consequently, the poor, by the very nature of things have no right to demand these things from the rich.… No possible contributions of sacrifices of the rich, particularly in money, could for any time prevent the recurrence of distress among the lower members of society. (Beaud 1983:78)

Chapter2 • TheLaborerintheCultureofCapitalism 45

It is a matter of morality, said Malthus, that those who are poor must not produce children until they can adequately provide for them. To those who violate this rule, there should be no pity:

To the punishment, therefore of nature he should be left, to the punishment of want. He has erred in the face of a most clear and precise warning, and can have no just reason to complain of any person but himself when he feels the consequences of his error. All parish assistance should be denied him; and he should be left to the uncertain support of private charity. He should be taught to know that the laws of nature, which are the laws of God, had doomed him and his family to suffer for disobeying their repeated admonitions.… It may appear to be hard that a mother and her children, who have been guilty of no particular crime themselves, should suffer for the ill conduct of the father; but this is one of the invariable laws of nature. (Malthus 1826:343)

One French industrialist wrote matter-of-factly that “the fate of the workers is not that bad: their labor is not excessive since it does not go beyond thirteen hours.… The manufacturer whose profits are poor is the one to be pitied” (Beaud 1983:101).

Of course, those arguing against supplying the poor with necessities were concerned also that if they were given food and shelter, they would have no reason to labor.

For others, such as Karl Marx and Friedrich Engels, society was being divided into two hostile camps and classes—the bourgeoisie and the proletariat:

Masses of laborers, crowded into the factory, are organized like soldiers. As privates of the industrial army, they are placed under the command of a perfect hierarchy of officers and sergeants. Not only are they the slaves of the bourgeoisie class, and of the bourgeoisie State, they are daily and hourly enslaved by the machine, by the overlooker, and above all, by the individual bourgeoisie manufacturer himself. The more openly this despotism proclaims gain to be its end and aim, the more petty, the more hateful and the more embittering it is. (Marx and Engels 1848/1941:14)

The proletariat must, said Marx and Engels, embody the suffering, rise against it, and produce a society free from the exploitation of one class by another. It must free itself but only by transcending the inhumane conditions of present-day society. Marx had attempted in his writ-ings to create a scientific theory of the fall of capitalism, in the same way that Adam Smith and David Ricardo had tried to create a scientific theory of the rise of capitalism. The results were not only a blueprint to be used by union organizers and revolutionaries but also the creation of two utopian ideologies—that of capitalism and of socialism—which would do battle into the twentieth century.

These, then, are some of the characteristics of the laborer and the relationship between labor and capital as established in the nineteenth century. There were other features as well, such as the increased vulnerability of the laborer to hardship and the greater likelihood of impoverishment. To understand better how the laborer was constructed, let’s turn to the contem-porary world. In countries all over the world, the nineteenth-century processes through which the laborer was constructed are being repeated. We see this most clearly in the growth of overseas assembly plants.

the growth of overseas Assembly Plants

In capitalism, profits and interest depend on the difference between the cost of producing a product and the price at which it is sold. If someone has a monopoly on a product, and if people need it, producers can charge as much as necessary to maintain or increase profits. But if other companies produce the same merchandise, it is likely that the price a company can charge will

46 PartI • TheSocietyofPerpetualGrowth

be determined by what others charge. Thus, Nike can charge 200 dollars for its sneakers, but if its competitors are charging only fifty dollars for the same product, Nike had better lower its price, convince people that its product is worth the difference, or face bankruptcy. Consequently, profit must come, not from increasing the price that people pay, but from controlling the cost of producing the product. Cost increase can be contained by controlling the cost of raw materials and machines—the means of production—or by controlling the price of labor.

The activity of work is common to all societies. In gathering and hunting societies, women and men spend a portion of their time gathering wild foods and hunting game; in pastoral societ-ies, people spend time herding and caring for animals; and in agricultural societies, they work at tending fields, harvesting and storing crops, and so on. But work in the black box of capitalism takes a different form. In fact, some economists believe the key to understanding the way money creates more money is understanding the way labor figures in the production process. For them, profit comes directly from what they call the surplus value of labor.

As we noted earlier, to produce commodities for sale, labor must be purchased and com-bined with the means of production. For example, I might buy cloth and make shirts to sell. I may pay two dollars for the cloth and sell the shirt for ten, thereby making a profit of eight dollars. Where does that profit come from? One obvious place is the labor that went to convert the cloth into a shirt. In this case we might say the labor was worth eight dollars. But what if, instead of making the shirt myself, I paid someone else to do it but paid him or her only two dollars and still sold the shirt for ten. The value of the labor that went into making the shirt is still eight dollars, but the worker I hired received only two; I get to keep the other six dollars. It is this money that constitutes the surplus value of labor.

Obviously, then, one way for a company to maximize profits is to maximize the surplus value of labor and pay workers as little as possible. Another way to increase profits is to get the laborer to produce more in the same period of time. Thus, if I paid my shirtmakers an hourly or daily wage, I could double my profits by getting them to produce two shirts in the time that they used to produce one shirt. This I could do by getting them to work faster or by improving the technology or process of shirt-making to make it more efficient.

Companies that produce commodities such as textiles, electronic goods, and toys are labor intensive—that is, they require human labor more than improved technology to manu-facture their products and are, consequently, always trying to minimize what they pay workers. Given the economic logic of capitalism, this makes perfectly good sense: The more they save on labor costs and the less they charge for their product, the more they will attract consumers. Furthermore, the more they sell, the greater their profits and greater the return for investors and stock owners. Thus, the role of labor in the black box is critical to our understanding of the amount of profit the box can generate.

There are various ways that producers can keep labor costs down. For example, they can import labor from peripheral areas, particularly for low-paying jobs. In 2011, there were 24.4 million foreign-born persons in the U.S. labor force, comprising 15.9 percent of the total (Bureau of Labor Statistics 2012). Many of these people worked as poultry plant workers, meat-packers, gardeners, hotel maids, seamstresses, restaurant workers, building demolition workers, and fruit and vegetable pickers (Greenhouse 2000). Corporations are also making use of the growing prison population; in the United States there are more than 2 million inmates, more than any other country in the world. Presently, thirty states have enacted laws allowing the use of convict labor by private enterprise who now employ more than 80,000 prisoners. Then there is slave labor. Kevin Bales (1999:8) estimates that there are 27 million slaves in the world today, largely in the form of bonded labor in India, Pakistan, Bangladesh, and Nepal. Bonded laborers give themselves into slavery as security for a loan or when they inherit a debt from a family member. Clearly, the greatest source of cheap labor exists in the periphery where, offi-cially, more than 189.9 million people were unemployed in 2007 and that figure is expected to increase by 5 million or more in response to the economic crisis of 2008 (Blankenburg and Palma 2009:532). It is there that corporations often go to reduce their labor costs.

Chapter2 • TheLaborerintheCultureofCapitalism 47

Corporations in core countries, such as the United States, made much use of foreign labor in the nineteenth century. However, as previously discussed, most of that labor moved to the source of employment, traveling largely from Europe and Asia to work in American mines, rail-road yards, and factories. By 1900, 14 percent of the population of the United States was foreign born (see Haugerud, Stone, and Little 2000). Once jobs were filled, however, the immigrants or their descendants who filled them were not anxious to see more immigrants arrive and com-pete for their jobs. Consequently, they lobbied through unions, churches, and political parties for the government to pass restrictive immigration laws. When Chinese laborers were brought over to help build the transcontinental railroad, groups such as the Knights of Labor protested, even demanding that the Chinese get out of the laundry business. As a result, the U.S. Congress passed the Chinese Exclusion Act of 1882, and anti-Chinese agitation broke out on the West Coast, marking one more stage in the emergence of racism in the United States.

Although importing laborers from overseas worked for a time, corporations soon found that they could more easily tap into pools of cheap labor by relocating their manufacturing pro-cesses, when possible, to countries on the periphery of the world system whose governments were committed to economic development through industrialization. For example, to facilitate the establishment of assembly plants, governments in Indonesia, Malaysia, Guatemala, and Mexico, among others, created in their countries free trade zones, areas in which large corpora-tions were permitted to deliver goods to be assembled—cut cloth for wearing apparel, electronic components, and so on—and for which they were not required to pay tariffs, provided that the items were not then sold in the country in which they were assembled. In exchange, the multi-national corporations, such as Nike, agreed to hire local workers. The home countries, such as the United States, contributed by passing legislation that allowed corporations to transfer the assembled goods back to the United States, paying an import tariff only on the labor cost of each product, rather than on the total value of the product. Thus, the sneakers you wear were probably cut by machines in the United States, shipped to Indonesia or Vietnam to be assembled, and then shipped back to the United States to be distributed and sold there and elsewhere in the world. As an economic arrangement, almost everyone seems to benefit from the growth of assembly plants:

• Nikeandothercompaniesareabletocompetewithothermanufacturersbypayingwork-ers in Third World countries a fraction of what they would have to pay American workers.

• WorkersintheThirdWorldfindemployment.• Consumerspaylessfortheirclothes,electronicdevices,toys,andsoon.• Investorsgetahigherreturnontheirmoney.

It seems that the only ones who don’t benefit are the American workers who lose their jobs (over 5 million in the past twenty-five years).

As a result, the growth in assembly plants was dramatic. In 1970 there were an estimated 1,000 women working in manufacturing in Malaysia, for example; by 1980, there were 80,000 concentrated in textiles, electronics, and food processing. In Mexico, the number of maquila-doras, as assembly plants are called, grew from virtually none in the 1960s to 1,279 employing 329,413 people in 1988, to more than 3,000 employing more than 1 million workers in 2012 (Hodder 1999; Rosenberg 2012). However, there are some problems. Critics have cited assem-bly plant workers’ poor working conditions, their low pay, the actions of foreign governments in discouraging the formation of workers’ unions, and the loose environmental regulations that have in some cases resulted in considerable environmental degradation around free trade zones. Furthermore, as corporations seek out new areas of cheap labor, they abandon old sites, such as Mexico, in favor of new sites, such as China or Vietnam. Consequently, after hitting a peak in 1999, the number of maquiladora workers in Mexico is on the decline.

In 1995, in response to abuses, American labor and children’s rights groups called for a boycott of all garments assembled in Bangladesh to protest the estimated 25,000 to 30,000 children working in garment factories there. The United States is Bangladesh’s biggest apparel customer, with nearly 50 percent of Bangladesh’s $1.6 billion in garment exports arriving in

48 PartI • TheSocietyofPerpetualGrowth

the United States. In some assembly factories in El Salvador, where women earn $4.51 for the day, or 56 cents an hour, union organizers are often summarily dismissed, bathrooms are locked and can be used only with permission, and talking on the job is prohibited. In Guatemala, work-ers are required to work overtime at a moment’s notice and are dismissed if they refuse. There have been reports of systematic violence against union organizers in Mexico, El Salvador, and Guatemala. And, as we shall see, assembly plants have far-reaching consequences on the societ-ies and cultures of the cities and countries in which they are located.

the Creation of free labor

One defining feature of capitalism is the creation of a class of people who are willing to sell their labor. There must be a working class and, subsequently, a demand for jobs. A key question, then, is, Why do people, particularly the workers, play the game of capitalism? For example, if the pay is poor and working conditions harsh, why do people work in assembly plants? Aren’t these workers, as some argue, lucky to have their jobs?

Although the United States is and has been largely a wage economy in which the vast majority of people, in effect, sell their labor to companies, we sometimes forget, as mentioned earlier, that the existence of a so-called working class is a relatively recent development. In the United States, and particularly in countries such as Malaysia and Mexico until recently, most people earned their livings from the land or from what they themselves produced and sold. Thus, we need to ask, Why people exchanged a life of relative independence as farmers and crafts-people for a life of dependent wage labor?

In Malaysia and Mexico, countries trying to industrialize and attract foreign manufactur-ers such as Nike, political developments in the nineteenth and early twentieth centuries led to the systematic dispossession of peasants from their land and to the increased importation of cheap products (e.g., textiles and iron implements) that put local artisans out of business. For example, up to the nineteenth century, Malaysia consisted of small states ruled over by sultans and so-called big men who extracted tribute from peasants. Peasants held use-rights to land and could pass on to children whatever land they worked but no more than that. The center of life was the kampung, or village. However, British colonialists took over the land and converted its use to the production of cash crops, leaving the unlanded population to seek labor on large plan-tations or migrate to cities in search of jobs. There was still more than enough land in Malaysia for everyone to farm, but it was used instead to produce crops, such as palm oil, for export rather than to produce food for the local population.

In Mexico a similar history has left most of the population without land to produce food. In the early nineteenth century, the vast majority of the Mexican population lived in villages. The land was divided among the residents but owned collectively. People were given the right to use land but not the right to sell it. Then, in the mid-nineteenth century, legislation was passed in Mexico declaring communally held lands to be illegal, giving peasants legal rights to their own land, which they could then also sell or mortgage to repay debts. The result was that wealthy persons—largely Americans—bought up huge tracts of land. By 1910, the year of the beginning of the Mexican Revolution, more than 90 percent of the population was landless and forced to work on large agricultural estates or migrate to the cities in search of jobs. In the course of half a century, the vast majority of the Mexican population was transformed from an autonomous peasantry working their own land to a population of dependent wage laborers.

The process of land dispossession has continued to the present time (as will be discussed later), not only in Mexico and Malaysia but also in many other parts of the world. This has resulted in a large population of landless people with only their labor to sell. Furthermore, as so-called free trade opens countries to goods from the United States and other wealthy countries, local farmers and craftspeople who cannot compete with large multinationals lose their liveli-hoods and are forced onto the labor market. As a result, the governments of these countries are under great pressure to facilitate the growth of jobs for the population. It is into these situations

Chapter2 • TheLaborerintheCultureofCapitalism 49

that American, Japanese, German, and British corporations, among others, have come to build assembly plants.

Assembly factories, however, involve a paradox. In countries such as Malaysia and Mexico, the men traditionally were the wage laborers, but women are sought by corporations, such as Nike, as employees. The women, for some reason, are willing to accept a wage level less than that needed for subsistence. Thus, we need to ask, Why are there jobs that pay less than a living wage, and why do certain categories of people seem relegated to them?

the segmentation of the Workforce

One consequence of the growth of offshore assembly plants was the entrance into the labor market of a new working population of young, single women between the ages of sixteen and twenty-four. Why do the assembly plants choose to employ young women, and why is it that women choose to work under sometimes unpleasant conditions? The answer to this question requires us to understand how and why labor is segmented into different levels.

Take, for example, the case of Malaysia. Aihwa Ong (1987) spent two years studying assembly plants in Malaysia owned by Japanese and American corporations. One of the first questions she asked was this: Why did the plants prefer to hire young women? Plant managers that she interviewed gave a number of reasons. One Japanese manager told Ong (1990:396–397) that “females [are] better able to concentrate on routine work” and “young girls [are] preferable than older persons, that is because of eyesight.” Another explained, “You cannot expect a man to do very fine work for eight hours [at a stretch]. Our work is designed for females…. [I]f we employ men, within one or two months they would have run away…. Girls [sic] below thirty are easier to train and easier to adapt to the job function.”

The idea that women are somehow more suited biologically for assembly plant work is widespread in developing countries. For example, a brochure designed to bring foreign invest-ments into Malaysia says this about its female workforce:

Her hands are small and she works fast with extreme care. Who, therefore, could be better qualified by nature and inheritance to contribute to the efficiency of a bench assembly production line than the oriental girl? (Ong 1987:152 [emphasis added])

Young women, such as these uniformed workers at a Nike assembly plant in Vietnam, comprise the vast majority of workers at overseas assembly plants. (AP Photo/Richard Vogel.)

50 PartI • TheSocietyofPerpetualGrowth

In Mexican maquiladoras the situation is much the same. María Patricia Fernández-Kelly (1983) was also interested in the effects of the assembly plants on women. To study these effects, she found a job in a maquiladora to share the experiences of the workers and to meet the women and learn about their lives. She, too, found that companies preferred to hire young females because managers believed that women have higher skill levels; are more docile; and are more willing to comply to the monotonous, repetitive, and exhausting assignments. Men are described by managers as more restless or rebellious, less patient, more likely to unionize, and less tolerant of the working conditions. As one manager related to Fernández-Kelly (1983:181),

We hire mostly women because they are more reliable than men, they have finer fingers, smaller muscles and unsurpassed manual dexterity. Also, women don’t get tired of repeating the same operation nine hundred times a day.

Assembly plants in both Malaysia and Mexico also preferred single women because man-agers believed that older, married women had too many other obligations; were often unwilling to work night shifts; and may have accumulated enough wage increments to be paid more than a new, young, single woman would earn.

There is also a large population of unemployed women that assembly factories can choose from. In Malaysia and Mexico, there are three applicants for every available position. Thus one maquiladora manager could announce to a conference organized by the American Chamber of Commerce that the 30 percent unemployment rate in Ciudad Juárez allows for high employee selectivity. Moreover, village elders in Malaysia and family heads in Mexico are eager to send otherwise non-wage-earning women to work in the assembly plants.

There is another reason, however, for the employment practices of assembly plants, one that tells us even more about the black box of capitalism: You don’t have to pay women and children as much as you have to pay men. Nor do you have to pay foreign workers as much as domestic workers. By extension, you do not have to pay people of color as much as you pay whites—that is, the contemporary labor force in peripheral countries, such as Mexico and Malaysia, is already segmented through various forms of social discrimination, as was the labor force in nineteenth-century North America and Europe. Whether or not a capitalist economy creates this type of discrimination, reinforces it, or simply takes advantage of it where it exists is arguable. Regardless, there is no question that, at least to some extent, social discrimination and prejudice—sexism, racism, and discrimination against immigrants—is profitable. It is an important part of the black box. But why?

Let’s return to basic economics. Modern industries can be loosely divided into two types. There are primary industries whose markets are well defined, whose profits are relatively certain, whose capital investment is high, and who are able to pay good wages and ensure decent working conditions. Primary industries have traditionally included automobile manufacturing, communications, and energy industries, to name a few. They require a well-paid, well-trained, and relatively content workforce.

Then there are secondary industries that include the fast-food industry; agriculture; elec-tronics; and, most notably, the clothing, garment, and/or textile industries. Within secondary industries there is intense competition, uncertain or changing demand, a lower profit margin, and a greater dependence on unskilled labor. Secondary industries are the least desirable for work-ers because to stay competitive, these companies must pay the lowest wages and yet maximize worker output. These are the industries most likely to expand operations to poorer countries. They are also the companies that are likely to hire the most vulnerable and the lowest-ranking members of a population. Traditionally, these people have been women, children, or members of subjugated groups. Thus, when corporations locate assembly factories abroad, they are, in effect, expanding the secondary labor market.

Of course, the hiring of women for low-paying, labor-intensive work has long been a feature of industrial capitalism. Women and children formed the bulk of the factory workforce at

Chapter2 • TheLaborerintheCultureofCapitalism 51

the beginning of the Industrial Revolution in the late eighteenth and early nineteenth centuries. In 1851, 31 percent of the labor force in England consisted of women, 45 percent of whom were in manufacturing. In the English textile industry of 1840, more than 75 percent of the workforce consisted of women and children. The locating of assembly plants overseas is simply the latest version of utilizing a socially vulnerable workforce to secure low-paid labor. This expansion of the secondary labor market abroad, however, has had the following economic consequences for workers and corporations at home and abroad:

• Ithasmeantthetransferofjobsabroadandresultingunemploymentathome.• IthaswidenedthegapbetweenprimaryandsecondarylaborintheUnitedStates.• Fromtheperspectiveofworkersinperipheralcountriesoftheworldsystem,ithasmeant

the development of poorly paid, unstable jobs with little opportunity for promotion.

The process of targeting the most vulnerable segment of the population for low-wage jobs also affects the meaning that societies give to specific tasks. For example, the division between skilled and unskilled jobs is often not based on the nature of the work, as one would suppose; instead, it is based on who is doing the work. In other words, the work that women do in assem-bly factories is not necessarily less skilled than other work; it is considered unskilled because it is performed by women. Fernández-Kelly discovered this when she tried to learn the sewing techniques of women in Mexican garment maquiladoras. She could barely keep up with them; it required a skill level equal to or greater than many jobs that we call “skilled.” In Brazil, women are hired to tend grapevines to produce the large, unblemished grape that consumers in industrial countries desire. The work is skilled (e.g., involving the grafting of vines), but because the work is done by women, it is described as requiring “manual dexterity, delicacy, and nimbleness of fingers” (Collins 2000:102). Thus, work that women do is defined as “unskilled” because it is done by women, just as work that blacks or the Irish did in the nineteenth century was defined as unskilled because it was done by blacks or Irish.

From the corporation’s standpoint, however, the transfer of secondary jobs to underde-veloped countries and the ensuing expansion of a cheap labor reserve pool afford corporate employers the greatest degree of political and economic control over workers. They are able to employ the most socially vulnerable sector of the working class, the people least likely to orga-nize, demand better wages, or press for better working conditions. As one Mexican maquiladora worker put it, men are unwilling to perform the monotonous labor; women are more shy and submissive and are more used to following orders. They are more easily intimidated and forced to obey. They are the easiest to discipline.

In sum, then, for corporations, women represent a major source of inexpensive, transient labor; thus, women, although making up the vast majority of assembly plant workers through-out the world, occupy few skilled or managerial positions. And because they occupy the lowest positions, women can be hired and fired, depending on the overseas demand for such things as textiles, shoes, plastics, electrical appliances, and, increasingly, electronics.

In spite of the often poor pay and harsh working conditions that women working in assembly plants endure, some economists and public policymakers argue that such employ-ment is necessary if women are ultimately to gain access to better positions and change their often subjugated positions in societies around the world. They argue that the money that women earn gives them control over resources that they would otherwise not have, that as families become dependent on the income that these women bring into their households, their positions in society will improve. Some also argue that the creation of this kind of work is a neces-sary stage of economic development and will eventually lead to better lives for all. We must remember, however, that if the labor market remains divided between primary and secondary industries, then someone must continue to do the low-paying work. Women may escape low-paying jobs, but only, as the Irish in the nineteenth century learned, if there is another group to take their place.

52 PartI • TheSocietyofPerpetualGrowth

Control and discipline

In nineteenth-century America, as young men and women sought work in the growing factory towns and cities, factory owners, as well as local citizens, faced a problem. These young peo-ple had been integrated into the social institutions of their hamlets and villages. As members of families and churches, they were expected to conform to certain standards of behavior; deviance from those standards could bring condemnation, punishment, and even social ostra-cism. But in the towns and cities to which they moved, migrant workers often were freed from such constraints, free to experiment with behaviors previously denied to them. Consequently, men  often gained reputations as “rowdies,” or “hoodlums,” whereas women were labeled “immoral” or “loose.” Thus the creation of free labor created a problem: How do you control the new labor force?

For example, in turn-of-the-twentieth-century New York City, thousands of young women found employment in factories and used their newfound freedom and the wages they earned for shopping, dating, dancing, or going on excursions to recreation areas such as Coney Island. However, their behavior alarmed some people who saw it as immoral; consequently, groups of social reformers organized and proposed ways to “protect” working women from these “temptations.” Some of their solutions to the problem resulted in the formation of social and religious clubs and associations for young women such as the Young Women’s Christian Association (YWCA).

These organizations also served another function: They relieved the fears of the parents of these young workers who otherwise might have been reluctant to allow the women to migrate to cities and factory towns.

As in nineteenth-century America and Great Britain, employment in the new assem-bly plants of such countries as Malaysia and Mexico often requires young men and women to leave their homes and move to cities, freeing them from the traditional constraints imposed by family and church, and, thus, freeing them to spend their leisure time in nontraditional activities. Take, for example, the situation of the largely female workforce in the new assembly plants of Malaysia. Most of the women are young, generally ranging from sixteen to twenty years old. In their villages, they would have lived at home, perhaps attended school, and been involved in vari-ous household chores under the direction of their mothers. Dating would have been rare and, when it occurred, would have been carefully supervised by parents. Marriages would have likely been arranged by parents. Factory work, however, allows these same young women to earn wages, a portion of which they control. Although most workers contribute one-half or more of their earn-ings to their families, they are free to spend the rest on themselves. Some use it for typing or academic classes to prepare for civil service jobs, in effect attempting to control their own job prospects and “careers.” Some become consumers, taking shopping trips to town or going to the movies, “making jolly with money,” as they say. They exchange traditional kampung garb for tight T-shirts, jeans, and Avon makeup, trying to achieve what they call the “electric look.”

Because Malaysian working women are now expected to save money to contribute to their own wedding expenses—money that had been traditionally supplied by their families—they feel justified in choosing potential spouses. Sexual freedom may be increasing, as indicated by an increase in abortions, and women are beginning to cross social boundaries, having “illicit” rela-tionships and marrying men of other ethnic groups (e.g., Chinese), something traditional family and church authorities would never have allowed.

One consequence of the growth of the number of working women in Malaysia is a stream of criticism about the loose morals of factory girls, especially from Islamic fundamentalists. The Malay media portrays factory women as pleasure seekers and spendthrifts engulfed in Western consumer culture. A story about prostitution might carry sensational headlines such as “Factory Girls in Sex Racket.”

All of this has resulted in a call for greater control of working women, in spite of the fact that similar behavior, such as dating and moviegoing, among upper-class college students has not

Chapter2 • TheLaborerintheCultureofCapitalism 53

received the same notice. Even the academic community and religious and state officials have claimed to recognize the problem of declining morals of young women and proposed measures, such as counseling and recreational activities, to arrest the decline. There have also been public calls for control of working women’s leisure time, despite the fact that they tend to work about three hours a day more than do women engaged primarily in traditional household chores.

In some ways, the newfound freedom of factory workers is as welcome by businesspeo-ple as it is by the young. Their new income—and their willingness to spend a portion of it on themselves—has turned young village men and women into consumers who buy many of the products they make. But the new freedoms create yet another problem. Capitalist enterprise requires a disciplined and reliable workforce; with old forms of discipline falling away, new forms must be developed to replace them. The question is this: How is that done?

Although family and church are largely absent from the lives of working young men and women, factory managers try to use these traditional institutions to control their workers. Malaysia is an Islamic country, and according to Islamic practice, parents are obligated to care for their children up to age fifteen, and traditional customs decree that children must also care for their parents. Thus, children, particularly women, are obligated to return to their parents the care that they gave them. One of the major appeals made to young women by factory owners and managers is that they use their wages to pay back part of what they owe their parents.

Factory managers also seek to maintain discipline by building relations with people in the women’s home villages, thus enlisting their help in controlling workers. For example, man-agers make donations to community organizations in the villages that supply workers. They also devise regulations to help parents monitor the activities of their daughters. When workers commute from their villages to the factories, the managers deliver workers to their homes by bus, or they allow parents to see overtime forms so they know how much time their daughters were spending at work and at other activities. These efforts enhance the prestige of managers in the eyes of village elders, whose moral support could then be obtained for the social control of working daughters.

Corporations also use traditional family values to encourage workers to comply with com-pany goals (Ong 1987:169). Thus, managers tell workers that they are part of “one big family.” One factory had posters proclaiming the company philosophy:

• Tocreateonebigfamily• Totrainworkers• Toincreaseloyaltytocompany,country,andfellowworkers

Managers portray themselves as parent figures to the larger community from which women workers come, and although workers complain of too much control, parents rarely tell their daughters to quit.

Religion is also used as a means of discipline (Ong 1987:185). Because Malaysia is an Islamic country, the government includes special departments and agencies that have jurisdiction over the application of religious law. For example, under the current interpretation of religious law, Muslims may be arrested for khalwat, “proximity” between a man and a woman who are not immediate relatives or married to each other. Those caught in situations that simply suggest sexual intimacy but not necessarily in the sex act are fined or sentenced to jail for a few months. Muslims arrested for zinah—that is, illicit sexual intercourse—may be more severely punished. As a result of the increase in the number of young women working in assembly factories, there have been more raids by the government’s religious department on the poor lodgings and cheap hotels used by the workers.

Then there is the factory discipline itself. We mentioned earlier that eighteenth- and nineteenth-century factories were modeled after prisons. Modern assembly plants have much the same character. In Malaysian assembly plants, workers are sometimes watched through glass partitions. In one factory, for example, three supervisors and twelve foremen controlled

54 PartI • TheSocietyofPerpetualGrowth

530 operators. Discipline was verbally enforced as women workers were scolded by overvigilant foremen for wanting to go to the prayer room, the clinic, or the toilet. Some foremen would even question workers in a humiliating manner about their menstrual problems or nonwork activities. Others were reported to have forced women to run laps around the assembly plant as a form of punishment for reporting late to work or not meeting their production quotas.

As in prisons, clothing can be used to instill discipline. Malaysian workers are required to wear factory overalls that they complain are too tight and which they are not allowed to unbut-ton. They are also required to wear heavy rubber boots. These clothes are very different from the loose-fitting clothes and sandals Malaysians traditionally wear while working.

Assembly plants also bring with them a Western, factory-oriented sense of the relationship between work and time to which contemporary assembly workers must adapt. Traditionally, in Malaysia, for example, young girls carried out their household or farm tasks relatively free from modern time and work discipline; their activities were interspersed with social visits, usually free of female supervision and always free of male supervision. If there was anything to mark the passage of time, it was the cycle of daily Islamic prayer.

Female workers in the factories, however, are clocked in daily for eight consecutive hours with two fifteen-minute breaks and a half-hour lunch break. Every month their work schedules are changed. Women begin to divide their lives into “work time” and “leisure time.” They were watched over by overzealous foremen, screened before they could leave their work benches to go to the toilet, and fined if they were late for work (in spite of the fact that pay was based on piecework). This is in vivid contrast to the traditional work routine where there was no distinc-tion between work and life and no conflict between labor and “passing the time of day.”

People in Malaysia are aware of the shift from traditional social time to the capitalist clock time, and they have developed their own ways to critique it. Ong (1987:112) told the story of a married couple, Ahmad and Edah, who, say their neighbors, driven by the desire for wealth, carefully spend their time on capital accumulation at the expense of social obligations. Their neighbors said their obsession with time was the result of a toyal, a spirit helper that they raised to filch money from neighbors. The toyal, they concluded, turned the tables on the couple by driving them even harder to use all their time to accumulate wealth.

resistance and rebellion

Capitalism requires a disciplined working class—people willing to work for wages that allow enterprises to make their necessary profit. But herein lies a problem: In general, people do not readily accept discipline and control and will seek a way to resist, either directly or indirectly.

Resistance to capitalist discipline can take direct forms—worker protests, formation of unions, and even revolution (subjects examined in later chapters). Resistance may also take the form of a moral critique, such as that of Colombian peasants who see capital accumulation repre-sented in the baptism of money as the loss of a child’s soul. Such indirect forms of resistance are not unique to the peoples of the periphery of the world system. For example, one of the stories that comes down to us from early industrial Europe is that of Rumpelstilskin. Folktales are more than simply stories; they are statements about people’s beliefs. Often they are morality tales that dramatize the consequences of proper or improper behavior. Jane Schneider (1989), for example, suggested that the meaning of the Rumpelstilskin tale lies in the development of the linen indus-try in early modern Europe. In fact, in many ways, it offers a critique of capitalist production not unlike that of the Colombian peasants.

In one version of the Rumpelstilskin story, a father brags that his daughter is able to spin straw into gold. The king, hearing of this boast, offers to take the girl as his wife if she is able to spin the straw in his castle into gold. The girl tries, fails, then enters into a pact with a strange dwarf who promises to spin the straw into gold for her, but only if she promises to give him her firstborn child. The girl accepts, Rumpelstilskin spins the straw into gold, and she marries the king and has a child. The dwarf comes to claim his fee but is distressed by her tears and grief and

Chapter2 • TheLaborerintheCultureofCapitalism 55

offers her a way out. If she can guess his name, he will free her from the contract. She does, of course, much to Rumpelstilskin’s dismay.

We have forgotten much of what this tale meant to sixteenth- and seventeenth-century European peasants. For example, one of the main industries of the period was linen production. Linen was produced by spinning flax straw into linen thread that was woven into a fabric that was sold for gold coins. So straw, in effect, really was spun into gold. Moreover, the spinning process was performed largely by young women. A woman’s spinning skill was not only a source of money, but also a quality men sought in wives—as the king sought in his future wife. Furthermore, the story contains a pact with a demon, and the price is the firstborn. Thus, as in the Colombian baptism of money, we find the symbolic statement that the generation of wealth comes only with social and personal sacrifice, often of children’s souls.

Malaysian assembly plant workers have also found a subtle, generally symbolic means of expressing their resistance to capitalist discipline. It takes the form of spirit possession. Although Malaysia is a Muslim country, Islam exists side by side with indigenous beliefs about magic and spirits. Thus, in the 1980s, assembly plant managers in Malaysia—especially American and Japanese managers—were unexpectedly confronted with an epidemic of spirit possessions in their factories (Ong 1987:204). Forty Malaysian operators were possessed in one large American electronics plant; three years later, in another incident, 120 operators were possessed. The factory was shut down for three days while a spirit-healer (bomoh) was called in to sacrifice a goat to the possessing spirit on the premises.

Another American microelectronics factory was closed down when fifteen women were possessed. According to factory personnel officers, possessed girls began to sob and scream hysterically. When it looked as though the possession would spread, the other workers were immediately ushered out. The women explained that the factory was “dirty” and consequently haunted by a datuk.

The Malay universe is still full of spirits moving between the human and nonhuman domain. Spirit possession seemed to express themes of filth, anger, and fierce struggles. Particularly prom-inent in the possession episodes were spirits such as toyal, who help their masters gain wealth out of thin air, and the pontianak, who threaten the lives of newborn infants.

Aihwa Ong suggested that the women were not reacting to anything as abstract as indus-trial capitalism but against a sense of violation, of a dislocation in human relations, in much the same way the Colombian peasants reacted to wage labor with the notion of the baptism of money and the sacrifice of children’s souls.

Beliefs about the baptism of money in Colombia, sacrificing firstborns in sixteenth- and seventeenth-century Europe, and spirit possession of factory workers in Malaysia are examples of the widespread critiques of capitalism that we find among people confronting capitalist production for the first time. Such beliefs are ways that people find to express their sense that capitalist production brings a modicum of economic betterment at high social and personal costs.


A major assumption of this book is that it is impossible to understand the modern world and its problems—population growth, hunger, poverty, environmental degradation, health, war, religious upheaval, and so on—without understanding the capitalist economy that, with its goal of accumulating more and more wealth, has in the past four to five centuries redefined and created new social and cultural forms and altered traditional cultural institutions to serve its own purposes. Capitalism has been characterized here as a black box whose purpose is to convert money into more money, to take monetary investments and convert them into profits, dividends, and interest. For most people, this process is as magical as is the behavior of baptized money among Colombian peasants.

56 PartI • TheSocietyofPerpetualGrowth

We began to examine how the black box performs its conversion by looking at the growth of overseas assembly plants and the creation, segmentation, and disciplining of the labor force necessary for the box to function at its greatest efficiency. Historically, free labor has been created by removing people from the land or destroying the small-scale industry that allowed them to support themselves. In different countries this was done in different ways, but the over-all result has been the creation of populations whose sole means of support is in the sale of their labor. This is as true in industrialized countries as it is in developing or undeveloped countries. In fact, all of us who depend on wage employment—from nuclear physicists to garment workers—constitute the pool of “free” labor. This labor pool is further divided along a contin-uum comprising at one end relatively well-paid, desirable jobs in industries or enterprises that require a well-trained workforce, and at the other end relatively low-paying, undesirable jobs in industries that are highly competitive and dependent on the existence of a cheap labor supply. Industries and enterprises that depend on a cheap labor supply are able to take advantage of social divisions and discrimination that generally follow lines of gender, race, age, and country of origin to minimize labor costs and control the labor force.

In creating or taking advantage of the increasing supply of cheap labor, the capitalist econ-omy must also develop ways to maintain workforce discipline, which it does through the factory system, the redefinition of time, and the use of traditional institutions, such as the family and the church. Yet, in spite of the new forms of discipline, workers offer resistance in the indirect form of masked criticism—as in the baptism of money, spirit possession, or moral tales such as that of Rumpelstilskin—or through direct forms of protest and the organization of unions.

The mobility, segmentation, and disciplining of the workforce is, of course, only one feature of modern capitalism, and an examination of labor is only the beginning of an under-standing of how the black box is able to transform money into more money. It is necessary to examine additional components. In order to do so, let us turn to other major questions: How did the entire system develop historically? How did the black box evolve to where it is today? Most specifically, How and why did the capitalist evolve from the merchant trader?


At no other time in human history has the world been a better place for capitalists. We live in a world full of investment opportunities—companies, banks, funds, bonds, securities, and even countries—into which we can put money and from which we can get more

back. These moneymaking machines, such as the Nike corporation, have a ready supply of cheap labor, capital, raw materials, and advanced technology to assist in making products that people

C h a p t e r

3 The Rise and Fall of the Merchant, Industrialist, and Financier

From the fifteenth century on, European soldiers and sailors carried the flags of their rulers to the four corners of the globe,

and European merchants established their storehouses from Vera Cruz to Nagasaki. Dominating the sealanes of the world, these

merchants invaded existing networks of exchange and linked one to the other. In the service of “God and profit” they located sources of products desired in Europe and developed coercive systems for their delivery. In response, European craft shops, either singly or aggregated into manufactories, began to produce goods to provi-

sion the wide-ranging military and naval efforts and to furnish commodities to overseas suppliers in exchange for goods to be

sold as commodities at home. The outcome was the creation of a commercial network of global scale.

—Eric Wolf, Europe and the People without History

When I think of Indonesia—a country on the Equator with 180 million people, a median age of 18, and a Moslem ban on alcohol—I feel

I know what heaven looks like.

—Donald R. Keough, President of Coca-Cola

Five years hence, commentators will look back to the birth of the credit derivative market as a watershed development.

—Blythe Masters, Derivatives Group of J. P. Morgan

58 PartI • TheSocietyofPerpetualGrowth

all over the world clamor to buy. Moreover, governments compete for their presence, passing laws and making treaties to open markets, while maintaining infrastructures (roads, airports, power utilities, monetary systems, communication networks, etc.) that enable them to manu-facture products or provide services cheaply and charge prices that remain competitive with other investments. Nation-states maintain armies to protect investments and ensure that markets remain open. Educational institutions devote themselves to producing knowledgeable, skilled, and disciplined workers, while researchers at colleges and universities develop new technolo-gies to make even better and cheaper products. Our governments, educational institutions, and mass media encourage people to consume more and more commodities. Citizens arrange their economic and social lives to accommodate work in the investment machines and to gain access to the commodities they produce. In return, the investment machines churn out profits that are reinvested to manufacture more of their particular products or that can be invested in other enterprises, producing yet more goods and services. Never before have people had so much opportunity to accumulate great wealth. Among the 400 richest Americans in 1999, 298 of them were worth a billion dollars or more, and the top 400 had a net worth of $1.2 trillion, about one-eighthofthetotalgrossdomesticproduct(GDP)oftheUnitedStates(seeForbes2000b).

But there are economic, environmental, and social consequences of doing business and making money. We live in a world in which the gap between the rich and poor is growing, a world that contains many wealthy and comfortable people and more than 1 billion people without enough to eat. Then there are the environmental consequences of doing business: Production uses up the earth’s energy resources and produces damaged environments in return. There are health consequences as well, not only from damaged environments but also because those too poor to afford health care often do without it. There are the political consequences of governments’ using their armed forces to maintain conditions that they believe are favorable for business and investors. And, finally, there are the occasional economic collapses in which the economies of whole countries suddenly decline, throwing millions of people out of work and wiping out vast wealth.

In the long viewof humanhistory, these conditions are very recent ones. Formost ofhuman history, people have lived in small, relatively isolated settlements that rarely exceeded 300 or 400 individuals. And until some 10,000 years ago, virtually all of these people lived by gathering and hunting. Then in some areas of the world, instead of depending on the natural growth of plant foods and the natural growth and movements of animals, people began to plant and harvest crops and raise animals themselves. This was not necessarily an advance in human societies—in fact, in terms of labor, it required human beings to do the work that had been done largely by nature. The sole advantage of working harder was that the additional labor supported denserpopulations.Settlementsgrewinsizeuntilthousandsratherthanhundredslivedtogetherin towns and cities. Occupational specialization developed, necessitating trade and communica-tion between villages, towns, cities, and regions. Political complexity increased, chiefs became kings, and kings became emperors ruling over vast regions.

Then, approximately 400 or 500 years ago, patterns of travel and communication contrib-uted to the globalization of trade dominated by “a small peninsula off the landmass of Asia,” as Eric Wolf called Europe. The domination by one region over others was not new in the world. There had existed prior to this time civilizations whose influence had spread to influ-encethosearoundthem—theMayancivilizationinCentralAmerica,Greekcivilizationofthefourth millennium b.c., Rome of the first and second centuries a.d., and Islamic civilization of the eighth and ninth centuries. But there was an important difference. The building of these empires was largely a political process of conquest and military domination, whereas the expan-sion of Europe, although certainly involving its share of militarism, was largely accomplished by economic means—by the expansion and control of trade.

Now let’s shift our focus to the development of the capitalist—the merchant, industrialist, and financier—the person who controls the capital, employs the laborers, and profits from the consumption of commodities. This will be a long-term, historical look at this development,

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 59

because if we are to understand the global distribution of power and money that exists today and the origins of the culture of capitalism, knowledge of its history is crucial.

Assume for a time the role of a businessperson, a global merchant, or merchant adventurer, as they used to be called,1 passing through the world of the past 600 years. We’ll begin search-ing the globe for ways to make money in the year 1400 and end our search in the year 2013, taking stock of the changes in the organization and distribution of capital that occurred in that time. Because we are looking at the world through the eyes of a merchant, there is much that we will miss—many political developments, religious wars, revolutions, natural catastrophes, and the like. Because we overlook these events does not mean they did not affect how business was conducted—in many cases, particularly in the case of war and war debts, they had profound effects. But our prime concern is with the events that most directly influenced the way in which business was conducted on a day-to-day basis and how the pursuit of profit by merchant adven-turers influenced the lives of people all over the world. Our historical tour will concentrate on five issues:

1. An understanding of how capital came to be concentrated in so few hands and how the world came to be divided into rich and poor. There were certainly rich people and poor people in 1400, but today’s vast global disparity between core and periphery did not exist then. How did the distribution of wealth change, and how did one area of the world come to dominate the others economically?

2. An understanding of the changes in business organizations and the organization of capital—that is, who controlled the money? In 1400, most business enterprises were small, generally family-organized institutions. Capital was controlled by these groups and state organizations. Today we live in an era of multinational corporations and financial institu-tions, many whose wealth exceeds that of most countries. We need to trace the evolution of the power of capital over our lives and the transformation of the merchant of 1400 into the industrialist of the eighteenth and nineteenth centuries, then into the investor and financier of the late twentieth and early twenty-first centuries. How and why did these transformations in the organization of capital come about?

3. The increase in the level of global economic integration. From your perspective as a merchant adventurer, you obviously want the fewest restraints possible on your ability to trade from one area of the world to another; the fewer the restrictions, the greater the opportunity for profit. Such things as a global currency, agreement amongnations onimport and export regulations, ease of passage of money and goods from area to area, and freedom to employ whom you want and to pay the lowest possible wage are all to your advantage; furthermore, you want few or no government restrictions regarding the consequences of your business activities. How did the level of global economic inte-gration increase, and what were the consequences for the merchant adventurer, as well as others?

4. Fourth,how do we explain the occasional collapse of national and global economies, such as the one that began in 2007 in the United States and spread to the rest of the world? Not only do such economic downturns force banks and businesses into bankruptcy, wipe out trillions of dollars of wealth, and throw millions of people out of work, they also threaten the stability of governments and the entire foundation of market economies.

5. Most importantly, where did the necessity for perpetual economic growth come from? That is, how did an economy arise in which people had to spend, earn, and produce more this year than last and more next year than this, in perpetuity?

With these questions in mind, let’s go back to the world of 1400 and start trading.

1 The name is taken from a sixteenth-century English trading company, The Merchant Adventurers, cloth wholesalers trading toHolland andGermanywithbasesof operation inAntwerp andBergen-op-Zoomand laterHamburg.Thecompany survived until 1809.

60 PartI • TheSocietyofPerpetualGrowth

The era of The Global Trader

a Trader’s Tour of the World in 1400

If, as global merchants in 1400, we were searching for ways to make money, the best opportuni-ties would be in long-distance trade, buying goods in one area of the world and selling them in another (see Braudel 1982:68). If we could choose which among the great cities of the world—Cairo,Malacca,Samarkand,Venice,andsoon—tobegintrading,ourchoicewouldprobablybe Hangchow, China. China in 1400 had a population of 100 million and was the most techno-logically developed country in the world. Paper was invented in China probably as early as a.d. 700 and block printing as early as 1050. China of 1400 had a thriving iron industry; enormous amounts of coal were burned to fuel the iron furnaces—the coal used in northern China alone was equal to 70 percent ofwhatmetalworkers inGreatBritain used at the beginning of the eighteenth century. The explosive power of gunpowder was harnessed around a.d. 650 and by 1000 was used by Chinese armies for simple bombs and grenades. Cannons were in use by 1300, some mounted on the ships of the Chinese navy, and by the fourteenth century, the Chinese were using a metal-barreled gun that shot explosive pellets (Abu-Lughod 1989:322ff.).

If you were to tour the Chinese countryside, you would have been struck by the networks of canals and irrigation ditches that crisscrossed the landscape, maintained by wealthy landowners or the state. China was governed by a royal elite and administered largely by mandarins, people selectedfromthewealthyclassesandwhowereexemptfrompayingtaxes.State bureaucratswere also selected and promoted through civil service examinations open to all but those of the lowest rank of society (e.g., executioners, slaves, beggars, boat people, actors, and laborers [Hanson 1993:186]). China produced some of the most desired trade goods in the world, particu-larly silk, spices, and porcelain.

The economic conditions in China also favored traders. There were guilds and associ-ations of merchants, such as jewelers; gilders; antique dealers; dealers in honey, ginger, and boots; money changers; and doctors. China had its own currency system. In the Middle East and Europe, governments issued money in the form of coins of precious metals whose value depended on their weight. In China there was not only copper coin but also paper money (cotton paper stamped with a government seal) to provide merchants with a convenient means of exchange. Paper money also allowed the state to control the flow of money in and out of the country. Precious metals, such as gold and silver, could not be used by foreigners in trade, so foreign traders were forced to exchange their gold or silver for paper money, which they then exchanged for gold and silver when they left. Because they had usually purchased Chinese commodities to sell elsewhere, they usually left with less gold and silver than when they arrived (Abu-Lughod 1989:334).

China was also politically stable. The rulers, members of the Ming Dynasty, had success-fully rebelled against the Mongols in a.d. 1368. The Mongols, nomadic horsemen who roamed the vast steppes of Central Asia, conquered China in 1276 and set up their own dynasty, the Yuan. The Mongols, eager to establish trade with the rest of the world, had created relatively safe trade routes to the rest of Asia, the Middle East, and Europe. At least at first, the Ming appeared to want to maintain that trade, sending its impressive navy as emissaries to ports along the Indian Ocean.

The city of Hangchow was situated between the banks of the Che River leading to the sea and the shore of an enormous artificial lake. According to Ibn Battuta, an Arab trader who visited the city in the 1340s, the city extended more than six to seven square miles and was surrounded by walls with five gateways through which canals passed. Thirteen monumental gates, at which itsgreatthoroughfaresterminated,providedentrytothecity.Situatedonthehillsoverlookingthe city were the imperial palace and homes of the wealthy state bureaucrats and merchants; at the opposite end of the city were the houses of the poor—crowded, narrow-fronted, three- to five-story houses with workshops on the ground floors. The main thoroughfare, the Imperial Way, was 3 miles long and 180 feet wide, crowded with carriages drawn by men or tiny horses.

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 61

The city was a trader’s paradise. Inside the city were ten markets as well as teahouses and restaurants where traders could meet and arrange their business. Outside the city were a fish market and wholesale markets. Ibn Battuta said it was “the largest city on the face of the earth.” Sectionsofthecitycontainedconcentrationsofmerchantsfromallovertheworld.JewishandChristian traders from Europe were in one; Muslim traders were in another, with bazaars and mosques, and muezzins calling Muslims to noon prayer. The bazaars of Chinese merchants and artisans were in yet another section. In brief, Hangchow would have been an ideal place to sell merchandise from Europe, the Middle East, or other parts of Asia and to purchase goods, such as spices and silks, that were in demand in other parts of the world.

Silkwasparticularlydesiredbyforeigntradersbecauseitslightweightandcompactnessmade iteasy to transportandbecauseChinahadavirtualmonopoly in thesilk trade.Syrian traders had smuggled silkworms out of China in the thirteenth century, and in 1400 one could purchase silk in India and Italy; but, the quality of Chinese silk was superior. Because the produc-tion of silk was likely in the hands of Chinese merchants, you would have purchased it directly from them. You might also purchase Chinese porcelain, especially if you planned to travel by ship because porcelain could be used as ballast by ships returning to the Middle East or Europe (seeFigure3.1).

Your next task would be to arrange to transport your goods to where you planned to sell them.Let’sassumeyouhadordersfrommerchantsincitiessuchasVenice,Cairo,andBruges,where Chinese goods were in demand. Your first task is to get your goods to the Mediterranean. You could go overland through China, through central Asia to northern India, or to ports on theBlack Sea, then travel to European ports such asVenice andNaples. The trip overlandthrough Asia to Europe would take you at least 275 days using pack trains—camels over the deserts, mules through the mountains, ox carts where roads existed, human carriers, and boats. The overland route was popular in the thirteenth and fourteenth centuries, when the Mongols had, through their conquests, unified Central Asia and issued safe conduct passes to traders. In 1400, however, with the Empire fragmented, you may have risked raiding by nomadic bands of Mongol horsemen.

The splendor and wealth of fifteenth- and sixteenth-century China is portrayed in this engraving of a mandarin’s terrace and garden. (Fine Art/Historical Picture Archive/Corbis.)

62 PartI • TheSocietyofPerpetualGrowth

A safer route in 1400 would have been the sea route, down the east coast of China, through theStraitofMalacca toSouthern India,and theneither through thePersianGulf to Iranandoverland,throughBaghdadtotheMediterranean,orthroughtheRedSeatoCairo,andfinallyby ship to Italy.

TravelingthroughtheStraitofMalaccaandintoSoutheastAsia,youwouldhavefoundpowerful elites ruling states from their royal palaces, surrounded by armed retainers, kin, artisans, and specialists. Beyond this was a peasantry producing rice to support themselves and the elites. These were the civilizations that built Angkor Thom and Angkor Wat in Cambodia. Youwould likelyhavebeenmoreathome,however, in theseaports thatdotted theStraitofMalacca, which owed their existence to trade. Occasionally, these ports would merge with inland kingdomssuchasMajapahitinJava.Themaincityoftheareain1400wasMalacca,foundedby pirates led in rebellion twenty years earlier by a prince from Majapahit. The prince converted to Islam, attracting to Malacca wealthy Muslim merchants, and by 1400 Malacca was a city of 40,000 to 50,000 people containing traders from sixty-one nations. The Portuguese Tomé Pires, writingacentury later,said,“WhoeverislordofMalaccahashishandsonthethroatofVenice”(Wolf 1982:58). While in Malacca, you likely would have obtained additional trade goods to takeWest.Spices,particularlycinnamon(atonetimeinEgyptconsideredmorevaluablethangold), were highly valued because they were easy to transport and brought high profits in the Middle East and Europe.

FromMalaccayouprobablywouldhavetraveledalongthecoastofSoutheastAsiaandontoIndia,whosewealthin1400rivaledthatofChina.SoutheastIndiahadathrivingtextileindustry.Farmersgrewcottonandpasseditontospinners,whomadethreadfortheweavers.There is some evidence that merchants provided cotton and thread to spinners and weavers and paid the artisans for what they produced. There was a sophisticated technology: a vertical loom, block printing, and the spinning wheel, probably introduced from Turkey. But cotton and textiles were not the only items you might have obtained in India for trade; there were also dyes, tannins, spices, oil seed, narcotics, lumber, honey, and ivory (see Wolf 1982).








WoolensLinensHorsesWine Silk


















fiGure 3.1 Major Trade Routes in 1400

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 63

FromIndiayoumighttraveltoEastAfrica,wherefromBantu-speakingpeoplesyoumighthave obtained slaves, ivory, leopard skins, gold fromZimbabwe, and rhinoceros horns (stillbelieved in some parts of the world to be an aphrodisiac).

LeavingEastAfrica,youwouldhavejourneyedupthecoastthroughtheRedSeatoCairoorthroughthePersianGulf,throughIraqtoBaghdad,andontoConstantinopleandtheEasternMediterranean. You would have found the Islamic countries of the Middle East favorable to business, with a sophisticated body of law regulating trade, including rules for the formation of trading partnerships and the extension of credit. One law allowed people to pay for merchan-dise at a later date at a higher price, a convenient way around the Islamic prohibition of lending money at interest. Bags of gold coin whose value was printed on the outside, and whose contents were apparently never checked, served as money. There were bankers who changed money, took deposits, and issued promissory notes, another way of extending credit and making loans. Merchants kept their accounts by listing credits and debits. Thus, all the rudiments of a sophisti-cated economy—capital, credit, banking, money, and account keeping—were present in Islamic trade (Abu-Lughod 1989:216ff.).

FromCairoyoucouldjoinacaravantogosouththroughtheSaharatoWestAfrica,wheretextilegoodswereindemandandwhereyoumightobtainslavesorgold.Virtuallytwo-thirdsofthegold circulating in Europe and the Middle East came from West Africa. Or you might travel a short waytoAlexandria,stillamajorcity.FromthereyouwouldtravelbyshipontheMediterraneantooneofthecity-statesofItaly,suchasVeniceorGenoa.ItalywasthecenterofEuropeanandMediterranean trade. At European fairs, Italian traders would set up a bench (banco, from which bank is derived) with their scales and coins, enabling traders to exchange currency from one area of the world for another. Italian bankers monopolized the international exchange of money and credit and pioneered the bill of exchange. This was a document in which a buyer agreed to deliver pay-ment to a seller at another time and place in the seller’s home currency. In the absence of any widely recognized currency, the bill of exchange greatly facilitated foreign trade (Abu-Lughod 1989:93).

YoumightthenjoinothermerchantsfromGenoa,Pisa,andMilanwhoformedcaravansto take goods—such as silks and spices from the Orient or the Middle East; alum, wax, leather, andfurfromAfrica;dates, figs,andhoneyfromSpain;andpepper,feathers,andbrazilwoodfrom the Middle East—over the Alps to the fairs and markets of western and northern Europe, a trip taking five weeks. Or you could send your goods by ship, through the Mediterranean and the NorthSeatotradingcenterssuchasBruges.

Once you reached northern or western Europe, you had already left the wealthiest part of the world. After the decline of the Roman Empire, western Europe was a backward area, exploitedforitsiron,lumber,andslaves.Urbanareashaddeclined,andartisanactivityretreatedto rural areas. Moreover, Europe had been devastated in the fourteenth century by bubonic plague: In the mid-fourteenth century, Europe’s population was about 80 million (Abu-Lughod 1989:94). By 1400, plague had reduced it by 45 percent, to between 40 million and 50 mil-lion. The plague likely originated in Central Asia or China. It traveled the trade routes, striking Chinesecitiesasearlyas1320andfirststrikingEurope inCaffa,on theBlackSea, in1346.ItarrivedinAlexandriain1347,probablyfromItalianportsontheBlackSea.AtitsheightinAlexandria, it killed 10,000 people a day, finally killing 200,000 of the city’s half-million people. ItstruckItalyin1348,appearedinFranceandBritainthesameyear,andreachedGermanyandScandinaviaayearlater.

FeudalismwasstillthemainformofpoliticalandeconomicorganizationinEurope.Kingsbestowed lands, or fiefs, to subjects in return for their loyalty and service. Lords “rented” land to peasants, generally for a share of the produce, which they used to pay tribute to the kings and to finance their own expenses.

Woolen textiles were the most important products of northern and western Europe in 1400.Flanders(westernBelgiumandnorthwestFrance),thetextilecenterofnorthernEurope,had virtually monopolized the purchase of raw wool from England, and woolen textiles from FlanderswereindemandthroughoutEuropeandinotherpartsoftheworld.

64 PartI • TheSocietyofPerpetualGrowth

Let’s assume you have sold the commodities you brought from China and realized a hand-some profit. The question is, What to do with your capital and profits?YoumightbuyFlemishtextiles in Bruges or, depending on the political circumstances, travel to England to buy textiles. You might buy land or finance other traders in return for a share of their profits. If, however, you decided to undergo another trade circuit, returning east would be your likely alternative. The Americas were probably unknown and certainly unreachable. You might have traveled down the European coast to West Africa, where European textiles were in great demand and where you could obtain slaves and gold. But while the wind patterns of the Eastern Atlantic would have carried your ship to West Africa, they made it impossible, given the sailing technology, to return by sea, and you would be forced to return overland across northern Africa. Your likely trade route, then, would have been back to Italy and east through the Mediterranean to India, the East Indies, and China.

What if you had been able to cross the sea to the Americas? What would you have found in 1400? No one left a written record of life in the New World just prior to the arrival of Europeans. Archaeologists, however, have created a record from what was left behind. You would have discoveredelaborate trade routesextending fromSouthAmerica intoNorthAmericaand theremains of great civilizations in Central Mexico and the Yucatán Peninsula.

The Inca were just beginning their expansion, which would produce the Andean Empire confronted by Pizarro in 1532. Inca society in 1400 was dominated by the Inca dynasty, an aristocracy consisting of relatives of the ruling group, local rulers who submitted to Inca rule. Men of local rank headed endogamous patrilineal clans, or ayllus, groups who traced descent to a common male ancestor and who were required to marry within their clan. These groups paid tribute to the Inca aristocracy by working on public projects or in military service. Women spent much of their time weaving cloth used to repay faithful subjects and imbued with extraordinary ritual and ceremonial value. The state expanded by colonizing new agricultural lands to grow maize. It maintained irrigation systems, roads, and a postal service in which runners carried informationfromoneendoftheempiretoanother.GroupsthatrebelledagainstIncarulewereusually relocated far from their homeland (Wolf 1982:62–63).

If you had traveled into the Brazilian rain forests, you might have encountered peoples such as the Tupinambá, who lived on small garden plots while gathering and hunting in the forests.Sixteenth-centurytravelerCalvinistpastorJeandeLéryconcludedthattheTupinambálivedmorecomfortablythanordinarypeopleinFrance(Maybury-Lewis1997:13).

In Mexico in 1400, the Aztecs were twenty years from establishing their vast empire with its capital at Tenochtitlán. In the Caribbean there were complex chieftainships with linkages to the civilizations of Mesoamerica and the Andes. A merchant of 1400 would have been able to followtraderoutesthatspreadfromMexicointothesoutheasternandnortheasternUnitedStates,encountering descendants of those who archaeologists called the Mississippians. In this society, goods and commodities were used to indicate status and rank. A trader would have encountered towns or ceremonial centers focused on great terraced, earthen platforms. The Mississippians relied on the cultivation of maize, beans, and squash, called “the three sisters” by the Iroquois. You might have met the Iroquois at the headwaters of the Ohio River, the Cherokee in the south-ern Appalachians, the Natchez on the lower Mississippi River, and the Pawnee and the Mandan on the Missouri River. On the surrounding prairies you would have encountered the peoples of the Northwest, the buffalo hunters of the plains (the horse, often associated with the Plains Indians, wouldn’t arrive for another century), and the Inuit hunters of the Arctic and subarctic. These civilizations and cultures might, in later centuries, have provided a lucrative market for the sale and purchase of goods had not other events led to their devastation.

Aswecompleteourglobaltour,thebarrierstocommercearestriking.Forexample,mostpolitical rulers were not yet committed to encouraging trade. Although states might value trade for the taxes, tolls, and rents they could extract from traders, merchants were still looked down on. Rulers generally viewed trade only as a way to gain profit from traders and merchants, and some states even attempted to control some trade themselves. In China, for example, trade in

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salt was monopolized by the government. Religious authori-ties in Europe, the Middle East, and China discouraged trade by extracting high taxes or forbidding loans at interest.

Geographywasobviouslyamajorbarrier:Tradecircuitsmight take years to complete. Roads were few and ships rela-tivelysmallandatthemercyofwindsandtides.Securitywasa problem: A merchants’ goods were liable to be seized or stolen, or merchants might be forced to pay tribute to rulers along the way.

Economically, there were various restrictions. We were a long way in 1400 from anything resembling a consumer economy. Most of the world’s population lived on a subsistence economy—that is, they produced themselves whatever they needed to exist. In Europe, for example, where 90 percent of the population was rural, people might buy an iron plow, some pots, and textile products, but that was all. Consumers tended to be the urban dwellers, largely the clergy, aristocracy, and the smallmiddleclassconsistingofartisans,merchants,andbureaucrats.Furthermore,ifpeoplewanted to buy more, there was virtually no currency with which to do it; even if all the gold and silver of Europe had been in circulation, it would have amounted to only about two dollars per person (Weatherford 1988:14).

Thus, overall, the world of 1400 seemed little affected by trade. China and India were probably the richest countries in the world, and there is little doubt that royal rulers con-trolled most of the wealth, largely through the extraction of tribute from peasants, artisans, and traders. Much of this they redistributed in the form of gifts, feasts, and charity. Moreover, the people who worked the soil, as those who remained gathering and hunting at the fringes and out-side the world system, had ready access to food. Though there is evidence of periodic famine in which thousands perished, it is unlikely that, as now, close to one-fifth of the world’s population in 1400 was hungry. Thus, although a growing system of trade was beginning to link more of the world’s people together, there had yet to develop the worldwide inequities that exist today. This, however, would rapidly begin to change over the next one hundred years.

The economic rise of europe and its impact on africa and the americas

Two events dominate the story of the expansion of trade after 1400: the increased withdrawal of ChinafromworldtradenetworksandthevoyageofVascodaGamaaroundthesoutherntip ofAfrica. These events resulted in a shift in the balance of economic dominance from a country of 100 million occupying most of Asia to a country of 1 million occupying an area just slightly larger than the state of Maine.

The date and reason for China’s withdrawal from its position of commercial dominance issomethingofamysteryandsubjecttoconsiderableacademicdebate(see,e.g.,Frank1998;Landes 1998). The ruling dynasty moved the capital of China inland and allowed its power-ful navy to gradually disintegrate. Regardless of the reasons for these actions, they resulted in a diminished role for China in global trade, and Portugal, with the most powerful navy in the world, was quick to fill the vacuum left by China in the East Indies. Portugal used its navy to dominate trade and supplemented trading activities with raiding (Abu-Lughod 1989:243).

Japan also took the opportunity afterChina’swithdrawal to expand its trading activityinSoutheastAsia. In the fifteenthcentury, Japan, likeEngland,wasa feudal societydividedinto an upper nobility, the daimyo, or great lords; the samurai, vassals of the daimyo; and the chonin, or merchants, who were looked down on by the nobility. There was contact between Japan and Europe by themid-sixteenth century, andChristianmissionaries soon establishedthemselvesinJapan.Butaround1500,JapanwasinvolvedinheavytradewithChina,trading








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refined copper, sulfur, folding fans, painted scrolls, and, most important, swords. One trade expedition carried 10,000 swords to China and returned with strings of cash, raw silk, porcelains, paintings, medicines, and books. Thus, in the fifteenth century, Japanwasbeginningeconomicexpansion toareasvacatedbyChina(Sanderson1995:154).

Technological advances in boat building were partially responsible for Portugal’s power. Around 1400, European boat builders combined the European square rigger with the lateen rig of the Arabs, the square rig giving ships speed when running and the lateen rig allowing the boat to sail closer to the wind. They also equipped their ships with cannons on the main and upper decks by cutting holes in the hull. The result was a speedy and maneuverable galleon, half warship and half merchantman (Wolf 1982:235).

Equally important for Portugal was location. Prior to the fifteenth century, Portugal was at the edge of the world system. The Mediterranean was controlled by the city-states of Italy and by Islamic powers. The Americas were seemingly out of reach, even if traders were aware of them. The west coast of Africa was inaccessible by boat unless one sailed south down the coast and returned overland. But once the route east to India and China was restricted, action shifted to the Atlantic, and as Africa and the Americas became readily accessible, Portugal was suddenly at the center of world trade.

It was the era of discovery and conquest, of the voyages of Columbus, of efforts to find alternative routes to China and the East Indies. Columbus believed he had discovered China or

Cipangu(Japan),andaslateas1638,thefurtraderJeanNicolet,onmeetingWinnebagoIndiansontheshoresofLakeMichigan,woreaChineserobehebroughttowearwhenmeetingtheGreatKahn of China (Wolf 1982:232).

Much is made in popular culture and history books of the spirit of adventure of early “explorers” suchasMarcoPolo,VascodaGama,andChristopherColumbus.But theywereless explorers than merchant sailors. Their motivation was largely economic; they were seek-ing alternative ways to the riches of China and the East Indies. One might say that European economic domination, to the extent it was fueled by the wealth of the Americas, was due to the accidental discovery of two continents that happened to be in the way of their attempts to find alternativeroutestoChina,Japan,andIndia.

If you were a global trader in the sixteenth century whose starting point was Lisbon, Portugal, you had a choice of trade routes. You could go east to the Middle East, India, or SoutheastAsia,allkeptopentoPortuguesetradersbyPortugal’snavy.Youcouldgosouthalongthe African coast, or follow Columbus’s route to the New World. Or you could simply trade into the rest of Europe. All routes could prove profitable. In our reincarnation as a Portuguese trader, let’s first go south to Africa.

Let’s assume you have the capital to hire a ship to carry yourself and your goods to Africa. You would probably be carrying Mediterranean wine, iron weapons, perhaps horses (much in demand in Africa), and a consignment of textiles possibly consisting of Egyptian linen and cotton. What sort of commodities would you acquire in Africa for trade in Europe?

Africans were already producing the same things as Europeans—iron and steel (possibly the best in the world at the time), elaborate textiles, and other goods. As a trader, you would have been interested in the textiles made in Africa, which were in demand in Europe. You would also have been anxious to trade in gold mined in West Africa, the source until that time of most of the gold in Europe and the Middle East. But your real interest would likely have been slaves.

Theinstitutionofslaverygoesbackwellintoantiquity.TheancientGreekskeptslaves,and slave labor was used throughout the Middle East and Europe in 1500. Muslims enslaved Christians, Christians enslaved Muslims, and Europeans enslaved Slavs and Greeks. Coal
















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minersinScotlandwereenslavedintotheseventeenthandeigh-teenth centuries, and indentured servitude was widespread in Europe. However, there was about to be a huge surge in the demand for slave labor from the new colonies being established in the Americas.

The nature of the slave trade has long been a conten-tious issue among historians. Many believe the slave trade was forced on Africa, if not by direct military intervention, then by economic extortion, as Europeans offered guns and horses needed by rulers to maintain their authority in exchange for slaves. But there is increasing evidence that the slave trade was largely an African institution in which Europeans and others wereonly toohappy topartake.Slavery inAfricawasdiffer-ent from slavery in Europe, however, and different from what it was to become in the Americas.

Slaveswere regarded traditionally inAfrica as subordinate familymembers, as theywere in Europe going back to Aristotle’s time. Thus, slaves in Africa could be found doing any duties a subordinate family member might do. To understand the African institution of slavery, it is also necessary to understand that among people in African states, there was little notion of private property; for example, land was owned by “corporate kinship groups,” net-works of related individuals who together owned land in common. People were given the right touselandbutnottoownit.Slavescomprisedtheonlyformofprivate,revenue-producingproperty recognized inAfrican law. Slaves could produce revenue because if you had thelabor in the form of family members, wives, or slaves, you could claim the use of more land. African conceptions of property are reflected also in the fact that, whereas in Europe taxes were paid on land, in Africa taxes were paid on people, “by the head” (Thornton 1992).

The size of African states may have reflected the lack of concern with land as property. JohnThornton (1992:106) estimated that only 30 percent ofAtlanticAfrica contained stateslargerthan50,000squarekilometers(roughlythesizeofNewYorkState),andmorethanhalfthe total area contained states of 500 to 1,000 square kilometers. Africans generally went to war not to acquire land, as in Europe, but to acquire slaves, with which more land could be worked.

Giventheseattitudestowardlandandlabor,thereexistedinAfricaatthetimeofEuropeanarrivalalargeslavepopulationandathrivingslavemarket.Slaveswereamajorformofinvest-ment; a wealthy African could not buy land but could acquire slaves and, as long as land was available, claim more land to use. Moreover, slaves, because they were property, could be inher-ited by individuals, whereas land, because it belonged to the corporate kin group, could not. Investing in slaves would have been the wealthy African’s equivalent of a European investing in land, and if you were not using slaves, you could sell them (Thornton 1992:87). Thus, European traders found ready sources of slaves, not because Africans were inveterate slave traders but because in Africa the legal basis for wealth revolved around the idea of transferring ownership of people (Thornton 1992:95).

Once you obtained the slaves, you might have obtained a special ship to transport them back to Europe or to one of the Atlantic Islands, where they were in demand as workers on the expanding sugar plantations. Sugar in the sixteenth centurywas still a luxury item, usedby the wealthy to decorate food or as medicine. The primary areas of supply were around the Mediterranean—Egypt, Italy, Spain, and Greece. But with the opening of the Atlantic,sugar plantations were established first on the Canary Islands and the Azores and later in the Caribbean. Sugar productionwas a labor-intensive activity, and slaves fromAfrica suppliedmuchof that labor.From1451 to1600,some275,000slavesweresent fromWestAfrica toAmerica and Europe. In the seventeenth and eighteenth centuries, sugar would begin to play a major role in the world economy; but in the sixteenth century, its possibilities were only begin-ning to be recognized.














68 PartI • TheSocietyofPerpetualGrowth

Let’s assume that after buying slaves in Africa and selling them in the new sugar planta-tions of the Azores, you resume your journey and go west to the Americas. The opening of the AmericasbroughtintoPortugalandSpainvastamountsofgoldandsilverplunderedfromtheInca and Aztec empires and extracted from mines by slave and indentured labor. When Pizarro invaded Peru and seized Atahualpa in 1532, he demanded and received a ransom of a room-ful of gold but killed the emperor anyway. When Cortes conquered the Aztec, he demanded gold; after the Aztec’s counterattack, Cortes’s fleeing men carried so much loot that one-quarter drowned as they fell from a causeway into a lake, so burdened down were they by their cargo (Weatherford 1988:7).

At the time of the conquest of the Americas, there was approximately $200 million worth ofgoldandsilverinEurope;by1600,thathadincreasedeighttimes.Some180to200tonsofgold, with a contemporary value of $2.8 billion, flowed into Europe, much of it still visible in the robes, statuary, and sacred objects of European churches (Weatherford 1988:14).

Mostof the silver came fromSanLuisPotosí.CerroRico (“richhill” inSpanish), themountainabovePotosíinBolivia,istherichestmountaineverdiscovered,virtuallyamountainof silver. In 1545 slaves and indentured laborers recruited from the indigenous population began diggingsilveroutofthemountain,formingitintobarsandcoins,andsendingittoSpain.By1603, therewere 58,800 Indianworkers inPotosí, 43,200 free day laborers, 10,500 contractlaborers, and 5,100 labor draftees.By 1650, Potosí rivaledLondon andParis in size,with apopulation of 160,000 (Wolf 1982:136).

The amount of currency in circulation worldwide increased enormously, enriching Europe but eroding the wealth of other areas and helping Europe expand into an international market system. China reopened its trading links to Europe and took in so much silver that by the mid-eighteenth century, its value had declined to one-fifth what it had been prior to the discovery of America. The gold from the Americas also had the effect of destroying the African gold trade (Weatherford 1988).

GoldandsilverwerenottheonlywealthextractedfromtheNewWorld.Spainimportedcochineal, a red dye made from insects (it took 70,000 dried insects to produce one pound of cochineal), indigo (blue dye), and cocoa. Portuguese traders established sugar plantations on the northeast coast of Brazil.

The cost of the European expansion of trade to the Americas, at least to the people of the Americas, was enormous. It resulted in the demographic collapse of the New World, what Eric Wolf called “the great dying” (1982:133).

There is broad disagreement about the population of the Americas at the time of the European conquest. Alfred E. Kroeber (1939), one of the founders of American anthropology, estimated that the total population of the Americas was about 8.4 million, of which 900,000 were inNorthAmerica.HaroldHerbertSpinden,relyingonarchaeologicalevidence,suggestedtherewere 50 million to 75 million people in the Americas in a.d.1200.HenryF.Dobyns(1983),working with archaeological evidence, estimates of the carrying capacity of given environments, and historical documents, estimated 90 million to 112 million in the hemisphere and 12.5 million in the area north of Mexico. The disagreement reflected in these numbers is not unimportant, for it involves an important legal question: Did the “discovery” of the New World permit Europeans to move on to unoccupied wilderness, or did they displace and destroy a settled indigenous population? If the latter is the case, then European claims of legal ownership of the land based on the doctrine of terra nullius—land belonging to no one—would be legally invalid.

There is little doubt, we think, that the higher estimates are closer to the actual population of the Americas. In 1500, Europe, a fraction of the size of the Americas, had a population of 45 million;Francealonehadapopulationof20million,andtinyPortugal1million.Andthiswas after the bubonic plague epidemics. There seems little doubt that the environment and soci-eties of the Americas were capable of supporting large populations. The peoples of the Americas built empires, palisaded settlements, temples, great pyramids, and irrigation complexes. There was certainly an adequate supply of foodstuffs to support a large population; most of our diet

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today comes from plants domesticated first in the New World, including corn, potatoes, sweet potatoes, tomatoes, squash, pumpkins, most varieties of beans, pepper (except black), amaranth, manioc, mustard, some types of rice, pecans, pineapples, bread fruit, passion fruit, melons, cranberries, blueberries, blackberries, vanilla, chocolate, and cocoa.

In 1496, Bartolomé Colón, Christopher’s brother, authorized a headcount of adults of Española, the present-day Haiti and Dominican Republic, then the most populous of the Caribbean Islands. The people of the island, the Tainos, created a culture that extended over most of the Caribbean. Colón arrived at a count of 1.1 million working adults; if we add children and the elderly, and consider that disease and murder had already diminished the population, theremust have been at least 2million and asmany as 8million on that island alone (Sale1991:160–161). Thus, it is hardly unreasonable to suppose that the population of the Americas as a whole was upward of 50 million to 100 million people.

The scale of death after the arrival of the Europeans is difficult to conceive and rivals any estimate made for the demographic consequences of a nuclear holocaust today. When the SpanishsurveyedEspañola in1508,1510,1514,and1518, theyfoundapopulationofunder100,000. The most detailed of the surveys, taken in 1514, listed only 22,000 adults, which anthropologistsSherburneCookandWoodrowBorahestimatedtorepresentatotalpopulationof 27,800 (Cook and Borah 1960). Thus, in slightly more than twenty years, there was a decline from at least 2 million to 27,800 people. Bartolomé de Las Casas, the major chronicler of the effectsoftheSpanishinvasion,saidthatby1542therewereonly200indigenousTainosleft,and within a decade they were extinct. Cook and Borah concluded that in Central America, an estimated population of 25.3 million was reduced by 97 percent in a little more than a century. In all, it is estimated that 95 percent to 98 percent of the indigenous population of the Americas died as a consequence of European contact.

Many died in battles with the invaders; others were murdered by European occupiers desperate to maintain control over a threatening population; and still others died as a result of slavery and forced labor. But the vast majority died of diseases introduced by Europeans to which the indigenous peoples had no immunity.

The most deadly of the diseases was smallpox. It arrived sometime between 1520 and 1524 with a European soldier or sailor and quickly spread across the continent, ahead of the advancing Europeans. When Pizarro reached the Incas in 1532, his defeat of a divided empire was made possiblebythedeathfromsmallpoxoftherulerandthecrownprince.WhenaSpanishexpedi-tionsetoutfromFloridaforthePacificin1535,theyfoundevidenceoftheepidemicinWestTexas. Dobyns (1983) assumed that virtually all the inhabitants of the hemisphere were exposed to smallpox during that one epidemic. What would the mortality rate have been from this one pathogen alone?

Dobyns(1983:13–14;seealsoStiffarmandLane1992)estimatedthatintheepidemicof1520–1524, virtually all indigenous peoples—certainly those in large population areas—would have been exposed to smallpox, and because there would have been no immunity, the death rate, judging by known death rates among other Native American populations, must have been at least 60percentto70percent.DobynsclaimedthatSpanishreportsofthetimethathalfofthenativepopulation died most certainly were underestimates.

This was not the only smallpox epidemic. Dobyns calculated that there were forty-one smallpox epidemics in North America from 1520 to 1899, seventeen measles epidemics from 1531 to 1892, ten major influenza epidemics from 1559 to 1918, and four plague epidemics from 1545 to 1707, to name a few. In all, he said, a serious epidemic invaded indigenous populations on average every four years and two and half months during the years 1520 to 1900.

Thus, the occupation of the New World by Europeans was not so much an act of conquest as it was an act of replacing a population ravaged by pathogens that Europeans carried with them. Depopulation was not the only consequence of the economic expansion of Europe into the Americas. The deaths of indigenous peoples proved a boon to the slave trade, as Europeans transported millions of Africans to the plantations and mines to replace the dying indigenous

70 PartI • TheSocietyofPerpetualGrowth

laborers. Much of the remaining native population gathered around mining communities and Spanish agricultural estates, providing a surplus labor supply, producing cheap crafts andagricultural products, and paying tribute and taxes to the colonizers (Wolf 1982:149). Their descendants today still suffer economic and social discrimination at the hands of descendants of European and indigenous unions.

In1776,AdamSmithwroteinThe Wealth of Nations that “the discovery of America, and thatofapassagetotheEastIndiesbytheCapeofGoodHope,arethetwogreatestandmostimportant events recorded in the history of mankind” (Crosby 1986:vii).

AdecadelatertherewasadebateamongthesavantsofFranceoverwhetherthediscoveryoftheNewWorldwasablessingoracurse.AbbéGuillaumeReynal,authorofafour-volumestudy of trade between Europe and the East and West Indies, wrote a paper to answer this ques-tion. In it he listed the gains that Europe had received and discussed the costs to the peoples of Asia and the Americas. He concluded:

Let us stop here, and consider ourselves as existing at the time when America and India were unknown. Let me suppose that I address myself to the most cruel of the Europeans in the following terms. There exist regions which will furnish you with rich metals, agreeable clothing, and delicious food. But read this history, and behold at what price the discovery is promised to you. Do you wish or not that it should be made? Is it to be imagined that there exists a being infernal enough to answer this question in the affirmative! Let it be remembered that there will not be a single instant in futuritywhenmyquestionwillnothave the same force. (Sale1991:366–367)

The birth of finance and the Tulip bubble of 1636–1637

The next, and perhaps the most important, stage in the evolution of the capitalist was the birth offinance.Financemaybeunderstood,asthethirdLordRothschildputit,asthe“movementofmoneyfrompoint‘A’,whereitis,topoint‘B’,whereitisneeded”(seeFerguson2008:62–63).It may also be properly understood as the art of making money with money, the major mark of a capitalist economy (see Hart 2000:10; Polanyi 1944:68–69). The easiest way to make money with money is to lend money at interest, an act probably as old as money itself. But lending implied certain preconditions that, until relatively recently in global history, were rarely met. First, it had to be permissible.Many religious texts, including the Old Testament, the NewTestament, and the Koran, discourage or condemn loans at interest. It was not until the fifteenth andsixteenthcenturiesthatsuchprohibitionswererelaxedinEurope.Second,lendingmoneyrequires that there be a pretty good chance that the lender gets his or her money back with inter-est. In other words, the lender had to be able to accurately assess the risk that the borrower would not default and set interest rates accordingly. Third, finance required the development of institu-tions to facilitate lending, borrowing, credit, investment, and the like. Banks, stock and bond markets, and bodies of financial law and the means to enforce it were prerequisites of a modern financial system.

Without finance and financiers, it would have been difficult, if not impossible, for nation-states to make war; finance large-scale trading voyages; establish trading companies; build canals, dams, and railroads; and so on. But the possibility of making money with money also assumed that at the close of a transaction—the loan, the investment, and so on—there was more money than at the beginning. And it is here that we begin to appreciate the requirement of our economy for perpetual economic growth. The more that is lent or invested (and the higher the interest rates), the more money has to be generated to meet the terms of the investment or loan. When people cannot repay their loans or when investors fail to profit from their investments, financial collapse can ensue. Without the necessary growth, borrowers, including nation-states, may default on their loans; banks may collapse; or currency may widely fluctuate in value. And

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such crises are fairly frequent. In their study of global financial crises,CarmenM.ReinhartandKennethS.Rogoff(2009:34)note that since 1800, there have been at least 250 cases where whole countries have defaulted on their loan obligations. And over the course of the last 200 years, advanced economies have had, on average, 7.2 banking crises lasting an average of 7.2 years each.

Knowing that the process of making money with money involves some risk, let’s resume our time voyage as a merchant adventurer; how could we have made money with money? The place to have begun would have been the Netherlands of the sixteenth and seventeenth centuries. After Portugal, it was the Dutch that began to dominate the global economy of that period. The Dutch were initially best able to exploit the new developments in trade, partially because of their large merchant fleet and the development of the fluitschip, a light and slender vessel that carried heavy cargoes. But, more importantly, it was in the Netherlands that the first modern economy emerged, one in which making money with money, that is, moving it from where it was to where it was needed(ordemanded)foraprice,becameacceptedandnormal(seedeVriesandvanderWoude 1997).

As in the case of Portugal, it is difficult to understand how a small country with virtually no natural resources other than a tiny fish (herring) could come to dominate the economic world. But it may not be too much to say that the Dutch were the first to realize the full poten-tial of money and to develop the whole field of finance. The Dutch did not invent finance, but they were the first to use it in a large-scale and public way. It would not be inaccurate to say that the Dutch were great investors, and, perhaps for that reason, the Netherlands is sometimes cited as the first modern economy to be characterized by sustained economic growth (see North and Thomas 1976).

The Dutch invested money in all sorts of things. In the period from 1610 to 1640, for example, Dutch citizens invested at least 10 million guilders (when annual average income was 200–400 guilders) in new capital-intensive technologies such as windmill pumping techniques to drain water and in increasing farmland for crops to feed the growing urban populations (see de VriesandvanderWoude1997:29).Theyalsoinvestedmoneyinthebuildingofcanalstoconnect cities and towns and in draining peat bogs, their major energy source.

Dutch citizens also made money financing the public debt. In 1600, the state owed some 5 million guilders, and the public could buy state bonds paying some 8 percent to 16 percent interest(deVriesandvanderWoude1997:114).By1660,some65,000people(outofsome220,000 households) had invested money in state bonds in order to gain the interest on the bonds, and, consequently, make money with money.

One of the most successful investments you might make at the time as a merchant adventurerwouldbe in theUnitedorDutchEastIndianCompany(VereenigdeOost-IndischeCompagnieorVOC).TheVOCwasthefirstmultinationalcorporationandthefirsttosellstock.It was also incredibly profitable, paying an average of 18 percent annual return on investments for almost 200 years.

Untilthatperiod,mostinvestmentsinlong-distancetradingvoyagesinvolvedoneround-trip voyage only. But with increasing competition from Portugal and England, Dutch merchants withthehelpofthegovernmentsetupthe“UnitedEastIndiesCompany,”grantingthecompanyexclusive trading rights over Asian trade, along with the authority to build forts, raise armies, and negotiate treaties with Asian rulers. To finance the company, the board, made up of seven-teen lords and representing the first board of directors, issued stock in the company. The initial offering raised some 6.45 million guilders, and the shares were bought by everyone from the wealthiest members of society to their servants.











The Netherlands

72 PartI • TheSocietyofPerpetualGrowth

Initially the company was to function for twenty years, and an accounting to investors was to be provided only after that time. Consequently, the only way that investors could withdraw their investment was by selling their shares. Thus the joint-stock company and the stock market were established at about the same time. A considerable number of people wanted to buy and sell shares and therefore a special structure was built in Amsterdam for people to gather and buy and sellsharesintheVOC.

Since a stock market cannot function effectively without banks, in 1609 the city ofAmsterdam established the Amsterdam Exchange Bank to settle accounts between lenders anddebtorsandthebanksoonbegantoacceptVOCsharesascollateralforloans,thuslinkingthe stock market and the supply of credit. When banks began to lend money to buy shares, the outline of a new kind of economy based on investment, credit, and debt began to emerge (see Ferguson2008:132).

SincemuchoftheinvestmentanddebtwastiedtotheVOC,itssuccesswasessentialtothemaintenanceoftheeconomy.Thatis,iftheinvestmentsintheVOCdidn’tpayoff,peoplewould have been unable to settle their debts or recoup the money that they had invested. Thus, theVOChadtogrowtheeconomy.Andthisitdid.

TheVOC’sstrategywastoestablish“factories”intheareasitcontrolled,producingthings(e.g., textiles and iron implements) to use to trade for local goods, such as spices, lumber, or handicrafts, which were shipped back and sold in Europe. In many cases, the successful work-ing of the factories required ruthless exploitation of indigenous communities as well as armed confrontationwith competing companies. As Jan Pieterszoon Coen, governor-general of theVOCputit,“Wecannotmakewarwithouttrade,nortradewithoutwar.”

Pieter van der Heyden’s sixteenth-century

painting The Battle about Money conveys the growing concerns

about making more money. The Dutch inscription on the

bottom warns that “It’s all for money and

goods, this fighting and quarreling.” (Heyden,

Pieter van der (c.1530 – after 1572). After, Pieter Bruegel

the Elder (c.1525–1569). The Battle of the Money

Bags and the Strong Boxes, 1570–1600. Engraving;

second state of four, sheet: 9 5⁄16 × 11 15⁄16 in. (23.6 ×

30.4 cm). Harris Brisbane Dick Fund, 1926 (26.72.40). The Metropolitan Museum

of Art, New York, NY, U.S.A. Image copyright

© The Metropolitan Museum of Art. Image

source: Art Resource, NY.)

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 73

With armies at their disposal, and fleets of fast-sailing ships available, thevolumeoftradecontrolledbytheVOCincreasedyearly.Inthe1620s,50VOCshipsreturnedladenwithgoodsfromAsia;bythe1690sthenum-ber was 156, and from 1700 to 1750 the tonnage of Dutch ships doubled.

Astradeincreased,sodidthevalueofVOCstock.From1602to1733thevalueofVOCstockrosefrompar(100)to786guilders.Inaddition,thedividends paid to shareholders by 1650 were eight times the purchase price, yielding an annual return of 27 percent, rivaling that of the most profitable present-day hedge funds.

But not all Dutch investments of the period worked out as planned; the Dutch not only can be said to have invented finance, they were also responsible for the first financial bubble and collapse. As mentioned ear-lier,theDutchwereavidinvestorsandfinancialspeculators.Forexample,as early as the 1550s, they invested in futures contracts. There were agree-ments between buyers and sellers that a specific commodity, such as grain or herring, could be purchased at a specific price at some time in the future. A futures contract was a way to reduce financial risk; the buyer would be guaranteed the right to buy a commodity at a price they could predict, and the seller was guaranteed a price for his or her product that they estimated would be profitable, regardless of whether the market prices of these com-modities rose or fell.

By the seventeenth century, futures contracts were being written on such trade items as pepper, coffee, cacao, brandywine, whale bone, and whale oil. However, unlike the earlier futures market, many of the contracts in the seventeenth century represented speculation on prices; that is, purchasers had no intention of taking possession of the goods, just as sellers did not possess the goods. People essentially were betting that the prices of the goods would either rise or fall; if they won their bet, they prof-ited. If not, they lost. And if many people speculated or bet on a specific commodity, and enough lost their bet, the whole economy could be thrown into disarray. Thus, we have the Dutch tulip mania of 1636/1637.

Beginningin1635,duringadecadewhensharesintheVOCweredoublinginvalue,tulips,to most Dutch, looked like a good thing. Tulips enjoyed great popularity among the Dutch, who appreciated their aesthetic quality and themany-colored patterns of the flowers. Since some patterns were more desirable than others, prices of tulip bulbs varied immensely.

Tulip bulbs can propagate through the formation of outgrowths on the mother bulb, and when the bulbs are invaded by a mosaic virus, it produces an effect called “breaking” that results in multicolored flower patterns that are highly desired. However, the presence of these patternscanbeverifiedonlybetweenJune,whenthebulbscanberemovedfromtheground,andSeptember,whentheymustbereplanted.Singlebulbsweresometimesworthmodestfortunes.AsingleSemperAugustusbulbsoldfor5,500guildersatatime,again,whentheaverageyearlyincome was 200 to 400 guilders.

In the fall of 1636, the trade in tulips began to accelerate as ordinary Dutch citizens began to purchase tulip futures, specifying the kind of tulip they wished to purchase and enter-ing into contracts with sellers. Most of the buyers had no intention of taking possession of the tulip bulbs, betting that the prices would rise and that they could then sell the rights to buy the tulips to people who wanted the bulbs. Often the sellers did not have any bulbs, but were bet-ting that they could get them at a price less than they were offered from the buyers. Thus, as deVriesandvanderWoude(1997:150)putit,“citizenscrowdedintotavernstobuyandsellbulbs they could not deliver and did not want to receive.” They were betting on the future price of bulbs.


In the attempt to make money with money, a single Semper Augustus bulb sold for 5,500 guilders at a time when the average yearly income was 200 to 400 guilders. (Edward Owen/Art Resource, NY.)

74 PartI • TheSocietyofPerpetualGrowth

paidondeliveryof thebulbs (presumably the following June) andput four cows as a down payment. Other down payments consisted of “tracts of land, houses, furniture, silver and gold vessels, paintings, a suit and a coat, a coach and dapple-gray pair.” Another buyer of a single Viceroybulb,valuedatFL2,500,paid“two lasts (a measure that varied by commodity and locality) of wheat, four of rye, eight pigs, a dozen sheep, two oxheads of wine, four tons of butter, a thousand pounds of cheese, a bed, some clothing and a silver beaker” (Kindleberger 1978:109).

TheninFebruaryof1637,forreasonsthatareunclear,pricesbeingofferedbegantocol-lapse,andinvestorswhohaddependedontheriseinpricesfacedeconomicruin.Sincetheyhadgiven the sellers only a portion of the agreed-upon price, they had to somehow come up with therest,whichtheyoftendidnothave.Furthermore,thesellers,whohadusedthecontractsascollateral for loans, had to come up with additional collateral that they didn’t have. But since the futures contracts were, at the time, unenforceable in court, there was no incentive to honor the contracts. Thus investors lost large sums of money or the goods that they had used as down pay-ment on their bulb purchases, while sellers were often not able to collect anyway. Many amateur investors went bankrupt. In spite of this, in the seventeenth century, the Dutch remained devoted investors,continuingtoputtheirmoneyinVOCstockorcanalbuilding,paintings,andclocks.

The lessons of theVOC and the “tulip bubble” are that for investors to profit and for borrowers to pay their debts, there must be some form of economic growth, either as an increase intrade,aswiththeVOC,orasanincreaseinthevalueofassets,suchastulipbulbs.Ifgrowthoccurs, profits are made and debt is repaid. If it doesn’t, investors experience losses and borrow-ers may default on their loans.

In addition, the period marked the increase in activities that required the gathering of large amounts of capital, usually through borrowing. Thus, states borrowed to wage war, merchants to engage in long-distance trade, and investors to speculate on commodities. And, as projects became larger and more expensive, greater sums of money had to be borrowed, lent, and repaid, all requiring perpetual economic growth.

Thus, the financial inventions of the Dutch Republic ushered in a new kind of economy, one in which making money with money became a significant feature of economic life, and in which economic growth became a necessity. There have also been repeated instances, as we will see, of speculative bubbles bursting and threatening to bring down whole economies, the most recentexamplebeingthecollapseofhousingvaluesintheUnitedStates,aswellasothercoun-tries, in 2007, which we will examine in more detail shortly.

The era of The i ndusTrialisT

By 1800, England had militarily, politically, and economically subdued her closest rivals of theearlyeighteenthcentury—FranceandHolland.Britishcommercethrived,fueledlargelybythe growth of industry, particularly textiles, and the related increase in the availability of cheap labor. And although Britain lost her American colonies, politically if not economically, she gained in many ways a wealthier prize—India.

But thebignewswas the industrialdevelopmentofEngland.From1730 to1760, ironproduction increased 50 percent; the first iron bridge was built in 1779 and the first iron boat in 1787.In1783Wattproducedthedouble-effectsteamengine.From1740to1770,consumptionof cotton rose 117 percent, and by 1800, mechanized factories were producing textiles at an unprecedented rate.

Socialscientistsoftenposetworelatedquestions:What made England take off? And why was there an industrial revolution at all? These are more than academic questions. As planners in so-called economically undeveloped countries attempt to improve peoples’ lives through eco-nomicdevelopment,theyoftenlooktothehistoryofGreatBritaintodiscoverthekeyingredientsto economic success. England became, to a great extent, the model for economic development, theepitomeofprogress,orsoitwasbelieved,particularlyinGreatBritain.

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 75

The reasons for the Industrial Revolution in England and the emergence of the capital-ist economy are varied, and although analysts disagree on which were the most important, there is general agreement on those that played some part. They include the following (see, e.g., Wallerstein 1989:22ff.):

1. An increase in demand for goods. This demand may have been foreign or domestic, supplemented by increased demands for largely military products from the state. The textile industry was revolutionary also in its organization of labor and its relationship to the foreign market, on which it depended for both raw materials (in the case of cotton) and markets. Historian Eric Hobsbawm argued that there was room for only one world supplier, and that ended up being England (Hobsbawm 1975).

2. An increase in the supply of capital. An increase in trade resulted in greater profits and more money, and these profits supplied the capital for investment in new technologies and businesses.

3. A growth in population. Population increased dramatically in England and Europe in theeighteenthcentury.From1550to1680, thepopulationofwesternEuropegrewby18 percent,andfrom1680to1820,by62percent.From1750to1850,England’spop-ulation increased from 5.7 million to 16.5 million. Population increase was important because it increased the potential labor force and the number of potential consumers of commodities. But there is disagreement as to why population increased and on the effects it had on industrialization.

Some account for the increasewith lowermortality rates attributable to smallpoxinoculation and an improved diet related to the introduction of new foodstuffs, such as the potato.Lifeexpectancyatbirthrosefromthirty-fivetofortyyears(Guttmann1988:130).Others attribute the rise in population to an increase in fertility. Indeed, families were larger in the eighteenth century. In England between 1680 and 1820, the gross reproduction rate (number of females born to each woman) went from two to nearly three and the average number of children per family from four to almost six. Later we examine the relationship of population growth to industrialization because it is key to understanding the rapid growth of population today.

4. An expansion of agriculture. There was an expansion of agricultural production in England in the eighteenth century that some attribute to enclosure laws. These laws drove squatters and peasants from common lands and forests from which they had drawn a livelihood. The rationale was to turn those lands over to the gentry to make them more productive, but this also had the effect of producing a larger landless and propertyless population, dependent on whatever wage labor they might find. Regardless, some argue that the increased agri-cultural yields allowed the maintenance of a larger urban workforce.

5. AuniqueEnglishcultureorspirit.Some,notablysociologistMaxWeber,attributetheriseof England to the development of an entrepreneurial spirit, such as the Protestant ethic, that motivated people to business success in the belief that it would reveal to them whether ornottheywereamongGod’select(Weber1958).

6. Statesupportfortrade.Someclaimthatamoreliberalstatestructureimposedfewertaxesand regulations on businesses, thus allowing them to thrive. The state did take action to support trade and industry. There was continued political and military support for extend-ing Britain’s economy overseas, along with domestic legislation to protect merchants from labor protest. A law of 1769 made the destruction of machines and the buildings that housed them a capital crime. Troops were sent to put down labor riots in Lancaster in 1779 and in Yorkshire in 1796, and a law passed in 1799 outlawed worker associations that sought wage increases, reduction in the working day, “or any other improvement in the conditions of employment or work” (Beaud 1983:67).

7. Theascendanceofthemerchantclass.StephenSanderson(1995)attributedthedevelop-ment of capitalism to an increase in the power of the merchant class. There has always

76 PartI • TheSocietyofPerpetualGrowth

been, he suggested, competition between merchants and the ruling elites, and although elites needed merchants to supply desired goods and services, they nevertheless looked down on them. But gradually the economic power of the merchant class grew until, in the seventeenth and eighteenth centuries, the merchant emerged as the most powerful member ofWestern,capitalistsociety.Capitalism,saidSanderson(1995:175–176),“wasbornofaclass struggle. However, it was not, as the Marxists would have it, a struggle between land-lords and peasants. Rather, it was a struggle between the landlord class and the merchants that was fundamental in the rise of capitalism.”

8. A revolution in consumption. Finally, some attribute the rapid economic growth inEngland to a revolution in the patterns of retailing and consumption. There was a growth in the number of stores and shops and the beginning of a marketing revolution, led by the pottery industry and the entrepreneurial genius of JosiahWedgewood,who named hispotterystylesaftermembersoftheRoyalFamilytoappealtothefashionconsciousnessofthe rising middle class.

Regardless of the reasons for England’s rise and the so-called Industrial Revolution, there is little doubt that in addition to the traditional means of accumulating wealth—mercantile trade, extracting the surplus from peasant labor, pillage, forced labor, slavery, and taxes—a new form of capital formation increased in importance. It involved purchasing and combining the means of production and labor power to produce commodities, the form of wealth formation called capitalism that we diagramed earlier as follows:

M S C S mp/lp S C′ S M′

[Money is converted to commodities (capital goods) that are combined with the means of production and labor power to produce other commodities (consumer goods) that are then sold for a sum greater than the initial investment.] How did this mode of production differ from what went before?

EricWolfofferedoneofthemoreconciseviews.Forcapitalismtoexist,hesaid,wealthor money must be able to purchase labor power. But as long as people have access to the means of production—land, raw materials, tools (e.g., weaving looms and mills)—there is no reason for themtoselltheirlabor.Theycanstillselltheproductoftheirlabor.Forthecapitalisticmodeofproduction to exist, the tie between producers and the means of production must be cut; peasants must lose control of their land, artisans control of their tools. These people, once denied access to the means of production, must negotiate with those who control the means of production for permission to use the land and tools and receive a wage in return. Those who control the means of production also control the goods that are produced, and so those who labor to produce them must buy them back from those with the means of production. Thus the severing of persons from the means of production turns them not only into laborers but into consumers of the product of their labor as well. Here is how Wolf (1982:78–79) summarized it:

Wealth in the hands of holders of wealth is not capital until it controls means of production, buys labor power, and puts it to work continuously expanding surpluses by intensifying production through an ever-rising curve of technological inputs. To this end capitalism must lay hold of production, must invade the productive process and ceaselessly alter the conditions of production themselves.… Only where wealth has laid hold of the conditions of production in ways specified can we speak of the existence or dominance of a capitalistic mode. There is no such thing as mercantile of merchant capitalism, therefore. There is only mercantile wealth. Capitalism, to be capitalism, must be capitalism-in-production.

Wolf (1982:100) added that the state is central in developing the capitalist mode of pro-duction because it must use its power to maintain and guarantee the ownership of the means

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 77

of production by capitalists both at home and abroad and must support the organization and discipline of work. The state also has to provide the infrastructure, such as transportation, com-munication,judicialsystem,andeducation,requiredbycapitalistproduction.Finally,thestatemust regulate conflicts between competing capitalists both at home and abroad, by diplomacy if possible, by war if necessary.

The major questions are, How did this industrially driven, capitalist mode of production evolve, and what consequences did it have in England, Europe, and the rest of the world?

Textiles and the rise of the factory system

Assume once again your role as a merchant; let’s examine the opportunities and problems con-fronting you as you conduct business. Typical textile merchants of the early eighteenth century purchased their wares from specialized weavers or part-time producers of cloth or from drapers, persons who organized the production of cloth but did not trade in it. The merchant then sold the cloth to a consumer or another merchant who sold it in other areas of Europe or elsewhere. The profit came from the difference between what the merchant paid the artisan or draper and what the customer paid. This is not a bad arrangement. It does not require a large capital outlay for the merchant because the artisan has the tools and material he or she needs, and as long as there is a demand for the cloth, there is someone who will buy it.

Butasamerchant,youfaceacoupleofproblems.First,thepeoplewhomaketheclothyoubuy may not produce the quantity or quality that you need, especially as an expanding population begins to require more textiles. Moreover, the artisan may have trouble acquiring raw materials, such as wool or cotton, further disrupting the supply. What can you do?

One thing to do is increase control over what is produced by “putting out”—supplying the drapers or weavers with the raw materials to produce the cloth—or, if you have the capi-tal, buy tools (looms, spinning wheels, and so on) and give them to people to make the cloth, paying them for what they produce. Cottage industry of this sort was widespread through-out Europe as merchants began to take advantage of the cheaper labor in rural areas, rather than purchasing products from artisans in towns and cities. In England of the mid-eighteenth century, there was probably plenty of labor, especially in rural areas, supplied by people who had been put off their land by enclosure legislation or because of failure to pay taxes or repay loans. In the land market of the eighteenth century, there were far more sellers than buyers (Guttmann1988).

Another problem English textile merchants faced in the mid-eighteenth century was that the textile business, especially in cotton, faced stiff competition from India, whose calico cloth was extremely popular in England. How do you meet this competition? The first thing England did was to ban the import of Indian cloth and develop its own cotton industry to satisfy domestic demand. This not only helped protect the British textile industry, but it also virtually destroyed the Indian cotton industry; before long, India was buying British cotton textiles. The result was summed up in 1830 in testimony before the House of Commons by Charles Marjoribanks (Wallerstein 1989:150):

We have excluded the manufactures of India from England by high prohibitive duties and given every encouragement to the introduction of our own manufactures to India. By our selfish (I use the word invidiously) policy we have beat down the native manufactures of Dacca and other places and inundated their country with our goods.

And in 1840, the chairman of Britain’s East India and China association boasted that this Company has, in various ways, encouraged and assisted by our great manufacturing ingenuity and skill, succeeded in converting India from a manufacturing country into a country exporting raw materials. (Wallerstein 1989:150)

78 PartI • TheSocietyofPerpetualGrowth

The next, and to some extent inevitable, stage in textile production was to bring together in one place—the factory—as many of the textile production phases as possible: preparing the raw wool or cotton, spinning the cotton yarn and wool, weaving the cloth, and applying the finishing touches. This allowed the merchant or industrialist to control the quantity and quality of the product and control the use of materials and tools. The only drawback to the factory system is that it is capital intensive; the merchant was now responsible for financing the entire process, whereas the workers supplied only their labor. Most of the increase in cost was a consequence of increased mechanization.

MechanizationofthetextileindustrybeganwiththeinventionbyJohnKayin1733ofthe flying shuttle, a device that allowed the weaver to strike the shuttle carrying the thread from one side of the loom to the other, rather than weaving it through by hand. This greatly speeded up the weaving process. However, when demand for textiles, particularly cotton, increased, the spinning of thread, still done on spinning wheels or spindles, could not keep up withweavers,andbottlenecksdevelopedinproduction.Tomeetthisneed,JamesHargreavesintroduced the spinning jenny in 1770. Later, Arkwright introduced the water frame, and in 1779 Crompton introduced his “mule” that allowed a single operator to work more than 1,000 spindles at once. In 1790 steam power was supplied. These technological developments increased textile production enormously: The mechanical advantage of the earliest spinning jennies to hand spinning was twenty-four to one. The spinning wheel had become an antique in a decade (Landes 1969:85). The increase in the supply of yarn—twelve times as much cotton was consumed in 1800 than in 1770—required improvements in weaving, which then required more yarn, and so on.

The revolution in production, however, produced other problems: Who was going to buy the increasing quantity of goods that were being produced, and from where was the raw material for production to come?

The age of imperialism

The results of the Industrial Revolution in Europe were impressive. The period from 1800 to 1900 was perhaps one of the most dynamic in human history and, certainly until that time, the most favorable for accumulation of vast fortunes through trade and manufacture. Developments in transportation, such as railroads and steamships, revolutionized the transport of raw materi-als and finished commodities. The combination of new sources of power in water and steam,

Power loom weaving in a nineteenth-

century cotton textile factory. Note that

all the workers are women. (Bettmann/


Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 79

a disarmed and plentiful labor force, and control of the production and markets of much of the rest of the world resulted in dramatic increases in the level of production and wealth. These  advancesweremost dramatic inEngland and later in theUnited States, France, andGermany.InEngland,forexample,spuncottonincreasedfrom250millionpoundsin1830to1,101 million pounds in 1870. World steam power production went from 4 million horsepower in 1850 to 18.5 million horsepower twenty years later; coal production rose from 15 million tons in 1800 to 132 million tons in 1860, and 701 million tons in 1900. The consumption of inanimate energy from coal, lignite, petroleum, natural gasoline, natural gas, and water power increased sixfold from 1860  to 1900; railway trackage went from 332 kilometers in 1831 to 300,000kilometersin1876.TheKruppironworksinGermanyemployedseventy-twoworkersin 1848; there were 12,000 by 1873.

There was also a revolution in shipping as ocean freight costs fell, first with the advent of the narrow-beamed American clipper ship and later with the introduction of the steamship. A clipper ship could carry 1,000 tons of freight and make the journey from the south coast of ChinatoLondonin120to130days;in1865asteamshipfromtheBlueFunnelLinewithacapacityof3,000tonsmadethejourneyinseventy-sevendays.TheconstructionoftheSuezCanal, completed in 1869 with the labor of 20,000 conscripted Egyptian fellaheen, or peasants, cut the travel time from England to eastern Asia in half—although it bankrupted the Egyptian treasuryandputthecountryunderAnglo-Frenchreceivership.Theseeventsinitiatedamilitaryrevolt that the British stepped in to put down, consequently cementing the British hold on Egypt andmuchof theMiddleEast.Politically, theUnitedStates emerged as aworldpower, andJapanwasbuildingitseconomyandwouldbereadytochallengeRussia.TheOttomanEmpirewason itsway todisintegratingasFrance,England,andRussiasought togaincontroloverthe remnants.

But it was not all good news for the capitalist economy. There was organized worker resistance to low wages and impoverished conditions, resistance and rebellion in the periphery, and the development of capitalist business cycles that led to worldwide economic depressions. Thus, although business thrived in much of the nineteenth century, it had also entered a world of greatuncertainty.First,withtheexpansionofthescopeofproduction,capitalinvestmentshadincreased enormously. It was no longer possible, as it had been in 1800 when a forty- spindle jenny cost six pounds, to invest in the factory production of textiles at fairly modest levels. Furthermore, therewas increased competition,with factory production expanding dramati-callyinHolland,France,Germany,andtheUnitedStates.Therewastheconstantproblemof overproduction, when supply outstripped demand and resulted in idle factories and unem-ployed workers. Unlike agricultural production—there seemed always to be a market forfood—industrialproductiondependsontherevolutionindemandor,asAnne-Robert-JacqueTurgotputit,“atransformationofdesires”(Braudel1982:183).Untiltheeighteenthcentury,manufacturers launched their enterprises only when profit was guaranteed by subsidies, interest-free loans, and previously guaranteed monopolies. Now manufacturers simply had to hope people would buy their products.

Moreover, there were speculative bubbles that burst, leading to investors’ losing millions ofdollars.Thebigmaniain1840sEnglandwasrailroadstock.PiquedbyQueenVictoriatakingher first train trip in 1842, British interest in building railroads surged, particularly among land-owners who would benefit by the rise of land values adjacent to railroads.

InEngland,GeorgeHudsonwasthefirsttofanthepublicinterest,buildingandacquiringthousands of miles of track and publicizing the virtues of rail travel. He charged high tariffs and paid low wages, leading to various accidents, but paying shareholders in his railroad a dividend of 9 percent. And anyone could start a railroad: All you needed were a collection of people, per-mission from parliament, an engineer, and the sale of subscriptions to raise the money necessary to build. Parliament thought of regulating the growth of railways more strictly, but backed down afterobjectionsfromspeculators,suchasGeorgeHudson.By1844,withinterestrateslowandrailways returning 10 percent dividends, the interest in railways was growing. In 1845, sixteen

80 PartI • TheSocietyofPerpetualGrowth

new railroad schemes were projected. People readily bought shares in proposed rail lines with promises of 10 percent dividends.

By 1845, 20,000 speculators had each subscribed for more than two pounds worth of shares, including 157 members of parliament and 257 clergymen. Many had contracted beyond their means. Two brothers who subscribed for 37,500 pounds’ worth of shares were the sons of a charwoman living in a garret on a guinea a week. They hoped to sell at a profit. Many bought shares in railways that would never be approved by parliament.

Newspapers and members of parliament all warned that it was sheer speculation and that everyone knew a crash would come, but believed that they would escape and get out before prices declined. By June, therewere plans for 8,000miles of new railways, four times thesize of the existing system and twenty times the length of England. By the summer of 1845, some railway scrip showed a profit of 500 percent and still more railways were being proposed and subscribed.

But by October of 1845, the boom was over and the worth of railway script crashed. Parliament was forced to pass the Dissolution Act, allowing the railways to disband but requiring speculators to purchase the script that they contracted for at the height of the craze. Many were financially ruined.

Then therewas theGreatGlobalDepressionof1873 that lastedessentiallyuntil1895.The depression was, of course, not the first economic crisis, but the financial collapse of 1873 revealed the degree of global economic integration, and how economic events in one part of the globe could reverberate in others. The economic depression began when banks failed in GermanyandAustriabecauseofthecollapseofrealestatespeculation.Atthesametime,theprice of cast iron in England fell by 27 percent because of a drop in demand. The drop in iron prices increased British unemployment, while European investors, needing to cover their losses from real estate, withdrew their money from American banks. This led to bank collapses in the UnitedStates.InEngland,from1872to1875,exportsfellby25percent,thenumberofbank-ruptciesincreased,andrailpricesfellby60percent.InFrance,theLyonstockmarketcrashedin1882; bank failures and rising unemployment followed. Competition among railroads decreased profitsandledtothecollapseofrailroadsecuritiesintheUnitedStates(Beaud1983:119–120;seealsoGuttmann1994).

The depression of 1873 revealed another big problem with capitalist expansion and perpetual growth: It can continue only as long as there is a ready supply of raw materials and an increasingdemandforgoods,alongwithwaystoinvestprofitsandcapital.Giventhissituation, If you were an American or European investor in 1873, where would you look for economic expansion and continued economic growth?

The obvious answer was to extend European and American power overseas, particularly into areas that remained relatively untouched by capitalist expansion—Africa, Asia, and the Pacific. Colonialism had become, in fact, a recognized solution to the need to expand markets, increase opportunities for investors, and ensure the supply of raw material. Cecil Rhodes, one of the great figures of England’s colonization of Africa, recognized also the importance of overseas expansion for maintaining peace at home. In 1895 Rhodes said,

I was in the East End of London yesterday and attended a meeting of the unemployed. I listened to the wild speeches, which were just a cry for “bread,” “bread,” and on my way home I pondered over the scene and I became more than ever convinced of the importance of imperialism.… My cherished idea is a solu-tion for the social problem, i.e., in order to save the 40,000,000 inhabitants of the UnitedKingdomfromabloodycivilwar,wecolonialstatesmenmustacquirenewlands for settling the surplus population, to provide new markets for the goods produced in the factories and mines. The Empire, as I have always said, is a bread and butter question. If you want to avoid civil war, you must become imperialists. (Beaud 1983:139–140)

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 81

P.Leroy-BeaulieuvoicedthesamesentimentsinFrancewhen, to justify the conquest of foreign nations, he said,

It is neither natural nor just that the civilized people of the  West should be indefinitely crowded together and stifled in the restricted spaces that were their first homes, that they should accumulate there the wonders of science, art, and civilization, that they should see, for lack of profitable jobs, the interest rate of capital fall further every day for them, and that they should leave perhaps half the world to small groups of ignorant men, who are powerless, who are truly retarded children dispersed over boundless territories, or else to decrepit populations with-out energy and without direction, truly old men incapable of any effort, of any organized and far-seeing action. (Beaud 1983:140)

As a result of this cry for imperialist expansion, people all over the world were converted into producers of export crops as millions of subsistence farmers were forced to become wage laborers producing for the market and to purchase from European and American merchants and industrialists, rather than supply for themselves, their basic needs. Nineteenth-century BritisheconomistWilliamStanleyJevons(Kennedy1993:9)summedupthesituationwhenhe boasted,

The plains of North America and Russia are our cornfields; Chicago and Odessa our granaries; Canada and the Baltic are our timber forests; Australasia contains our sheep farms, and in Argentina and on the western prairies of North America are our herds of oxen;Peru sends her silver, and the gold ofSouthAfrica andAustraliaflows to London; the Hindus and the Chinese grow tea for us, and our coffee, sugar, andspiceplantationsareallintheIndies.SpainandFranceareourvineyardsandtheMediterranean our fruit garden, and our cotton grounds, which for long have occu-pied theSouthernUnitedStatesarenowbeingextendedeverywhere in thewarmregions of the earth.

WheatbecamethegreatexportcropofRussia,Argentina,and theUnitedStates,muchofitproducedintheUnitedStatesonlandstakenfromtheNativeAmericans.RicebecamethegreatexportofSoutheastAsia,spurredbyGreatBritain’sseizureoflowerBurmain1855anditsincrease in rice production from 1 million to 9 million acres. Argentina and Australia joined the UnitedStatesasthemajorsupplierofmeatascattleranchersinAustraliaandtheUnitedStatesturned indigenous peoples into hired hands or hunted them to extermination, as did the ranchers in California into the late nineteenth century (see Meggitt 1962).

In 1871 a railroad promoter from theUnited States built a railroad inCostaRica andexperimentedinbananaproduction;outofthisemergedin1889theUnitedFruitCompanythatwithin thirty-five years was producing 2 billion bunches of bananas. The company reduced its risk by expanding into different countries and different environments and by acquiring far more land than it could use at any one time as a reserve against the future.

The demand for rubber that followed the discovery of vulcanization in 1839 led to foreign investments in areas such as Brazil, where one major supplier increased production from 27 tons in 1827 to an average of 20,000 tons per year at the end of the nineteenth century. The laborers who collected the rubber were workers who had lost their jobs with the decline in the sugar industries and Indians, who were sometimes held captive or tortured or killed if they didn’t












82 PartI • TheSocietyofPerpetualGrowth

collect their quota of rubber. The wives and children of those Indians who ran away would be killed if they didn’t return (Taussig 1987).

In the nineteenth century, palm oil became a substitute for tallow for making soap and a lubricant for machinery, resulting in European military expansion into West Africa and the conquest of the kingdoms of Asante, Dahomey, Oyo, and Benin.

Vastterritorieswereturnedovertotheproductionofstimulantsanddrugs,suchassugar,tea, coffee, tobacco, opium, and cocoa. In theMexican state of Chiapas and in Guatemala, legislation abolished communal ownership of land. Land could now be privately owned and subject to purchase, sale, and pawning, allowing non-Indians to buy unregistered land and fore-close mortgages on Indian borrowers (Wolf 1982:337). These lands were then turned to coffee production and, later, cattle ranching. In Ceylon, common land was turned into royal land and sold to teaplanters. In1866diamondsandgoldwerediscovered in theOrangeFreeStateofWest Africa. By 1874, 10,000 Africans were working in the European-owned diamond mines. By 1884, there were almost 100,000 and 255,000 by 1910. In 1940 there were 444,000.

Colonization was not restricted to overseas areas; it occurred also within the borders of core states.In1887,theU.S.CongresspassedtheGeneralAllotmentAct(the“DawesAct”)tobreakup the collective ownership of land on Native American reservations by assigning each family its own parcel, then opening unallotted land to non-Native American homesteaders, corporations, and the federal government. As a consequence, from 1887 to 1934, some 100 million acres of land assigned by treaty to Native American groups was appropriated by private interests or the government(Jaimes1992:126).

At first glance it may seem that the growth in development of export goods such as coffee, cotton, sugar, and lumber would be beneficial to the exporting country because it brings in revenue. In fact, it represents a type of exploitation called unequal exchange. A country that exports raw or unprocessed materials may gain currency for their sale, but they then lose it if they import processed goods. The reason is that processed goods—goods that require additional labor—are more costly. Thus, a country that exports lumber but does not have the capacity to process it must then reimport it in the form of finished lumber products, at a cost that is greater than the price it received for the raw product. The country that processes the materials gets the added revenue contributed by its laborers.

Then there is the story of tea and opium and trade in China. China, of course, was a huge prize, but the British and western European nations had a problem with trade into China: Chinese products, notably tea, were in high demand, but there was little produced in England or the rest of Europe that the Chinese wanted or needed. However, there was a market in China for opium, virtually all of which was produced and controlled by the British East India Company. Opium was illegal in China, but the government seemed incapable of stopping the smuggling thatwas hugely profitable forBritish,American, and Frenchmerchants.When,in 1839, the Chinese government tried to enforce laws against opium sales by seizing opium held by British merchants in warehouses in Canton, the British government sent in troops and effectively forced the Chinese government to stop enforcing opium laws. An analogy today mightbetheColombiangovernmentsendingtroopstotheUnitedStatestoforceacceptanceofColombian cocaine shipments. Moreover, using its military superiority, the British demanded and received additional trading rights into China, opening a market not only for opium but for British textiles as well.

TheBritish-ledopiumtradefromIndiatoChinahadthreeconsequences.First,itreversedthe flow of money between China and the rest of the world. During the first decade of the nine-teenth century, China still took in a surplus of $26 million; by the third decade, $34 million left China to pay for opium. Historian Carl Trocki (1999) suggests, in fact, that the opium trade financedBritishcolonialexpansioninthenineteenthcentury.Second,it isestimatedthatbythe end of the nineteenth century, one out of every ten Chinese had become an opium addict. Third, cotton exports to India and China had increased from 6 percent of total British exports

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 83

in 1815 to 22 percent in 1840, 31 percent in 1850, and more than 50 percent after 1873 (Wolf 1982:255ff.).

Thus, as a merchant adventurer, your economic fortune has been assured by your government’s control over foreign economies. Not only could you make more money investing in foreign enterprises, but also the wealth you accumulated through trade and manufacturing gained you entry into a new elite, one with increasing power in the core countries. Power was no longer evidenced solely in the ownership of land but in the control of capital. In England, for example, the great families of high finance and international trade, businesspeople, manufactur-ers, shipowners, bankers, parliamentarians, jurists, and families of the aristocracy and gentry, all crisscrossed by ties of marriage and kinship, became the new ruling class. This new elite depended on business and industry to a great extent for their economic power: In the eighteenth century, landed inheritance accounted for 63.7 percent of national wealth in Great Britain;toward the end of the nineteenth century, that figure had decreased to 23.3 percent. Meanwhile, during the same period, wealth linked to capitalist development increased from 20.8 percent to almost 50 percent.

IntheUnitedStates,anewcapitalisteliteemergedduringandaftertheCivilWar,aspeoplesuchasJ.P.Morgan, JayGould, JimFisk,CorneliusVanderbilt, andJohnD.Rockefeller—mostofwhommadetheirfortunes indealingswith theU.S.government—emergedasanew bourgeoisie. More importantly, they were the driving force behind the emergence of a relatively new form of capital organization—the multinational corporation.

The era of The CorporaTion, The MulTilaTeral insTiTuTion, and The CapiTal speCulaTor

Although the imperialist activities of the core powers allowed their economies to grow, they also created international conflict on a scale never before imagined. In 1900, each of the great powers soughttocarveoutasphereofdominationinAsia,Africa,andSouthandCentralAmericathat,with the help of nationalism, racism, and xenophobia, turned economic competition into politi-cal and military conflict. These conflicts fed on myths of national or racial superiority—British, French,American,white,andsoon—andthesupposedcivilizingmissionoftheWest(Beaud1983:144). At the Berlin Conference of 1885, great European powers met to carve up zones of influence and domination in Africa, laying the groundwork for levels of colonization from which Africa still has not recovered.

Attempts to extend or defend these zones of economic influence triggered what was until then the bloodiest war ever fought—World War I. Eight million people were killed. Britain lost 32percentofitsnationalwealth,France30percent,Germany20percent,andtheUnitedStates9percent.Germanywasforcedtopay$33billioninreparations.Industrialproductionfell inallcountriesexcept theUnitedStates.Then theRussianRevolutioncutoffhugemarkets forEuropean and American products, while colonized countries demanded independence.

TheUnitedStatesemerged fromWorldWar Ias theworld’s leadingeconomicpower:Its national income doubled, and coal, oil, and steel production soared. However, workers’ real wages and the power of labor unions declined; new forms of factory organization led to greater fatigue—there were 20,000 fatal industrial accidents per year in the 1920s, and the courts blocked the formation of new unions and the application of social laws, such as those prohibiting child labor. It was an era of the rise of a new, great economic power—the corporation.

The rise of the Corporation

Fromyourperspectiveasamerchantadventurer,themostimportantdevelopmentoftheearlytwentiethcenturywas themerger frenzy in theUnitedStates thatwouldbeunrivaleduntilthe1990s.CompaniessuchasFord,GeneralMotors,andChryslerinautomobiles;General

84 PartI • TheSocietyofPerpetualGrowth

Electric and Westinghouse in the electric industry; Dupont in chemicals; and StandardOil in petroleum dominated the market. In 1929, the 200 largest companies owned half of the country’s nonbankingwealth. Since then, of course, corporations have become one ofthe dominant governance units in the world. By 1998, there were more than 53,000 trans-national corporations (French 2000:5). From their foreign operations alone they generatedalmost $6 trillion in sales. The largest corporations exceed in size, power, and wealth most of the world’s nation-states and, directly or indirectly, define policy agendas of states and international bodies (Korten 1995:54). As a merchant adventurer, you have now entered the corporate age. What kind of institution is the corporation, and how did it come to accumulate so much wealth and power?

Technically, a corporation is a social invention of the state; the corporate charter, granted by the state, ideally permits private financial resources to be used for a public purpose. At another level, it allows one or more individuals to apply massive economic and political power to accumulate private wealth while protected from legal liability for the public consequences. As a merchant adventurer, clearly you want to create an institution in which you can increase and protect your own profits from market uncertainties (Korten 1995:53–54).

The corporate charter goes back to the sixteenth century, when any debts accumulated by an individual were inherited by his or her descendants. Consequently, someone could be jailed for the debts of a father, mother, brother, or sister. If you, in your role as merchant adventurer, invested in a trading voyage and the goods were lost at sea, you and your descendants were responsible for the losses incurred. The law, as written, inhibited risky investments. The corporate charter solved this problem because it represented a grant from the crown that limited an investor’s liability for losses to the amount of the investment, a right not accorded to individual citizens.

The early trading companies, such as the Dutch East India Company and the Hudson’s Bay Company, were such corporations, and some of the American colonies themselves were founded as corporations—groups of investors granted monopoly powers over territory and industries. Consequently,corporationsgainedenormouspowerandwereabletoinfluencetradepolicy.Forexample, in the eighteenth century, the English parliament, composed of wealthy landowners, merchants, and manufacturers, passed laws requiring all goods sold in or from the colonies to gothroughEnglandandbeshippedonEnglishshipswithBritishcrews.Furthermore,colonistswere forbidden to produce their own caps, hats, and woolen or iron goods.

Suspicion of the power of corporations developed soon after their establishment.Eveneighteenth-century philosopher and economist Adam Smith condemned corporations in The Wealth of Nations. He claimed corporations operated to evade the laws of the market by arti-ficially inflatingpricesandcontrolling trade.AmericancolonistssharedSmith’ssuspicionofcorporations and limited corporate charters to a specific number of years. If the charter was not renewed, the corporation was dissolved. But gradually American courts began to remove restric-tionsoncorporations’operation.TheU.S.CivilWarwasa turningpoint:Corporationsusedtheir huge profits from the war, along with the subsequent political confusion and corruption, to buy legislation that gave them huge grants of land and money, much of which they used to build railroads. Abraham Lincoln saw what was happening and just before his death is said to have wrote that

corporations have been enthroned.… An era of corruption in high places will follow and the money power will endeavor to prolong its reign by working on the preju-dices of the people … until wealth is aggregated in a few hands … and the Republic is destroyed. (Korten 1995:5)

Gradually,corporationsgainedcontrolofstatelegislatures,suchasthoseinDelawareandNewJersey, lobbying for (andbuying) legislation thatgrantedcharters inperpetuity, limitedthe liabilities of corporate owners and managers, and gained the right of corporations to operate

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 85

in any way not specifically prohibited by the law. For example, courts limited corporate liability foraccidents to workers, an important development in the nineteenth century when fatal industrial acci-dents from 1888 to 1908 killed 700,000 workers, or roughly one hundred per day. Other favorable court rulings and legislation prohibited the state from setting minimum wage laws, limiting the number of hours a person could work, or setting minimum age requirements for workers.

A Supreme Court ruling in 1886 by a sin-gle judge, however, arguably set the stage for the full-scale development of the next stage of the culture of capitalism. The court ruled that corpo-rations could use their economic power in a way theyneverbeforehad.Relyingon theFourteenthAmendment, added to the Constitution in 1868 to protect the rights of freed slaves, the Court ruled that a private corporation is a natural person under the U.S. Constitution and consequently has thesame rights and protection extended to persons by the Bill of Rights, including the right of free speech (Hartmann 2002). Thus, corporations were given the same “rights” to influence the government in their own interest as were extended to individual citizens, paving the way for corporations to use their wealth to dominate public thought and dis-course. The debates in the United States todayover campaign finance reform, in which corporate bodies can “donate” millions of dollars to political candidates, stem from this ruling, although rarely, if ever, is that mentioned. Thus, corporations, as “persons,” were free to lobby legislatures, use the mass media, establish educational institutions such as the many business schools founded by corporate leaders in the early twentieth century, found chari-table organizations to convince the public of their lofty intent, and in general construct an image that they believed would be in their best interests—all of this in the interest of “free speech.” This power wasreinforcedin2010whentheU.S.SupremeCourt,inafivetofourdecision,ruledinthecaseofCitizensUnitedthatCongresscouldnotlimittheamountofcampaigncontributionsofcorporations or unions.

Corporations use this power, of course, to create conditions in which they could make more money. But in a larger sense they used this power to define the ideology or ethos of the emerging culture of capitalism. This cultural and economic ideology is known as neoclassical, neoliberal, and libertarian economics, market capitalism, or market liberalism and is advocated in society primarily by three groups of spokespersons: economic rationalists, market liberals, and members of the corporate class. Their advocacy of these principles created what David Korten called corporate libertarianism, which places the rights and freedoms of corporations above the rights and freedoms of individuals—the corporation comes to exist as a separate

This early twentieth-century cartoon depicts Jack, of “Jack and the Beanstalk,” confronted by the then “giants” of Wall Street, including John D. Rockefeller, J. J. Hill, J.P. Morgan, and Jay Gould, all watched over by a seemingly helpless President “Teddy” Roosevelt. (Fotosearch/Getty Images.)

86 PartI • TheSocietyofPerpetualGrowth

entitywithitsowninternallogicandrules.Someoftheprinciplesandassumptionsofthisideol-ogy include the following:

1. Sustainedeconomic growth,asmeasuredbygrossnationalproduct(GNP),isthepathtohuman progress.

2. Free markets, unrestrained by government, generally result in the most efficient and socially optimal allocation of resources.

3. Economic globalization, achieved by removing barriers to the free flow of goods and money anywhere in the world, spurs competition, increases economic efficiency, creates jobs, lowers consumer prices, increases consumer choice, increases economic growth, and is generally beneficial to almost everyone.

4. Privatization, which moves functions and assets from governments to the private sector, improves efficiency.

5. The primary responsibility of government is to provide the infrastructure necessary to advance commerce and enforce the rule of law with respect to property rights and contracts.

However, hidden in these principles, said Korten, are a number of questionable assump-tions. First, there is the assumption that humans are motivated by self-interest, which isexpressed primarily through the quest for financial gain (or, people are by nature motivated primarily by greed). Second, there is the assumption that the action that yields the greatestfinancial return to the individual or firm is the one that is most beneficial to society (or, the drive to acquire is the highest expression of what it means to be human). Third is the assumption that competitive behavior is more rational for the individual and the firm than cooperative behav-ior; consequently, societies should be built around the competitive motive (or, relentless greed andacquisitionleadtosociallyoptimaloutcomes).Finally,thereistheassumptionthathumanprogress is best measured by increases in the value of what the members of society consume, and ever-higher levels of consumer spending advance the well-being of society by stimulating greater economic output (or, it is in the best interest of human societies to encourage, honor, and reward the preceding values).

Although corporate libertarianism has its detractors, from the standpoint of overall eco-nomic growth, few can argue with its success on a global scale. World economic output has increased from $6.7 trillion in 1950 to almost $70 trillion in 2011. Economic growth in each decade of the last half of the twentieth century was greater than the economic output in all of human history up to 1950. World trade increased from total exports of $308 billion in 1950 to $5.4trillionin1998.In1950,worldexportsofgoodswasonly5percentoftheworldGNP;by1998,thisfigurewas13percent(French2000:5).

There were still, however, some problems for the merchant adventurer in the early twentieth century. As corporations rose to power in the 1920s and 1930s, political and business leaders were aware that corporations, by themselves, could not ensure the smooth running of the global economy. The worldwide economic depression of the 1930s and the economic dis-ruptions caused by World War II illustrated that. That every country had its own currency and that it could rapidly rise or fall in value relative to others created barriers to trade. Tariffs and import or export laws inhibited the free flow of goods and capital. More importantly, there was the problem of bringing the ideology of corporate libertarianism, and the culture of capitalism in general, to the periphery, especially given the challenge of socialism and the increasing demands of colonized countries for independence. The solution to these problems was to emerge from a meeting in 1944 at a New Hampshire resort hotel.

bretton Woods and the World debt

In1944PresidentFranklinD.Rooseveltgatheredthegovernmentfinancialleadersofforty-fournations toameetingat theMt.WashingtonHotel inBrettonWoods,NewHampshire.Fromyour perspective as a merchant adventurer, it was to be one of the most far-reaching events of

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 87

the twentieth century. The meeting was called ostensibly to rebuild war-ravaged economies and to outline a global economic agenda for the last half of the twentieth century. Out of that meet-ing came the plan for the International Bank for Reconstruction and Development (the World Bank),theInternationalMonetaryFund(IMF)tocontrolcurrencyexchange,andtheframeworkforaworldwidetradeorganizationthatwouldleadtotheestablishmentin1948oftheGeneralAgreementonTariffsandTrade(GATT)toregulatetradebetweenmembercountries.AlthoughGATTwasnotascomprehensiveanagreementasmanytraderswouldhaveliked,itsscopewaswidelyenlargedonJanuary1,1995,with theestablishmentof theWorldTradeOrganization(WTO). The functions of these agencies are summarized in Table 3.1.

The IMF constituted an agreement by themajor nations to allow their currency to beexchanged for other currencies with a minimum of restriction, to inform representatives of the IMFofchangesinmonetaryandfinancialpolicies,andtoadjustthesepoliciestoaccommodateothermembernationswhenpossible.TheIMFalsohasfundsthatitcanlendtomembernationsiftheyfaceadebtcrisis.Forexample,ifamembercountryfindsitisimportinggoodsatamuchhigher rate than it is exporting them, and if it doesn’t have the money to make up the difference, theIMFwillarrangeashort-termloan(Driscoll1992:5).

The World Bank was created to finance the reconstruction of Europe after the devastation of World War II, but the only European country to receive a loan was Holland, then engaged in tryingtoputdownarebellionofitsSoutheastAsiancolonies.TheWorldBankthenbegantofocus its attention on the periphery, lending funds to countries to foster economic development, with, as we shall see, mixed results.

TheGATThas served as a forum for participating countries to negotiate trade policy.The goal was to establish a multilateral agency with the power to regulate and promote free trade among nations. However, because legislators and government officials in many countries, particularlytheUnitedStates,objectedtotheideaofaninternationaltradeagencywiththepowerto dictate government trade policy, the creation of such an agency did not occur until the WTO wasfinallyestablishedonJanuary1,1995.Inessence,theagencycanreacttoclaimsbymembernations that other nations are using unfair trade policies in order to give businesses in their coun-tryanunfairadvantage(seeLow1993:42).Forexample,in1989theEuropeanUnioninstituteda ban on the importation of beef injected with bovine growth hormones. These hormones are manufacturedintheUnitedStatesbyMonsantoCorporationandareusedtoboostmilkproduc-tionincows.Thehormonewasapprovedin1993bytheU.S.FoodandDrugAdministration,but public interest groups maintain that, because it increases udder infections in cows, it requires greateruseofantibioticsincows,andtheseantibioticsendupinthemilk.Somescientistsevenlinktheuseofthehormonetocancerdevelopment(seeBGHBulletin2000).TheUnitedStates,onbehalfofMonsanto,claimedtotheWTOthatthebanamountedtoanunfairbarriertoU.S.beefexports.TheWTOruledinfavoroftheUnitedStatesandallowedtheU.S.governmenttoimpose a 100 percent tariff on $116.8 million worth of European imports, such as fruit juices, mustard, pork, truffles, and Roquefort cheese. Thus, the WTO can rule that a country’s food,

Table 3.1 The Bretton Woods Institutions

Institution or Agency Function

International Monetary Fund (IMF) To make funds available for countries to meet short-term financial needs and to stabilize currency exchanges between countries

International Bank for Reconstruction and Development (World Bank)

To make loans for various development projects

Global Agreement on Tariffs and Trade (GATT)

To ensure the free trade of commodities among countries

88 PartI • TheSocietyofPerpetualGrowth

environmental, or work laws constitute an “unfair barrier to trade” and penalize a country that doesnotremovethem(seeFrench2000).

One of the most profound influences of the Bretton Woods meeting is the accumulation of the debt of peripheral countries; some consider this “debt crisis” the gravest one facing the world. The reasons for the debt crisis, and the possible impact it can have on everyone’s lives, are complex but essential to understand. Overwhelming debt of peripheral countries is one of the major factors in many global problems that we will explore, including poverty, hunger, environ-mental devastation, the spread of disease, and political unrest.

Three things were particularly important in creating the debt crisis: the change during the last third of the twentieth century in the meaning of money, the amount of money lent by the World Bank and other lending institutions to peripheral countries, and the oil boom of the early 1970s and the pressure for financial institutions to invest that money.

Money, as noted earlier, constitutes the focal point of capitalism. It is through money that we assign value to objects, behaviors, and even people. The fact that one item can, in various quantities, represent virtually any item or service, from a soft drink to an entire forest, is one of the most remarkable features of our lives. But it is not without its problems. The facts that different countries have different currencies and that currencies can rise or fall in value relative to the goods they can purchase have always been barriers to unrestricted foreign trade and global economicintegration.Furthermore,therehavealwaysbeendisputesconcerninghowtomeasurethe value of money itself. Historically, money has been tied to a specific valuable metal, gener-ally gold. Thus, money in any country could always be redeemed for a certain amount of gold, although the amount could vary according to the value of a specific country’s currency.

Although the meeting at Bretton Woods would not lead to the establishment of a global currency, the countries did agree to exchange their currency forU.S. dollars at a fixed rate,andtheUnitedStatesguaranteedthatitwouldexchangemoneyforgoldstoredatFortKnoxatthirty-fivedollarsperounce.Butinthe1960s,duringtheVietnamWarandtheincreaseinU.S.governmentspendingonhealth,education,andwelfareprograms,theUnitedStateswascreatingdollars far in excess of its gold supply, while at the same time guaranteeing all the rest of the moneyintheworld.Asaresult,in1971theUnitedStatesdeclareditwouldnolongerredeemdollars on demand for gold. This totally divorced the American dollar and, effectively, all the other currencies in the world, from anything of value other than the expectation that people would accept dollars for things of value. Money became simply unsecured credit.

Because countries no longer needed to have a certain amount of gold in order to print money, money became more plentiful. How this happened, and the impact it has had on all our lives, requires some elaboration.

We generally assume that governments create money by printing it. And, in fact, when money was linked to gold, there was a limit on how much could be printed. However, with the lifting of these restrictions, most money is now created by banks and other lending institutions through debt. We generally assume, also, that the money that banks lend is money that others have deposited. However, that is not the case; only a fraction of the money that banks lend needs to be in deposits. In effect, whenever a bank lends money, or whenever a product or service is purchased on credit, money has been created. In effect, then, there is virtually no limit on the amount of money that lending institutions can create; furthermore, the interest on the loan payments creates yet more money. Economists call this debt money (Rowbotham 1998:5), or creditmoney(Guttmann1994).

Debt provides an important service to the culture of capitalism; it allows people to buy things with money they don’t have—thereby fueling economic growth—and it requires people towork inorder topayoff theirdebts.Furthermore, it stimulatesgreaterneed for economicgrowth to maintain interest rates—that is, return on investments. It also means, however, that there is more money that has to be invested and lent, and a considerable amount of that went to peripheral countries. This proved to be a boon not only for individual borrowers but also for peripheral countries seeking to develop their economies. The problems were that the interest on

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 89

most loans was adjustable (could go up or down depending on economic circumstances) and that debts began to accumulate beyond what countries could repay.

The second factor that led to the debt crisis was the operation of the World Bank. The Bank itself had a problem. European countries, whose economies it was to help rebuild, didn’t need the help. With a lack of demand for their services, what could they do? How could the institution survive? The Bank’s solution was to lend money to peripheral countries to develop their economies. The plan was to help them industrialize by funding things such as large-scale hydroelectricprojects,roads,andindustrialparks.Furthermore,thebiggertheproject,themorethe Bank could lend; thus, in the 1950s and 1960s, money suddenly poured into India, Mexico, Brazil, and Indonesia, theBank’s four largest borrowers. From1950 to 1970, theBank lentsome $953 million. We should not overlook the fact that these loans also benefited wealthy core countries, who largely supplied the construction companies, engineers, equipment, and advisors needed to develop these projects.

But the success of the Bank in lending money created another problem—what economists call net negative transfers; borrowing nations collectively were soon paying more money into the Bank in loan repayments than the Bank was lending out. Put another way, the poor or peripheral nations were paying more money to the rich core nations than they were receiving from them. Aside from the consequences for poor countries, this would ultimately lead to the bank going out of business—its only purpose would be to collect the money it had already lent out. This is not a problem for regular banks because they can always recruit new customers, but the World Bank has a limited number of clients to whom it can lend money. Now what do you do? The Bank’s solution was to lend still more.

Morethananyoneperson,RobertMcNamara,pastchiefoftheFordMotorCompanyandsecretaryofdefenseduringtheJohnF.KennedyandLyndonB.Johnsonadministrations,madethe World Bank into what it is today. During McNamara’s tenure from 1968 to 1981, the Bank increased lending from $953 million to $12.4 billion and increased staff from 1,574 to 5,201. The result was to leave many peripheral countries with staggering debt burdens. There were other problems as well.

The third source of the debt crisis was the oil boom of the early 1970s. Oil producers were making huge profits (“petrodollars”). The problem was that this money needed to be invested, particularly by the banks into which it went and from which depositors expected interest pay-ments. But banks and other investment agents had problems finding investments. One of their solutions was to lend even more money to peripheral countries.

Thus, by the late 1970s, peripheral countries had borrowed huge sums of money and, with this infusion, were doing generally well. But then financial policies in the wealthy countries pre-cipitated an economic collapse. With their own economies in recession because of the increase in oil prices in the 1970s, core governments reacted by raising interest rates. Countries such as Brazil, Mexico, and Indonesia that had borrowed large sums of money at adjustable, rather than fixed, interest rates suddenly found that they could no longer pay back what they owed. Many couldn’t evenpayback the interest on the loans. Furthermore, an economic recession in thecore nations decreased the demand for whatever commodities peripheral countries had for sale, further undermining their economies.

This all sounds largely like an economic problem that would have little effect on you or me, or on a peasant farmer in Mexico, a craftsperson in Africa, or a small merchant in Indonesia. But, in fact, it has had an enormous impact, and it illustrates how global problems are tied closely to today’s merchant adventurers.

There is an old joke that says that when an individual can’t pay his or her bank debts, he or she is in trouble, but when a big borrower, such as a corporation or country, can’t repay its debts, the bank is in trouble. This, in brief, was the dilemma posed by the global debt crisis for private lending institutions and the World Bank.

TheWorldBankand the IMFresponded to thedebtcrisisby trying to reschedule therepayment of debts or extending short-term loans to debtor countries to help them meet the

90 PartI • TheSocietyofPerpetualGrowth

financial crises. However, to qualify for a rescheduling of a debt or loan payment, a govern-ment had to agree to alter its fiscal policies to improve its balance-of-payments problems—that is, it had to try to take in more money and spend less. But how do you do that? There are variousways,allcreatingseriousproblemsinonewayoranother.Forexample,countrieshadto promise to manage tax collecting better; sell government property; increase revenues by increasing exports; reduce government spending on social programs, such as welfare, health, and education; promise to refrain from printing more money; and take steps to devalue their currency, thus making their goods cheaper for consumers in other countries but making them more expensive for their own citizens.

Although these measures are rarely popular with their citizens, governments seldom refuse IMFrequeststoimplementthembecausenotonlymighttheynotreceiveashort-termloan,butagencies, such as the World Bank, and private capital controllers, such as banks and foundations, wouldalsothenrefusetomakefundsavailable.ThereispressureontheWorldBankandIMFto forgive or reduce debt, and forty-one of the poorest countries in the world have been targeted fordebtreliefofsomesort(seeJubilee2000).Butformostcountries,theinterestaloneontheirdebts dictates economic, environmental, and social policies that are devastating.

First,debtmeansthatcountriesmustdowhatevertheycantoreducegovernmentexpensesand increase revenue or attract foreign investment. Reducing government expenses means cutting essential health, education, and social programs. The results are apparent when you com-pare high-, middle-, and low-income countries on such measures as income, life expectancy, and schooling (see Table 3.2).

Second, the effects on environmental resources are equally devastating. To increase revenues, countries must export goods and resources. Because most indebted countries, particu-larlythoseinsub-SaharanAfrica,havelittleindustrialcapacity,theymustexportrawmaterials,such as minerals and lumber. This requires dismantling whatever environmental regulations may have existed. But because so many countries (including the wealthy countries of the world) are in debt, each must adopt the same export strategy, thus driving down the prices they receive for their exports (see Rowbotham 1998:89).

Third, there is the question, Where did all the money that was lent to peripheral coun-tries go? Because “capital flight”—money leaving the periphery—increased dramatically during the period of rising debt, the prevailing view is that loans were siphoned off by the elites in theperipheryand investedback in thecore.Forexample,while the IMFandother financial

Table 3.2 Comparison Between High-, Middle-, and Low-Income Countries for GDP, GDP per Capita, Debt, and Other Variables, 2007–2008

High-Income Countries

Middle-Income Countries

Low-Income Countries

GDP (current US$) (billions) 43,189.9 16,826.9 568.5

GNI per capita, Atlas method (current US$)

39,345 3,260 524

External debt stocks (% of GNI) — 24.5 35.2

Life expectancy at birth, total (years) 79 69 59

Population, total (millions) 1,068.5 4,650.7 972.8

Population growth (annual %) 0.7 1.1 2.1

School enrollment, primary (percent net) 95.0 88.5 77.6

Surface area (sq. km) (thousands) 35,300.1 79,484.9 19,310.5

Source: Data from World Bank Data and Statistics,,,contentMDK:20535285~menuPK:1192694~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 91

institutions were lending billions to restore the Russian economy after the fall of communism, $140 billion (U.S.)—almost $2 billion per month—fled Russia during the first six years of market reforms. The World Bank estimates that between 1976 and 1984, capital flight from Latin America was equal to the area’s whole external debt (Caufield 1996:132). Capital flight from Mexico alone from 1974 to 1982, invested in everything from condominiums to car dealer-ships,amountedtoatleast$35billion.“Theproblem,”jokedonememberoftheU.S.FederalReserve Board, “is not that Latin Americans don’t have assets. They do. The problem is they are all in Miami” (Caufield 1996:133).

Finally, debt is not only a problem of poor countries.Most countries in theworld areheavilyindebt,andtheymustcontinuetogrowtorepayit.In2009,Dubai,partoftheUnitedArab Emirates, which had a per capita income of over $44,000, found itself overextended, threat-eningtodefaultonitsdebt(Thomas2009),andothercountriessuchasIreland,Greece,andEastEuropean countries face a similar situation. Table 3.3 provides an illustration of the external

Table 3.3 External Debt, Debt as a Percentage of GDP, and Investor Credit Rating1 (1–100 with 100 the highest) of Selected Countries, 2007, 2011

CountryGross External

Debt ($)2External Debt as a Percentage of GDP

Investor Credit Rating

External Debt per Capita

2011 2011 2011 2011

United States 14,959,000,000 99,46 89.4 47,664

Hungry 216,000,000 110.3 53.1 21,706

Italy 2,494,000,000 136.6 66.5 40,724

Australia 1,283,000,000 139.9 89.7 58,322

Spain 2,392,000,000 169,5 64.7 50,868

Greece 564,920,000 178.9 19.6 50,792

Germany 5,674,000,000 183.9 89.8 69,788

Portugal 511,940,000 207.3 46.5 47,483

Austria 847,950,000 241.3 88.2 103,160

Finland 478,840,000 244.8 92.5 90,984

Norway 653,290,000 246,9 94.8 138,783

France 5,632,000,000 254.4 85.2 85,824

Sweden 995,000,000 262.3 92.9 109,318

Hong Kong 939,830,000 265.7 85.6 131,380

Denmark 591,400,000 283.2 89.1 106,680

Belgium 1,457,000,000 353.7 79.4 139,613

Netherlands 2,590,000,000 367 90.8 154,820

Switzerland 1,332,000,000 391.3 94.1 174,022

United Kingdom 10,157,000,000 451.4 85.8 161,110

Ireland 2,226,000,000 1,239 51.9 478,087

Source:SeePaulToscano,“CountriesOverloadedwithDebt,”CNBC,; Institutional Investor, Global Rankings, Investor Credit Rating may be interpreted as the extent of investor confidence in the growth of the economy. More information is available at,plusinterest,thatcorporations,privatecitizens,andthegov-ernment owe to entities outside their borders.

92 PartI • TheSocietyofPerpetualGrowth

debt of selected countries; this is money owed to entities outside the country. Table 3.3 also provides information on investor confidence in each country (in terms of investor ratings, which work much like the credit ratings of individuals, the higher the number, the more likely you will realize profit on your investment). As a merchant adventurer, this gives you an idea of whether or not you’d like to do business in a country.

The debt problems of both poor and wealthy countries once again remind us that, as a merchant adventurer, you must expect periodic financial crisis, often related to debt. It is debt, for example, that played a major role in the financial crisis of 2007–2008, as we’ll see next.

The “seCond GreaT ConTraCTion”

In the summer of 2007, the world began to enter what some have called the “second great contraction” (Reinhart and Rogoff 2009), the first being the global economic depression of the 1930s. As we have seen, being a merchant adventurer has its risks and opportunities. But there are also risks of a financial collapse that can not only wipe out great financial gains but also throw millions out of work and place national and local governments on the brink of collapse. The common explanation for this latest global financial collapse is that it resulted from the bursting of a housing bubble in theUnitedStates. The story is that low interest rates in theUnitedStatesalongwithhighcashinflowsfromoverseas,particularlyChina,sentAmericanson a house-buying spree that sent home prices soaring at an unprecedented rate. The bubble was further fueled by the “subprime mortgages,” loans to people with few financial resources who soon defaulted on their loans. When people began to default, and banks stopped lending, the housing market collapsed, resulting in the crash of home values and the wiping out of trillions of dollars of wealth. Most explanations for the crash focused on human greed, homebuyers pur-chasing more than they could afford, and banks, seeking greater and greater incomes, lending far more than they should have. However, as we will see, it was a little more complex than that.

Regardless, the housing crash brought major banks to near collapse and resulted in a near-meltdownoftheentireeconomicsystem.Theconsequencesweresevere.Since2007,accordingtotheIMF,ifweincludelossestothefinancialsector,tocorporations,tohomeowners,andtounincorporatedbusinesses,thetotalglobalequitylosswilltotalsomeUS$40trillion,orabouttwo-thirdsoftheworld’sGDP.Inhumanterms,theInternationalLabourOrganizationestimatesthat worldwide unemployment could rise by at least 30 million people, and possibly as much as 50 million people, while more than 200 million people, mostly in developing economies, will fall into poverty (see Blankenburg and Palma 2009).

To understand the story of the second great contraction we need to begin with a gigantic oilspill—theExxon-ValdezdisasterofMarch24,1989,whentheoiltankerownedbyExxonOil Company ran aground in PrinceWilliam Sound, Alaska, and spilled 10.8 million U.S. gallons into the sea. The merchant adventurers of our story were finance people who worked at J.P.Morgan,oneofthelargestinvestmentbanksintheUnitedStates.AsanthropologistandfinancialjournalistGillianTett(2009)tellsit,Exxonapproacheditsbank,J.P.Morgan,fora5 billion dollar loan in order to cover possible penalties to the company because of the oil spill. The bank had no problem with the loan itself: Exxon was one of its best customers and one of the most profitable companies in the world. But it was concerned about the reserve require-ment, a rule imposed by international regulatory agencies, that banks keep in reserve a portion of what is owed to protect them against default. The same reserve requirement applies to bank deposits; for example, if you deposit $1,000 in the bank, the bank may lend out about $900 of that to others, but it must keep $100 out of every $1,000 in order to meet depositors’ demands for withdrawals. It must keep only 10 percent, because no one expects everyone to want to with-draw their money (or fail to pay their loans) all at once. But banks have problems with reserve requirements, because money that has to be held in reserve is money that is not working, that is notbringingininterestorfees.Forbankstopayinterest,theymustinvestdeposits(orsellthem).Thus a problem that banks have is, How can they put the money they hold in reserve to work?

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 93

AtJ.P.Morgan,agroupinthederivativesdepartmentheadedbyPeterHancockthoughttheyhadaperfectsolution.TheyapproachedtheEuropeanBankforReconstructionandFinance(EBRF),whichhadlotsofmoneyat theirdisposal,andaskedwhether, forafee, theywouldinsure the Exxon loan. That is, in the unlikely event that Exxon defaulted on its obligation, whetherEBRFwouldmakegoodontheloan.OnceEBRFagreedtodothis,thederivativesteamatJ.P.Morganwenttobankregulatorsandaskedtheregulatorstoreducethereserverequire-ment on the Exxon loan, since, they argued, it was now insured, and even if Exxon failed to pay,theywouldthencollectfromEBRF.Theregulatorsagreed,andJ.P.Morganwasabletooff-load the credit risk from the Exxon loan. They called this new financial instrument a “credit default swap.” This may seem like a fairly esoteric banking deal, but it set the stage for the economic disaster to follow.

The team at J. P.Morgan reasoned that they could use the same financial strategy onotherloansthatitheldasithadontheExxonloan.J.P.Morganhadoutstandingabout10bil-lion dollars of loans to some 307 major corporations. What if they took those loans and shifted themtoadummycorporation(thusremovingthemfromtheJ.P.Morganbooks),dividedthoseassets in the form of the interest on the loans of the new corporation into smaller packages, and thensoldthemtoinvestors(seeFigure3.2).TheycalledthesesecuritiesBroadIndexSecuritiesTrustOfferings,orBISTROs.Thesesecuritieswereaformoffinancialderivative,afinancialinstrument whose worth was linked to some other asset. These are the same sorts of finan-cial instruments or contracts that Dutch investors were buying when they invested in tulips or that commodity traders bet on when they invest in the future value of corn, hog backs, or soy. Furthermore,whatiftheycouldfindalargeinsurancecompanytoguaranteethoseloansinthesamewayastheEBRFhadguaranteedtheExxonloan?Iftheycoulddothat,theyreasoned,thebank regulators would let them greatly reduce the reserve requirements on the 10 billion dollars of loans from the 307 corporations, which will reduce the risk exposure of the bank, thus freeing upmillionsofadditionaldollarsforinvestment.TheyapproachedJosephCaffano,theheadofa









Pool of DebtOwed

to Bank

CorporateEntityWhoseAssetsConsist ofMoneyOwed byBorrowers

Step 1 Step 2 Step 3 Step 4

Borrowers Securities(CDO)

fiGure 3.2 The Process of Creating Collateral Debt Obligation (CDOs)

94 PartI • TheSocietyofPerpetualGrowth

smalldepartmentatthegiantinsurancecompanyAIG,and,foramodestfee,Caffanocommit-tedAIGtoinsurethesecuritiesissuedonthecorporateloans.And,finally,regulatorsagreedtolower the bank’s reserve requirement.

TheteamatJ.P.Morgancelebrated,notbecausetheythoughttheyhadputoneoveronthe regulators, but because they had come up with a financial innovation that could free up billions, if not trillions, of dollars for investment and, consequently, help to speed economic growth.Furthermoretheyhadeffectivelydealtwiththeriskofloandefaultbyinsuringagainstit and, at the same time, distributing risk among a larger group, thus diluting the possible loss of any one person or financial entity. They had, they thought, contributed to a better financial world.AsoneofthemembersoftheJ.P.Morganderivativesteamputit,“Fiveyearshence,commentators will look back to the birth of the credit derivative market as a watershed develop-ment” (Tett 2009:56).

When other banks heard about the financial innovations of the derivatives team at J. P. Morgan, theyenthusiastically followedsuit,packaging loansordebt that theyheld intosecuritiestoselltoinvestors.ThesesecuritieswerealsoinsuredbyAIGandothersandseemedto have so little risk that investment rating services gave them double and triple A ratings, the same given to government-issued securities.

Then,BayerischeLandesbank,alargeGermanbank,approachedthederivativespeopleatJ.P.Morganandaskedthemtopackagesome$14billionU.S.homemortgagesintosecuri-tiestosell;however,thatposedaproblem.Unlikecorporateloans,whichhadalonghistorythat enabled banks to estimate the probability of default, there was no corresponding informa-tion for housing mortgages. Thus, it was difficult to assess how risky these securities would be. J.  P.Morgan went ahead with the German bank, but only after building in additionalsafeguardsagainstdefault,and,afterdoingonemoreBISTROdeal,discontinuedthatlineofdevelopment.

Other banks, however, partially to keep up with their competition, bundled trillions of dollars of home mortgages and other forms of debt (credit card loans, auto loans, commercial loans, etc.) into collateral debt obligations (CDOs) and sold them to eager investors from pension funds, banks, insurance companies, and anyone else who hoped to make an almost certain profit buying triple A or double A securities. One turning point may have come when large banks entered into agreements with home mortgage companies to buy any mortgage they sold to homebuyers in order to meet the demand from investors for more of these securities. Mortgage companies could then make millions of dollars in fees for selling a mortgage to a homebuyer, with little concern about the homebuyer’s ability to pay, since they were then selling the loan, sometimes the same day, to larger banks. These companies were so anxious to give mortgages that they offered them with no down payment, even, in some cases, offering mortgage buyers a free car or a household of furniture. In some circles, these were called “liar loans,” because there was no background check on borrowers’ income or resources, “neutron loans,” because they killed the people but left the houses standing, or, finally, “ninja loans,” no income and no assets. If the homebuyer expressed concern about repaying the mortgage, they were offered mortgages with low initial payments and told that if they had a problem once payments increased, they could, with home prices rapidly rising, sell the home at a profit or refinance the loan.

Of course, it didn’t work out. The simplest way of looking at the collapse is that trillions of dollars were bet on the premise that the value of an asset—houses in this case—would continue to increase, when, in fact, the values collapsed. As buyers defaulted on their loans, the value of the securities based on those loans either greatly declined or were impossible to sell because no one knewhowmuchtheywereworth.Furthermore,derivativesbasedoncommercialloans,creditcard debt, and automobile loans were threatened by defaults. With banks losing money, holding assets of unknown worth and not knowing the financial state of other institutions and borrowers, and insurance companies unable to compensate investors for their losses, banks stopped lending, and the whole financial system threatened to freeze. Remember that finance is based on moving

Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 95

money, for a price, from where it is to where it is needed, and now, in the fall of 2007, it stopped moving. The insurance companies and banks that had guaranteed the  securities were forced to pay out billions of dollars they didn’t have and were onthevergeofcollapseuntiltheU.S.governmentcame to the rescue with a trillion-dollar bailout. But the resulting banking crisis stopped the flow of money and credit and forced the massive sell-ing of assets (stocks, real estate, etc.) by people who needed to meet debt obligations. This further decreased asset value, affecting millions of busi-nesses and throwing millions of people worldwide out of work.

The second great contraction followed the path of many banking crises (see Reinhart and Rogoff 2009). An inflow of money resulting from foreign investment and low interest rates set off a flurry of spending and investment, driving up prices until the process became unsustainable and resulted in financial collapse. We had seen the same thing happen with Dutch tulips and British railway stock, where people bet, wrongly, that an asset would continually increase in value. But it would be a mistake to attribute these financial crises to greed. Instead, to understand it, we must examine the internal logic of our financial system, and, again, the imperative for perpetual economic growth.

As we mentioned earlier, once a segment of the economy depends on making money with money, perpetual growth must ensue. That is, once money is lent or invested, the money must, so to speak, work to produce more money to account for both the original amount lent or invested (the principal), plus the interest, dividend, or profit. The amount of growth required depends, obviously, on the interest, dividend, or profit required. If there is insufficient growth to generate the additional money, loans go unpaid, and/or dividends or profits unrealized. Thus, going back to the present crisis, as long as house prices continued to grow, the system worked well; but once they ceased growing and in fact declined, the entire economic system was threatened.

A simple example should suffice. Take a household that is earning $150,000 a year. They purchase a house for $600,000 at 7 percent interest over ten years; the monthly payment is $6,965, but the total interest paid over the course of the loan is $235,981. The $600,000 (that is the value of the house) has been created by the bank by extending the loan, and that remains in the form of a fixed asset (the house). The remaining $235,981, that is the interest payment, represents new money that does not yet exist. The household has to produce that, and to do so, it must produce, on average, $23,598 a year, or 15.7 percent a year of their total initial income in order to pay off the debt.

There are, of course, many other variables that need to be considered to calculate the actual necessary growth rate (rates of inflation, the cost of rolling over portions of the debt, the extent to which the money invested produces, or doesn’t produce, new money, and so on). But it does illustrate why, in an economy devoted to making money with money, perpetual growth in the form of increased economic activity is necessary.

We have already seen how debt in the case of developing or emerging countries threatens their economic survival. The money that was borrowed, in most cases, did not, for various rea-sons (declining commodity prices, unfair trade practices, rising energy costs, corruption, etc.), generate the rate of economic growth necessary to produce the money needed to repay the

One of the major consequences of an economic crisis is the loss of jobs. In the United States alone, the second great contraction resulted in at least 15 million job losses. (Sherwin McGehee/Getty Images.)

96 PartI • TheSocietyofPerpetualGrowth

principal and interest on the loan. Thus, countries defaulted in their loans, were forced to accept structural adjustment programs that cut services, or were forced to sell assets, often at bargain-basement prices.

The question of how much growth is necessary given a specific level of debt is important because of the significant increase in debt obligations over the past few decades, particularly in theUnitedStates.Table3.4showsthecurrentdebtobligationsofdifferentsegmentsoftheU.S.economyasofJanuary2009(Hodges2009).

Much of this debt is newly created; for example, 80 percent of it was created since 1990; in1981householddebtwas48percentofGDP,whilein2007,itwas100percent.Privatesectordebtwas123percentofGDPin1981and290percentbylate2008.Thefinancialsectorhasbeeninaleveragingfrenzy:Itsdebtrosefrom22percentofGDPin1981to117percentinlate2008(see Crotty 2009:575).

The question that never gets addressed is, What is the rate of economic growth required to honor all of these debt obligations? That is, how much growth is necessary before the rates of default impact financial institutions to the extent that credit dries up, businesses fail, unemploy-ment rises, more defaults ensue, and so on? The numbers chosen for the household debt example mentioned earlier were not arbitrary. The $600,000 represents the approximately $60  trillion debtheldbyallsectorsoftheU.S.economyin2010,andthe$150,000incomerepresentstheapproximately$15 trillionU.S.GDP, that is, the total valueofgoods and servicesproducedeachyear.Thus,iftheaverageinterestonallofthesedebts,whichrangefrom1percentonU.S.Treasury notes to 20 percent or more on credit card debts, is, say, 7 percent and the average term of the debt or investment is ten years, the economy must produce well over $20 trillion in new money. That is, the economy must grow at a rate of 15 percent a year, a rate virtually impos-sible to achieve.

There is another factor, which receives little attention, that contributes to our understand-ing of economic growth and financial crises—that is, the wealthier a country becomes, the more difficult it is to maintain economic growth. That is why emerging economies, such as China, India, and Brazil, can grow from 6 percent to 10 percent a year, while wealthy economies struggletoattainthenecessary3percentto5percent(seeFigure3.3).

The implication is that our modern merchant adventurers must continue to come up with new and innovative ways to make more and more money. That is why the derivatives team at J. P.Morganwas told,“Youwillhave tomakeat leasthalfyour revenueseachyear froma product which did not exist before” (Tett 2009:7–8).

Table 3.4 U.S. Total Debt by Sector (January 1, 2012)1

Debt TypeDebt Amount

(Trillion) Debt Per Person

Federal Government Sector $15.22 $ 49,097

State and Local Government Sector $ 3.01 $ 9,677

Household Sector $13.22 $ 42,445

Business Sector $11.63 $ 37,516

Financial Sector $ 13.6 $ 43,871

Other $ 2.24 $ 7,226

Sum of all government and private sector debt

$ 58.9 $190,000


Chapter3 • TheRiseandFalloftheMerchant,Industrialist,andFinancier 97

Thus, the current economic crisis has more to do with the internal logic of our economic system—particularly the need for perpetual growth—than it does with any intrinsic human char-acteristic, such as greed. In general, the economy works, and sometimes doesn’t work, because of people operating according to specific cultural prescriptions and not because of any innate characteristic.


We began this chapter with the goal of trying to understand five historical developments that have had a profound influence on today’s world and in the development of the culture of capi-talism—the increase in the division of world wealth, changes in the organization of capital, the increase in the level of economic globalization, the reasons for periodic financial crises, and why our economies have to perpetually grow. We found that the division of wealth has grown enormously, between both countries and areas of the world. In 2000 more than 1.2 billion people lived in absolute poverty, earning the equivalent of less than one dollar per day. The three top ultrarichpeople,includingMicrosoft’sBillGates,ownmorethanthegrossnationalproductoftheforty-eightpoorestnationscombined.Furthermore,thegapisincreasing.AccordingtotheUNWorldDevelopmentReportof1997,of the173countries in thestudy,seventy toeightyhave lower per capita incomes than they did have ten or thirty years ago. People in Africa con-sume20percentlessthantheydidtwenty-fiveyearsago.TheUNreportpointedoutthatthe20 percent of the world’s population living in the wealthiest countries consume 86 percent of the world’s goods and services. The poorest 20 percent consume only 1.3 percent.

The organization of capital has changed dramatically. We began our journey with capital largely in the hands of individual merchants, family groups, or limited partnerships and ended with the era of capital controllers, such as transnational corporations, multilateral institutions, and investment firms. In 1400, it might take a global merchant a year’s journey from one area of the world to another to complete an investment cycle of buying and selling goods; today a capital controller can transfer billions from one area of the world to another without ever leaving his or her computer.

We have seen global economic integration increase to the extent that global trade is easier today than trade between adjacent towns was in 1400, as trade treaties dissolve regional and countryboundaries,freeingcapitaltomigratewhereitismostlikelytoaccumulate.Furthermore,




e o

f G








East A

sia a





e an



l Asia




n an





le Eas

t and




th A











fiGure 3.3 Economic Growth Rate by Region, 2007

98 PartI • TheSocietyofPerpetualGrowth

we have seen how global financial and multilateral institutions, such as corporate controllers, the WorldBank,theIMF,andtheWTO,functiontoopeninternationalmarketstocorporationsandforce countries to dismantle environmental, social, and labor reforms.

Fourth,weexaminedwhyeconomicbubblesformandburstandwhythesecollapsescanlead to economic crisis, and finally, why we must have perpetual economic growth and what happens when growth fails. We will need, in a later chapter, to examine whether or not there is a way out of this dilemma of perpetual growth, but for the time being it is important to understand its consequences.

Our analysis of how the culture of capitalism functions is incomplete, however, until we understand the development and function of the nation-state, how it has functioned in the evolu-tion of the culture, and how it mediates between the consumer, laborer, and capitalist.


Imagine an alien from another planet who lands on Earth after a nuclear holocaust has destroyed all life but has left undamaged terrestrial libraries and archives. After consulting the archives, suggested Eric Hobsbawm (1990), our observer would undoubtedly conclude

that the last two centuries of human history are incomprehensible without an understanding of the term nation and the phenomenon of nationalism.

C h a p t e r

4 The Nation-State in the Culture of Capitalism

We have about 50% of the world’s wealth but only 6.3% of its population. This disparity is particularly great as between ourselves

and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated

everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism

and world-benefaction.

—George F. Kennan, Director of Policy Planning,

U.S. State Department, 1948

Due to the unqualified and unstoppable spread of free trade rules, and above all the free movement of capital and finances, the “econ-

omy” is progressively exempt from political control; … Whatever has been left of politics is expected to be dealt with, as in the

good old days, by the state—but whatever is concerned with the economic life the state is not allowed to touch; any attempt in this direction would be met with prompt and furious punitive action

from the world markets.

—Zygmunt Bauman, Globalization: The Human Consequences

100 PartI • TheSocietyofPerpetualGrowth

Thenation-state,alongwiththeconsumer,laborer,andcapitalist,is,wesuggest,anessen-tialelementofthecultureofcapitalism.Itisthenation-state,asEricWolf(1982:100)suggested,that guarantees the ownership of private property and the means of production and provides supportfordiscipliningtheworkforce.Thestatealsohastoprovideandmaintaintheeconomicinfrastructure—transportation, communication, judicial systems, education, and so on—required bycapitalistproduction.Thenation-statemustregulateconflictsbetweencompetingcapitalistsathomeandabroad,bydiplomacyifpossible,bywarifnecessary.Thestateplaysanessentialrole in creating conditions that inhibit or promote consumption; controls legislation that may force people off the land to seek wage labor; legislates to regulate or deregulate corporations; creates the base money supply by borrowing from the central bank; initiates economic, political, andsocialpoliciestoattractcapital;andcontrolsthelegitimateuseofforce.Withoutthenation-state to regulate commerce and trade within its own borders, there could be no effective global economic integration. But how did the nation-state come to exist, and how does it succeed in binding together often disparate and conflicting groups?

Virtually all people in theworld consider themselvesmembers of a nation-state. Thenotionofapersonwithoutanation, saidErnestGellner (1983:6), strains the imagination;apersonmusthaveanationalityasheorshemusthaveanoseandtwoears.WeareAmericans,Mexicans, Bolivians, Italians, Indonesians, Kenyans, ormembers of any ofmore than 200statesthatcurrentlyexist.Wegenerallyconsiderourcountry,whicheveritis,asimbuedwithtradition, a history that glorifies its founding and makes heroes of those thought to have been instrumentalinitscreation.Symbolsofthenation—flags,buildings,monuments—takeontheaura of sacred relics.

By the middle of the twentieth century, the attainment of nationhood had become a sign of progress andmodernity.To be less than a nation—a tribe, an ethnic group, or a regionalbloc—wasasignofbackwardness.Yetfewerthanone-thirdofthemorethan200statesintheworld are more than thirty years old; only a few go back to the nineteenth century, and virtually none go back in their present form beyond that. Before that time, people identified themselves as members of kinship groups, villages, cities, or, perhaps, regions, but almost never as members of nations. For the most part, the agents of the state were resented, feared, or hated because of their demands for tribute, taxes, or army conscripts.

Statesexisted,ofcourse,andhaveexistedfor5,000to7,000years.But theideaof thenation-state,ofapeoplesharingsomeboundedterritory,unitedbyacommoncultureortradition,commonlanguage,orcommonrace,isaproductofnineteenth-centuryEurope.MosthistoriansseetheFrenchRevolutionof1789asmarkingthebeginningoftheeraofthenation-state.Yet,in spite of the historical newness of the idea, for many people nationality forms a critical part oftheirpersonalidentity.Someofthequestionsweneedtoexploreareasfollows:How did the nation-state come to have such importance in the world? Why did it develop as it did, and how do people come to identify themselves as members of such vague abstractions? Finally, why does the nation-state kill as often as it does?

Thequestionofkilling is important,because todaymostkillingandviolence iseithersanctionedbyorcarriedoutbythestate.Thisshouldnotsurpriseus:Mostdefinitionsofthestate,followingMaxWeber’s(1947:124–135),revolvearounditsclaimtoamonopolyontheinstrumentsofdeathandviolence.“Stateness,”asElmanService(1975)putit,canbeidenti-fiedsimplybylocating“thepowerofforceinadditiontothepowerofauthority.”Killingbyotherthanthestate,asMortonFried(1967)noted,willdrawthepunitiveactionoforganizedstate force.

Theuseofforce,however,isnottheonlycharacteristicanthropologistsemphasizeiniden-tifying the state; social stratification, the division of societies into groups with differing access to wealth and other resources, is also paramount. Yet even here the state is seen as serving as an instrument of control to maintain the privileges of the ruling group, and this, too, generally requiresamonopolyontheuseofforce(seeCohenandService1978;Lewellen1992).

Chapter4 • TheNation-StateintheCultureof Capitalism 101

Thus,tocompleteourdescriptionofthekeyfeaturesofthecultureofcapitalism,weneedtoexaminetheoriginandhistoryofthestateanditssuccessor,thenation-state;wealsoneedto understand the role of violence in the maintenance of the state and the role of the state in the maintenance and growth of the economy.

The Origin and hisTOry Of The sTaTe

The evolution of the state

States represent a form of social contract in which the public ostensibly has consented toassign to the state a monopoly on force and agreed that only it can constrain and coerce people (Nagengast 1994:116). Philosophers and political thinkers have long been fascinated by thequestionofwhythestatedeveloped.Seventeenth-centuryphilosopherThomasHobbesassumedthe state existed to maintain order, and that without the state, life would be “nasty, brutish, and short.”However,anthropologistshavelongrecognizedthatsomesocietiesdoverywellwithoutanything approaching state organization; in fact, “tribeswithout rulers,” as theywere called,representeduntil7,000to8,000yearsagotheonlyformofpoliticalorganizationintheworld.Governmentinthesesocietieswasrelativelysimple.Theremightbeachieforvillageleader,but their powers were limited. In gathering and hunting societies, most decisions were probably made by consensus. Village or clan chiefs may have had more authority than others, but even they led more by example than by force. Power, the ability to control people, was generally diffused among many individuals or groups.

Thestateasastratifiedsocietypresidedoverbyarulingelitewith thepower todrawfrom and demand agricultural surpluses likely developed in the flood plains between the TigrisandEuphratesinwhatisnowIraq4,000to5,000yearsago.ThefortifiedcitiesofUrukandUr, forming thestateofSumeria,hadpopulationsof40,000.Statesdeveloped indepen-dently in Egypt, the Indus River Valley of India, the Yellow River Valley of China, and, later, Mesoamerica and Peru.

Anthropologists have long been concerned with the idea of the origin of the state (see Lewellen1992).Why didn’t human aggregates remain organized into small units or into villages or towns of 500 to 2,000 persons? What made the development of densely settled cities neces-sary? Why, after hundreds of thousands of years, did ruling elites with control of armed force emerge to dominate the human landscape?

One theory is that as the population increased and food production became more com-plex,aclassofspecialistsemergedandcreatedastratifiedsociety.Whocomprisedthisclassorwhytheyemergedisanopenquestion.KarlWittfogel(1957),inhis“hydraulictheory”ofstatedevelopment,proposedthatNeolithicfarmersintheareawherestatesdevelopedweredependentonfloodingrivers,suchastheTigris,theNile,andtheYellowrivers,towatertheirfieldsanddeposit new soil. But this happened only once each year; so to support an expanding population, farmers began to build dikes, canals, and reservoirs to control water flow. As these irrigation systems became more complex, groups of specialists emerged to plan and direct these activities, andthisgroupdevelopedintoanadministrativeelitethatruledoverdespotic,centralizedstates.

Others propose that an increase in population, especially where populations cannot easily disperse, requires more formal means of government and control and will lead to greater social stratification and inequality. These theories of state development emphasize the integrative function of the state and suggest that it evolved to maintain order and direct societal growth and development.

However, another framework emerges from the work of Marx and Engels. In this frame-work, early societies were thought to be communistic, with resources shared equally among members and little or no notion of private property. However, technological development permitted production of a surplus of goods, which could be expropriated and used by some

102 PartI • TheSocietyofPerpetualGrowth

persons to elevate their control or power in society. Asserting control permitted this elite to form anentrepreneurialclass.Tomaintaintheirwealthandauthority,theycreatedstructuresofforce.

Anthropologists’majorcriticismofthisframeworkisthatthereislittleevidenceofthiskind of entrepreneurial activity in prehistoric societies; moreover, it is difficult to apply notions such as “communism” and “capitalism” to early societies. However, Morton Fried (1967) proposed that differential access to wealth and resources creates stratification, and once stratifi-cation emerges, it creates internal conflict that will lead to either disintegration of the group or to the elite imposing their authority by force.

Yetanotherviewproposesthatexternalconflictisthemotivationforstatedevelopment:Once a group united under a strong central authority develops, it could easily conquer smaller, lesscentralizedgroupsandtakecaptives,land,orproperty.Followingthislineofreasoning,ifsmallergroupsweretoprotectthemselvesfrompredatorstates,they,too,hadtoorganize,theresult being the emergence of competing states with the more powerful ones conquering the weakeronesandenlargingtheirboundaries.RobertCarneiro(1978)reasonedthatwarhasservedto promote consolidation of isolated, politically autonomous villages into chiefdoms of united villages and into states. At first, war pits village against village, resulting in chiefdoms; then it pits chiefdom against chiefdom, resulting in states; and then it pits state against state, creating yet larger political units.

It should be clear that these theories are not mutually exclusive; the emergence of states maybearesultofanyoneoracombinationoffactors.Thus,othertheorists,suchasMarvinHarris(1971)andKentFlannery(1972;1973),proposethattheevolutionofthestaterequiredthe interaction of various factors such as control of birth rates, nature of food resources, and the environment.

Regardlessofwhythestateemergedasahumaninstitution,it isclearthatby1400theworld was very much divided into states and empires ruled by groups of elites who maintained theirpositions through theuseof force.But thestatesofprehistoric times—thecity-statesofancient Greece, the Roman Empire, the Chinese dynasties—were very different from the modern nation-state.ItisdoubtfulthatsubjectsoftheMingDynastyorRomanEmpireidentifiedthem-selves as members of a state, let alone a nation. It is unlikely that a British or French soldier of the sixteenthorseventeenthcenturyfeltheowedallegiancetohis“nation”—tohiskingorqueen,perhaps,butnottoanythingsoabstractasa“country.”Thenation-stateisaveryrecenthistoricaldevelopment, one we need to understand to appreciate its role in the culture of capitalism.

The history and function of the nation-state

Thestateasitexiststodayisobviouslyverydifferentfromthestatethatevolved7,000yearsagoorthestateasitexistedintheyears1500or1800.Wehavegonefrombeingstatestobeingnationsornation-states.Thedifferencesare important.Astate isapoliticalentitywith iden-tifiable components. If someone asked citizens of theUnited States to identify a constituentof the “state,” they couldpoint to federal buildings (e.g., theCongressionalOfficeBuilding,theWhiteHouse, and federal courthouse) or name federal bureaucracies (e.g.,Congress, theInternalRevenueService, and theDepartmentofAgriculture); theycould list the things thatthestaterequiresofthem—topaytaxes,registerforSocialSecurity,obtaincitizenship,orvote.However, if someoneasked themwhatconstituted the“nation,” towhat,other than the flag,couldtheypoint?Otherthanbeing“patriotic,”whatcouldtheysayisrequiredofthembythe“nation”?TheAmericannationisafarmoreabstractconceptthantheAmericanstate;anation,asBenedictAnderson(1991:5–6)putit,is“animaginedpoliticalcommunity.”Yetinthepast200years,stateshaveevolvedtonationsornation-states.But why did a new form of political entity develop, and what function did it perform?

Themodernstate,suggestedhistorianFernandBraudel(1982:515–516),hasthreetasks:to secure obedience and gain a monopoly on force with legitimate violence; to exert control over economic life to ensure the orderly circulation of goods and to take for itself a share of

Chapter4 • TheNation-StateintheCultureof Capitalism 103

the national income to pay for its own expenditure, luxury, administration, or wars; and to participate in spiritual or religious life and derive additional strength by using religious valuesorestablishingastatereligion.Weexaminelatertheuseofviolenceby the stateand theuseof religiousvalues.Let’sfirst examine the state control of economic life.

The state has probably always been involved in itssubjects’economiclifeinonewayoranother.Theancientstateexisted partly to protect the privileges of the elites by ensur-ing production of resources, offering protection from other elites, and extracting surplus wealth from a largely peasant population. Traders supplied wealth to the elite in the formof taxes, tributes, and fees required todobusiness.The statealso performed some functions for the trader—it might mint coins and produce paper money, establish standards for weights and measures, protect the movement of merchants and goods, purchase goods, and create and maintain marketplaces where merchants could sell their products. But the ancient states probably did little actively to encourage trade, and in many ways they may have inhibited it. For example, they may have taxed themerchant toanextent thatmakingaprofitbecamedifficult.Theelitemayhavelimited the goods that merchants could trade or limited the market for goods—for example, by claiming exclusive rights to wear certain kinds of clothes or furs, hunt certain animals, eat certain foods, and inhabit certain sites.

In sixteenth- and seventeenth-centuryEurope and Japan, states began to take a trulyactive role inpromotingandprotecting trade, recognizing that the state’swealthdependedonthesuccessofitsmanufacturersandtraders.Theybegantoprotecttheirmanufacturersandtraders by imposing protective tariffs on goods from other states, using military force to open marketsinperipheralareas,andgrantingtradingmonopoliestofirmswithintheirborders.Statescreatedandmaintainedports,builtroadsandcanals,and,later,subsidizedrailroadconstruction.

Thestatewasalsoinvolvedintheconsumptionofgoods,eitherbypurchasinggoodsor,again, using its military or bargaining power to open up foreign markets to its merchants. One of themostlucrativesourcesofmanufacturers’profitswas(andstillis)thesaletogovernmentsofweapons and other goods and services (food, clothing, and transportation) necessary to maintain the military and other government services. Although ostensibly the military existed in core countries to protect the state against foreign invaders, it was far more often used to create and maintain colonies necessary for the success of domestic manufacture and trade and to maintain domesticorder.Finally,thestateorganized,entitled,anddirectedfinancialinstitutions,suchasbanks, which ensured the ready availability of capital.

Thenation-state,saidImmanuelWallerstein(1989:170),becamethemajorbuildingblockoftheglobaleconomy.Tobepartoftheinterstatesystemrequiredthatpoliticalentitiestransformthemselvesintostatesthatfollowedtherulesoftheinterstatesystem.Thissystemrequiredforits operation an integrated division of labor, along with guarantees regarding the flow of money, goods,andpersons.Stateswerefreetoimposeconstraintsontheseflowsbutonlywithinasetofrules enforced collectively by member states or, as it usually worked out, a few dominant states.

At the beginning of the nineteenth century, the new capitalist state faced two problems. Thefirstwaspolitical.With thedownfallof thedoctrineof thedivinerightofkingsand theabsolute state, political leaders faced a crisis of political legitimacy. On what basis could they claim control of the state apparatus that had become so critical for the emergence and success of the “national economy”?Asecondandrelatedproblemwaseconomic:How could the state promote the economic integration of all those within its borders? Although the English state couldclaimcontroloverEngland,Scotland,andWales,andtheFrenchstateovertheregionsofFrance(Bretagne,Picardie,Provence,Languedoc,etc.),thesituationinthecountrysidedidnot reflect that control. At the beginning of the nineteenth century, few residents of the British



















104 PartI • TheSocietyofPerpetualGrowth

Isles would identify themselves as Britons; few residents of the state of France would identity themselvesasFrench—atleast25percentofthemdidn’tevenspeakFrench.GermanyandItaly,ofcourse,didn’tyetexist.

Thus,thedegreeofeconomicintegrationofregionswasweakornonexistent.Notonlydidpeople speak different languages, but they also used different currencies, had different standards andmeasures,andweredownrighthostiletostateofficials.Wagesandpricesvariedfromareatoarea,andstandardizedvocational trainingwasvirtuallynonexistent.Furthermore, tastes incommodities differed; things manufactured or produced in one area might not appeal to people in other areas. Thus, local economies existed either side by sidewith or independent of theso-callednationaleconomy.WhilecountriessuchasEngland,France,andtheNetherlandswerebusyincorporating territories inSouthandNorthAmerica,Asia,Africa,andtheMiddleEastintotheirnationaleconomies,theyhadn’tyetfullyincorporatedmembersoftheirownstates.

Therewas,however,asinglesolutiontoboththepoliticalandtheeconomicproblem:toturn states into nations—groups of people who shared a common culture, language, and heritage and somehow belonged together (or thought they did), worked together, and shopped together. ThiswasnoteasytoaccomplishbecausevirtuallyallofthemajorEuropeanstatesintheeigh-teenthandnineteenthcenturieswerehodgepodgesoflanguages,cultures,andreligions.WhenGaribaldiunitedagroupofprovincesintowhatwastobecomeItaly,lessthan3percentofthepopulation spoke Italian as their native language. German became the language of Germany only becauseJosephIIarbitrarilydecideditshouldbe.Thusnationshadtobecreated:Frenchmen,Italians, Germans, and Americans had to be manufactured by convincing them they had some-thing in common, preferably loyalty and devotion to their respective states.

If members of a state would see themselves as sharing a common culture—a common heri-tage,language,anddestiny—stateleaderscouldclaimtorepresentthe“people,”whoevertheymightbe,andthepeoplecouldbemoreeasilyintegratedintothenationaleconomy.Theywould,ideally, accept the same wages, speak the same language, use the same currency, have similar skillsandsimilareconomicexpectations,and,evenbetter,demandthesamegoods.Thequestionis, How do you go about constructing a nation?

COnsTruCTing The naTiOn-sTaTe

Ithasbeenarguedbysome,especiallyardentnationalistsofvariouspersuasions, thatnation-states are expressions of preexisting cultural, linguistic, religious, ethnic, or historical features sharedbypeoplewhomakeuporwouldmakeupastate.Formanyofthenineteenth-centuryGermanwriterswhowereinstrumentalincreatingtheideaofthenation-state—JohannGottfriedvonHerder,JohannGottliebFichte,andWilhelmFreiherrvonHumboldt—nationswereexpres-sionsofsharedlanguage,tradition,race,andstate.Thus,todayweseesomeofthecitizensofQuebec claiming that their cultural heritage and language differentiate them from the rest of Canada and entitle them to nationhood, Kurds aspiring to their own state on the basis of cultural unity,BosnianSerbsdemandingtheirownstateonthebasisof theirethnicpurity,andSikhsdemanding their own state based on their mode of worship.

However,themoregenerallyheldview,certainlyamongscholars,isthatnation-statesareconstructed through invention and social engineering.Traditions, suggestedEricHobsbawm,must be invented. People must be convinced that they share or must be forced to share certain features, such as language, religion, ethnic group membership, or a common historical heritage, regardlessofwhethertheyreallydo.AsHobsbawmandRanger(1983:1)putit,

“Inventedtradition”istakentomeanasetofpractices,normallygovernedbyovertlyor tacitly accepted rules and of a ritual or symbolic nature, which seek to inculcate certain values and norms of behavior by repetition, which automatically implies con-tinuity with the past. In fact, were it possible, they normally attempt to establish continuity with a suitable historic past.

Chapter4 • TheNation-StateintheCultureof Capitalism 105

Creating the Other

Anunderstandingofhowthenation-stateand,byextension,people’snationalidentitiesarecon-structediscriticaltounderstandingnationalismandethnicity.Let’sbeginbyexaminingsomeofthewaysGreatBritainandFrance,pioneersinnationbuilding,wentaboutthetask.LindaColley(1992)illustratedhowthiswasdoneinGreatBritain.Colley’sbookincludesapaintingbySirDavidWilkie,Chelsea Pensioners Reading the Gazette of the Battle of Waterloo, that caused a sensationwhenitwasexhibitedattheRoyalAcademyin1822.

ThepaintingdepictsacrowdcelebratingthenewsoftheBritishvictoryoverNapoleonatWaterloo.ThedistinguishingfeatureofthepaintingisitsclearidentificationofpeoplefromalloverBritain.ThereareWelsh,Scottish,andIrishsoldiers;womenandchildren;richandpoor;and even a black military bandman. It is, Colley said, a celebration of patriotism that transcends boundaries of age, gender, class, ethnicity, and occupation. It is war, the painting suggests, that forged a nation by uniting this diverse group against a common enemy. Even the signs on the tavernscelebratepastwarsandvictories.According toColley,Wilkie recognized the impor-tance of war in nation building and that uniting diverse people and groups against outsiders is oneofthemosteffectivewaystocreatebondsamongthem(1992:366–367).

Outsiders, however, can be used in more symbolic ways to build national unity. For example, Colley suggested that the making of the British nation from its culturally and linguistically diverse populations would have been impossible without a shared religion, and that BritishProtestantismallowedtheEnglish,Scots,andWelshtoovercometheirculturaldiver-gence to identify themselves as a nation. However, that would not have been so effective had their religion not also distinguished them from their arch rival, Catholic France.

Furthermore, the founding of a colonial empire created additional Others from whom members of the British nation could distinguish themselves. Britons thought the establishment ofanempireprovedBritain’sprovidentialdestiny,thatGodhadchosenthemtoruleoverotherpeoplesandtospreadtheGospel.ContactwithmanifestlyalienpeoplesfedBritons’beliefabouttheirsuperiority.Theycouldfavorablycomparetheirtreatmentofwomen,wealth,andpower.The building of a global empire corroborated not onlyBritain’s blessings, butwhatScottishsocialist Keir Hardie called the indomitable pluck and energy of the British people (Colley 1992:369).

Sir David Wilkie’s painting Chelsea Pensioners Reading the Gazette of the Battle of Waterloo represents the power of the nation-state to transcend boundaries of age, gender, class, ethnicity, and occupation. (North Wind/North Wind Picture Archives.)

106 PartI • TheSocietyofPerpetualGrowth

Thus, one of the most effective ways to construct anation is to create some Other against whom members of the nation-statecandistinguishthemselves.ThatOtherneedn’tbea country; it may be a category of persons constructed out of largely arbitrary criteria, such as racial characteristics or reli-gion.Thus,agroupmayinsistthatonlypeopleofaparticularskin color or religion or who speak a particular language can be citizens of their nation.War, religion, and the creation ofcolonies full of subjugated peoples provided for Britons a sense of their collective identity as a people, allowing them to over-come their own significant differences in language, culture, and economic status. Of course, people must find it in their own self-interestaswelltoproclaimtheiridentityasmembersofanation-state.AsColley pointed out,men andwomenbecame

Britishpatriotstoobtainjobsinthestateortoadvertisetheirstandinginthecommunity.Somebelieved that British imperialism would benefit them economically or that a French victory wouldharmthem.Forsome,beinganactivepatriotservedtoprovidethemfullcitizenshipand a voice in the running of the state.

Yet the creation of hated or feared Others through such means as war, religion, and empire building is probably not in itself sufficient to build loyalty and devotion to a nation. If  it were, the nation-statewould likely have emergedwell before it did. Constructing anation-statealsorequiresanational,bureaucraticinfrastructurethatservesinvariouswaysto unite people.

Language, Bureaucracy, and education

EugenWeber,inhisbookPeasants into Frenchmen(1976),providesaclassicaccountofnationbuilding. He documents how peoples in France were administratively molded into a nation by bringing the French language to the countryside, by increasing the ease of travel, by increasing access to national media, by providing military training, and, most importantly, by creating a national educational system.Weber (1976:486) compares the transformationofpeasants intocitizensofaFrenchnation-statetotheprocessofcolonizationandacculturation:Unassimilatedmasseshadtobeintegratedintoadominantculture.Theprocess,hesuggests,wasakintocolo-nization,exceptittookplacewithinthebordersofthecountryratherthanoverseas.What kind of transformation of national identity did take place in France in the nineteenth century?

At the beginning of the nineteenth century, even after the French Revolution, a significant portion of rural France still lived in worlds of their own. Few if any would have called themselves “French.”ThepeasantsofFrancewereforthemostpartsubsistencefarmers,producingnotformarket or cash but for themselves and their families. People spent their lives in their villages. Scholarsestimatethatone-fourthoftheresidentsofFrancedidnotspeakFrench,includinghalfthe children who would reach adulthood in the last quarter of the nineteenth century. Arnold van Gennep would write as late as 1911 that “for peasants and workers, the mother tongue is patois, theforeignspeechisFrench”(Weber1976:73).

Stateofficialssawlinguisticdiversityasathreatnottoadministrativeunitybuttoideo-logicalunity,asharednotionoftheinterestsoftherepublic,aoneness.Linguisticandculturaldiversity came to be seen as imperfection, something to be remedied (Weber 1976:9).As aresult, in the1880s, at the insistenceof thegovernment, theFrench languagebegan to infil-tratethecountryside,aprocessmoreorlesscompletedby1914,althoughevenin1906English travelers in France had problems communicating in French.

Withthehomogenizationoflanguagecamethehomogenizationofculture.Localcustomsbegantobereplaced;dressandfoodpreferencesbecamestandardized.Althoughmanyaspectsof localculturebegan todisappear,somewereadoptedasnationalsymbols.Theberet,worn











Great Britain

Chapter4 • TheNation-StateintheCultureof Capitalism 107


Another sign of state integration and the decline of local traditions and values is the decay of popular feasts and rituals that celebrated the unity of local groups and their replacement by private ceremonies and rituals along with a few national holidays. Communal celebrations, such asChristmas,NewYear,andTwelfthNight,turnedintofamilyaffairs.Whereoncetheywerepublic rituals, baptisms, first communions, and marriages became private ceremonies. Renewal ceremonies that glorified time (the season), work (harvest), or the community (through its patron saint) disappeared as the redistribution of goods, once done through ritual at these ceremonies, wasnowmanagedmoreefficiently(andmorestringently)bythestate(Weber1976:398).Thereplacement of local holidays and festivals with national holidays also allowed these occasions tobeturnedintoperiodsofmassiveconsumptionandgiftgiving,similartoValentine’sDay,Easter,Mother’sDay,andChristmasintheUnitedStates(Schmidt1995).

National unity in Francewas also evidenced by the growth of patriotism. In the earlynineteenth century, draft evasion in the provinces was high; for most, the military was a foreign institution. There was great tax resistance. Even toward the end of the nineteenth century,someFrenchcitizenshadneverheardofNapoleon;nationalauthoritywasembodiedinthetaxcollectorandtherecruitingsergeant.Thisisnottosay,asWeber(1976:114)pointedout,thatthe French were unpatriotic, only that they had no uniform conception of patriotism. As he said, “patrioticfeelingsonthenationallevel,farfrominstinctive,hadtobelearned.”

Thus, in thenineteenthcentury,people livingwithin theboundariesof theFrenchstategradually learned to be French. But how did this happen? How were peasants turned into French citizens? As with Great Britain, war and the struggle against outsiders certainly played a role in theconversion.ThewaragainstPrussia in1870–1871wasasignificantunifyingeventformostresidentsofFrance.TheexpansionofacolonialempirehelpedcreateOtherstowhomtheFrenchcouldfeelsuperior.Butmoresignificantwas thefact that,asWeberpointsout, therewerefar-reachingchangesintheinfrastructureandbureaucracyofFrance.

Newroadswerebuilt,connectingpeopletootherstowhomtheyhadneverbeenconnected;the growth of the railroads further increased mobility and contact between people of different regions.Therailroadshelpedtohomogenizetastes.AlthoughwenowassociatetheFrenchwithwine drinking, wine was not common in the countryside in the first half of the nineteenth century; itbecamemoreavailableonlywiththerailroads.Theroadsandrailroadsbroughtpeasantsintoanationalmarket;itallowedthemtogrowandsellcropstheycouldn’tsellbeforeandtostopgrow-ing those they could purchase more cheaply, bringing ruin to some local enterprises no longer protected by isolation. Fashions from the cities began to penetrate the countryside. And the roads and railroads set people on the move. In the early part of the nineteenth century, if people migrated tofindwork,theyalmostalwaysreturned.Thiswasnolongertruebytheendofthecentury.

As more people spoke French and became literate, they gained access to newspapers and journals, which in turn increased knowledge of national affairs and interests, demonstrating that events at the national level affected their lives. Military service increased identification with the state.Priortothe1890stherewaslittlesenseofnationalidentityinbeingasoldier;soldierswereeitherfearedorthoughttobringbadhabitstotheircommunities.Localmenwhojoinedthearmywere forced to conform when they returned to their villages lest their newly learned habits affect others. Many returned not even having learned to speak French. But the war with Prussia seemed to mark the beginning of a national identity in the rank and file of the military and among the peasants.Thearmybegantobecomeaschoolforthefatherland.Furthermore,formostrecruits,life in the army was better than life at home; the army ate better, dressed better, and was healthier thantheaverageFrenchcitizen.Towardtheendofthecentury,moreandmoresoldiersdidnotreturn to their villages after finishing their military obligations.

As important as all these agents of nation building were in France and other countries, perhapsnonewasasimportantastheschool.Webercreditedtheschoolwithbeingtheultimatesource of acculturation that made the French people French.

108 PartI • TheSocietyofPerpetualGrowth

At the beginning of the century, educational conditions were abysmal in France, as in most countries; some teachers couldn’t read, and someclasseswere conductedbynunswhocouldreadonlyprayers.In1864,aFrenchschoolinspectorcommentedthatnoneofthechildrenunderstood what they read, and when they could read, they could not give an account of it. Furthermore, schooling in the countryside had little practical benefit; it could not improve the lives of students economically or socially. Although improving education in the countryside had beenagoalofthestatesincethe1830s,greatchangesoccurredonlyinthe1880s,whenthestatebegan tosubsidizeeducationandeveryhamletwith twentychildrenormorewasrequired tohave a school.

It was clear to state officials that education was necessary as a “guarantee of order and socialstability”(Weber1976:331).“Toinstructthepeople,”onesaid,“istoconditionthemtounderstandandappreciatethebeneficenceofthegovernment”(Weber1976:331).Clearlytherewas an explicit link in the minds of state officials between education, nation building, national identity,andeconomicexpansion.Followingisapassagefromafirst-yearcivicstextbookthathelpedstudentsin“appreciatingtheircondition”:

Society(summary):(1)Frenchsocietyisruledbyjustlaws,becauseitisademocraticsociety.(2)AlltheFrenchareequalintheirrights:butthereareinequalitiesbetweenus that stemfromnatureor fromwealth. (3)These inequalitiescannot disappear.(4)Manworkstobecomerich;ifhelackedthishope,workwouldceaseandFrancewould decline. It is therefore necessary that each of us should be able to keep the moneyhehasearned.(Weber1976:331)

Schoolingwastobethegreatagentofnationalism.Asoneteachersaidin1861,itwouldteach national and patriotic sentiments, explain the benefits of the state and why taxes and military service were necessary, and illustrate for students their true interest in the fatherland. In 1881,anotherwrotethatfutureinstructorsmustbetaughtthat“theirfirstdutyistomake[theircharges]loveandunderstandthefatherland.”Bythe1890s,officialsconsideredtheschool“an

Third graders in Palo Alto, California, pledge their allegiance to their

nation-state (Russell Curtis/Science Source.)

Chapter4 • TheNation-StateintheCultureof Capitalism 109

instrument of unity,” an “answer to dangerous centrifugal tendencies,” and the “keystone ofnationaldefense”(Weber1976:332–333).

Thebest instrumentof indoctrination, said schoolofficials,washistory,which,whenproperly taught, “is the only means of maintaining patriotism in the generation we are bring-ingup.”In1897candidatesforthebaccalauréat moderne were asked to define the purpose ofhistoryineducation;80percentrepliedessentially that itwas toexaltpatriotism(Weber1976:333).

Before 1870, few schools had maps of France; by 1881, few classrooms, no matterhow small,werewithoutone.Bytheendofthecentury,theeducationalsystemseemedtobeaccomplishing its task, as evidenced by boys in rural France who began to enact the exploits of historical heroes.

ErnestGellner (1983:34) drew the connection between nation building, education, andeconomic integration even more tightly. According to Gellner, work in industrial society no longer means working with things; rather it involves working with meanings, exchanging com-munications with other people, or manipulating the controls of machines, controls that need to be understood. It is easy to understand the workings of a shovel or a plow; it is another thing to understand the complex process through which a button or control activates a machine. As a consequence, a modern capitalistic economy requires a mobile division of labor and precise communication between strangers. It requires universal literacy; a high level of numerical, tech-nical, and general sophistication; mobility where members must be prepared to shift from area toareaandfromtasktotask;andanabilitytocommunicatewithpeopletheydon’tknowinacontext-dependentformofcommunication,inacommon,standardizedlanguage.Toattainthestandard of literacy and technical competence needed to be employable, people must be trained, notbymembersoftheirownlocalgroupbutbyspecialists.Thistrainingcouldbeprovidedonlybysomethinglikea“national”educationsystem.Gellner(1983:34)wentsofarastosuggestthateducation became the ultimate instrument of state power, that the professor and the classroom came to replace the executioner and the guillotine as the enforcer of national sovereignty, and that a monopoly on legitimate education became more important than the monopoly on legiti-mate violence to build a common national identity and to provide the training necessary for the full integration of national economies.

Violence and genocide

WhilecreatingafearedorhatedOther,anationalbureaucracy,andaneducationalsystemareessentialinconstructingthenation-state,violenceremainsoneofthemaintoolsofnationbuild-ing.Infact,thereisaview,sharedinanthropologybyPierrevandenBerghe(1992),LeoKuper(1990),CaroleNagengast(1994),andothers,thatthemodernnation-stateisessentiallyanagentof genocide and ethnocide (the suppression and destruction of minority cultures). Given the glorificationofthenation-stateasavehicleofmodernization,unity,andeconomicdevelopment,this seems a harsh accusation. Yet there exists ample evidence that one of the ways states have soughttocreatenationsistoeliminateorterrorizeintosubmissionthosewithinitsborderswhorefuse to assimilate or who demand recognition of their status as a distinct ethnic or national group.IntheUnitedStates,theattemptfirsttokillallindigenouspeoples,thenforciblytoassim-ilatethosewhoremained,followedbyapolicyof“benignneglect,”isbutoneexampleofstatehostility to cultural variation, aswe shall see. The claim that states are agents of death andoppressionagainstminorityorevenmajoritygroups(e.g.,SouthAfrica,Sudan,andPakistan)isoften provided in daily news reports.

Between1975and1979,inoneoftheworstcasesofstatekillinginthetwentiethcentury,the government of Cambodia, theKhmer Rouge, systematically killed asmany as 2millionof its7millioncitizens.Thesekillingswerecarriedout in thenameofaprogramtocreateasocietywithoutcities,money,families,markets,orcommodity-moneyrelations.Millionsweredisemboweled, had nails driven into the backs of their heads, or were beaten to death with hoes.

110 PartI • TheSocietyofPerpetualGrowth

This program involved destroying what the leaders saw as the enemy classes—imperialists(e.g., ethnicVietnamese,ethnicChinese,andMuslimChams),feudalists(theleadersoftheoldregime,Buddhistmonks,andintellectuals),andcompradorcapitalists(ethnicChinese).Thegoalwas as much nationalistic as it was socialistic—to return Cambodia and the Khmer race to its pre-viousglory.TheytookoveracountrydevastatedbyU.S.bombingduringtheVietnamWarandendedupkillingmillionswhotheydeemeddidn’tbelong(Kuper1990).ButtheKhmerRouge’skillingofitscitizens,whilereachinganintensitymatchedbyfewstates,washardlyanexception.AsCaroleNagengast(1994:119–120)wrote,

Thenumbersof peopleworldwide subjected to theviolenceof their own statesarestaggering.MorethanaquarterofamillionKurdsandTurksinTurkeyhavebeen beaten or tortured by the military, police, and prison guards since 1980;tens of thousands of indigenous people in Peru and Guatemala, street children in BrazilandGuatemala,PalestiniansinKuwait,KurdsinIraq,andMuslimwomenand girls in Bosnia have been similarly treated. Mutilated bodies turn up some-where every day. Some 6,000 people in dozens of countrieswere legally shot,hung, electrocuted, gassed, or stoned to death by their respective states between 1985and1992forpoliticalmisdeeds:criticismofthestate,membershipinbannedpolitical parties or groups, or for adherence to the “wrong” religion; formoraldeeds:adultery,prostitution,homosexuality,sodomy,oralcoholordruguse;foreconomicoffenses:burglary,embezzling,andcorruption;andforviolentcrimes:rape, assault, and murder.


havebeenshot,beaten,tortured,knifed,burned,starved,frozen,crushed,orworkedto death; buried alive, drowned, hung, bombed, or killed in any other of the myriad waysgovernmentshaveinflicteddeathonunarmed,helplesscitizensandforeigners.Thedeadcouldconceivablybenearly360millionpeople.Itisasthoughourspecieshas been devastated by a modern Black Plague. And indeed it has, but a plague of power not germs.

Rummel attributed state killing to power and its abuses, claiming it is largely totalitarian regimes that resort todemocide,genocide,orethnocide.Democraciesalsokill,asevidencedinthetwentiethcenturybyindiscriminatebombingsofenemyciviliansinwar,thelarge-scalemassacre of Filipinos duringU.S. colonization of thePhilippines at the turn of the century,deathsinBritishconcentrationcampsduringtheBoerWarinSouthAfrica,civiliandeathsinGermany as a result of the Allied blockade, the rape and murder of helpless Chinese in and around Peking in 1900, atrocities committed by Americans in Vietnam, the murder of helpless AlgeriansbytheFrenchduringtheAlgerianWar,andthedeathsofGermanprisonersofwarinFrenchandU.S.prisoner-of-warcampsafterWorldWar II.ButRummel saideven theseprove his point about power, for virtually all of these cases were committed in secret behind a trail of lies and deceit by agencies and power holders who were given the authority to operate autonomously and shielded from the press. Even attacks on German and Vietnamese cities were presented as attacks on military targets. He concluded that as we move from democratic through authoritarian and to totalitarian governments, the degree of state killing increases dramatically (Rummel1994:17).

Chapter4 • TheNation-StateintheCultureof Capitalism 111


theprocesseuphemisticallydescribedasnation-buildingis,infact,mostlynation-killing; …the vastmajority of so-called “nation-states” are nothing of the sort;and … modern nationalism is a blueprint for ethnocide at best, genocide at worst.

Van den Berghe said that the nation-state myth has been allowed to persist becauseinternationalbodies,suchastheUnitedNations, insist that internalkillingisastatematter,a“gentlemen’sagreement”betweenmemberstatesnottoprotestthebutcheringoftheirownciti-zens.Also,scholarsperpetratethemythwiththeuseofnation-statedesignation.Theresultistolegitimizegenocideintheinterestsofbuildingnation-statesthatfunctiontofurthereconomicand political integration.

CaroleNagengast(1994:122)proposedthatstate-sponsoredviolenceservestoaidintheconstructionandmaintenanceofthenation-state.Sheexaminednotonlystatekillingbutalso theinstitutionalizationoftorture,rape,andhomosexualassault.Thepurposeofthisstate-sponsoredviolence is not to inflict pain but to create what Nagengast called “punishable categories ofpeople,”tocreateandmaintainboundariesandlegitimateordelegitimatespecificgroups.Stateviolenceagainstitsowncitizens,shesuggested,isawaytocreateanOther,anambiguousunder-class that consists on the one hand of subhuman brutes and on the other hand of superhuman individuals capable of undermining the accepted order of society. Arrest and torture serve to stigmatizepeopleandtomarkthemaspeoplewhonoonewantstobe.Arrestandtorturebecome,in effect, a way of symbolically marking, disciplining, and stigmatizing those categories ofpeoplewhoseexistenceordemandsthreatentheidea,power,andlegitimacyofthenation-state.Furthermore,becausethetortureandviolencearecommittedonlyagainst“terrorists,”“commu-nists,”or“separatists,”itbecomeslegitimate.“Weonlybeatbadpeople,”saidaTurkishprisonofficialin1984.“Theyarenogood,theyareworthlessbums,theyaresubversiveswhothinkthatcommunismwillrelievethemofthenecessityofworking.”Herevealedwithapparentpridethathe had “given orders that all prisoners should be struck with a truncheon below the waist on the rudeparts,andwarnednottocometoprisonagain.”“Myaim,”hesaid,“istoensurediscipline.That’snottorture,foritisonlythelazy,theidle,thevagabonds,thecommunists,themurdererswhocometoprison”(citedNagengast1994:121).

Terroristactsareoftendepictedasbeingextralegal—thatis,committedbypersonsoutsidestate control. Yet there is considerable evidence that most terror is applied by states to integrate orcontrolareluctantcitizenry.AsJefferySluka(2000:1)putsit,

If terrorism means political intimidation by violence or its threat, and if we allow the def-inition to include violence by states and agents of states, then we find that the major form of terrorism in the world today is practiced by states and their agents and allies, and that quantitatively,anti-stateterrorismpalesintorelativeinsignificanceincomparisontoit.

Deathsquadsoperateoutsidethelawbutwiththetacitapprovalofthestate.Thustheiractionscarry out state goals of eliminating dissidents without due process of law but are enough removed fromofficialstateagenciestoallowthestate“plausibledenial.”Rarelyaremembersofdeathsquadspunished, and many are also members of official state agencies, such as the police, militia, or army.

Targetsofdeathsquadsareoftenportrayedbythestateas“terrorists”orsubversivesbuttend tobeanyone thatchallenges thestatusquo.These includepeoplewhoorganizeunions,offerBibleclasses,proposelandreforms,oradvocatetaxincreasesontherich.Theyincludeclergy,labororganizers,humanrightsactivists,socialworkers,journalists,andsoon.Victimsinclude women, children, the elderly, and relatives of activists. More recently, particularly in LatinAmerica,victimsincludestreetchildren.


112 PartI • TheSocietyofPerpetualGrowth

werelynched,3,446wereblack.Peoplewereneverpros-ecuted for participating in a lynching, and they frequently requested to have their pictures taken next to the victim, oftenturningthephotographintoapostcard(Allen2000).1

Core countries play a major role in supporting vio-lent regimes in the periphery by either training officers or offering direct military aid. Virtually all this military support is used, not to defend against foreign invasion, but to suppress political dissent or unionization or todisciplinearesistantcitizenry.Andthefinancialcostofmaintaining militaries and supplying client states is high (seeTable4.1).AlexanderGeorge inhisbookWestern State Terrorism concludes that

the plain and painful truth is that on any reasonable definition of terrorism, taken literally, the United States and its friendsare the major supporters, sponsors, and per-petrators of terrorist incidents in the world today….[M]any,probablymost, significantinstances of terrorism are supported, if not organized,bytheU.S.,itspartners,andtheirclientstates.(George1991:1–2)

1 Many of these are available at

There were 4,743 lynchings in the United

States from 1882 to 1968. These “death squads” acted with impunity and were

never prosecuted by the state. (Bettmann/


TaBLe 4.1 Military Spending, World Share, Spending per Capita, Share of GDP, and Change from 1999 to 2008 of Fifteen Countries with the Highest Military Spending

Rank Country Spending ($ Bn.) Percent of GDP World Share (%)

— World Total 1,630 2.6 100

1 United States 711.0 4.7 41

2 China 143.0 2.0 8.2

3 Russia 71.9 3.9 4.1

4 United Kingdom 62.7 2.6 3.6

5 France 62.5 2.3 3.6

6 Japan 59.3 1.0 3.4

7 Saudi Arabia 48.2 8.7 2.8

8 India 46.8 2.5 2.7

9 Germany 46.7 1.3 2.7

10 Brazil 35.4 1.5 2.0

11 Italy 34.5 1.6 2.0

12 South Korea 30.8 2.7 1.8

13 Australia 26.7 1.8 1.5

14 Canada 24.7 1.4 1.4

15 Turkey 17.9 2.3 1.0

Source:Military Expenditures: SIPRI Yearbook, 2011

Chapter4 • TheNation-StateintheCultureof Capitalism 113

spin, free Trade, and The rOLe Of energy in The gLOBaL eCOnOmy

In March of 2003, the United States, Great Britain, and asmall number of military personnel from forty other countries invadedIraq.TheinvasionandsubsequentoccupationofIraqareclearlyoneofthefirstdefiningmomentsofthetwenty-firstcentury. Its consequences dominated U.S. electoral politics,preoccupied the media, and resulted in the deaths of hundreds of thousands of Iraqis, Americans, and others, along with the displacement of millions more at an ultimate cost of over one trilliondollars.Thequestionis,What can we learn about the role of the nation-state from this event and from the wider involvement of the United States in the Middle East? More specifically, What does it tell us about the role of the nation-state in marshaling support for its actions and for its function of maintaining the health and growth of the economy?


U.S.involvementintheMiddleEast,particularlyinMiddleEastpolitics,beganlargelyinMayof1933,whenStandardOilofCalifornia(today’sChevron)gainedtherighttodrillforoilinSaudiArabia,formalizingtheagreementwiththeSaudisbyformingapartnershipknownastheArabian-AmericanOilCompany(Aramco).Aramcoworkedhardatmakingthepartnershipworkat theculturallevel, insistingthatemployeesfollowstrictSaudilawsandbuildingpowerplants,roads,schools,andotherneededfacilities.By1980,SaudiArabiahadbought100percentofAramco’ssharesandin1988,withlittleobjectionfromtheUnitedStates,tookovertotalmanagementofthecompany,changingthenametoSaudiAramco.


In1953,Iran,withthefifth-largestoildepositsintheworld,becameaU.S.interestwhenademocraticallyelectedgovernmentledbyMohammadMossadeqnationalizedtheBritishAnglo-IranianOilCompany.SeeingBritishintereststhreatened,theUnitedStatesjoinedGreatBritain,and,workinglargelythroughtheU.S.CentralIntelligenceAgency(CIA)andwithIranianarmyofficers,overthrewMossadeqon thepretext thathehadcommunist leanings.They lent theirsupport totheshahMohammedRezaPahlavi,whohadbrieflyreignedwhenhisfather,RezaPahlavi, abdicated in 1941 andwho ruledmore as a dictator than a constitutionalmonarch.As a result ofU.S. participation in the overthrowofMossadeq,U.S. firms gained a 40 per-centshareinIranianoilandtherighttomaintainmilitarybasesinIran.Largelybecauseoftherepressivenatureoftheshah’sgovernment,hewasdeposedin1979whenapopularrevolutiondrove him from power and installed a fundamentalist Islamic government headed by Islamic clericAyatollahKhomeini.TheIranianRevolutionhadtwoseriousconsequencesfortheUnitedStates:thelossofaccesstoIranianoilandthelossofmilitarybasesinIran.

The year 1979was also eventful because Iraq, with the second-largest oil reserves intheworld,officiallyacquiredanew leader,SaddamHusseinal-Tikriti. In1963,Saddamhadbeenamongagroupofarmyofficerswho,withCIAhelp,overthrewandkilledGeneralAbdel-KarimKassem,whohadangeredtheUnitedStatesbylegalizingtheCommunistPartyinIraqand enacting land reforms while granting autonomy to the Kurdish population in the north of the country. In1980Saddam invaded Iran.When it looked like Iraqmight lose thewar, the
















114 PartI • TheSocietyofPerpetualGrowth

United States supplied arms and intelligence to Iraq, whichfinallysignedatreatywithIranin1989afterthedeathsofsome1.5 millionpeople.TheUnitedStatesremainedongoodtermswithSaddamuntil1990,when,inaterritorialdispute,SaddaminvadedKuwait.TheUnitedStatesanditsalliesrespondedbylaunching Operation Desert Storm to “liberate” Kuwait. TheUnitedStateseasilysucceededindrivingtheIraqiarmyoutofKuwait,andthenledtheUnitedNationsinapplyingeconomicsanctions against Iraq and limiting the country’s ability toacquire any goods (including medicines) that conceivably could beusedformilitarypurposes.UNICEFestimatedthatat least500,000childrendiedfor lackofmedicinesasaconsequenceofthesanctions.Then,inMarchof2003,theU.S.-ledcoalitioninvaded Iraq.

Toillustratetheroleofthenation-state,mainlytherelationshiptocapitalists(particularlymultinational corporations), we need to examine the following questions, each of which is raised by the Iraq invasion. First, how does a nation-state, especially one with a representative government, gain support for policy decisions and collective action such as the invasion of another country? Second,how does the invasion of Iraq relate to the nation-state’s stew-ardship of the economy, especially its relationship to multinational corporations? Finally, given the importance of Middle Eastern petroleum supplies, what is the role of nation-states in the availability of energy supplies, and what is the role of oil, and energy in general, to the workings of national economies?

manufacturing Consent: spin

Manufacturing consent,a termsuggestedbyEdwardS.HermanandNoamChomsky(2002),refers to the efforts of governments and corporations to manipulate the manner in which poli-ciesandeventsarerepresentedby themassmediaand,consequently, interpretedbycitizens.TheeffortofPresidentGeorgeW.Bush’sadministrationtojustifytheinvasionofIraqisagoodexample.ThereissignificantevidencethatevenbeforetheattacksofSeptember11,2001,ontheWorldTradeCenter and thePentagon, theadministrationwanted to invade Iraqand thatevenafter9/11wasadvisedthatpublicopinionfirsthadtobepreparedforaninvasion(Johnson2004:227).TheadministrationconsequentlylaunchedapublicrelationscampaigntoconvincepeoplethatremovingSaddamHusseinwouldbeessentialforAmerica’s“waronterror.”

Therewereclaims(“slamdunks,”accordingtotheheadoftheCIA,GeorgeTenet)thatSaddamhadweaponsofmassdestruction,noneofwhichwereeverfound.Thenthepresidentfloatedscenarios inwhichIraqcouldusedrones to target theUnitedStateswithchemicalorbiologicalweapons.Thesecretaryofdefense,DonaldRumsfeld,toldnewsmenthatthegovern-menthad“bulletproof”evidenceoflinksbetweenIraqandalQaedaandthatIraqhadofferedsafehaventobinLadenandTalibanleaders.Ofcourse,thepresidentlateradmittedthattherewerenosuchlinks,althoughinFebruaryof2006,threeyearsaftertheinvasion,90percentoftheAmericantroopsfightinginIraqstillbelievedthatSaddamwasdirectlyresponsiblefor9/11(Zogby2006).

Political pundits and politicians later attacked the questionable reasons given for the inva-sionofIraq.Butallgovernments,includingthoseoftheUnitedStates,havegenerallyusedspinto justify military action, to manufacture consent that going to war is in some national interest. TojustifythewaragainstSpainin1898,whichresultedintheUnitedStatesdrivingSpainfromCubaandannexing thePhilippines, theU.S.governmentclaimed(withsignificanthelp fromthenewsmediaandwithoutevidence)thattheSpanishwereresponsiblefortheexplosionthatdestroyed the battleship MaineinHavanaHarbor.InAprilof1917,WoodrowWilsonestablished








The Philippines

Chapter4 • TheNation-StateintheCultureof Capitalism 115

the Committee on Public Information (CPI) to marshal support fromareluctantcitizenryfortheUnitedStates’declarationofwar againstGermany. TheCPI gainedmedia support for thewar, distributed posters depicting alleged German atrocities, and recruited influential members of American towns and cities togivesupposedlyspontaneousfour-minutetalkstocommunitygroups in support of the war.

In 1962, after Fidel Castro installed a communist gov-ernmentinCuba,andafterafailedU.S.-supportedinvasiontodepose Castro failed, the chair of the joint chief of staff, General LymanLemmitzer,sentamemotoSecretaryofDefenseRobertMcNamaraproposingthatthemilitarykillinnocentAmericansin the street, sink boats carrying refugees from Cuba, and con-duct terrorist attacks in American cities—and blame Cuban agents to justify a U.S. invasion of Cuba. Named OperationNorthwoods,itwassignedbyallmembersofthestaff.McNamaraignoredthememoandtwomonthsafterwardforcedLemmitzer’sretirement(Bamford2002:778–791;seealsoJohnson2004:301).

PresidentLyndonJohnsonjustifiedU.S.militaryactioninVietnamin1964byclaim-ingthattheNorthVietnamesehadattackedanAmericanwarshipon“routinepatrol”intheGulf ofTonkin andgained a congressional resolution that justifiedU.S.military interven-tioninVietnam.Infact,thewarshipwasonanintelligence-gatheringmissiontoassistSouthVietnam forces attacking North Vietnam. The president claimed that there was a secondattack,whichneveroccurred.AsCongressvotedtoauthorizemilitaryaction,theNew York Timessaidthatthepresidenthadgone“totheAmericanpeoplewiththesomberfacts,”whilethe Los Angeles Times urged Americans to “face the fact that the Communists, by their attack on Americanvesselsininternationalwaters,havethemselvesescalatedthehostilities.”

At thestartof thefirstGulfWar in1991,PresidentGeorgeH.W.Bushsaid that IraqisoldiershadinvadedaKuwaitihospital,pulled312babiesfromtheirincubators,and“scatteredthemacrossthefloorlikefirewood.”ButaccordingtothedoctorsinKuwait,therewereonlyafew incubators and few if any babies in them at the time of the invasion. After the war, it was revealedthatKuwaithadhiredtheWashingtonpublicrelationsfirmHill&Knowltontopeddlethisstory,andonOctober10,1990,arrangedforan“eyewitness”totestifybeforeCongressthatithadindeedhappened.Thatwitness,whoturnedouttobethedaughteroftheKuwaitiambassa-dortoWashington,hadnotbeenanywherenearahospitalinKuwaitCityinAugust1990.Other“witnesses”whoclaimedtohaveseenIraqiatrocitieslateracknowledgedthattheyhadallbeencoachedbyHill&Knowlton(Cohen2002;Johnson2004:230;Regan2002).

Spin isnot, of course,unique togovernment.Corporations,public interestgroups, andeven religious leaders try to depict the world in ways that are, for one reason or another, in their owninterests.Butanotherreasonforspinisageneraldistrustamongtheeliteofnation-statesof democratic decisionmaking. FareedZakaria (2003), former editor of the journalForeign Affairs,warnedthattoomuchdemocracythreatenslibertiesandthatpublic-spiritedelitesshouldactas“socialstabilizers”andnotbeaccountableto“publicwhim.”Centralbanks,theEuropeanUnion,andtheWorldTradeOrganization(WTO)areexamplesofsomeoftheeliteorganiza-tionsthathesuggestsweneedinordertotemperwhathecalls“illiberaldemocracy.”Zakaria’sargument reflects the political writings of people from Aristotle to Edmund Burke, all warning about the dangers inherent in giving people the right to have too much of a say in their lives and in their government. Where did this distrust come from, and how did it give rise to the need to manufacture consent?

Tobeginansweringthesequestions,let’sgobacktothelatenineteenthandearlytwentiethcenturies, a period when civic participation and social activismwere thriving in the United
















116 PartI • TheSocietyofPerpetualGrowth

States.Itwasatime,also,whencorporateprerogativeswerebeingcalled into question and when social movements were driven by popular appeals to equality and social justice. At the same time, elites were warning again about the dangers of democracy. One of the most influential of these warnings came from French soci-ologistGustaveLeBon inhisbookThe Crowd: A Study of the Popular Mind (first published in 1895). InThe Crowd, LeBonwarned of the power of the masses, which had been set loose and wasovertakingthehistoricalstage.Thequestiongiven“scientific”legitimacybyLeBonwashowtoassertcontrolover“themob”?LeBon’squestion is creditedby some, includingmedia scholarStuartEwen(1996),withleadingtothecreationofthewholefieldofpublicrelationsandtheemergenceof“spin,”attemptsto“engi-neerconsent,”andmoldpublicopiniontotheinterestsofnations,elites,corporations,andfee-payingclients.

Edward Bernays was central to this development. Bernays, whosenameisrecognizabletofew,islistedbysomeasoneofthehundred most important people of the twentieth century. Bernays, oftencalled“thefatherofspin,”wasbornin1891toapowerfulandwealthyAustrianfamily(hewasanephewofSigmundFreud).Bernayswasapublicrelationsgenius:HegothisstartworkingfortheU.S.CPIduringWorldWarI.Heoriginatedtheorchestrationof public events to advertise products, as when he convinced wom-en’s rightsmarchers inNewYorkCity toholdupLuckyStrikecigarettesas“TorchesofFreedom.”Bernayswastheadvisorandconfidant of presidents, world leaders, and corporate heads for overeightyyears.Interviewedwhenhewasalmost100 yearsoldbyStewartEwen,Bernaysexpressedaclearlyhierarchicalviewofsociety inwhichan“intelligent few”havebeenchargedwith

influencingthetideofhistory.Publicrelations,hesaid,isaresponse“toatranshistoricconcern:the requirement, for thosepeople in power, to shape the attitudesof thegeneral population”(Ewen1996:11).HeevensuggestedthataneleventharticlebeaddedtotheBillofRights—inaddition to the freedom of speech, freedom of assembly, and freedom of the press, he said, we shouldadd“thefreedomtopersuade.”

Bernays, of course, was not alone in his sentiments. Guided by public relations pioneers suchasIvyLeeandWalterLippmann,popularopinionandculturebegantobeseenassomethingthat must be controlled for the good of society. Particularly concerned in the early twentieth century were corporations whose practices were coming under increased scrutiny and attack by journalists, government agencies, and the public at large.

Corporations hired public relations consultants to sell policy decisions, and soon a social scienceemergedthatspecializedinmasspsychologyandmanipulation.Thesepublicrelationspeople saw themselves as “news engineers.” They proposed to get out “facts” to enable thepublic to understand the soundness of corporate policy. Government and corporate campaigns to influencepublicopinion led to thedoctrineofwhathistorianRobertB.Westbrookcalleddemocratic realism, the idea that it was best to strictly limit government by the people and to redefine democracy as, by and large, government for the people by enlightened and responsible elites(Ewen1996:147).

Themastersofspinhadalowopinionofpublicintelligence.JournalistWalterLippmann,for example, thought the public incapable of seeing the world clearly, much less understanding it.But,hesaid,thescientificallytrainedpersoncouldengineer“pseudo-environments”toper-suade people to see the larger political environment, and to this end, the mass media, was critical.

During World War I, the U.S. government

established the Committee on Public

Information to gain support for the war

against Germany. (World History Archive/


Chapter4 • TheNation-StateintheCultureof Capitalism 117

Particularlyfrighteningtoelitesduringthe1930sweretheeconomicandsocialpoliciesof Franklin D. Roosevelt’s New Deal, which threatened corporate autonomy. Furthermore,Roosevelt was particularly effective in presenting the reasons for his policies by trying to educatethepublic,ratherthansimplycontrolit.Forexample,inhisfirstofthirty-one“FiresideChats,”heoutlinedtheintricaciesofthebankingsystem,whysomanyhadfailedinthepreced-ing months, and what must be done to make them secure again. Roosevelt, Ewen writes,

struck a bargain with popular activism. Exhibiting trust and affection for the public, not fear,heencouragedordinarypeople toexamineevenhisownNewDealpro-grams and provide suggestions—if required—for more suitable actions to be taken. (1996:257–258)

Alarmed conservatives and businesspeople countered the NewDeal with the NationalAssociationofManufacturers(NAM)andlaunchedacampaigntoconvincethepublicthatwhatwas good for businesswas good for them. They produced pamphlets such asWhat Is Your American System All About, which told people they had a choice of what kind of country they lived in,one inwhich“thecitizen is supremeand thegovernmentobeyshiswill,”orone inwhich“thestateissupremeandcontrolsthecitizen.”

Someofthestrategiesincludeddistributingnewspaperarticleswithapro-businessspinaddressingDepression concerns such as the uneven distribution ofwealth and class antago-nisms.Theyhadsixprofessedly independent scholars fromPrinceton,NewYorkUniversity,Stanford,andUniversityofSouthernCaliforniataketurnswritingnewspapercolumnsattackingeconomicaspectsoftheNewDealandpublishedaseriesofbookletscalledYou and Industry for schools, colleges, and public libraries. Young America, distributed weekly to schools, contained articlesofferingauser-friendlyportrayalofcapitalism.Theyalsoproduceddocumentariesfortheaterssuchastheten-minuteseriesAmerica Marches OnnarratedbyLowellThomasdescrib-ingAmericaasthegreatestindustrialsystemtheworldhaseverseen.Theyalsomovedtodrama,producinga fifteen-minuteweekly radio showcalledThe American Family Robinson, which chronicled the lives of ordinary Americans and portrayed businesspeople as heroes and labor organizersasvillains.Theyalsospentmillionsonbillboardsupholding“theAmericanWay”anddescribingthegloriesoflifeinAmericaandtheevilsofcommunist“collectivism.”Forexample,theAmericanMedicalAssociation(AMA)launchedacampaignin1949toscuttlewhatlookedlike a promising plan for federally insured health coverage by linking the plan to communism. Thespotlightwasshiftedfromhealthcareneedstotheevilsofgovernmentintervention.Inall,theyspent$1.4milliontodefeattheproposal(theequivalentofover$10milliontoday).

Today,whilespendinghundredsofmillionsofdollarsonpublic relations,corporationstrytomasktheirinvolvementinspinbyformingcitizengroups,suchastheNationalWetlandsCoalition (with its logo of a duck flying over a swamp), sponsored by oil and gas drilling com-panies and real estate developers fighting for reducing restrictions on the conversion of wetlands to drilling sites and shopping malls. Keep America Green, sponsored by the bottling industry, argues for antilitter campaigns rather than mandatory recycling legislation.

Protected by the free speech provision of the First Amendment, corporations marshal huge publicrelationseffortsonbehalfoftheiragendas.IntheUnitedStates,the170,000publicrela-tions employees whose job it is to manipulate news, public opinion, and public policy in the interestsoftheirclientsoutnumbernewsreportersby40,000.Astudyin1990discoveredthatalmost40percentofthenewscontentofatypicalU.S.newspaperoriginatesaspublicrelationspressreleases,storymemos,andsuggestions.TheColumbia Journalism Review reported that more than half the news stories in the Wall Street Journal are based solely on corporate press releases(Korten1995:148).

Thusanimportantfunctionofthestateanditscorporatesupportersistousethepoliticaland economic power at their disposal to manufacture consent for actions and policies that it

118 PartI • TheSocietyofPerpetualGrowth

believes are essential, and convince the public that these actions and policies are in their interest. Thus,evenbasicforeignpolicydecisions,manyadvise,mustbedonecovertly.Contemporarypolitical analysts such asCharlesKrauthammer andRobertD.Kaplan advise thatAmericanglobaldominationisbestdonecovertlyandsecretly,sinceifleft toitsowndevices,theU.S.publicwoulddisarmandplaceconstraintsonexecutivepower(Johnson2004:68).

The elites’ low regard for public participation also requires removing fromdemocraticdecision making anything having to do with economic policy. In fact, one of the curious facts aboutattemptsbynation-states toengineerconsent ishow infrequentlyeconomic factorsareincorporatedintospintojustifywar.Wegotowar,saythemediamanagers,toprotectcitizensfromattack(Saddam’sdronesorbiologicalweapons)orforhumanitarianpurposes(to“bringdemocracy”or“tofreepeoplefromtyranny”),neverforeconomicpurposes.Yet,aswe’llseenext, economic factors were very prominent in the invasion of Iraq.

markets and free Trade

OneofthemajorcriticismsvoicedbypolicymakersandthemediaoftheU.S.-sponsoredinva-sion of Iraq was that, while the initial phase of the invasion went well, there was no plan for what to do next. Consequently, the story goes, an insurgency was allowed to develop that undermined theplanstoinstallademocraticstate.Whatwentbasicallyunnoticed,particularlybythepopu-larmedia,wasthat, infact, theadministrationhaddrawnupanelaboratesetofwell-plannedeconomic reforms that were imposed on Iraq by the Coalition Provisional Authority (CPA) immediatelyaftertheinvasion.Thesereformsrevealanotherroleofthemodernnation-state—to provide to corporate sponsors unregulated access to markets and resources and to establish rules,laws,andregulationsthatmaximizetheabilityofcorporationstoprofit—rules,laws,andregulations that likely would not be supported by the general population of a democratic state.

TheUnitedStatesputtogethertheCPAaftertheinvasiontogovernIraqpriortothehold-ing of democratic elections. However, before elections could be held, the director of the CPA, L. PaulBremer,imposedasetofordersthatwereintendedtoturnIraqintoamodeldemonstra-tionof“freetrade”andneoliberaleconomictheory.


• Suspendingalltariffs,customsduties,importtaxes,orlicensingfeesongoodsandservicesentering or leaving Iraq.

• GrantingfullimmunityfromIraqilawtoallsecurityfirmsbroughtintoworkinIraq.• Privatizingsome200state-ownedenterprises,permitting100percentforeign-ownership

of Iraqi businesses.• Allowinginvestorstotake100percentoftheprofitstheymadeinIraqoutofthecountry

with no requirement that the profits be reinvested.• Prohibitinganyrequirementthatforeigncompanieshirelocalworkers,recognizeunions,

or reinvest any profits back into the country.• AllowingforeignbankstoopeninIraqandtakea50percentinterestinIraqibanks.• Loweringthecorporatetaxratefrom40percenttoaflat15percent.

Theseorders constituted a corporatewish list of rules and regulations that virtuallynodemocratic legislature could openly support, let alone implement. Furthermore, the CPA planned to build these rules into the Iraqi constitution so that they would have to be acknowledged by any subsequentIraqigovernment.Thiswasparticularlyimportantbecausewithoutguaranteesthatthese economic policies would be retained by future Iraqi governments, no corporation or bank orinvestorwouldriskinvestingmoneyintheIraqeconomy(seeKlein2004).

Thus,someofBremer’sfirstactsasheadoftheCPAwastofire500,000stateworkers,most of them soldiers, but also doctors, nurses, teachers, publishers, and printers (partly because theyweremembersofSaddamHussein’spoliticalparty,BaathArabSocialist);opentheborder

Chapter4 • TheNation-StateintheCultureof Capitalism 119

tounrestrictedimports(muchtothedismayoflocalIraqibusinesspeople);andprivatizesome200state-ownedcompaniesproducingeverything fromcement towashingmachines. In fact,U.S.corporationswerebroughtintosupplytheoccupationwithcementthatcouldhavebeensupplied by Iraqis at a fraction of the cost. “Getting inefficient state enterprises into private hands,”Bremersaid,“isessentialforIraq’seconomicrecovery”(Klein2004).Itisnoteworthythatinthebeginningof2007,withtherisingpossibilityofaU.S.defeatinIraq,thePentagonbeganaprogramtoreopenstate-runfactoriesinordertoprovidejobsforthemassofIraqiunem-ployedputoutofworkbytheCPA(Glanz2007).

TheactionsoftheCPAinIraqrepresentthekindsof“freetrade”regulationsthatcorpo-rations lobby for, but which are rarely enacted in their pure form because of objections from smallbusinesspeople,unions,orcitizensingeneral.Infact,inanydemocraticsystemwhererepresentatives have a say, such reforms are very difficult to enact, as thirty years of efforts in LatinAmerica,Asia,theUnitedStates,andEuropeattest.Iraqrepresentedasituationinwhichfree trade reforms could be imposed by force with no interference from democratic institu-tions. But force is not the only way to prevent democratic procedures from interfering with free trade reform.

Corporations have enormous power, as we noted inChapter3.Theeconomicresourcesavailable to corporations rival those available to most countries and one of the major priorities of corporationsisadvancingthedoctrineof“freetrade.”Thisinvolvesworkingwithnation-statestoremovetheso-calledbarrierstotrade.Thesebarriersincludethefollowing:

• taxesandtariffsongoodsenteringorleavingacountry• subsidies,taxbreaks,orotherformsofpreferentialtreatmentthatcountriesmightgiveto

domestic businesses, such as payments to farmers or tax breaks to specific businesses• socialorenvironmentallaws,suchasthoseregulatingtheageofworkers,workingcondi-

tions, or laws restricting environmental damage by corporations• customsandculturaltraditions(e.g.,themiddaysiestainSpain)

The question is,Other than conquering a country militarily, in what other ways can these barriers be removed, particularly if a large portion, or even a majority of the population, objects?

First, nations or groups of nations can agree among themselves to remove barriers to trade. Forexample, theUnitedStatesandAustralia implementeda free tradeagreement in January2005.TheNorthAtlanticFreeTradeAgreement(NAFTA)betweenCanada,theUnitedStates,andMexicoisanotherexample,asistheAsian-PacificEconomicCooperationForum(APEC)that includes some twenty-one countries.Generally these agreements stipulate that countriescannot give preferential treatment to domestic business and must lower or remove tariffs on goods traded between member countries. It may also mean that countries cannot impose labor or environmental laws on businesses or corporations from other member countries if they are deemed anunfair restrictionon trade.Typically these agreementsmust be ratifiedbydemo-cratically elected bodies, but once they are ratified, control over many economic rules and laws passes to unelected individuals empowered to hear disputes between countries, or between countries and corporations.

A second way that barriers to trade can be removed is through actions of multilateral organizationssuchastheInternationalMonetaryFund(IMF)ortheWorldBank.Generally,if a country is in debt to the IMF and must renegotiate the repayment of the loan, the IMF will insist that the country do everything it can to promote foreign investment in the country; this typically involves removing the sorts of barriers to tradementioned earlier. Thus, theIMFinsistedthatJamaica,whichisheavilyindebt to theIMF,openthecountryto foreigncorporationswishingtodobusinessthere.OneresultwasthevirtualdestructionofJamaicanagriculture, because Jamaican farmers could not produce and sell produce in their owncountry as cheaply as could American agribusiness. In these cases, democratically elected

120 PartI • TheSocietyofPerpetualGrowth

representatives have virtually no choice but to follow IMF directives; otherwise the country will be cut off from loans from other financial entities and will likely lose any possibility of attracting foreign capital and investment.

AthirdwaytoreducebarrierstotradeisthroughmembershipintheWTO.As we noted in the last chapter, thegoaloftheWTOistofosterfreetrade.Forexample,Japan,becauseofpub-lic concerns about pesticide residues in foods, required testing whenever a poisonous chemical was used to fumigate imported fruits and nuts against infestation by coddling moths. But since Japan’ssafetystandardswerehigherthanthosesetbytheWTO,theUnitedStatescomplainedtotheWTOthatthisregulationconstitutedabarriertotrade,andtheWTOrulingbodyagreed.

It is fair to ask, who benefits from free trade? It clearly benefits corporations that are guaranteed access to global resources, labor supplies, and consumers. It also benefits consumers by lowering the prices for goods and services. And it disproportionately benefits wealthy nations who are able to impose sometimes unfair trading practices on poor countries. Forexample,theWTOrequiresthirdworldcountriestoremoveallsubsidiesforagriculturebut allowsEU and U.S. subsidies to continue because theywere in place before theWTOagreement. Finally, overall, free trade may contribute to economic growth by accelerating both production and consumption.

Who, then, is hurt by free trade? First, small farmers and businesspeople who cannot compete with large corporations. Mexican peasants did relatively well selling their corn when thegovernmentassistedthemwithmoneyforfertilizersandplacedimporttariffsonU.S.cornfarmers.However, onceNAFTA removed those protections,Mexican farmers could not selltheircorninMexicoascheaplyaslargeU.S.farmerscould.Thisdoesnotnecessarilymeanthatsmall-scalefarmsincountriessuchasJamaicaandMexicoarelessefficient;instead,farmersincountriessuchastheUnitedStatesreceivehiddensubsidiesofonesortoranother.OnereasonJamaican farmerscouldnot competewithU.S. farmers isbecause the interest rates (dictatedby theIMF) that theyhad topayon loansweremuchhigher than interest,U.S.farmersalsopaylessforenergythanJamaicanfarmersorfarmersinpoorercountries.Thus,inspiteoftheideologyoffreetrade,farmersinEuropeandtheUnitedStatesaregivendistincteconomicadvantages over farmers in poorer countries.

Hurt also by free trade are laborers who, because of the terms of many free trade agreements, are denied effective labor representation, or, as we noted inChapter2,areforcedto compete with laborers in other countries who, for various reasons, must accept lower wages. And, aswe’ll see inChapter5, laborers are also restrictedby immigration laws.Thuswhilegoods, services, and capital may freely flow across borders, workers may not. Finally, another categoryofpersonsharmedbyfreetradearecitizenswhoareexposedtounregulatedproductsandenvironmentalhazards.

energy and Technology

ThereislittlequestionthattheinvasionandoccupationofIraqinvolvedoil.U.S.presidentsandpolicymakershavelongmadeitclearthatprotectingaccesstoMiddleEasternoilfortheUnitedStates and its allies is critical to bothnational security and the economy ingeneral. In 1980PresidentJimmyCarterdescribedaccesstooilinthePersianGulfasa“vitalinterest”andsaidthattheUnitedStateswoulduse“anymeansnecessary,includingmilitaryforce”toovercomeanattemptbyahostilepowertoblockthatflow(Klare2004:4).U.S.militaryleadersmadeanexplicit reference to Iraq in the joint chiefs of staff report Strategic Assessment 1999 when they notedthatan“oilwar”inthePersianGulfwasaseriouspossibilityandthatU.S.forcesmightbeusedtoensureadequatesupplies.TheysuggestedalsothatawarcouldeliminatetheinfluenceofSaddamHusseinandgainU.S.controlofIraqioil,whileatthesametimegainingaccesstotheenergy-richareaofCentralAsia(Johnson2004:226).

Chapter4 • TheNation-StateintheCultureof Capitalism 121

One question is, How has oil, or energy in gen-eral, come to play the role it has in global politics, and in what way does it affect the role and function of the nation-state?

Fossil fuels are, by far, the major source of global energy,withoilthedominantsource(seeFigure4.1).

Generally speaking, up until recently, energy sources have been relatively plentiful; in 2000 oilwas selling for under twenty dollars a barrel, coal was still plentiful (although highly polluting), and natural gas deposits seemed more than adequate. However, in the firstyearsof the twenty-first century, energyoutlooks became alarming. The price of oil at onepoint reached seventy dollars a barrel, and some oil geologists predicted that we would soon reach “peak oil,”meaning that the totalamountofpetroleumproducedwouldbegin todecline.LargelybecauseoftheeconomicgrowthofChinaandIndia,globaloilusagejumped450percentfrom15millionbarrelsadayin1955to83.7millionbarrelsadayby2005.TheUnitedStatesaloneconsumesover20millionbarrels(840milliongallons)ofoiladay,andglobaldemandispro-jectedtobe118millionbarrelsperdayby2030(Bodman2006).








figure 4.1Global Energy Sources, 2006

TaBLe 4.2 U.S. Petroleum Imports by Country of Origin: Thousand Barrels per Day, 2006–2011

Country 2006 2007 2008 2009 2010 2011

Canada 2,353 2,455 2,493 2,479 2,535 2,706

Mexico 1,705 1,532 1,302 1,210 1,284 1,205

Saudi Arabia 1,463 1,485 1,529 1,004 1,096 1,195

Venezuela 1,419 1,361 1,189 1,063 988 944

Nigeria 1,114 1,134 988 809 1,023 817

Iraq 553 484 627 450 415 460

Algeria 657 670 548 493 510 358

Angola 534 508 513 460 393 346

Russia 369 414 465 563 612 621

United Kingdom 272 277 236 245 256 158

Ecuador 278 203 221 185 212 192

Kuwait 185 181 210 182 197 191

Norway 196 142 102 108 89 113

Colombia 155 155 200 276 365 422

Brazil 193 200 258 309 272 249

All Countries 13,707 13,468 12,915 11,691 11,793 11,360


122 PartI • TheSocietyofPerpetualGrowth

partly because of increased natural gas production from the environmentally risky process of hydrofracking.

Adding to concerns about sufficient energy resources, especially oil, is the fact that someoil-producingcountries,manyofwhichweresubject tocolonial rule,aredistrustfulofforeigninvolvementorhavegroupsprotestingorrebellingagainstthecentralgovernment.Theoil-producingareasofNigeria,forexample,havebeensubjecttoattacksbygroupsthathavesufferedfromenvironmentaldevastationduetooilexplorationanddrilling(Klare2004:127).Andglobalenergyconsumptioningeneralisprojectedtoincreaseatarateof2.6percentayear(seeTable4.3).

Given the projected energy crisis that many see approaching, is it fair to ask, why it is that we can’t reduce our energy dependence? One answer is that economic growth is directly tied to energyconsumption.Itisprobablynoaccidentthattheincreaseinpetroleumusagesince1950(450percent)isclosetothepercentageincreaseinthemoneysupply(seeTableI.3). Generally, each percent of GDP growth requires 0.27 percentage increase in energy usage (Martenson2011:150).Theproductionofmoneybeginswithenergy.Energyisrequiredtofuelourtech-nologies,whichinturnproducegoodsandservicesthataretransformedintomoney.Thus,oneof the keys to maintaining economic growth is the constant acceleration of production through theuseofenergy-dependenttechnology(seeRobbins2005).

Wecanseehowtheprocessworkswiththerecenthistoryofagriculture.Agricultureandanimal husbandry were, perhaps, the first areas to which technology was applied to accelerate production.VirtuallyallofthefoodcropsanddomesticatedanimalsthatcomprisetheWesterndietexisted2,000yearsago.TodayWesternfarmersandranchersjustgrowandraisethemfasterandwithlesshumanlabor.Inthenineteenthcentury,theadventofmechanizedagriculture—thesteelplow;themechanicalreaper;andthe“combine,”whichcombinedthemachinesforreapingandthrashingwheat—cutthelabortimeforeachbushelofwheatharvestedfromsixty-oneto

TaBLe 4.3 Projected Energy Consumption (quadrillion Btu) by Selected Region, 2010–2030

Regions (ranked by projected increase in energy consumption) 2010 2015 2020 2025 2030

Projected Annual Percent Increase

China 79.9 99.0 119.8 142.5 169.8 5.0

India 20.0 24.0 28.4 33.1 38.7 3.8

Africa 18.3 22.1 25.0 28.3 32.6 3.4

Central and South America 29.2 34.8 40.7 47.2 53.9 3.4

Middle East 25.9 30.4 34.5 39.4 44.6 3.1

Brazil 11.1 13.0 14.7 16.8 18.9 2.9

Mexico 8.1 9.5 11.0 12.7 14.5 2.8

South Korea 11.1 12.8 14.1 15.4 16.9 2.5

Russia 34.6 39.4 44.4 49.4 54.6 2.4

Canada 15.8 17.1 18.2 19.4 20.6 1.6

United States 110.2 118.7 127.2 136.6 146.4 1.5

Australia/New Zealand 6.7 7.2 7.7 8.3 8.8 1.4

European Union 85.5 89.4 92.2 96.1 101.2 0.9

Japan 23.1 24.1 24.7 25.5 26.2 0.6

Total World 524.2 594.2 666.0 745.6 835.4 2.6


Chapter4 • TheNation-StateintheCultureof Capitalism 123


Inthelatterhalfofthetwentiethcentury,theso-calledgreenrevolution(which we will discuss in more detail inChapter6)furtherreducedlabortimebysubstitutingnonhumanenergy(largelysubsidizedbynation-states)intheformofchemicalherbicides,pesticides,andfertilizersforhumanenergy.Technologyhasalsocontributedtotheacceleratedgrowthofdomesticatedanimals.Agrass-fedsteer in1750wouldnotattainmaximumweightuntil itwas fiveor sixyearsold.By1950,grain feedingwouldbring thesteer tomarket in twoor threeyears.Butwithtoday’suseofoil-basedherbicidestoincreasepasturage,proteinsupplements,growthhor-mones, forced feeding of grain, and antibiotics to ward off infections, a typical steer can reach itsslaughterweightofsome1,200poundsinfourteentosixteenmonths(Pollan2002).Now,withtheadventofgeneticengineering,researchersarefurtheracceleratingthegrowthandsizeof animal species such as salmon, trout, catfish, and oysters, as well as plants.

Thecostofacceleratingfoodproductionisavastlyincreasedneedforenergy,particularlypetroleum.AsRichardManning(2004)putsit,we“eatoil.”Manningisreferringtothedevelop-mentofenergy-dependentagriculturethathasemergedinthepasthalfcentury(seeChapter6).AmodernAmericanfarm,saysManning,requirestheenergyequivalenceoffourtonsofTNTperacreperyear;Iowafarms,intotal,requiretheenergyequivalenceof4,000Nagasakibombs.Every calorie that we eat is backed by at least a calorie of oil; the production of one calorie of breakfast cereal requires four calories of energy. If the rest of the world ate the same way as people in theUnitedStatesdid,global fossil-fuel reservescouldbegone in sevenyears (seeManning2004).

In addition, the use of technology to accelerate capital accumulation does not apply only to food.Wecanfindtechnologymakingeverythinggofaster(seeGleick2000)invirtuallyeveryarea of the economy, from transportation to communication to commodity production to the pace ofwork.Itisnoaccidentthatthewealthieracountry,themorefastpacedthelifeofitscitizens(seeLevine1997).Timeis,asmanyacapitalisthasremarked,money.Andtechnology,andtheenergy that runs it, overcomes time.

Forthesereasons,itisessentialfornation-statestoensurethattheircitizenshaveadequateand increasing access to energy sources. Furthermore, the cost of the energy must be low enough to allow a significant difference in value between it and the goods and services into which the energy is ultimately converted. In other words, it makes little economic sense if the profit from thesaleofabushelofcornisequaltothecostoftheenergyneededtoproduceit.Thus,itiscrucialfornation-statestoensureaccesstoenergyandtocheapenergy.Atthispointinhistory,fossil-basedfuels(oil,coal,andnaturalgas)arethecheapestsourcesofenergy.

The problem, of course, is that as nation-states compete for cheap energy sources andaccess to foreign markets and resources, the risk of violent conflict increases. Consequently, militarypowerbecomesmoreimportant.Atthispointintime,theUnitedStatesisclearlythestrongest military power in the world and used that power, as in Iraq and Afghanistan, to main-tain access for producers to energy and markets, and spinning military action to both maintain publicsupportforitsactionswhileminimizingglobalcondemnation.Butthishasconsequences.

Chalmers Johnson (2004:285ff.) suggests that the battery ofmilitary bases required toensureU.S.accesstoenergyandmarketscarrieswithitwhathecallsthe“sorrowsofempire,”whichwillultimatelychangethenatureofthenation-state.These“sorrows”includeastateofperpetualwarthatwillleadtomoreviolentattacksagainstU.S.citizensandtoanincreaseinreliance by smaller states on weapons of mass destruction; a loss of democracy and constitu-tional rights toan increasingly imperialpresidency;a“shreddedprincipleof truthfulness,”aspropaganda and spin are used to glorify war; power and the military itself; and, finally, eco-nomicdecline andneglect of education, health, and individualwell-being asmore andmoreeconomic resources are spent to maintain the military empire. In addition, the maintenance of empire requires themilitarizationof society ingeneral.Forexample, the requirement for theUnitedStatestomaintainastandingmilitaryandstaffthemorethan750basesaroundtheworld

124 PartI • TheSocietyofPerpetualGrowth

requiresthe“professionalization”ofthearmedforces,producingpeoplewhowillfightbecausethey are told to, because it is their job, regardless of the political goals of military operations. InWorldWarII,weneededpropagandatoconvincethearmedforcesthattheywerefightingagainstevil:Todayitisenoughtobesimplyorderedintowar.AsJohnsonputit,

Withpublic support slackening, themilitaryhighcommand turned to inculcatingmartial values into the troops, making that the most vital goal of all military instruc-tion,supersedingeventrainingintheuseofweapons.Thesevaluesweretoincludeloyalty, esprit de corps, tradition, male binding, discipline and action—generally speaking,aJohnWayneviewoftheworld.(2004:58)


Thestateemergedsome7,000to8,000yearsagotopoliticallyintegratelargelyheterogeneouspeoples and cultures. Military conquest was the main vehicle for its creation and maintenance. Twohundredtothreehundredyearsago,thenation-statedevelopedtofulfillanewneed—thatof economic integration. Military conquest as a device was not entirely abandoned, but new strategies of integration, such as improved means of communication and transportation, national education systems, and the ideology of nationalism, became preferred means of attaining desired economic ends.

Thenation-statehelpedcreatethetypeofpeople—laborersandconsumers—requiredtomaintain and protect the interests of the capitalist. It created and maintained an unprecedented division of labor and imposed a shared culture that enabled workers to communicate with preci-sion while thirsting for the commodities that labor produced and which served as the basis of the elite’swealth.

More importantly, terror and violence remained state instruments of integration, serving toeliminatethosewhorefusedtoassimilateintothenewidealofthenation-stateortomarkasundesirable Others against whom the majority could unite. As a consequence, millions have died as victims of their own governments.

Theneedtomaintaineconomicgrowth,toconvinceanoftenreluctantcitizenrytosupportgovernment policy, even if it goes against their interests, has also led to a dependence upon spin bybothgovernmentsandcorporations.Ithasalsoledtoglobalmilitarizationasnation-statescompetetoopenaccessfortheircorporationstoresourcesandmarketsofothernation-statesand to protect vital energy resources that serve as the foundation of national economies and, indeed, societies.

With thisdiscussionof thenation-state,weconcludeour outline of the culture of capi-talism and the origins of and relations among consumer, laborer, capitalist, and nation-state.Theserelationshipsmayseemcomplex,buttheyarewrittenonvirtuallyeverycommoditywe possess. For example, sneakers were once for kids or tennis or basketball players. Consumers of this commodity have been cleverly created through massive advertising campaigns involv-ing, among other things, endorsements from popular sports figures, which not only make the shoesfashionablebutalsoallowNikeandothercorporations tosell themforup tohundredsofdollars.Tomake theirshoes,Nikehas,as theyshoulddo toplease their investors, soughtoutcheapsourcesoflabor.ThelaborforapairofNikesneakerscostslessthanonedollarperpair,andthetotalamountNikespendsonlaborisaboutthesameasthatpaidtomajorsportsfiguresforendorsements.Asaconsequence,Nikeearnsbillionsofdollars,returningmuchofitto banks and investors and using some to influence government legislation that would be favor-able to its interests.Tohelpgenerate thisprofit,nation-statessupport theentireoperationbysupporting and maintaining communication networks, financial institutions, and favorable labor legislation,andmaintainmarketsandaccess tonecessaryresources.Without thenation-state,businesses could not prosper, and consumers could not buy, at least not as cheaply as they do.

Chapter4 • TheNation-StateintheCultureof Capitalism 125

Thus,countriessuchasVietnamandIndonesiaoffertaxbreakstoNikeandcontrolanddisci-pline their labor forces to ensure an inexpensive and docile workforce, many of whom use their wagestopurchaseNikeproducts.

Thus,althoughthehistorical,social,cultural,economic,political,andideologicalfactorsthat have helped create and maintain the culture of capitalism are in their totality complex, they can be identified in virtually every element of our culture, at least for those who care to look. Furthermore, as we shall see, these same factors contribute in one way or another to virtually every global issue that we discuss in the remainder of this book.

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Our thesis is that the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating

the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the

self-regulation of the market, disorganized industrial life, and thus endangered society in yet another way. It was this dilemma which forced the development

of the market system into a definite groove and finally disrupted the social organization based upon it.

—Karl Polyani, The Great Transformation (1944)

A problem faced by every society is how to distribute wealth—that is, what are the principles established in a society that determine people’s access to desired resources? In the rare case where wealth is plentiful and people are few, there is, theoretically, no problem; everyone gets what they want. But if resources are scarce, or if, for what-ever reason, human wants are great, some way must be devised to determine who gets what. In traditional societies, the most common ways of distributing goods were through sharing or gift giving, principles that we still recognize and use. If people had more than they needed, or others had less, resources were freely given. In the case of gift exchange or in systems of reciprocity, people gave things to others or helped with some task in the expectation that at some time in the future the recipient of the gift would offer some return. It is quite possible, theoretically, to organize even large-scale societies using the principles of sharing and gift exchange as the major means to distribute resources (see Graeber 2001).

Tribute or taxes are other ways to distribute wealth. In this case, goods or services—in the form of crops, animals, crafts, textiles, or money—are delivered or paid to a central authority (i.e., chief, lord, king, or state) that, after keeping a portion for its own expenses, redistributes the rest. Taxes that we pay to the government, for example, are used to finance government functions, while the remainder, ideally, is redistributed to fund such things as education, welfare, health programs, infrastructure (roads, water systems, waste removal, etc.), and the military.

The Global Impact of the Culture of Capitalism: Introduction

P a r t t w o

128 PartII • TheGlobalImpactoftheCultureofCapitalism:Introduction

Finally, there is the market. Marketplaces are thousands of years old. For centuries, traders, artisans, and farmers brought their goods to marketplaces and traded them for other goods or sold them for money. Virtually every town and city in the world going back thousands of years had its marketplaces or systems of markets where people could go and purchase or trade for whatever they needed. Today, of course, virtually the entire world is a marketplace. When we speak of “the market,” we are referring to a principle of wealth distribution rather than a specific place, although the principle is the same; people produce things or supply services for other people in exchange for money.

Ideally people will supply only those goods and services for which there are demands, and, generally, a balance will be established regarding what is demanded and what is supplied. In his classic work The Wealth of Nations (1776), Adam Smith saw the workings of the market as an “invisible hand” by which a benevolent God administered a universe in which human happi-ness was maximized, an ideal system whereby each person, seeking his or her own ends, would contribute to the betterment of society as a whole. Thus, by seeking money and wealth, each person would work toward supplying what others needed or demanded. For Smith, the market represented a utopian vision in which wealth was perpetually created for the benefit of all.

For the market to work as Smith predicted, however, certain conditions had to be met, and three were particularly critical. First, to benefit from the market, individuals had to be able to exert demand, and to do that, they had to have money. If a person had no money, no one was going to produce anything for her or provide him or her with any services. Second, you had to have competition between people supplying goods and services to the market; with competition, producers were forced to auction their goods and services to buyers who were able to choose the best and most efficient among them, thus continually forcing producers to provide the best and the least expensive goods and services. Third, there had to be a means of enforcing contracts, a means of upholding the rule of law, and a means to supply information to people about the products and services available; each of these was to be the function of the state.

There is no doubt that the market as a means of distributing goods and services is highly efficient. However, because the conditions that Smith outlined for the working of the market are rarely met, most societies divide goods and services between those that should be supplied only by the market (e.g., luxury goods and other nonessentials) and those goods or services that should be available to everyone regardless of their ability to pay. In the United States, for example, education is considered a service that is so essential to the workings of a democratic society that it is available (indeed required) for everyone, at least to a point. Food, water, shelter, and health care are, to some degree in most societies, available to people outside the market. Thus, an additional function of the state is to decide what is and what is not too important to be left to the operation of the market.

But in addition to the problem of deciding what should be left to the market and what should be provided outside the market, there is the problem of what economists call market exter-nalities. These are specific consequences of the workings of the market; some are positive, but most are negative. For example, operating with no regulation, the market can have dire conse-quences on the environment as more and more people exploit natural resources to produce goods and services that people demand. The sickness and death that result from the inability of people to pay for food is a market externality, as is the unequal distribution of wealth and its consequences.

In addition, in the same way that societies can vary regarding what should be distributed by the market and what should be available to all regardless of their ability to pay, societies can also vary to the extent to which they allow producers, manufacturers, and corporations to exter-nalize their costs. For example, for years tobacco companies did not have to pay for the damage to smokers’ health; the cost was externalized and paid by customers or by the general population in the form of health and insurance costs. The following chapters are, in one way or another, about market externalities, but it might help to better illustrate what we mean by externalities by examining a couple of items of our culture and the effects that their production and operation have on the larger society.

PartII • TheGlobalImpactoftheCultureofCapitalism:Introduction 129

A Primer on mArket externAlities: PolAnyi’s PArAdox

In his classic book on the Industrial Revolution The Great Transformation Karl Polanyi posed what might be called “Polanyi’s paradox”: How is it possible to get the market to perform efficiently without, at the same time, “annihilating the human and natural substance of society”?

The paradox is beautifully illustrated in an ingenious piece of work called Stuff: The Secret Lives of Everyday ThingsbyJohnC.RyanandAlanTheinDurning(1997).Theydescribewhathappens in the rest of the world to supply an average North American with the stuff of everyday life such as a cup of coffee, a newspaper, a T-shirt, shoes, a car, a hamburger, French fries, and a glass of cola.

The coffee, for example, required around a hundred beans from a coffee tree grown, per-haps,onasmall farminColombia; rancherscleared thehillside topasturecattle,whilepoorfarmersusedthelessproductiveareatoplantcoffeeandfruit trees.Priortothe1980s,densetrees covered the coffee plants and harbored numerous birds and other wildlife. However, in the 1980s,thesetreeswerecutdownwhilefarmersplantedhigh-yieldingvarietiesofcoffee,intheprocess increasing soil erosion and decimating the bird population. With the absence of birds and other insect eaters, pests increased, thus requiring the use of more pesticides, applied by workers clothed in T-shirts and shorts who unavoidably inhaled residues of pesticides into their lungs. Because coffee is the second most traded commodity in the world, prices are low, as are the less-than-a-dollar-a-day wages that relegate workers to crowded shantytowns. After picking the beans for our cup of coffee, workers hand-fed the beans into a diesel-powered crusher, with thepulpdumpedintotheriver.Driedbythesun,theremainsofthebeans(onepoundofbeanstotwo pounds of pulp) were shipped to New Orleans on a freighter made in Japan of Korean steel mined on the lands of indigenous peoples in western Australia and powered by Venezuelan oil.

Once in New Orleans, the beans were roasted for thirteen minutes at 400 degrees in ovens fueled by natural gas from Texas. Packed in bags constructed of polyethylene, nylon, aluminum foil, and polyester, the coffee was shipped in an eighteen-wheeler getting six miles to a gallon to a local warehouse and then taken by a smaller truck to our local grocery. From there, we brought it home in a large brown paper sack made in paper mills in Oregon, traveling by car and using about a one-fifth of a gallon of gasoline. Once home, we measured out the beans in aplasticscoopmoldedinNewJerseyandspoonedthemintoourChinese-madegrindercon-sisting of aluminum, copper, and plastic parts. We poured the coffee into an unbleached paper filter and into our plastic-and-steel drip coffeemaker. The water came by pipe from our local reservoir via a water-processing plant and was then heated to some 200 degrees, the electricity coming from our local gas-, coal-, oil-, or nuclear-powered utility. We drank from a cup made in Taiwan and added sugar from the cane fields that had once been sawgrass marshes south of Lake Okeechoobee,denudedofsome75percentto95percentofitsanimallifelargelybythegrowthof sugarcane fields.

That, of course, is only a partial story of our cup of coffee (see, e.g., Tucker 2011), but it shouldserveasanideaofthesecretlifeorbiographyofacupofcoffee(seeKopytoff1988).For the coffee consumer, the main economic consideration is its market price, about ten dollars a pound, or three dollars a cup. The problem is that the market price doesn’t include the cost of the market externalities such as the damage to the environment caused by the coffee’s produc-tion and distribution, the health and impoverished lives of the coffee workers, or the waste and decimation of water resources in the production process. These represent the externalized costs of coffee and are simply passed on to others or to future generations. The external costs of things are rarely calculated and, consequently, never directly paid. In fact, the economy could not func-tionasitdoesifwehadtopaythemoneycostsofexternalities(seeWallerstein1997).TableII.1provides some idea of how market factors—the things that go into the production, sale, distribu-tion, and disposal of goods and services—translate into market externalities.

We can also understand Polanyi’s paradox by examining an example of the market work-ing as perfectly as it can—the case of Wal-Mart stores. The explicit goal of Wal-Mart is to sell

130 PartII • TheGlobalImpactoftheCultureofCapitalism:Introduction

things at the lowest cost. It even has a policy that a commodity that is unchanged from one year to the next be sold at a lower cost. This formula has worked extremely well, particularly forprice-consciousshoppers.AsofJanuary31,2009,Wal-Martoperated891discountstores,2,612supercenters,153NeighborhoodMarkets,and602Sam’sClubsintheUnitedStates.By2012,Wal-Martalonehadover8,500storesworldwide,and,withover2millionemployees,isthelargestemployerintheworld(CopelandandLabuski2013).Thecompanyrankssecondinsales in the world ($447 billion in 2012). In the United States, it is the largest grocer, toy seller, and furniture retailer. Wal-Mart is now the largest private employer in Mexico. Economists credit Wal-Mart for the nonexistent inflation in the United States and for about 12 percent of the economy’sproductivitygainsinthesecondhalfofthe1990s.Andadmirerscredit Wal-Martwith making goods more readily available to the poor. Analysts say that grocery prices, for example, drop an average of 10 percent to 15 percent in markets Wal-Mart has entered (see Fishman 2003).

Wal-Mart succeeds in lowering prices by pressuring its over 21,000 worldwide suppliers to be efficient and produce things at lower costs, savings that it then passes on to consumers. In effect, Wal-Mart is acting as Adam Smith’s “invisible hand.” Former labor secretary Robert B. Reich said, “Wal-Mart is the logical end point and the future of the economy in a society whose preeminent value is getting the best deal” (Lohr 2003).

But the sticker price of a Wal-Mart item is only part of the story, and this is where Polanyi’s paradoxcomesin:Inadditiontothedirectcostofanitem(thestickerprice),thereistheexter-nalized cost, as in the case of coffee. In order to provide the lowest prices, Wal-Mart forces those companies that supply their goods to reduce production and labor costs. In the United States, this has resulted in the shutting down of hundreds of factories and the loss of thousands of jobs as companiesshiftoperationstocountrieswithcheaperlaborcosts.CarolinaMills,whichsuppliesthread yarn and finishing materials to apparel makers, half of whom sell to Wal-Mart, has closed ten of seventeen factories and reduced its labor force from 2,600 employees to 1,200 because its customers couldn’t compete with clothing imported into the United States by Wal-Mart. In some cases, even companies that don’t sell to Wal-Mart have had to reduce costs in order to compete. Hoover, for example, has been the leading name in vacuum cleaners in the United States for over a hundred years. Recently, Hoover’s sales dropped 20 percent because of cheaper models being madeinChinaforWal-Mart.Hoover’sparentcompany,Maytag,demandedthatitsworkersinOhio take a cut in insurance and other benefits; otherwise the company would move its produc-tion facilities to maquiladorasinCiudadJuarez,Mexico(Fishman2003).

tAble ii.1 Market Factors and Negative Externalities

Market Factors Possible Market Externality

Labor costs Low wages, slavery, poverty, disease, hunger, alienation

Extraction of raw materials Habitat devastation, pollution, military expansion

Transportation and distribution Infrastructure creation and environmental consequences, pollution, etc.

Disposal costs Pollution, disease, habitat destruction

Manufacturing and production costs Environmental pollution, resource depletion

Advertisement and market expansion

Exploitation of children, conversion of relations of reciprocity into market relations, etc.

Maintaining market-friendly laws and regulations

Corruption, military expansion, distortion of the political process, etc.

PartII • TheGlobalImpactoftheCultureofCapitalism:Introduction 131

Wal-Mart imports 12 percent of all Chinese exports, and even inChina,wherewagesarelow,theyinsistonevenmore“efficiency.”TheChingHaiElectricWorksCo.inShajing,China,makes severalmillion electric fans per year, selling themundermany of theworld’sleading brands and under two of their own. The workers were paid thirty-two dollars per month, about40percentbelowChina’sminimummonthlywageoffifty-sixdollarspermonth.Inthelate1990s,Wal-Martdemandedthatthepriceofthefansbelowered,andtheyhavesincefallenfrom approximately seven dollars to four dollars per fan. But to do this, the manager of the plant firedhalftheworkforcewhilecontinuingtoproducethesamenumberoffans.Consequently,theremaining workers must work fourteen hours a day (Fishman 2003).

The loss of jobs, the low pay, the environmental damage done in areas where environ-mental laws don’t exist or aren’t enforced, and the health costs to underpaid and overworked laborers represent the cost of commodities that don’t appear in the sticker price. And it is probably not inaccurate to say that as the sticker price of items goes down, the externalized costs go up.ThesituationwassummedupwellbySteveDobbins,presidentofthreadmakerCarolinaMills:“Wewantcleanair,clearwater,goodlivingconditions, thebesthealthcarein the world,” he said, “yet we aren’t willing to pay for anything manufactured under those restrictions” (Fishman 2003).

Thus, to produce goods at the cheapest cost, certainly an admirable economic goal, we must use up more environmental and social capital. But it doesn’t stop there. As corporations such as Wal-Mart succeed, they are able to exert political influence that dwarfs that of ordi-nary citizens in a democracy. For example, in 2012, Wal-Mart donated over two million dollars tofavoredpoliticalcandidates,54percentgoingtoRepublicansand46percenttoDemocrats(OpenSecretsND).In2011,Wal-Martallocatedalmost8milliondollarstolobbyingactivitiesthat boughtmention on 49 differentCongressional legislative actions. Political contributionsclearly translate into political influence, replacing corporate legislative agendas, which include rules and laws that increase market externalities, for those of citizen voters. While these agendas may on occasion overlap, they are clearly not the same.

Wal-Mart is one example of how commodities can be produced more cheaply by externalizing the costs of production and distribution. (Marc F. Henning/Alamy.)

132 PartII • TheGlobalImpactoftheCultureofCapitalism:Introduction

Many of the problems we will be looking at in the following chapters—such as poverty, hunger, disease, environmental destruction, and ethnic conflict—represent, at least in part, market externalities, part of the cost of the goods and services that we crave. This fact is, or should be, relatively transparent. It certainly is no secret that Wal-Mart forces its suppliers to cut wages, reduce or eliminate health benefits, and move operations to places with no unions, few environmental regulations, and little if any worker protection. It is also no secret that the trans-port of goods from halfway around the world uses vast energy resources, or that local stores, if they are not put out of business by Wal-Mart, are forced to cut wages or lay off employees. Why, then, are people not more concerned about market externalities?

As we’ve mentioned, one of the tasks of the culture of capitalism is to mask from its members (or to allow its members to mask from themselves) the negative consequences of the market’soperation.Corporationsspendbillions,forexample,todistancethemselvesfromtheprocesses used to manufacture and distribute their products. They hide the “dirt” in the biogra-phies of commodities through advertising and public relations efforts. They hide the effects of their production and distribution practices by controlling the information that is allowed to reach the public or through legislative or legal measures to discourage public criticism. The language we use often helps us hide negative market externalities. We speak of “malnutrition” rather than “starvation,”somehowimplyingthatitisthefaultofthevictim.Deadlyriots,massacres,andgenocides are blamed on “ancient hatreds,” while the underlying economic factors are obscured or ignored. “Environmentalists” are labeled a “special interest group,” rather than as properly concerned citizens. We develop ideologies that seek to explain global problems in ways that dis-tance the problems from the operation of the market. One of the tasks of the following chapters is to examine some of the ways that we hide from ourselves, or ways that others hide from us, the consequences of our demand for perpetual economic growth. We’ll begin, therefore, with one of the most common explanations for global problems—population growth.


Some modern research on the genetic structure of human populations suggests that we are all descended from a relatively small number of individuals, and no more than a few fami-lies, who lived in Central Africa as recently as 100,000 to 200,000 years ago. By 15,000

years ago, their progeny numbered 15 million (the present population of Mexico City). The world population at the time of Christ had increased to about 250 million (a little more than the present population of Indonesia) and on the eve of the Industrial Revolution had tripled to about 700 million (a little more than twice the size of the current population of the United States). In the following two centuries, the population increased at an annual growth rate of 6 per 1,000,

C h a p t e r

5 Population Growth, Migration, and Urbanization

There is not now, nor has there ever been, too much global migration. The world would clearly be better off with more migration. The prob-

lem is, therefore, not that there is too much global migration, but, rather, that we do not yet have effective ways whereby the gainers

from global migration can compensate the losers. The problem is not global migration. The problem is a lack of political will.

—Timothy J. Hatton and Jeffrey G. Williamson,

Global Migration and the World Economy

… the cities of the future, rather than being made out of glass and steel as envisioned by earlier generations of urbanists, are instead

largely constructed out of crude brick, straw, recycled plastic, cement blocks, and scrap wood. Instead of cities of light soaring

toward heaven, much of the twenty-first century urban world squats in squalor, surrounded by pollution, excrement, and decay. Indeed, the one billion city dwellers who inhabit postmodern slums might well look back with envy at the ruins of the sturdy mud homes of ÇatalHüyük in Anatolia, erected at the very dawn of city life nine

thousand years ago.

—Mike Davis, Planet of the Slums

134 PartII • TheGlobalImpactoftheCultureofCapitalism

reaching 2.5 billion by 1950. In the following five decades, it has more than doubled, at a growth rate of 18 per 1,000, to reach more than 6 billion in 2000. We passed 7 billion in 2012, and the UN estimates that we will almost reach 9 billion by 2050 (United Nations 2004). Growth in world population is summarized in Table 5.1.

The rate of population growth over the last sixty years has prompted concern that the world is poised on the brink of disaster; that we are running out of enough food to sustain the growing population; and that population growth is responsible for poverty, environmental destruction, and social unrest. Moreover, so the argument goes, economic development in poor countries is impossible as long as populations continue to rise, because any increase in economic output must be used to sustain the increased population instead of being invested to create new jobs and wealth. These concerns have led to concerted efforts by international agencies and governments to control the rate of population growth, especially in peripheral countries where it is highest (see Table 5.2).

A number of people, however, seriously question whether population growth is a problem. Some economists argue that population growth is a positive factor in economic development; some environmentalists claim that environmental destruction is a result of rapid industrialization and capitalist consumption and investment patterns, not population growth; and some religious authorities are opposed to any form of birth control.

In addition to growing, the earth’s human population is moving. Over the past two centu-ries there have been major waves of global migration, the first from about 1870 to 1920 when some 600,000 to a million people a year moved, largely from Europe to the New World, and the second, beginning around 1980 and continuing today. Migration, along with population growth, has also generated alarm, so much so that political parties in the United States, Europe, and Australia have made controlling immigration a significant (if not only) policy concern.

Table 5.1 Population, Annual Growth, Doubling Time, Projected Growth, 10,000 b.c. to a.d. 2050

Year 10,000 b.c. 0 1750 1950 20002025



Population (millions) 16 252 771 2,330 6,100 7,810 9,039

Annual growth (%) 0.008 0.037 0.064 1.845 1.400 1.000 —

Doubling time (years) 8,369 1,854 1,083 116 51 70 —

Source: United Nations, 1998. Revision of the World Population Estimates and Projections,; Population Reference Bureau, 2011. 2011 World Population Data Sheet,

Table 5.2 Population and Projected Population Growth for World Regions, 2009

Population (millions)

Births per 1,000


Deaths per 1,000


Rate of Natural

Increase (%)

Projected Population


Projected Population


World 6,810 20 8 1.2 8,087 9,421

More Developed 1,232 12 10 0.2 1,282 1,318

Less Developed 5,578 22 8 1.4 6,805 8,103

Less Developed (excluding China)

4,246 26 8 1.7 5,329 6,666

Least Developed 828 35 11 2.4 1,151 1,657

Source: Population Reference Bureau, 2009,

Chapter5 • PopulationGrowth,Migration,and Urbanization 135

As we shall see, however, the situations, both in terms of population growth and migra-tion, are more complex than presented in public debates. To understand better the demographic and ideological issues involved in the population debates, we need first to examine the major frameworks used to explain population growth, the Malthusian or neo-Malthusian position, and the framework provided by demographic transition theory. We will try to show how they are seriously flawed, ethnocentric, and self-serving for core nations. Then we examine some of the factors known to determine how many children are born and specifically examine what anthro-pology can contribute to the debate over population growth. Then we will examine the issue of migration, particularly the economic impacts of both legal and illegal immigration, and finally examine urbanization and the growth of global slums.

The MalThusians Versus The reVisionisTs

Interest in the effects of increasing population dates back at least as far as Reverend Thomas Malthus’s famous Essay on the Principle of Population, written in 1798. This essay outlines his well-known argument that whereas population “increases in a geometrical ratio,” the resources for survival, especially food, “increase only in an arithmetical ratio” (see Livi-Bacci 1992:76). Without preventive checks to control fertility, such as “moral restraint” or “marriage post-ponement,” argued Malthus, population will constantly increase, deplete resources, and bring into play“positivechecks”—famine,disease,andwar—thatwillreturnpopulationtoabalancewith resources.

Malthus had some historical confirmation for his ideas. For example, he predicted that as population rose and the demand on resources increased, food prices (e.g., that of grain) would increase and result in increased mortality rates. Indeed, this seemed to have been the case in Europe in the seventeenth and eighteenth centuries. Likewise, he predicted that a decreased demand because of population decrease would result in lower prices, decreased mortality, and a subsequent rise in population, exactly as occurred in Europe after the plague epidemics of the fourteenth century.

Malthus predicted that disaster was imminent. What he failed to foresee was that in the face of increasing population, innovations in agricultural techniques would result in constantly increasing food production. Even though the world population today is at least six times what it was in 1800, there is still more than enough food produced worldwide to support the population.

In spite of Malthus’s failed predictions, others have recently revived his message, argu-ing that, although Malthus may have been wrong in his early projections, no one could foresee the explosive growth of population in the past fifty years. Food production, they say, is now beginning to fall behind population growth, and even innovations that improve production are only stopgap measures. Neo-Malthusians may disagree on how close we are to disaster, but they unanimously agree that unless we take measures to reduce population growth, especially in the periphery, the whole planet faces ruin. The consequences of this population growth, they say, are now all around us in overcrowded cities, polluted environments, increased crime, and massive immigration. But their arguments have the most far-reaching implications in policies regarding economic development. It is impossible, according to neo-Malthusians, for poor countries to escape poverty when their populations grow at a rate greater than 2 percent per year because resources that could be used to increase living standards must instead go to maintaining the peo-ple added to the population. Thus, any economic innovations will provide only temporary relief because the gains are quickly offset by the increase in population. They conclude that the only way economic development can provide benefits is for these countries to lower their birth rates. The governments of most countries must agree, because 127 countries, representing 94 percent of the world’s population, express support for family planning.

Economist J. E. Meade (1967; see also Livi-Bacci 1992) provided a parable to illustrate what he saw as the folly of population growth. He tells of two imaginary countries, Sterilia and Fertilia. Sterilia is a coastal country with a democratic government and an ethnically mixed

136 PartII • TheGlobalImpactoftheCultureofCapitalism

population. Fertilia, an inland country with a homogeneous population, is ruled by upper-class landowners who have little contact with the outside world. Both countries were colonized, and both received their independence at the same time and had similar demographic characteris-tics—high fertility (birth rate) and high mortality (death rate). Mortality, however, was sharply reduced in both countries by DDT spraying, which eliminated malaria-bearing mosquitoes, and penicillin administration, which controlled several diseases.

Sterilia’s government promoted economic development and to that end instituted a well-organized family planning program. The imperial elite of Fertilia, however, did little to control their growing population. Consequently, the surplus rural population flooded into the cites, and economic capital had to be used to support the growing number of poor, leaving little to invest in education, roads, communications, and health. People in Sterilia, however, began having smaller families and were able to save money, which became capital for economic investment. Their well-fed, healthy, efficient workers produced and sold products and goods that earned more money to be invested in education, creating a still more efficient and profitable workforce. Consequently, Sterilia surged ahead, with growing commerce, increasing literacy, and expanding health programs, whereas Fertilia became trapped in a spiral of increasing poverty. The moral of Meade’s parable is clear: Those countries that institute successful programs of birth control will prosper; those that do not will suffer economic and social decline. But is that really true?

The Case of india and China

We do have a real-life Sterilia and Fertilia—China and India, countries that together represent 38 percent of the population of the periphery. Since the early 1950s, India, the Fertilia of our parable, has promoted family planning programs but with little success. When early attempts to convince couples to have fewer children failed, the government tried more coercive means, attempting to pass laws requiring sterilization after the third child (one province passed such a law but never enforced it). When that failed, the government attempted to convince women to use an intrauterine device, but this failed because of exaggerated rumors about the dangers of the devices. Oral contraceptives were never authorized for use in India. Consequently, the policy of population reduction has not been successful. Although the birth rate fell from 5.97 children per woman in 1950 to 3.3 in 2000, increases in life expectancy decreased the population growth rate over the same period from 2 percent to only 1.8 percent per year.

China, our real-life Sterilia, embarked on a concerted effort to control population growth in 1970, twenty years after India. In 1980 they developed a program to ensure that their popula-tion of 996 million would not exceed 1.2 billion by the year 2000. The government instituted policies to raise the age at which people could marry, increase birth intervals, and limit the number of children couples could have to two. Provincial leaders were assigned birth quotas, and groups were formed to encourage the use of contraceptives, sterilization, and abortion, which was widespread, free, and did not require the husband’s consent. Later, a one-child policy was encouraged by providing incentives for those complying (higher wages, larger houses, priority for children’s education, and free medical care) and penalties for those not complying (wage cuts, smaller houses, and lower priorities for education and medical care).

In spite of public resistance and a population with a large number of women of reproduc-tive age, China has succeeded where India failed. Population growth fell from 2.2 percent in 1970 to 1.4 percent in 1990 and to 0.877 percent in 2000. Whereas India’s population in 2025 will be four times what it was in 1950, China’s population will have increased by a factor of less than three. One would predict, therefore, that the rate of economic growth will be higher in China than in India.

But that hasn’t happened. As we noted in Chapter 1, both countries have among the most thriving economies in the world. India’s growth rate was more than twice the world average—more than 9 percent in 2006 and 2007, falling to about 5 percent in the wake of 2008 global downturn. China’s economy grew at almost 8 percent in early 2009, in spite of the global

Chapter5 • PopulationGrowth,Migration,and Urbanization 137

downturn, after averaging some 8 percent to 11 percent over the previous decade. Moreover, if we compare economic growth and standard of living as measured by the gross domestic product (GDP) of poor countries in general to population growth in those countries, there is no relation-ship. If we measure progress, as some have suggested, by an index of social freedom, India ranks well above China (see Livi-Bacci 1992:186–187). There are still significant differences between India and China: China has done notably better in improving the quality of life of the bulk of its population, ranking ahead of India in areas such as literacy, health care, life expectancy, and nutrition. But these improvements are largely attributed to China’s social policies and seem to have little to do with the rate of population growth.

Economists and demographers who have examined the connection between economic development and population growth in other countries have discovered little evidence that popu-lation growth inhibits economic development. In fact, historically, population growth correlates with economic prosperity, whereas population decline or stability is generally associated with economic stagnation or decline. For example, from 1820 to 1987, the population of the four leading Western nations (Great Britain, France, Germany, and the United States) grew by a factor of 5.5, whereas their combined GDP (in constant prices) increased by ninety-three. In other words, while population increased five times, production increased seventeenfold. After reviewing studies that examine the relationship between demographic and economic growth, demographer Massimi Livi-Bacci (1992:145) concluded that during the past two centuries, population growth has not hindered economic development and that quite possibly the reverse is true, with the countries that experienced the greatest population increase assuming the leading role in the global economy.

Does the real-life failure of the parable of Fertilia and Sterilia mean there is no connection between population growth and economic development? That’s difficult to say, but it does sug-gest that the connection is obscured by factors that probably cancel each other out. It also means population growth has not been an insurmountable obstacle to economic development.

This billboard in China promotes family planning and idealizes the single-child nuclear family. The fact that the child is female is a significant attempt to make acceptable a single female child in a society in which only males can continue the ancestral line. (Alain Le Garsmeur/Documentary/Corbis.)

138 PartII • TheGlobalImpactoftheCultureofCapitalism

The issue of Carrying Capacity

Even if we accept the idea that population has not yet inhibited economic growth, can we say, as many neo-Malthusians do, that although we haven’t felt the impact yet, the reduced doubling time of the population will soon result in the human population exceeding the carrying capac-ity of the earth? Biologists use the term carrying capacity to denote the maximum number of organisms a given environment will support. For example, we can examine the types of food that sustain wolves in a specific environment and, by calculating how much of that food is available, estimate the number of wolves the environment will support. This is the kind of assumption Malthusians make about the human population: Given food and other resources on the planet, how many people can survive before those resources are depleted? For example, David Pimentel and his associates (1999) estimate that, because of declining fertile land, declining water resources for irrigation, and declining fertilizer usage, by the year 2100, the world will be able to support only a population of 2 billion people living at a standard half that of the United States in the 1990s.

However, the problem with applying the theory of carrying capacity to human beings is that our capacity for culture and symbolic thought enables us constantly to alter our diets and the way we exploit the environment for food. It is true, for example, that a given environment will support only so many people who live by gathering wild plants and hunting wild animals. But when a gathering and hunting society exceeded the population a given area could support and were restricted from migrating to another area, they could and did begin to plant and harvest their own plants and herd and breed their own animals. Later, when agricultural populations began to grow, they started farming and developing techniques that allowed them to grow more food on the same land. Human beings are capable of constantly changing the rules of subsistence by altering their resource base. In fact, estimates of the Earth’s carrying capacity vary widely, from 7.5 billion to 147 billion, depending on the technology employed to produce food (Cohen 1995; Livi-Bacci 1992:207). Consequently, it is difficult if not impossible to predict when our ability to provide for additional people will end, if ever. And that is one of the major arguments between Malthusians and Revisionists.

If we conclude that the alarms raised by neo-Malthusian arguments are unsubstantiated, it is fair to ask, Why do Malthusian alarms dominate the dialogue about the so-called problems of population growth? More specifically, Why are their arguments so attractive to politicians and policy planners, and why do people so readily accept their assumptions?

The ideology of Malthusian Concerns

One of the important questions addressed by anthropologists concerns why people believe what they do about themselves and the world—that is, What social purpose or function does a par-ticular belief serve? For example, if people believe that witches exist and that they will punish people who harm others, the belief will serve to enforce proper social behavior. If people believe that gazing at someone with envy can harm that person, members of that society will be reluctant to flaunt their wealth, fearing it might attract an “evil eye.” It is legitimate to examine the social function or purpose of any viewpoint, even those that are scientifically founded. Regardless of whether Malthusian assumptions are correct, it is legitimate to ask what social interests or pur-poses might be advanced by their acceptance (see Barnes 1974). Put another way, Do Malthusian arguments about population growth mask other concerns or social interests?

For example, population growth was not, for Thomas Malthus, the major issue. What concerned him was the rising number of poor in England, why they should exist, and what should be done about them. Poverty, according to Malthus, was not a consequence of expand-ing industrialism, enclosure laws that evicted people from common lands, or the need of manufacturers for a source of inexpensive labor; it arose from the laws of nature, the discrep-ancy between the powers of reproduction and the ability to expand food production. People

Chapter5 • PopulationGrowth,Migration,and Urbanization 139

were poor because there were too many of them and because they kept having children in spite of their poverty. Providing relief to the poor, argued Malthus, would simply encourage them to have more children. Instead, they should be forced to delay marriage (Malthus was opposed to all forms of birth control). In 1834, encouraged to a large extent by Malthus’s writings, the British government revised the so-called Poor Law, repealing various forms of relief that had been in place for centuries and leaving the destitute to decide whether their condition required their access to public shelters, which were deliberately made into places of horror (Polgar 1975:86).

The Malthusian position assumes that if poverty exists, it must be because of overpopu-lation, which is the fault of those people who, because of a lack of moral standards, refuse to change their reproductive behavior. There also may have been in the Malthusian position a fear that the army of the poor gathering in cities such as London would stimulate revolution, much as it did in France in 1787.

Malthus’s ideas did not go unchallenged during the nineteenth century. Karl Marx, as we examined earlier, saw poverty not as a consequence of excess population but as a condition pro-duced by the capitalist mode of production, which required a surplus of labor, an “industrial reserve army” condemned to compete for wages, with the losers doomed to unemployment and underemployment. It is their exclusion or partial exclusion from the economy and their depen-dence on wage labor, not their numbers, said Marx, that determined their impoverished condition.

Malthusian explanations for poverty and demographic theory were resurrected by neo-Malthusians after World War II. In his 1968 book The Population Bomb, biologist Paul Ehrlich, whose work is among the most influential in reviving Malthusian theory, described how he came to discover the significance of the population problem. It dawned on him, he said, “one stinking hot night in Delhi.”

As we crawled through the city [in a taxi], we entered a crowded slum area. The temperature was well over 100 degrees and the air was a haze of dust and smoke. The streets seemed alive with people. People eating, people washing, people sleep-ing. People visiting, people arguing and screaming. People thrust their hands through the taxi window, begging. People defecating and urinating. People cling-ing to buses. People herding animals. People, people, people, people. As we moved slowly through the mob, hand horn squawking, the dust, noise, heat, and cooking fires gave the scene a hellish aspect. Would we ever get to our hotel? All three of us were, frankly, frightened … since that night I’ve known the feel of overpopulation. (Ehrlich 1968:15)

As political scientist Mahmood Mamdani (1972) pointed out, had Ehrlich been in Times Square in New York or Picadilly Circus in London, he would have been in the midst of an even larger population, but those situations would not likely have led Ehrlich to fear overpopulation. Ehrlich was disturbed not by the number of people but by their poverty and the physical threat posed by a poor and potentially unruly populace.

In addition to those who blamed the poor for their poverty and targeted them for popula-tion reduction, Malthusian demographic and social theory also appealed to eugenicists, those who saw poverty as a consequence of faulty genes rather than national social or economic policy. Eugenic theory is rooted incorrectly in Charles Darwin’s ideas about natural selection and “fitness.” Eugenicists reason that Darwin’s ideas can be applied to human populations and that if people with defective genetic endowments had more offspring than those with superior genetic endowments, the quality of the human race (or German “race” or British “race”) would decline. Consequently, for eugenicists, it makes sense to promote policies that discourage or prevent people with defective genes from reproducing, while encouraging people with superior genes to have as many offspring as possible. Clearly, they reason, people are poor because they have a faulty heredity.

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Eugenics has long been discredited by most scientists, although it sometimes appears in modified forms, as it has recently in the debate over the inheritance of intelligence and IQ (see Cohen 1998; Robbins 2008:210ff.). But in the heyday of eugenics in the 1920s, groups such as the Committee to Study and Report on the Best Means of Cutting Off the Defective Germ-Plasm of the United States concluded, “Society must look upon the germ-plasm as belonging to society and not merely to the individual who carries it” (Polgar 1975:189).

Another advocate of Malthusian demography, Garrett Hardin, wrote,

How can we reduce reproduction? … But in the long run a purely voluntary system selects for its own failure: non-cooperators outbreed cooperators. So what restraints shall we employ? A policeman under every bed? … We need not titillate our minds with such horrors, for we already have at hand an acceptable technology— sterilization.… If parenthood is only a privilege, and if parents see themselves as trustees of the germ plasm and guardians of the rights of future generations, then there is hope for mankind. (Polgar 1975:190)

We will probably never know how many women in the world or in the United States were sterilized by those who felt they were ridding the population of “defective” genes. In The Legacy of Malthus (1977), Allan Chase estimated that up until 1975, half of the 1 million sterilizations performed yearly in the United States were involuntary.

It should be apparent that it is difficult historically to separate advocates of birth control from racist and eugenic agendas. In the past, and perhaps today, programs to control or reduce population have often masked racist and sexist policies aimed at controlling the poor. Early con-cerns about population growth were directed at the poor in the core—the urban poor of England, blacks and Native Americans in the United States, immigrants, and the rural poor. It was not until the 1950s that Western nations began to concern themselves with the fertility of people in the periphery. One question is, Why, in the 1950s and 1960s, did population growth in the periphery begin to concern Western governments?

One reason may be the same as that for concern over poor populations in the core: It cost money to try to help them. Malthusians like Paul Ehrlich embraced ideas such as those advocated

Whether a place is perceived as “overpopulated” or not, often depends on its degree of opulence. Although these crowded streets of Seoul, South Korea, are packed, few would see a “population problem.” The poverty represented by this line of beggars in Varanasi, India, would more likely create concerns about “overpopulation.” (Left: AP Photo/Yun Jai-hyoung. Right: DIPTENDU DUTTA/AFP/Getty Images.)

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by William and Paul Paddock, who in their 1967 book Famine—1975 advocated using the mili-tary triage policy for food aid. The Paddocks recommended that the United States use its excess food production to halt starvation only in those countries that would submit to its power:

During the coming Age of Food that nation which has the most food will be, if it uses that food as a source of power, the strongest nation. This will be, then, clearly an era which the United States can dominate—if the United States picks up the challenge. (Paddock and Paddock 1967:232)

Furthermore, advocates of population control share a concern for mass migration of the poor to their countries as well as for social unrest that could upset economic and political stability in the countries of the periphery. For example, a National Security Study memoran-dum produced in 1974 by the National Security Council at the request of U.S. secretary of state Henry Kissinger (Mumford 1996) concluded that population growth in the periphery is a threat to U.S. national security for four reasons: (1) Larger nations will gain greater political power,(2) populousnationsmaydenytheUnitedStatesaccesstoneededstrategicmaterials,(3) a growing population will include a large number of young people who may be more likely to challenge global power structures, and (4) the growing population may threaten U.S. inves-tors in those countries. The memorandum targets India, Brazil, Egypt, Nigeria, Indonesia, the Philippines, Bangladesh, Pakistan, Mexico, Thailand, Turkey, Ethiopia, and Colombia as the countries of greatest concern.1

Thus, as Steven Polgar (1972;1975) suggested, U.S. foreign policy was driven less by a concern for overpopulation than by a concern that increasing population in the periphery hindered the possibility of raising the income level (and purchasing power) of people in the periphery and by a concern that increased populations might represent a political and economic threat to the United States. Polgar said that population concerns in core countries stem not from a fear of overpopulation but from a change in the role of exploited countries. People in the periphery were needed at first for labor and later for markets. In fact, until the 1940s, core coun-tries were unconcerned with population growth in the periphery, and they complained it was too slow. Once the need for certain raw materials declined as synthetics were developed, and as the poverty of these people precluded their being turned into consumers, they ceased being useful, especially because they became potential revolutionaries, migrants, and criminals. The subjects became burdens.

Not everyone who believes there is a population problem or that poverty is a consequence of overpopulation is a racist or an imperialist. But people have been far too ready to accept the basic Malthusian assumptions without question. The consequence is that Malthusian explana-tions for poverty, environmental destruction, disease, and social unrest may mask other, more pertinent, reasons for these problems and divert our attention from them. But it is not only Malthusian assumptions that have dominated the public discussions about population.

DeMographiC TransiTion Theory

The other framework that dominates discussions of the population problem is the theory of demographic transition (see Table 5.3).

According to this theory, world population growth increased only very slowly from human beginnings to around 1750. This relatively steady state of population growth was maintained largely because high birth rates were offset by high death rates. Toward the end of the eighteenth century and the beginning of the nineteenth, mortality began to decline in developed countries

1 The original memorandum is available online at Africa 2000 at A link can also be found at the Web site for this book at

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because of advances in medicine and sanitation, whereas birth rates remained the same; conse-quently, population rose rapidly. Then, because of population pressures and the availability of contraception, birth rates declined to close to “replacement levels” and the rate of population growth stabilized, at least in the developed countries (see Coale 1974).

The population rise in the periphery came later, beginning in the mid-twentieth century, but was particularly explosive because mortality rates were reduced much more quickly than in core countries, especially among children. Fertility rates in the periphery, according to demo-graphic transition theory, are only now beginning to decline in response to population growth. This occurs when the increasing costs of education and child care in modernizing societies, along with the availability of modern forms of contraception, provide the incentives and means for people to reduce their family size.

The demographic transition model shares assumptions with neo-Malthusian theory: It, too, links lowered fertility with economic development. However, instead of arguing that economic development requires lower fertility, demographic transition theorists suggest that lowered fertility will result from economic development. The problem with this model is that it makes some decidedly ethnocentric assumptions.

First, it assumes that throughout history, fertility rates have always been uniformly high. Demographic transition theorists reason that high fertility rates were necessary to balance the number of deaths that occurred because of the harsh living conditions of preindustrial peoples. Yet there was clearly an ethnocentric bias in this assumption; although demographic theorists recognized that fertility rates among preindustrial Europeans did vary depending on the age at which marriage occurred, as we’ll see, they assumed that preindustrial non-Europeans would not or could not control their fertility rates.

Second, the demographic transition model assumes that the only way of stabilizing popula-tion growth is to make available Western methods of birth control and contraception. As we shall see, the model significantly ignores variations in fertility that are based on various economic and social factors as well as the fact that preindustrial populations were significantly healthier than previously thought.

Third, it assumes that the resistance of people in poor countries to adopt Western stan-dards of fertility is the result of irrational thinking, outmoded religious values, or traditional or fatalistic worldviews. Fertility control, in contrast, is consistently viewed as rational and modern (Caldwell 1982:119).

Finally, some claim that demographic transition theory has its own ideological bias—that its goal is to provide an alternative to Marx’s idea of a surplus reserve of workers. As we noted earlier, Marx saw capitalism as creating a surplus population because competition for scarce jobs would allow merchants, manufacturers, and governments to keep wages as low as possible. If labor were scarce, however, employers would have to compete for laborers and wages would increase. If Marx were correct, one would have expected colonial governments to encourage population growth in the periphery, rather than restrict it. In fact, that is exactly what happened. In the early twentieth century, colonial governments in Africa worried about the low population and subsequent lack of laborers and did everything they could to increase the birth rate.

Demographic transition theorists blame high population growth in the periphery on the people themselves, arguing that capitalist expansion, rather than causing the problem of

Table 5.3 Stages of Demographic Transition

Birth Rate Mortality Rate Rate of Population Growth

Stage 1 High High Stable

Stage 2 High Low Accelerated

Stage 3 Low Low Stable

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population growth, can cure it. In other words, demographic transition models see economic development as an answer to the problem; Marx viewed economic development as a cause (O’Brien 1994).

Demographic transition theorists generally ignore the fact that human populations have consistently adjusted fertility rates to local economic and social conditions. Moreover, if that is so, we can assume that high fertility in peripheral countries is not solely the result of a lack of ability to control births and that it is not, given the context of people’s lives, irrational. In other words, high fertility rates are not the result of ignorance, outmoded religious values, or lack of education, but the result of social or economic factors that people, largely women, react to in order to adjust the size of their families. However, to understand how populations regulate their size without having access to modern means of birth control, we need to answer the question, How have human societies historically controlled the size of their population?

a primer on the Determinants of population growth and Decline

At its simplest, worldwide population growth is a factor of only two things—births and deaths. If the rate of death is lower than the rate of birth, population increases. If deaths exceed births, population declines. In regional populations, migration also contributes to population increases or declines, but for now let’s focus on natural increases or decreases. The question is, What economic, social, and cultural factors dictate birth and death rates?

FerTiliTy Birth rates are a factor of the number of children born in a given population; this is determined by biological and social factors, including the frequency of births during a woman’s fecund period and the portion of the fecund period—between puberty and menopause—used for reproduction.

Frequency of births—the interval between births—is determined by a number of factors, including the following:

• Periodofinfertilityafterbirth:Thereisaperiodafterbirthwhenovulationdoesnotoccur.• Timebetweenovulationandconception:Althoughsomewomenmayconceiveduringthe

first ovulation after giving birth, others do not. The average is five to ten months.• Averagelengthofpregnancy(ninemonths).• Fetal mortality: About one in five recognized pregnancies ends in miscarriage. (The

actual percentage of interrupted pregnancies, including those that are unrecognized, may approach 80 percent.)

• Presenceorabsenceofbirthcontroltechniques.

Of these factors, the length of time between births and the presence or absence of birth control techniques provide for most of the variation in birth rates. Length of time between births can be influenced by various cultural factors. For example, breast-feeding suppresses ovula-tion. In societies in which children are not weaned until the age of three, four, or five years, breast-feeding leads to greater intervals between births. Attitudes toward breast-feeding vary significantly: In some societies it is encouraged and expected; in others it is discouraged, perhaps because of concerns about body image or because it has sexual connotations.

Economic and consumption patterns may also influence breast-feeding. For example, breast-feeding in the periphery has markedly decreased in the past thirty to forty years because of increased advertising and sales of powdered infant formula. Thus, cultural or social factors that inhibit breast-feeding, especially in the absence of modern birth control methods, may result in shorter spacing between births and an increase in fertility and population growth.

Many societies practice a postpartum sexual taboo, a rule that women should not have sexual intercourse for a set period of time after the birth of a child. The period can vary from a few months to a few years, but regardless of the length, the taboo is likely to increase birth spacing.

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Thus, even leaving aside the influence of modern birth control techniques, the spacing of births through so-called natural means may vary from eighteen to forty-five months (1.5 to 3.5 years).

A second major factor in fertility is the fecund period used for reproduction, or the number of years in which a woman can conceive. This, too, can vary considerably because of cultural, social, or economic factors. Biological fecundity is the period shortly after the onset of menses until the onset of menopause; this can range from eleven years of age to over fifty years of age, although the average is fifteen years of age to forty. More importantly, however, is cultural fecundity, the age at which a woman becomes sexually active. This is determined in most societ-ies by age at marriage, which varies, on the average, from fifteen to twenty-five years of age.

Combining the minimum and maximum period between births attributable to natural factors with the minimum and maximum age at marriage produces two very different population growth scenarios (see Livi-Bacci 1992:13). Assuming a fifteen-year reproductive period (fecun-dity lasting from age twenty-five to age forty) with a maximum interval between births produces a fertility rate of 4.3 children per woman:

15@year reproductive period

3.5@year birth interval= 4.3 children

However, assuming a reproductive period of twenty-five years (fecundity lasting from age fifteen to age forty) and minimum birth spacing of 1.5 years produces a fertility rate of 16.7 childrenperwoman:

25@year reproductive period

1.5@year birth interval= 16.7 children

The latter condition is not likely to be realized because it does not account for the increased risk of death or pathological conditions resulting from childbearing that may lower fecundity; in fact, the highest fertility rates recorded range from eleven to twelve children per woman. However, the aforementioned projections provide some idea of the possible range of differences in fertility rates based solely on cultural factors, such as age at marriage and age of weaning, independent of the availability and use of modern contraceptive techniques.

Anthropologists have also examined the extent to which other cultural practices, such as polygamy and monogamy, affect birth rates. For example, some predict that polygamy—the practice of a man having more than one wife—might lower birth rates because the frequency of intercourse with each wife would be lower than in a monogamous marriage. Studies, however, have been inconclusive. Frequency of sexual intercourse itself is another culturally determined variable that may affect fertility rates but which also has not been shown to influence fertility rates significantly (see Nag 1975).

DeaTh A second major determinant of population growth is death, particularly the average life expectancy in a population. Most important is the percentage of the reproductive period real-ized in the life expectancy ranges. For example, in a population with a life expectancy of twenty years, the number of women who live through their full reproductive period is far less than in a population with a life expectancy of sixty years. In fact, demographers have calculated that with a life expectancy at birth of twenty years, only 29.2 percent of the potential reproductive period is lived, whereas with a life expectancy of eighty years, 98.2 percent of the potential fecund period is lived (Livi-Bacci 1992:19).

Most demographers have assumed that mortality rates in preindustrial societies were con-sistently high, but, as we shall see, that is probably mistaken. It seems we have consistently underestimated the general health levels of preindustrial societies.

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The other major mortality factor in population growth is infant mortality, especially because this is where the greatest variation in life expectancy rates occur. It is also an area in which control on population growth can be exercised with the practice of infanticide and abor-tion. For example, one factor in death rates may be preference for male or female children, a preference that may be determined by economic needs. In societies that practice traditional agriculture, there is evidence that boys and girls are equally valued as farm workers. In early industrial society, however, when wage labor began to be more prevalent, there was a preference for boys, a preference that gradually began to subside as women entered the factory workforce (Harris and Ross 1987a:156).

MigraTion Migration is another factor in population growth rates. Although migration may not appear to influence world population, it can influence regional patterns of population growth and decline (and, consequently, influence global population; see Manning 1990). For example, migration can affect reproductive rates: A population in which many people migrate may feel reduced population pressure, which may result in earlier marriages and rising birth rates. If more men migrate, fewer women may marry, causing the birth rate to decline. Migration rates may in turn be affected by cultural factors: In agricultural areas that practice impartible inheritance, in which land is passed on undivided to an older or younger child, those who do not inherit are more likely to migrate out; in agricultural societies that practice partible inheritance, in which land is divided among some or all children, people are less likely to leave.

Other factors can influence the rate of population growth, such as the percentage of a population of childbearing age and factors relating to environmental constraints. But what is important, and sometimes ignored by demographic transition theorists, is that populations have in the past been able to maintain population stability without modern methods of birth control; dramatic increases in population growth have sometimes occurred because of economic or social factors, not because modern health or sanitation practices reduced death rates. Because this is critical for understanding some of the biases in alarmist projections of population growth, let’s examine a few historic cases of demographic transitions.

some examples of Demographic Change

To illustrate how the cultural and social factors previously outlined can influence rates of popu-lation growth independent of modern birth control methods, let’s look briefly at three cases of demographic change: the case of prehistoric gathering and hunting societies, the story of French Canadian fertility, and demographic changes in Ireland in the late eighteenth and early nineteenth centuries. We will see, as Marvin Harris and Eric Ross (1987a) noted, that historic populations did adjust their fertility rates to fit local economic and environmental conditions.

The FirsT DeMographiC TransiTion One of the assumptions of demographic transi-tion theorists is that preagricultural peoples suffered from high mortality that was balanced by correspondingly high fertility to keep the population from dying out. Let’s examine the first great demographic transition of 10,000 to 12,000 years ago, when human populations began to switch from gathering and hunting to agriculture.

We know from archaeological evidence and research that, among gatherers and hunters, population growth rates before 10,000 b.c. were slow. However, chemical and anthropometric analysis of skeletal remains and ethnographic studies reveal that gatherers and hunters had fewer health problems than later agricultural and industrial peoples; in addition, the rate of infant mor-tality was comparable to or well below that of European rates up to the nineteenth century and below those of peripheral countries through the mid-twentieth century (Cohen 1994:281–282). Moreover, life expectancy was relatively high, around thirty years—higher than some nineteenth-century Western countries and higher than that in many peripheral countries until recently. If

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infant mortality was lower than many have assumed and life expectancy was higher yet the rate of population growth was low, then there must have been other means of controlling popu-lation size.

Assuming life expectancy varied from twenty-five to thirty-five years and that a woman’s reproductive period extended from ages fourteen to twenty-nine, with birth spac-ing of twenty-three months, we would expect six births per woman; if three of these children survived, there would be a 50 percent increase in population for each generation. Because we know this did not occur, there must have been some limit placed on population growth. War and conflict between groups, given what we know about conflict among gatherers and hunters, cannot account for that much population loss, and

episodic disasters would not have occurred with the frequency required to check population at that level.

The only other way population growth could have been limited is through a check on fertility. Research among contemporary gatherers and hunters, such as the Ju/wasi of Namibia studied by Nancy Howell (1979), shows that they have on average 4.7 children, well below the average in the periphery of six to eight. Howell suggested that the leanness characteristic of these populations is associated with late menarche, irregular ovulation, long postpartum amen-orrhea (suppression of menses), and early menopause. She also suggested that an active physi-cal life stimulated the contraceptive hormone prolactin in gathering and hunting populations,

as does exercise in contemporary female athletes. Probably of greater influence is prolonged breast feeding, which would have suppressed ovulation and resulted in greater birth spacing. Moreover, it is likely that abortion and infanticide played a major role in keeping population growth levels at near zero (Cohen 1994; Polgar 1972).

Regardless of the reason, gatherers and hunters do have lower fertility rates than sedentary neighbors, and research shows that their fertility levels increase when they settle. In other words, gathering and hunting peoples were able to control fertility and adjust it to changing conditions.

The FrenCh CanaDians People have not only been able to maintain low fertility levels when conditions required it, but they have also been able to increase their rate of growth. French Canadians represent a classic case of demographic success. In the seventeenth century, 15,000 peoplemigratedfromFrancetowhatisnowQuebec;someofthesemovedon,andin1680 the population was about 10,000 people. In 100 years, from 1684 to 1784, the population grew from 12,000 to 132,000—an elevenfold increase representing an annual growth rate of 2.4 percent.Becauseonlyapproximatelyone-thirdoftheoriginalsettlersestablishedfamilies,itis estimated that the vast majority of the current 8 million French Canadians are descended from some 1,425 women.

The demographic success of French Canadians was due not to declining death rates but to high birth rates resulting from early marriages. Probably because of a higher proportion of males in the population, women married at ages fifteen to sixteen; moreover, unlike women in France, widows in Quebec had little trouble remarrying and consequently giving birth to more children. Thus, women in Quebec averaged only twenty-five months between pregnan-cies, compared to twenty-nine months in France. Finally, there was a lower mortality rate and a life expectancy five years greater in Quebec than in France, perhaps because low popula-tion density kept down the spread of disease. Of the Quebec pioneers who began families, each couple had 6.3 children, of whom 4.2 married; consequently, the population doubled in thirty years. The 4.2 children of each family in turn produced an average of thirty-four off-spring—that is, each original couple had more than fifty children and grandchildren. Moreover, daughters of pioneers had even higher fertility rates than their mothers and grandmothers; those

















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marrying between fifteen and nineteen years of age had an aver-age of 11.4 offspring, compared to 10.1 for the original pioneers marrying between the ages of fifteen and nineteen (which con-trasted with 9.5 in northwest France, where most of the pioneers came from).

Table 5.4 compares the number of offspring of women in the area from which the pioneers migrated with that for pioneer women and their offspring.

The fertility rate of French Canadians in the eighteenth century is among the highest ever recorded. Finally, some people assume religion was a factor in the fertility of Quebec women; however, today, with Catholicism still the dominant religion in Quebec, as it was in the seventeenth and eighteenth centuries, the province has one of the lowest birth rates in the world.

The Case oF irelanD The case of Ireland reveals some of the mechanisms through which people can raise their fertility levels in response to local economic conditions and demands of colonial powers. At the beginning of the eighteenth century, population growth in Ireland was relatively low. People married late, reducing the fecund period, and mortality was high, life expectancy generally being under thirty years. Then from 1780 to 1840, the popula-tion doubled from 4 million to more than 8 million. There seems little doubt that the reason was that women began to marry earlier, between ages fifteen and twenty, and in some areas even younger (Connell 1965:425). The question is, Why were Irish women marrying earlier?

Marriages in Ireland were arranged but only when the prospective bride and groom had access to land to farm. Before the late eighteenth century, marriage occurred at a relatively late age—between twenty and twenty-five years for women—because there was not enough land to support early marriage. Two things happened that increased the availability of land and encour-aged earlier marriages. Virtually all the farms in Ireland were owned by British landlords who extracted rents from the tenants. Their profits rose when a new landholding was created, so they had a vested interest in increasing the number of farms. In addition, population was rising in England in the late eighteenth century, increasing the demand for food, particularly corn. Therefore, landlords who increased their number of farms and the amount of land devoted to corn production could realize greater profits. As a result, landlords subdivided farms into smaller and smaller plots, reclaimed swamps, and extended farming into mountainous areas.

Families were able to subsist on smaller plots of land than before because of the potato. Introduced to Ireland in the sixteenth century, the potato had become the staple subsistence crop of the Irish farmer. Potato cultivation is very productive: An acre of potatoes can feed a family of six, including their livestock. A barrel of 280 pounds of potatoes can feed a family of five for a















Table 5.4 Fertility Rates of Women in Northwest France Compared to Pioneer Women in Quebec and Their Offspring

Age at Marriage

No. of Offspring, NW France

No. of Offspring, Pioneer Women, Quebec

No. of Offspring, Daughters of Pioneers

15–19 9.5 10.1 11.4

20–24 7.6 8.1 9.5

25–29 5.6 5.7 6.3

Source: See also MassimiLivi-Bacci, 1992. A Concise History of World Population. Cambridge: Blackwell.

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week at a daily consumption rate of eight pounds per person. Estimates are that people ate about ten pounds a day, which, along with a liter of milk, would provide some 3,800 calories along with all necessary nutrients. This allowed landlords to divide land into smaller parcels, providing a greater number of farms.

Thus, from 1791 to 1831, the amount of agricultural land increased, whereas the size of individual farming plots became smaller. The result was an increase in the number of farm-ing plots, which permitted people to marry earlier, resulting in a rate of population increase of greater than 1 percent per year.

In 1845, a potato fungus struck, destroying the harvest of 1846 entirely and leading to the great famine of 1846–1847. This and epidemics resulted in 1.1 million to 1.5 million deaths and an exodus from Ireland of 200,000 people per year. The average age at marriage increased from twenty-three to twenty-four in 1831–1841 to twenty-seven to twenty-eight by 1900, and one-fifth of the population never married. As a result, the population of Ireland decreased from 8.2 million in 1841 to 4.5 million in 1901.

In sum, the cases of the gatherers and hunters, Quebec pioneers, and Irish peasants reveal that, contrary to the assumptions of demographic transition theory, populations historically adjusted their fertility rates when they needed to adapt to local social and economic conditions, and they did so without the benefits of modern contraception. This raises the question, Why are populations in the periphery not, for the most part, lowering their fertility rates in the face of increasing population and supposedly declining economic resources?

populaTion growTh in The periphery

Traditional demographic transition theory, and most public policy and government analysts, sug-gests that the rapid rise in population in the poor nations is because of lowered mortality, itself a result of the importation of Western medical technology and public health measures. There is no question that life expectancy has increased remarkably in the periphery since 1950 and that a reduction in child mortality is the biggest factor in mortality decline.

Population growth in the periphery, however, began “exploding” well before the intro-duction of Western medicine and public health measures. Egyptian population grew in the nineteenth century from 2.5 million to 9 million, whereas the Mexican population grew from 5.8 million to 16.5 million. Cuba’s population rose from 550,000 in 1800 to 5.8 million in 1953 (Wolf 1969:281). Furthermore, we saw how in Ireland the population increased not because of improvements in health but as a consequence of the economic demands of English landlords. The question is, How and why did the economic expansion of the world capitalist economy change reproductive behaviors?

Some anthropologists, such as Carol R. Ember (1983), suggest that, in general, fertility increased with the intensification of agricultural activities promoted by colonizers in the Third World. Ember pointed to evidence that women reduce birth spacing as agricultural activities intensify, partly to compensate for the increased domestic work for women when men increase their agricultural labors.

Thus, it should be no surprise that populations grew under colonialism. As long as the production of commodities for export was essential to economic growth in the core, and as long as profits exceeded the costs of maintaining the colonies, policies that led to increases in the labor force served colonial aims (Polgar 1972:207). If there was any concern about population on the part of colonial rulers, it was too low. One Frenchman complained in 1911 that Equatorial Africa lacked labor for its development (Cordell 1994:137). Women in Africa, like women else-where, responded to colonial economic pressures by increasing their fertility rates. For example, in villages in the Sudan, after the British established cotton growing in the 1920s to produce raw materials for its textile mills and increased the need for workers either to grow cotton or to replace those removed from subsistence agriculture, women began to wean their children earlier so they could become pregnant again (O’Brien 1994).

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wealth Flows Theory

It is clear, then, that people, particularly women, can and do adjust fertility in response to local economic and social conditions, and they do so without the assistance of Western methods of contraception. Yet fertility rates, while dropping in some countries, remain high in most. The question is, Why does the demand for children in developing countries remain high? Among the reasons generally given are the following:

• Thecostofraisingchildreninruralareasislow,andintermsofcost,childrenmayrepre-sent a net gain economically.

• For security in old age. Surveys in Indonesia, the Koreas, Thailand, Turkey, and thePhilippines reveal that 80 percent to 90 percent of parents expect economic assistance from children in their old age.

• Cultural factors encourage people to see children as an affirmation of family values, aguarantee of family continuity, and the expression of religious principles.

Beginning with the idea that people in some societies resist attempts to limit fertility because of the economic benefits of children, demographer John Caldwell (1982) formulated the wealth flows theory to explain the reproductive decisions made by families. There are, according to Caldwell, only two types of reproductive strategies that families can adopt: One occurs where there is no economic gain to restricting fertility; the other occurs when there is an economic gain. Furthermore, where it is beneficial to have children, people will maximize family size; where it is not economically beneficial, people will minimize family size. In other words, when children contribute wealth to the family, when wealth flows from children to parents, parents will maxi-mize the number of children they produce; when wealth flows from parents to children, parents will minimize family size. Caldwell defined wealth in broad terms to include money or wages as well as economic security, labor assistance, prestige, the expansion of social and political networks, and so on.

The Yoruba of Nigeria, for example, desire large families because they increase the size of the security system in times of need, increase the number of cooperating individuals in less

Family form has much to do with family reproductive strategies. The many children in the extended Nigerian family pictured on the left are expected to contribute to its wealth, whereas the small number of dependents of the typical Western nuclear family, such as this one above in Boston, are expected to be a drain on family resources. (Left: Bruce Paton. Right: Juan Carlos Tinjaca/Shutterstock.)

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serious situations, and expand the range of economic and political contacts of family mem-bers. They also increase the number of political allies and the number of relatives who attend family ceremonies, both of which enhance prestige and status. For both urban and traditional Yoruba, family numbers are taken as signs of political strength and affluence. Moreover, a large family provides a springboard for success in the modern economy by supplying funds for education or personal connections to aid in finding jobs (Caldwell 1982:136). Children perform services not only by producing goods but also by providing services that adults regard as children’s work—carrying water; collecting fuel, messages, and goods; sweeping; looking after siblings; and caring for animals. Adult children help with labor and gift-giving and assist in making family contributions to community ceremonies, funerals, and birth cer-emonies. Adult children also care for aging parents and contribute to farms and businesses in such a way that aged parents can still participate. Finally, parents can invest in training or education of children to maximize later returns. When surveyed, 80 percent of Yoruba said that children are better than wealth, and even that children are wealth. Only 6 percent said that children consume wealth.

In core countries, however, children clearly consume wealth. For example, the U.S. Department of Agriculture estimates that in the United States, a child born in 2008 in the high-est income group will “cost” $483,750 until the age of eighteen, while a child born in the lowest income group will “cost” $200,340 (see Table 5.5).

Table 5.5 Estimated Annual Expenditures1 on a Child Born in 2008, by Income Group, Overall United States (USDA 2009)

Income Group

Year Age Lowest ($) Middle ($) Highest ($)

2008 <1 8,500 11,610 19,250

2009 1 8,760 11,960 19,840

2010 2 9,030 12,330 20,440

2011 3 9,380 12,750 21,090

2012 4 9,660 13,140 21,730

2013 5 9,960 13,540 22,390

2014 6 9,980 13,920 23,090

2015 7 10,280 14,340 23,790

2016 8 10,590 14,780 24,520

2017 9 11,810 16,180 26,330

2018 10 12,170 16,680 27,130

2019 11 12,540 17,190 27,960

2020 12 13,520 18,670 30,650

2021 13 13,940 19,240 31,580

2022 14 14,360 19,830 32,540

2023 15 14,830 21,150 36,030

2024 16 15,280 21,800 37,130

2025 17 5,750 22,460 38,260

Total — 200,340 291,570 483,750

1 Estimates are for the younger child in husband-wife families with two children and assume an average annual infla-tion rate of 3.05 percent.

Chapter5 • PopulationGrowth,Migration,and Urbanization 151

As a result of his research, Caldwell (1982:140) concluded that

the key issue here, and, I will argue, the fundamental issue in demographic tran-sition, is the direction and magnitude of intergenerational wealth flows or the net balance of the two flows—one from parents to children and the other from children to parents—over the period from when people become parents until they die.

Furthermore, said Caldwell, for intergenerational wealth flow to change, there must be a fundamental change in family structure; programs that simply emphasize family planning or increase the availability of contraception will not provide incentives to reduce fertility. Given these conclusions, the questions are, What kinds of changes are required in family structure to reduce fertility, and if in some circumstances fertility decline is desirable, under what economic and social circumstances will families be motivated to have fewer children?

The social implications of wealth Flows Theory

Wealth flows theory highlights an area of research that demographers have tended to neglect—the relationship between family structure and fertility. Anthropologists have been traditionally concerned with kinship and family relations because in small-scale and preindustrial societies, kinship, more than any other factor, tends to define a person’s relationship to everyone else. In small villages and towns, for example, it is not unusual for everyone to be related in some way to everyone else and for everyone to know exactly what those relations are. In fact, in many societies, in the absence of kin, a person is viewed with suspicion and hostility. Many anthropol-ogists who have lived and done fieldwork in such communities have had the experience of being assigned some fictional kinship designation—the sister, brother, daughter, or son of someone in the community.

One of the major distinctions that anthropologists make about different types of families is between the nuclear family and the extended family. The nuclear family consists of a father, mother, and children. This is the standard family unit in most Western countries and (although not the most common) in the United States. In other societies, extended families consisting of mothers and/or fathers and brothers, sisters, parents, grandparents, and others are the norm. Extended family structure can also vary considerably depending, for example, on whether a per-son is considered to be more strongly tied to his or her father and his kin (patrilineal descent), to his or her mother and her kin (matrilineal descent), or equally to both (bilateral descent).

Whether a society emphasizes nuclear family ties or extended family ties can obviously have great significance on patterns of family relations. In nuclear families, for example, parents or siblings are clearly responsible for the care of children; in extended families, children may be cared for by parents, siblings, members of the mother’s or father’s family, grandparents, and so on. In nuclear families, resources (income, possessions, etc.) are shared among mother, father, and children; in extended families, resources may be shared and distributed among a far greater number of individuals.

Furthermore, emotional ties may vary considerably. In a patrilineal extended family, a man may have closer ties to his brother than to his wife, or a woman may have closer ties to a brother or sister than to her husband. In nuclear families, the main tie is between husband and wife, and their main obligation is to their children. The question is, What implications do popula-tion control programs have for family structure and relations?

If wealth flow is the main determinant of fertility in a society, then fertility behavior will change only if there is a shift from extended family structures, in which wealth almost always flows from children to parents, to nuclear family structures, in which wealth almost always flows from parents to children. In Nigeria, for example, government efforts at reducing fertil-ity have met with almost no success, even among modernized urban families. This is because the extended family, even in the cities, remains the norm. In the few instances of demographic

152 PartII • TheGlobalImpactoftheCultureofCapitalism

innovators—those who have changed their fertility behavior—there has been a marked change in attitudes toward family and children to the emotional and economic patterns that resemble those found in nuclear families. These people have withdrawn emotionally from ancestors and extended family relatives and become more involved with their children and their children’s future. They give more emotion and wealth to their children than they expect to get back. Caldwell (1982:149) speculated that those couples who have adopted the Western form of family, and consequently Western notions of family size, have probably done so not because of population control and family programs but because of the long-standing attempt by missionaries, colo-nial administrators, and educational authorities to persuade people to abandon their traditional family structure and adopt a Western family ideal.

To the extent that such efforts are successful and that population control and family planning programs contribute to these efforts, we will see a loss of extended families along with the patterns of emotional, economic, and social ties that characterize them, and the adop-tion of emotional, economic, and social characteristics of the Western family. In other words, fertility change requires a nucleation of obligations, expenditures, and emotions in which con-jugal family ties take precedence over all external relationships and that foster the belief that what parents owe their children is more important than what children owe their parents. The Western nuclear family is also marked by a greater emphasis on the rights of individuals to act independently of the family by, for example, choosing a spouse on the basis of mutual attrac-tion, choosing a residence independent from one’s parents, choosing a career, and making decisions together with a spouse about family size.

The Question of gender and power

The United Nations Population Fund report The State of the World’s Population, 2000 (UNPF 2000:2), concludes that the status of women is one of the prime determinants of fertility and population growth. They conclude that if

women had the power to make decisions about sexual activity and its consequences, they could avoid many of the 80 million unwanted pregnancies each year, 20 mil-lion unsafe abortions, some 500,000 maternal deaths (including 78,000 as a result of unsafe abortion), and many times that number of infections and injuries. They could also avoid many of the 333 million new sexually transmitted infections contracted each year.

Anthropologists suggest also that relations between husbands and wives may be as important as the influences of extended and nuclear family structure in influencing fertility. In situations where there is high unemployment, where women have limited access to economic resources and must depend on men and children for economic contributions or economic secu-rity, fertility will be high. This is clearly revealed in the research of W. Penn Handwerker (1989) in Barbados.

In the 1950s, according to Handwerker, the West Indian family was characterized by weak conjugal bonds, a relative absence of stable nuclear units, weak bonds between fathers and chil-dren, and strong bonds between mothers and children. Family interactions among men, women, and children tended to take place in visiting relationships, consensual cohabitation, and legal marriage, which tended to occur late if at all. Consequently, 80 percent of births occurred outside of marriage.
















Chapter5 • PopulationGrowth,Migration,and Urbanization 153

Historically, marriage patterns were a function of sugar production and the demand for sugar on the world market. The British freed their Barbados slaves in 1833, but the freed slaves were still dependent on wage labor in the sugarcane fields. Furthermore, to replace slaves who left, the British encouraged the migration of thousands of indentured laborers from India and the East Indies. As a result, the population of Barbados increased in the nineteenth century from 60,000 to 200,000. Because the sugar growers controlled the economy, and because there was a more than adequate workforce competing for available jobs, wages were low. To get a job, a laborer often needed the patronage of someone connected to the sugar growers. As a result, living conditions for the bulk of the black laborers were among the worst in the British West Indies. Infant mortality, for example, was 25 percent in the early 1900s and remained as high as 15 percent into the 1950s.

Handwerker claimed that the scarcity of jobs created severe competition among the poor for available work, such that men and women could optimize their resources only by exploit-ing each others’ weaknesses. Because only men were employed on the sugar plantations, they earned most of the money, money they used to gain sexual conquests, rum, and unquestioned authority. Meanwhile, women exploited men’s desire for sex, their absence from the home, and their distance from children to attach the children emotionally to themselves and distance them from their fathers.

This does not mean women didn’t have jobs—60 percent worked from age fifteen to age fifty-five. Their work was low-paying manufacturing work, or they worked as seamstresses, domestics, and petty traders. Wages were so low that one woman commented, “You are lucky if a daughter can earn enough to help herself, let alone help you” (Handwerker 1989:77). To survive, a woman needed to supplement her income with that of a man.

These patterns of male–female relations resulted in a family pattern in which women attracted men as cohabitants, boyfriends, and, later, husbands in a unit in which men sought to dominate and control women. Men continued to meet their social obligations by working long hours, often at several jobs, providing an adequate material base for their wives and children; they exercised absolute authority in the home and spent free time with either men or other women. Women, needing men for economic support, submitted reluctantly, often complaining that their husbands or coresidents simply wanted a slave and expressing a desire to be treated as equals. Yet because of the pattern of out-migration of men, and the resulting greater number of women, men were able and expected to have extramarital affairs.

The result was a family in which men had minimal emotional attachments to their wives and children, whereas women worked to maintain close ties to their children. Women used sex to cement the tie to men, and, according to Handwerker’s informants, children were by-products of the exchange. Moreover, older children were expected to help support their mothers and even to protect them from their fathers or stepfathers. As Handwerker (1989:88) said,

Women could optimize or improve their resource control only by unrestricted childbearing. Getting pregnant and bearing children tended to be viewed as both a woman’s duty and as her goal, and mothers generally took the view that their children owed them support for bringing the children into the world.

Even the belief system worked to enhance high fertility. Women believed that abstention from sex was unhealthy and that a woman who failed to bear all the children she was capable of bearing would suffer from high blood pressure and other diseases. “You have children until you can have no more,” one woman in her fifties put it. Thus, patterns of economic exploitation created a family form in which women, acting according to the logic of their social and eco-nomic conditions, maximized the number of children they would have.

Beginning in the 1960s, however, family structure slowly began to change in response to changing economic conditions. The colonial sugar economy declined to the point that sugar rep-resented only about 6 percent of domestic output and 10 percent of employment. Manufacturing

154 PartII • TheGlobalImpactoftheCultureofCapitalism

and tourism grew, and with it the importance of education for access to jobs. Connections to people of influence mattered less. More importantly, women gained access to jobs unavailable to them before.

As a consequence, the Barbadian family of the 1980s was very different from the family of the 1960s and earlier. Women expect their husbands to be companions, and there have been equivalent expectations on the part of husbands. Although women still suffer from job discrimination, education provides them with access to better-paying jobs as technical special-ists, secretaries, receptionists, business executives, university employees, and lawyers. From 1950 to 1980, the percentage of women working in manufacturing increased from less than 15 percent to more than 50 percent. The competition for resources between men and women lessened, and the exploitative pattern of relations decreased. Marriages came to resemble more the so-called companionate marriages that emerged in England in the nineteenth century (Stone 1976); men began to enjoy their families, and their lives began to center more on their wives and children.

This did not occur without conflict, however. Because the stronger emotional ties within the nuclear family required weakening to some extent ties outside the family, especially between sons and mothers, relations between wives and mothers-in-law became strained as they competed for the affections of husbands. Regardless, the family of the 1980s came to resemble the ideal-ized Western nuclear family. Women viewed children as a cost rather than as a future resource, and young Barbadian women explicitly denied owing anything to their parents.

With the change in family patterns, there has been a dramatic decrease in fertility, from a birth rate of about five per woman in the 1950s to a low of about two in the 1980s. Handwerker (1989:210) concluded that changes in patterns of family relations, not large-scale population control programs of the sort advocated by the Cairo Population Conference, will determine fertility. It is not knowledge of contraceptive techniques or a population problem per se that inhibits women from having smaller families but an issue of power relations. Family planning programs, said Handwerker,

should not be expected to bring about fertility transition because they can neither create the jobs nor provide the education necessary for many jobs that would permit women to achieve meaningful control over their own lives. The “right” to have a small family is not a real option for women who are dependent for basic material well-being on their children.

Issues of Immigration

Migration, particularly of illegal or undocumented immigrants, is another issue that has raised political alarms in wealthy countries. Presently over 200 million or one out of every 35 persons in the world resides in a country other than that in which they were born. The prevailing pattern, as one would expect, is for people in poor countries to migrate to richer ones in search of jobs. As Jeffery Kaye (2010:3) puts it, “migrants go where the grass in greener.” Mexicans seek to enter the United States, while Guatemalans try to go to Mexico. Bangladeshis try to go to Kosovo or Great Britain, while sub-Saharan Africans want to go to Spain or Italy, and Bolivians to Argentina. See Table 5.6 for a list of selected countries by foreign-born population.

Immigration policy is a major issue in both developed and developing countries. While countries from which people migrate support immigration, for reasons we’ll explore, the vast majority of people in the developed world desire strong immigration controls.

To examine why immigration is such an emotional topic, we need to answer the following questions: How has migration varied historically? Why do people emigrate? What are the eco-nomics of migration? How does it affect wages and the economies of both the host and sending countries? What is the impact of illegal immigration and how have countries tried to regulate immigration? What is a sensible immigration policy?

Table 5.6 Countries by Number of Immigrants (2005)

CountryNumber of Immigrants

Estimated Number of Illegal Immigrants1

Percentage Total of All Immigrants

in the World

Immigrants as a Total of National


United States 38,355,000 12–20 million 20.56 12.81

Russia 12,080,000 10–12 million 6.474 8.483

Germany 10,144,000 5.437 12.31

Ukraine 6,833,000 3.662 14.7

France 6,471,000 200,000–400,000 3.468 10.18

Saudi Arabia 6,361,000 3.409 25.25

Canada 6,200,000 35,000–120,000 3.272 18.76

India 5,700,000 A few hundred thousand to 20 million.

3.055 0.517

United Kingdom 5,408,000 550,000–950,000 2.898 8.982

Spain 4,790,000 2.567 10.79

Australia 4,097,000 100,000 2.196 19.93

People’s Republic of China 3,852,000 100,000 2.064 0.2944

Pakistan 3,254,000 1.744 1.984

United Arab Emirates 3,212,000 1.722 71.4

Hong Kong 2,999,000 1.607 42.59

Israel 2,661,000 1.426 37.87

Italy 2,519,000 1.35 4.288

Kazakhstan 2,502,000 1.341 16.88

Cote d’Ivoire 2,371,000 1.271 13.06

Jordan 2,225,000 1.193 39.01

Japan 2,048,000 1.098 1.599

Iran 1,959,000 1.05 2.861

Singapore 1,843,000 0.9878 42.6

Palestinian Territories 1,680,000 0.9004 45.38

Ghana 1,669,000 0.8945 7.548

Kuwait 1,669,000 0.8945 62.11

Switzerland 1,660,000 0.8897 22.89

Malaysia 1,639,000 800,000 0.8784 6.15

Netherlands 1,638,000 0.8779 10.05

Argentina 1,500,000 0.8039 3.871

Turkey 1,328,000 0.7118 1.814

Uzbekistan 1,268,000 0.6796 4.768

Source: World Population Policies 2005, United Nations, Department of Economic and Social Affairs, March 2006. ISBN 978-92-1-151420-9. See also List of countries by foreign-born population in 2005. Wikipedia. Illegal Immigration, Wikipedia.

Figures for the number of illegal immigrants are rough estimates at best, which is why estimates for the United States range from 10 to 20 million. Different interest groups will also skew the numbers to support their political or economic agenda. The number also depends to some extent on enforce-ment procedures of a given country, both in border controls and detection procedures. For that reasons estimates will probably run from one-fifth to one-half of the number of legal immigrants.

156 PartII • TheGlobalImpactoftheCultureofCapitalism

history of Migration

The first great wave of immigration involved the first human ancestors mov-ing out of Africa and into Europe, the Middle East, and Asia. Some of those Asian immigrants crossed the land bridge of the Bering Straits and into North and South America sometimes between 10,000 and 20,000 years ago. The movement of Europeans into the New World after 1500 marked another migration milestone, as didtheinvoluntarymovementofsome10 million Africans into North and South America.

The next great wave occurred with the Industrial Revolution when demands for both skilled and unskilled labor surged, and industrializing regions and countries

sought to attract immigrants, even subsidizing their travel. The first legislation regarding immi-gration in the United States in 1864 sought to increase the number of immigrants. At first during the early part of the nineteenth century rates of migration tended to be small, first because travel was difficult, and, second, because most people were too poor to afford to move. But, steamship and railroad travel in the latter half of the nineteenth century made travel easier, while increases in wealth afforded people increased opportunities to emigrate. Between 1870 and 1920, almost 28 million people arrived in theUnited States fromEurope,while another 10 to 11millionmigrated to South America.

The first instance of opposition to European immigration in the United States occurred in the 1850s. The Order of the Star Spangled Banner, or “Know-Nothing” Party, was formed to protest the entry of Irish immigrants fleeing the potato famine. They argued that America should be for those born here, and argued that the Irish were loyal to a foreign power—the Pope. In the United States the first action to restrict immigration, which we mentioned in Chapter 2, was the Chinese Exclusion Act of 1882, enacted in response to protests, largely in California, that Chinese immigrants were taking jobs from native workers. (See Table 5.7 for a history of U.S. legislation regarding immigration.) There was also evidence that by increasing the availability of labor, wages declined and unemployment increased. Thus studies suggest wages of the average American, absent immigration after 1870, would have been 11 percent to 14 percent higher than they were (Hatton and Williamson 2005:125).

In addition, as voting rights were extended to more people in liberal democracies such as the United States, Great Britain, and Australia, politicians were forced to pay more attention to native workers’ concerns that their economic welfare was being threatened by the influx of immigrants. Concerns increased as the source of European immigrants gradually switched from northern Europe, where increased industrialization lessened people’s motivation to emigrate, to southern and eastern Europe. The influx of desperately poor Italians, Slavs, Ukrainians, and Jews, with no English-language skills raised fears that they could never assimilate to life in the United States. In 1907, the U.S. Congress created a committee, the Dillingham Commission, to study the life of immigrants, and in 1911 they issued a forty-one-volume report that led to the next restrictive legislation, the Literacy Act of 1917 (see Table 5.7).

However, there were counter pressures. While native laborers feared that immigrants threatened their wages, if not their jobs, and others felt threatened by the cultural diversity repre-sented by the immigrants, employers in agriculture, industry, and business welcomed the rise in laborers willing to work for less. This conflict between labor and business continues to define the policy debates about immigration in the United States and elsewhere.

Between 1870 and 1920, almost 28 million

people arrived in the United States from

Europe, while another 10 to 11 million

migrated to South America.

(The Bridgeman Art Library Ltd/Alamy.)

Chapter5 • PopulationGrowth,Migration,and Urbanization 157

Table 5.7 The History of U.S. Legislation to Regulate and Control Immigration

Date Legislation Description

1864 An Act to Encourage Immigration

This was the first action taken by the United States federal government regarding immigration. Prior to that it was seen as a state prerogative.

1882 The Asian Exclusion Act Essentially prohibited the immigration of Chinese citizens. The legisla-tion was a reaction to protests, largely in California, claiming that Chinese workers were taking jobs of U.S. workers.

1891 The Immigration Act of 1891

Established an Office of the Superintendent of Immigration within the Treasury Department.

1917 The Literacy Act The act established a literacy test for prospective immigrants, imposed a “head” tax, and excluded categories of people including “idiots,” alcoholics, and anarchists.

1921 Emergency Quota Act Limits were established for the number of immigrants from different coun-tries. The limit for any country was 3 percent of the total from that country in the United States according to the Census of 1910. The quotas allowed for 356,000 total but limited the number from countries whose citizens were seen as having a problem assimilating and likely to end in poverty. Asian restrictions remained in place and there were no quotas from Western Hemisphere countries.

1924 Johnson-Reed Act Lowered the total quota for immigrants from 356,000 to 165,000 and estab-lished the Border Patrol.

1942–1960 Mexican Farm Labor Program—1942–1964

The “Bracero Program,” as it was called, was initially prompted by a demand for manual labor during World War II and began with the U.S. government bringing in a few hundred experienced Mexican agricultural workers to California. Texas initially opted out of the program in prefer-ence for an “open border” policy, but was denied braceros by the Mexican government until 1947 due to perceived mistreatment of Mexican laborers. The number admitted under the program ranged from just over 4,000 in 1942 to almost 450,000 in 1959.

1965 Immigration and Nationality Act

Also called the “family reunification act,” because its main provision was to allow relatives of people in the United States to join them. It allotted 20,000 immigrants for each Eastern Hemisphere country with a maximum total of 170,000 a year. 64 percent of the spots were reserved for relatives of U.S. citizens, with 30 percent allotted to various employment categories. Most notably the act removed the exclusion of Asians and Africans.

1985 The Immigration Reform and Control Act

The major provision was to grant amnesty to some 3 million illegal immi-grants. It also made it illegal to hire an illegal immigrant, but, after protests form business leaders, softened the law so that it read “to knowingly hire an illegal immigrant.”

1990 Immigration Act of 1990 With some modifications, largely governs present U.S. immigration policy. The 1990 revisions introduced an annual quota of 675,000 divided into three classes: 480,000 were allotted to family members of U.S. citizens, employment-based visas were increased from 54,000 to 140,000, and 55,000 were allocated to diversify immigration from countries with rela-tively low immigrant presence in the United States. Homosexuality was removed as grounds for exclusion.

1996 Illegal Immigration Reform and Immigrant Responsibility Act

This act states that immigrants unlawfully present in the United States for 180 days but less than 365 days must remain outside the United States for three years unless they obtain a pardon. If they are in the United States for 365 days or more, they must stay outside the United States for ten years unless they obtain a waiver. If they return to the United States without the pardon, they may not apply for a waiver for a period of ten years. Also enhanced funding for border surveillance.

158 PartII • TheGlobalImpactoftheCultureofCapitalism

The Immigration Act of 1921 established quotas for countries according to the number from that country already in the United States (see Table 5.7). These restrictive acts, along with the economic depression of the 1930s, brought the first wave of massive immigration to a halt, as an average of fewer than 50,000 people a year entered the United States in the 1930s (Hatton and Williamson 2008:183).

The immigration restrictions of the 1920s did benefit U.S. workers, particularly blacks, who had been crowded out of the northern labor market by European immigrants. The migration of blacks from the south into the industrialized north between 1910 and 1950 helps account for the leveling of incomes through the middle third of the twentieth century (Hatton and Williamson 2008: 197). And, since North Americans were not excluded in the immigration acts of the 1920s, the percentage entering from Canada and Mexico rose from 12.9 percent of all immigrants in 1910, to 45.4 percent from 1920 to 1929. Mexican immigration rose by 320,000 in that decade (Hatton and Williamson 2008:186).

The next great global movement of people began after WW II and continues today. It has differed from the previous pattern in five ways. First, Europe declined as a source of immi-grants and became a major destination, surpassing the United States in that regard. Second, Latin America changed form being a prime destination for migrants, to becoming a major source. In fact, from 1960 to 1980, Latin America went from hosting 1.8 million foreign-born to provid-ing 1.8 million migrants, a change of 3.6. million in only twenty years (Hatton and Williamson 2008:208). While only about a fifth of all U.S. immigration originated south of the border in the 1950s, almost half (47.2 percent) did so in the 1990s, half of that coming from Mexico.

The third post–WW II shift came in Asia where immigration, largely from India, China, Korea, the Philippines, and Vietnam into the United States increased largely as a result of the United States’ 1965 Immigration Act that removed Asian restrictions (see Table 5.7). The demand for migrant labor in the oil-rich Persian Gulf countries marked a fourth change, with the annual flow of migrants going from less than 100,000 in 1973 to nearly 1 million in 1991. Persian Gulf countries preferred Asian workers over Arab migrants because Asians were less likely to permanently settle in the countries and were less of a political threat.

Finally, with the collapse of the Soviet Union and the subsequent removal of restrictions on emigration, the flow of immigrants from eastern Europe to western Europe surged from about 240,000 a year to 1.2 million a year between 1985 and 1989.

The economics of immigration

Much of the political debate about immigration has to do with who wins and who loses eco-nomically. Clearly, historically, the benefits to the migrant are considerable. Even back in the nineteenth century, a Norwegian could increase his income 3.7 times by immigrating to the United States, and an Indian from Madras working on a sugar plantation in British Guinea could increase his income by five times. Overall in the late nineteenth century, during the peak of European migration to the New World, wages in the New World were double that of Europe. Today, wages in the wealthy countries of the world are five times that of the Third World (Hatton and Williamson 2008:215). In the Philippines, for example, a nurse earns about $260 a month. It is not surprising then that when in 2004 more than 50,000 Filipino-trained nurses were working in the United States, at the same time the Philippines was experienc-ing a shortage of nurses. Between 2000 and 2007, almost 78,000 nurses left the Philippines. In fact, with doctors in the Philippines making on average $4,000 a year, more than 6,000 between 2000 and 2008 retrained as nurses to migrate to the United States or elsewhere (Kaye 2010:34–35).

Employers also gain from immigration. One estimate is that the 11 percent increase in labor supply from immigration between 1980 and 2000 reduced the wages of the nonmi-grant worker by 3.2 percent (Hatton and Williamson 2008:293). This is one of the reasons that business and agricultural groups favor liberal immigration laws. When Texas and Arizona

Chapter5 • PopulationGrowth,Migration,and Urbanization 159

lawmakers, under strong pressure from largely Republican and conservative antiimmigrant groups, passed legislation designed to stop the influx of undocumented Mexican laborers, business groups, which were also largely Republican, had to publically oppose the legislation. Given the power of agricultural and business groups in the United States, it is surprising that immigration laws are as strict as they are, but, perhaps, unsurprising, that enforcement of these laws is generally lax.

Another winner is the country from which people emigrate. One source of gain to source countries comes in the form of remittances, money that migrants bring home or send home to friends and relatives (see Table 5.8). In some cases, some 10 percent or more of a country’s GDP, or national income, comes from money brought or sent back by emigrants. And the amounts in Table 5.8, which are based on money sent through formal banking channels, may be underestimated by anywhere from 10 percent to 90 percent. Remittances are such an important part of national incomes that some countries, such as the Philippines, India, Vietnam, Sri Lanka, Indonesia, and Bangladesh, have special government offices to encourage and assist emigrants, and airports have special signs wishing them good luck as they leave.

In addition, there is evidence that money sent home by immigrants significantly reduces child mortality rates and increases educational levels of households that receive remittances (Hatton and Williamson 2008:333). And a further benefit is that as migrants leave, they reduce the number of people competing for jobs and which raises average wages. The only drawback is that migrants tend to be the most educated in the source country, although what is lost in eco-nomic productivity is more than made up for by remittances.

In sum then, some of the winners in the migration sweepstakes are:

• themigrantsandtheirfamilies,eitherthosethataccompanythemorthosethatstaybehind• employers,renters,businesses,andlikelyconsumersinthehostcountry• theeconomyofthesourcecountry,alongwithworkerswhoremaininthesourcecountry

Table 5.8 Total Remittances (in US$ millions) in 2010 by Top Receiving Country and Percent of GDP of Selected Countries in 2009

World $440,077 0.7%

1 India 53,131 1 Tajikistan 35.1%

2 China 51,300 2 Tonga 30.3%

3 Mexico 21,997 3 Samoa 26.5%

4 Philippines 21,373 4 Lesotho 26.2%

5 Bangladesh 10,804 5 Nepal 23.8%

6 Nigeria 10,045 6 Moldova 22.4%

7 Pakistan 9,683 7 Lebanon 21.9%

8 Lebanon 8,409 8 Kyrgyz 21.7%

9 Vietnam 8,000 9 Haiti 21.2%

10 Egypt 7,725 10 Honduras 17.6%

11 Indonesia 7,250 11 El Salvador 16.5%

12 Morocco 6,452 12 Jamaica 15.8%

13 Ukraine 5,595 13 Jordan 14.3%

14 Russian 5,477 14 Guyana 13.7%

15 Serbia 4,896 15 Serbia 12.6%

Source: Remittances data, Development Prospects Group, World Bank, 2011,

160 PartII • TheGlobalImpactoftheCultureofCapitalism

Other winners include:

• theglobalemploymentserviceswhoearnbillionsfortheirservices• thewireservicesthatsendremittances• thesmugglerswhocharge$1,400to$5,000ormoretohelpmigrantsentercountriesille-

gally, and the people and industries that earn billions trying to stop them.

Those who lose are laborers, generally the unskilled, in the host country, who may see a reduction in their wages of anywhere from 3 percent to 9 percent (Hatton and Williamson 2008:304–305). Other losers are the illegal immigrants who die (200 or more each year on the U.S.-Mexican border, and thousands more in Europe and Asia) trying to reach their destination. Some claim that taxpayers who support public services, such as schools, health facilities, and social services utilized by immigrants, lose, and we’ll examine that claim below.

understanding illegal immigration

There are an estimated 25 to 32 million undocumented immigrants in the world, and that is probably an underestimate. In the United States there are an estimated 12 to 20 million illegal

immigrants (see Table 5.6), some 59 percent from Mexico and approximately half being individuals who overstayed a visa permitting them to enter the country legally.

It is fair to say that illegal immigration represents a failure of neoliberal free-trade doc-trine. Free trade promotes the movement of goods, services, and capital, but traps in place those made redundant by those same policies. Free trade, as we examined in Chapters 3 and 4, is based on the idea that the free flow of commodities, services, and capital increases economic activity in general, and produces overall economic benefits for all. Over the past fifty years, in fact, with multi- and bilateral trade agreements and the establishment of the World Trade Organization (WTO) most barriers to the flow of commodities, services, and capital have diminished or been removed. Thus consumers can enjoy the lower prices of goods made in China, U.S. corporations can employ people in the Philippines or in India to answer customers’ phone inquiries, and banks and other financial institutions are free to buy shares in the banks or invest in enterprises of other coun-tries. At the same time, however, the growth in economic inequality between countries, in part because of these agreements, creates more of a desire for those in poor countries to seek eco-nomic opportunities in richer countries. This is the opposite of the situation in the nineteenth and early twentieth century when the movement of commodities, services, and capital was restricted by tariffs and laws, while labor was free to move where it was most in demand.

For example, the North American Free Trade Agreement (NAFTA) between Canada,

The debate over immigration policy is as intense as ever in both the United States and Europe. A major conflict is between businesses, which welcome immigrants willing to work for less, and native workers, who feel threatened with lower wages. (Dennis Brack/ Delimont Photography/Newscom.)

Chapter5 • PopulationGrowth,Migration,and Urbanization 161

Mexico, and the United States allowed American farmers to flood the Mexican market with corn, displacing thousands of Mexican farmers. Theoretically, the most productive and profitable agricultural techniques of U.S. producers won out over the less productive and less profitable Mexican producers. With free trade, those displaced should be free to seek employ-mentwhere  they couldbemoreproductive, but areprevented fromdoing soby restrictiveimmigration laws. In 1994, the Mexican government was close to bankruptcy and was saved by a loan that allowed Mexico to repay its debts to Wall Street Banks. But, in exchange, the Mexican government had to raise interest rates on loans and loosen the rules regarding foreign ownership of banks. But the rise in interest rates that, in part, allowed the Mexican govern-ment to repay its loan ahead of schedule, resulted, according to a 2008 report by the Mexican Senate, in the bankruptcy of hundreds of thousands of Mexican businesses and the loss of millions of jobs. The report concluded that the economic collapse would result in 6 million Mexicans seeking employment in the United States (see Kaye 2010:50–51). It is probably no  coincidence that after the signing ofNAFTA, theUnitedStates doubled the number ofborder agents.

In Senegal, as Jeffrey Kaye notes, the traditional dish is thieboudienne. To prepare this dish, fry some onions and fish; stir in tomato paste, rice, and water; and bring to a boil. Then add vegetables such as carrots, sweet potatoes, turnips, eggplant, and cabbage and simmer until done. Yet, for Senegalese, buying these items from Senegalese producers is now almost impos-sible. Fishing declined by half from 1997 to 2005 because industrial-size trawlers from Europe, Japan, and the United States depleted the fish stocks. Senegalese farmers can’t compete with the factory-style agriculture of the United States and Europe whose produce sells more cheaply in Senegalese markets than local produce. Senegal imports 80 percent of its rice, although it has the capacity to produce all it needs. With jobs destroyed, and the collapse of the Senegalese economy in the 1990s, the only option left for many Senegalese was to migrate, either legally or illegally. Thus the 2009 United Nations Development Report estimates that the emigration rate is 4.4 percent (United Nations 2009:145).

Economists are almost unanimous in agreeing that, overall, unrestricted immigration increases global well-being. Estimates of the economic benefits range from a doubling of the world’s GDP, to an increase of 10 percent. Another study estimates that a transfer of 16 million migrants to wealthy countries, 8 million skilled and 8 million unskilled workers, would raise world GDP by $156 billion or 0.6 percent, and would result in a 1 percent drop in skilled wages and a 0.6 percent drop in unskilled wages in the host country. It would raise skilled wages by 5 percentandunskilledwagesby0.1percentinthelessdevelopedsourcecountry(HattonandWilliamson 2008:371).

Another reasons for favoring unrestricted migration is the aging problem. Worldwide in 1950, there were twelve persons of working age for every person age sixty-five or older. By 2010, that number shrunk to nine. By 2050, this elderly support ratio—the number of people one to sixty-five years of age, divided by the number over sixty-five—which indicates lev-els of potential social support available for the elderly, is projected to drop to four. This is particularly serious in Europe, although not quite as much in the United States. Since pension programs require working adults to support retirees, there will be fewer of the former and more ofthe latter.

In order to keep the elderly support ratio constant at 2000 levels—4.3 for Europeans and 5.2 in the United States—a significant number of immigrants are required. New U.S. immigration would need to be 14.3 million per year in 2000–2025 and 11.9 million per year in 2025–2050, roughly fifteentimes that based on current rates. Net EU immigration would have to be even higher, 8.6 million and 18.4 million per year, or forty to seventy times higher than what is currently projected (Hatton and Williamson 2008:377).

Yet, in spite of the advantages offered by immigrants—legal and illegal—polls taken over the last two decades find that people in the wealthy countries overwhelmingly support more restrictive immigration laws, especially when it comes to stopping illegal immigrants. Cries of

162 PartII • TheGlobalImpactoftheCultureofCapitalism

“We have lost control of our borders,” are common both in the United States and Europe. The question is, is immigration fair to taxpayers?

The most common concern is that illegal immigrants constitute a financial burden on tax-payers. Immigrants, in general, are more likely to receive benefits from one or more welfare programs, 19.7 to 13.3 percent for native families. Since Latin American families tend to have more children, they also receive a higher share of education benefits. And immigrants who are poor, also pay less tax.

One study commissioned by the U.S. Congress calculated that the net fiscal burden per immigrant-headed household in 1996 was between $1,613 and $2,206 representing a fiscal cost of between $166 and $226 per nonimmigrant household (Hatton and Williamson 2008:308). Thus the cost to a California household was about $2,000. Another study by the Federation for American Immigration Reform (FAIR) concluded that illegal immigration costs U.S. taxpayers about $113 billion a year, or $1000 per U.S. household (Martin and Ruark 2010:1).

However, others questioned these studies because they simply estimate the taxes paid by illegal immigrants and subtract it from an estimate of the public services (health, education, and social services) received. For example, a study commissioned by Americans for Immigration Reform (AIR) concludes that ending illegal immigration would result $1,757 trillion in lost spending, $651.511 billion in annual lost output, and 8.1 million lost jobs (Perryman Group 2008:5). A third study by the Immigration Policy Center (Hanson 2009) examines the data and includes that gains and losses from illegal immigrants basically balance out.

The debate is likely to continue; one reason is that it is difficult to separate economic arguments about immigration—legal and illegal—from social attitudes, prejudices, and racism, particularly given the fact that most migrants come from poor countries. Generally speak-ing, countries do welcome migrants who are most like them. Australia, as well as Canada and the United Kingdom, has a point system to determine a person’s eligibility to immigrate (see Table 5.9).Youmightwanttodetermineyourscore.

In sum, we can conclude that countries still largely control their borders, particularly if they were willing to enforce penalties on employers who hire illegal immigrants. However, given the political power of business and corporations, and the economic losses they would incur if they were unable to utilize immigrant labor, governments tend to be unwilling to enforce such laws. The result is a system where the government attempts to play up its efforts to restrict immigration to satisfy antiimmigrant sentiment, while at the same time providing little financial support for enforcement, thus satisfying business and corporation needs for cheaper labor.

For the migrant, particularly an undocumented one, the result is a shadow existence whose fate lies largely with border agents and employers. Michael Kearney (1991) points out that even such things as border patrols function not so much to apprehend illegal migrants as to force them to accept low-paying jobs while not claiming benefits accorded to other laborers. He cited the example of migrant Mixtecs, who walk through the mountains in winter to find work and who, because of their work ethic, are desired by American employers. They don’t understand why the Migra (border patrol) seek to apprehend them, forcing them to work harder and faster before they are apprehended and forcing them to take whatever work at whatever wages they can. But, as Kearney (1991:61) indicates, that is exactly the point of the Migra; it is not intended to stop migrants from coming into the United States to work; rather it functions to discipline them to work harder and accept low wages.

urbanization and the growth of slums

In 1950 there were 86 cities in the world with a population of more than 1 million; today there are 400 and by 2015 there will be at least 550. Cities absorbed nearly two-thirds of the global population growth since 1950, and are currently growing by a million babies and migrants each week (see Table 5.10). And in the developing world, the vast majority of urban dwellers

Chapter5 • PopulationGrowth,Migration,and Urbanization 163

Table 5.9 Australian Immigration Point System

Estimate Your Points with the Migration Matters Skilled Migration Points Calculator. Pass is 65 Points


18–24 25 points

25–32 30 points

33–39 25 points

40–44 15 points

45–49 0 points

English Language

Competent English–IELTS 6 or below 0 points

Proficient English–IELTS 7 10 points

Superior English–IELTS 8 20 points

Australian work experience in nominated occupation or a closely related occupation *

No Australian work experience 0 points

One year Australian 5 points

Three years Australian 10 points

Five years Australian 15 points

Eight years Australian 20 points

Overseas work experience in nominated occupation or a closely related occupation *

No overseas work experience 0 points

Three years overseas 5 points

Five years overseas 10 points

Eight years overseas 15 points

Qualifications (Australian or recognised overseas)

No recognized qualification 0 points

• Offshorerecognisedapprenticeship• AQFIII/IVcompletedinAustralia• DiplomacompletedinAustralia

10 points

Bachelor degree (including a Bachelor degree with Honours or Masters) 15 points

PhD 20 points


Designated language 5 points

Partner skills 5 points

Professional Year 5 points

Sponsorship by state or territorygovernment 5 points

Sponsorship by family or state or territory government to regional Australia 10 points

Study in a regional area 5 points

Points Total:

0 points





Table 5.10 Global Percentage of Urban Population by Region: 1950–2040 (Projected)

WorldLatin America and

the Caribbean Asia AfricaUnited States Europe

More Developed Regions

Less Developed Regions

Least Developed Regions

Year % urban % urban % urban % urban % urban % urban % urban % urban % urban

1950 29.4 41.4 17.5 14.4 64.2 51.3 54.5 17.6 7.4

1955 31.4 45.3 19.2 16.2 67.2 54.1 57.7 19.6 8.4

1960 33.6 49.3 21.1 18.6 70 57 60.9 21.8 9.5

1965 35.5 53.3 22.9 21.2 71.9 60 63.9 24 11.1

1970 36.6 57.1 23.7 23.5 73.6 62.8 66.6 25.3 13

1975 37.7 60.7 25 25.6 73.7 65.2 68.7 27 14.7

1980 39.4 64.3 27.1 27.8 73.7 67.3 70.1 29.5 17.2

1985 41.2 67.4 29.8 29.8 74.5 68.7 71.3 32.3 19

1990 43 70.3 32.3 32 75.3 69.8 72.3 34.9 21

1995 44.8 73.1 34.8 33.9 77.3 70.3 73.2 37.5 22.7

2000 46.7 75.5 37.4 35.6 79.1 70.8 74.1 40.1 24.3

2005 49.1 77.3 40.9 37.3 80.7 71.6 75.9 43 26.1

2010 51.6 78.8 44.4 39.2 82.1 72.7 77.5 46 28.1

2011 52.1 79.1 45 39.6 82.4 72.9 77.7 46.5 28.5

2015 53.9 80.2 47.6 41.1 83.3 73.8 78.8 48.7 30.3

2020 56 81.5 50.5 43.2 84.4 74.9 80 51.3 32.7

2025 58 82.5 53.1 45.3 85.2 76.1 81.1 53.6 35.2

2030 59.9 83.4 55.5 47.7 86 77.4 82.1 55.8 38

2035 61.7 84.3 57.8 50.1 86.8 78.6 83.1 57.9 40.8

2040 63.5 85.1 60 52.6 87.5 79.9 84.1 60 43.8

2045 65.3 85.9 62.2 55.1 88.2 81 85 62 46.8

2050 67.2 86.6 64.4 57.7 88.9 82.2 85 64 49.8

Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision and World Urbanization Prospects: The 2011 Revision

Chapter5 • PopulationGrowth,Migration,and Urbanization 165

live in slums. In 2001, there were an estimated 924 million slum dwellers in the world, rep-resenting about 32 percent of the world’s total urban population (see Table 5.11). In the least developed countries, some 78.2 percent of urban residents live in slums (UN-HABITAT 2003:vi).

The movement to the cities by unemployed rural laborers is another side to the failure of neoliberal free trade. Most of the migrants to the cities have been displaced by the influx of foreign produce and commodities, or displaced by the working of foreign capital. But unable, because of restrictive immigration laws, to seek employment in rich countries, they flock instead to the cities of their home country in search of employment that rarely exists. Instead they enter the informal economy making do however they can, as we’ll examine in Chapter 6. Being poor, they settle on any piece of vacant land available, generally areas unsuitable for middle-class residents, such as hillsides, swamps, toxic dumps, alleyways, rooftops, or whatever spaces are available. In Cairo, squatters unearthed tombs of sultans in which to make a home (Davis 2006:33). In Hong Kong, which is one of the richest places in the world, one-quarter of a million people live in slums. Single men erect wire around their sleeping spaces to prevent theft. These bed-spaceapartmentsaverage38.3peopleinanareaof194squarefeet,orlessthan7by3 feetper person. Los Angeles is the first-world capital of the homeless, with 100,000 homeless people (Davis 2006:35).

Slums represent in another way the failure of neoliberal economics. Capital, as we noted earlier, will not work to provide goods and services for those who can’t pay for it. Essentially, if you have no money, you don’t exist. Furthermore, part of the neoliberal agenda is to reduce, privatize, or eliminate government services. Consequently, while the need for federal, state, or municipal governments to build urban infrastructures—sewage treatment plants, roads, police and fire services, clean water, etc.—increases, their ability to do so is undercut by global capital. As Mike Davis (2006:137) describes, urban slums are deep in the shit that urban residents have struggled for centuries to dispose of.

TABle 5.11 Level of Urbanization, 2000 and 2020 (Projected) and Slum Population, 2001 by region

Level of Urbanization (%)

Estimated Urban Slum Population 2001

2000 2020 in thousands %

Developed Regions 75.3 79.9 54,068 6

Europe 73.4 77.6 155,344 6.2

Other 78.4 83 21,006 5.7

Developing Regions 40.4 51.3 869,918 43

Northern Africa 51.7 59.7 21,355 28.2

Sub-Saharan Africa 34 45.7 166,208 71.9

Latin American and the Caribbean 75.4 81.8 127,567 31.9

Eastern Asia 38.2 55.1 193,824 36.4

South-Central Asia 29.8 37.8 262,354 58

South-Eastern Asia 37.5 51.1 56,781 28

Western Asia 64.7 69.8 41,311 33.1

Oceania 26.4 33.8 499 24.1

Source: Compiled from data in UN-HABITAT. 2003.

166 PartII • TheGlobalImpactoftheCultureofCapitalism

Authorities try to deal with these slums by ignoring them, or, if the need arises, try to destroy them. As Brazil prepares to host the Olympics in 2016, it planned to build a waterside park and an Olympic village for the athletes, only to find 4,000 people living in a squatter settlement taking the city to court to prevent the razing of their homes. Unlike China’s prepa-ration for the Beijing Olympics, where thousands of families were forcibly relocated to make room forOlympicvenues, favela dwellers in Brazil are supported by a network of activists. In spite of that, some 170,00 people may face eviction ahead of the World Cup and Olympics (Romero 2012).

The battles faced by squatter settlements mirror the struggles of illegal immigrants trying to carve out a space for themselves on the margins of civilization.

As Mike Davis points out, there was nothing inevitable about the growth of slums. Castro in Cuba, and the rulers of Brazil, Algeria, and elsewhere where progressive governments came to power, tried to address the influx of people from the countryside with state-built housing, but only China and Cuba had any level of success.

Perhaps the most comprehensive study of slums was pioneered by the World Bank economist Branko Milanovic in his work The Challenge of Slums: Global Report on Human Settlements 2003 (UN-HABITAT 2003). Slums, it concludes, are characterized by insecurity of tenure, a lack of basic services, especially water and sanitation, inadequate and sometimes unsafe building structures, overcrowding, and location on hazardous land. Residents are poor, have limited or no access to credit, and suffer inordinately from waterborne diseases such as cholera and typhoid. Women, and the children they support, tend to suffer the most.

On a more positive note, the report observes that slums are often the first stopping off point for immigrants, providing low-cost housing that allows immigrants to save money for entering urban society. Slum dwellers try to make an honest living in the informal economy, and form networks of social, economic, and political support. They provide much of the labor force for the cities and are melting pots for different groups and cultures. And slum dwellers are not devoid of the material appurtenances of modern life. One study in Bangkok, Thailand, found that virtu-ally all slum households had a color television, almost all had a refrigerator, and two-thirds had a washing machine and a CD player, although only 15 percent had a bathroom with hot water (UN-HABITAT 2003:xxx).

In the least developed countries of the world,

some 78.2 percent of urban residents

live in slums, as rural residents flow to cities

in search of wage labor, erecting shelters on

unoccupied land. (Peter Treanor/Alamy.)

Chapter5 • PopulationGrowth,Migration,and Urbanization 167

But in spite of the efforts of those living in urban poverty to make the best of horrid living conditions, the situation is severe enough that the World Bank warned that urban poverty could become “the most significant and politically explosive problem of [this] century” (Davis 2006:20).


Western scientific and popular discussions of population growth have been dominated by two frameworks. The Malthusian perspective predicts that population growth threatens the world with starvation, poverty, environmental destruction, and social unrest. The demographic tran-sition theory, while sharing the Malthusian concern over population growth, predicts that, as in the wealthy countries, population in poorer countries will eventually stabilize if they adopt Western programs of economic development designed to bring them into the modern world. From an anthropological perspective, both views are faulty, because both assume the connec-tions between population growth and economic development, and both ethnocentrically assume the reasons for population rise and decline in premodern societies. Furthermore, the Malthusian position has a clear class and, perhaps, ethnic bias in its tendency to blame the victims of poverty and environmental decline for their economic, social, and ecological state, ignoring the effects of the historical expansion of capitalism. The ethnocentrism of demographic transition theory is evident in its assumptions that modernization will result in lowered fertility because, somehow, modernity encourages rationality in choices about family size. However, as we have seen, there is nothing irrational about large families in societies where the family is a major source of eco-nomic support and security, and where the wealth received from children throughout one’s life far exceeds the wealth that flows to children.

We examined the relationship between fertility and family structure, describing John Caldwell’s intergenerational wealth flows theory, and demonstrated that lowering fertility requires a change in family structure from an extended family pattern to a nuclear family pattern. We also noted that unless women gain access to economic resources, it remains in their interest to maximize fertility. Yet, if fertility decline is a major priority for international agencies and countries, and if, as anthropological research indicates, such a decline requires the adoption of the Western nuclear family along with its values, attitudes, and consumption patterns, we need to examine the consequences of such a change. In particular we need to consider whether the social and economic effects of such a change are worth whatever might be gained by slowing population growth.

And finally we examined the global movement of peoples, either from country to country, or from rural areas to cities, displaced by the dynamic of globalization and in search of employ-ment, occasionally finding it, or, if not, entering the world of the informal economy, a subject we’ll examine in the next chapter.


At the end of World War II, public officials and scientists from all over the world predicted that with advances in modern technology it would be possible by the end of the twentieth century to end poverty, famine, and endemic hunger in the world. Freed from colonial

domination and assisted by new global institutions, such as the United Nations and the World Bank, the impoverished countries of Africa, Asia, and Latin America, people assumed, would follow paths to economic development blazed by the core countries.

C h a p t e r

6 Hunger, Poverty, and Economic Development

The persistence of widespread hunger is one of the most appalling features of the modern world. The fact that so many people

continue to die each year from famines, and that many millions more go on perishing from persistent deprivation on a regular

basis, is a calamity to which the world has, somewhat incredibly, got coolly accustomed…. Indeed, the subject often generates either

cynicism (“not a lot can be done about it”) or complacent irre-sponsibility (“don’t blame me—it is not a problem for which I am


—Jean Drèze and Amartya Sen, Hunger and Public Action

Poverty is the main reason why babies are not vaccinated, why clean water and sanitation are not provided, why curative drugs

and other treatments are unavailable and why mothers die in childbirth. It is the underlying cause of reduced life expectancy,

handicaps, disability and starvation. Poverty is a major contributor to mental illness, stress, suicide, family disintegration and substance

abuse. Every year in the developing world 12.2 million children under 5 years die, most of them from causes which could be pre-

vented for just a few US cents per child. They die largely because of world indifference, but most of all they die because they are poor.

—World Health Organization, World Health Report

Chapter6 • Hunger,Poverty,andEconomicDevelopment 169

Today these optimistic projections have been replaced by hopelessness and resignation as 1.2 billion people are estimated to still live on less than one dollar per day, and almost 3 billion on less than twodollarsperday.Estimatesof thenumberofpeople with insufficient food range from 800 million to well over a billion, virtually one-sixth of the world’s population. Children are particularly vulnerable; food aid organizations estimate that 250,000 children per week, almost 1,500 per hour, die from inadequate diets and the diseases that thrive on mal-nourished bodies.

In 2008, the Food and Agriculture Organization of the United Nations estimated that more than 900 million, or about 13 percent of the global population, are afflicted with hunger. Of those suffering from hunger, 94 percent live in developing nations. Most are subsistence farmers, landless families, or people working in fishery or forestry. The remainder live in shantytowns on the fringes of urban areas. A quarter of the hungry are children.

Common misunderstandings about world hunger should be quickly dispelled:

• First,worldhunger isnot the resultof insufficient foodproduction.There is enoughfood in the world to feed 120 percent of the world’s population on a vegetarian diet, althoughprobablynotenoughtofeedtheworldonthedietofthecorecountries.Evenincountries where people are starving, there is either more than enough food for everyone or the capacity to produce it.

• Second,famineisnotthemostcommonreasonforhunger.Althoughfamines,suchasthoseinrecentyearsinEthiopia,Sudan,Somalia,andChad,receivethemostpresscover-age, endemic hunger—daily insufficiencies in food—is far more common.

• Third,famineitselfisrarelycausedbyfoodinsufficiency.Whenhundredsofthousandsstarved to death in Bangladesh in 1974, it was not because of lack of food. In fact, there was more food than there had been in the years leading up to the disaster and more food than was produced in the years following. The starvation resulted from massive unemploy-ment brought on by flooded farmland and high food prices brought on by a fear of food shortages.Peoplestarvedtodeathbecausetheycouldn’taffordtobuyfoodandhadnoland to grow their own.

• Finally,hungerisnotcausedbyoverpopulation.Althoughgrowingpopulationsmayrequiremore food, there is no evidence that the food could not be produced and delivered if people had the means to pay for it. This does not mean population and food availability play no role in world hunger; rather, it indicates that the relationship is far more complex than it appears.

The questions are, Why do people continue to starve to death in the midst of plenty? More importantly, is it still possible to believe that poverty and hunger can be eliminated? If so, how? And if not, how can the poor adapt to their conditions?

To answer these questions, we need to know about the nature and history of food produc-tion and to understand the reasons why people are hungry. There is a prevailing view that hunger is inevitable, but that need not be the case. We examine some possible solutions to world hunger, how specific countries, some rich and some poor, have tried to ensure that people have adequate food, and how people actively seek to cope with poverty.

The evoluTion of food ProducTion: from The neoliThic To The neocaloric

Until recently in world history, virtually everyone lived on farms, grew their own food, and used whatever surplus they produced to pay tribute or taxes, to sell at local markets, and to keep for seed for the following year. Since the beginning of the Industrial Revolution,















170 PartII • TheGlobalImpactoftheCultureofCapitalism

people have left the land in increasing numbers, converging on cities and living on wages. As late as 1880, half of the U.S. population was engaged in agriculture; this figure decreased to 38 percent by 1900, and to 18 percent by 1940. Today, less than 2 percent of Americans feed the other 98 percent, as well as millions of others around the world who purchase the products of American agriculture (Schusky 1989:101). This shift of the population from farming to other sources of livelihood is intensifying all over the world. Why do people leave the land on which they produce their own food to seek wage employment, which requires that they buy food from others?

To answer this question, we need to understand the history of agriculture, why food pro-duction has changed, and how economic and agricultural policies have resulted in increased poverty and hunger.

from Gathering and hunting to the neolithic

For most of their existence, human beings produced food by gathering wild plants—nuts, roots,berries,andgrains—andhuntinglargeandsmallgame.Generally,thesepeopleenjoyeda high quality of life. They devoted only about twenty hours per week to work, and archaeo-logical studies and research among contemporary gathering and hunting societies indicate that food was relatively plentiful and nutritious. Life span and health standards seem to have been better than those of later agriculturists. Consequently, a major question for anthropologists has been why human populations that lived by gathering and hunting began to plant and cultivate crops. Before 1960, anthropologists assumed that domesticating plants and animals provided more nourishment and food security than gathering and hunting. But when, in the 1960s, the research of Richard Lee and James Woodburn (see Devore and Lee 1968) revealed that the food supply of gatherers and hunters was relatively secure and that the investment of energy in food production was small, speculation turned to the effects of population increase on food production. Mark Cohen (1977) suggested that increases in population densities may have required people to forage over larger areas in search of food, eventually making it more effi-cient to domesticate and cultivate their own rather than travel large distances in search of game andwildplants.Eventhentheshiftfromgatheringandhuntingtodomesticationofplantsandanimals must have been very gradual, emerging first on a large scale in Mesopotamia about 10,000 years ago during the Neolithic era. From that point until 5,000 years ago, settlements domesticated such plants as wheat, barley, rye, millet, rice, and maize and began to domesti-cate animals such as sheep, goats, pigs, camels, and cattle. Traditionally, animals have served as a farmer’s food reservoir, fed with surplus grains in good times and killed and eaten when grain became scarce. Some, such as sheep, goats, cattle, and camels, eat grasses that human beings cannot eat, thus converting cellulose to protein for human consumption in the form of meat and dairy products.

Slash and burn, or swidden, agriculture is the simplest way of cultivating crops; although it is highly efficient when practiced correctly and requires considerable knowledge of local habitats. In swidden agriculture, a plot of land is cleared by cutting down the vegetation, spread-ing it over the area to be used for planting, and then burned. Seeds are planted, and the plants cultivated and then harvested. After one to three years of use, the plot is more or less abandoned, and a new area cut, burned, and planted. If there is sufficient land, the original plot lies fallow for ten years or more until bushes and trees reestablish themselves; then it is used again. Of the four major factors in agricultural production—land, water, labor, and energy—swidden agriculture is land intensive only. It uses only natural rainfall and solar energy and requires about twenty-five hours per week of labor. For tools, swidden agriculture requires only an ax or machete and a hoe or digging stick.

Swidden agriculture is still practiced in much of the periphery, but only recently have researchers begun to appreciate its efficiency and sophistication. Burning vegetation, for example, once thought only to add nutrients in the form of ash to the soil, also kills pests, insects,

Chapter6 • Hunger,Poverty,andEconomicDevelopment 171

and weeds. When practiced correctly, it is environmentally sound because it re-creates the natu-ral habitat. Swidden agriculturists must choose a site with the proper vegetation and desirable drainage and soil qualities. They must cut and spread the brush properly and evenly to maximize the burn and the heat. Cuttings that dry slowly must be cut earlier than those that dry quickly. Unlike in monoculture—the growing of a single crop—swidden plots are planted with a variety of foodstuffs as well as medicinal plants and other vegetable products. Swidden agriculturists must know when to abandon a plot so that grasses do not invade and prevent regeneration of brush and forest. Furthermore, abandoned plots are rarely truly abandoned, being used to grow tree crops or attract animals that are hunted for food.

Just as there is debate as to why gatherers and hunters began to practice agriculture, there is some question as to why swidden agriculturists began to practice the more labor-intensive irrigation or plow agriculture. These techniques do not necessarily produce a greater yield rela-tive to the labor energy used; however, they do allow use of more land more often by reducing or eliminating the fallow period. Land that in swidden agriculture would lie fallow is put into production. Irrigation agriculture also allows continual production on available land, sometimes allowing harvest of two or three crops in a year. Moreover, it permits the use of land that could notbeusedforagriculturewithout irrigation.EsterBoserup(1965)suggested that increasingpopulation density required more frequent use of land, eliminating the possibility of allowing land to lie fallow to regain its fertility. Thus, plow and irrigation agriculture, while requiring greater amounts of work, does produce more food.

The productivity comes at a cost, however. Of the four agricultural essentials—land, water, labor, and energy—irrigation requires more water, labor, and energy than swidden agriculture. In addition, irrigation generally requires a more complex social and political structure, with a highly centralized bureaucracy to direct the construction, maintenance, and oversight of the required canals, dikes, and, in some cases, dams. Furthermore, irrigation can be environmentally destructive, leading to salinization (excess salt buildup) of the soil and silting. For example, it is estimated that 50 percent of the irrigated land in Iraq and 30 percent inEgyptiswaterloggedorsalinized(Schusky1989:72).Irrigatedsitesmayalsobeusedtodump sewage and often harbor disease-carrying parasites and insects, resulting in an increase in such diseases as cholera, typhoid, schistosomiasis, and malaria. Irrigated areas also serve as a haven for weeds. Finally, the shift to plow or irrigation agriculture changed the division of laborbetweenmenandwomen (Boserup1970).Generally, in swiddenagriculture,menclear the land and women burn the cuttings and care for the crops. In some areas today, such as sub-Saharan Africa, women do the majority of the agricultural labor. However, in plow or irrigation agriculture, women tend to do less of the labor—their labor shifts to domes-tic chores, and often the total amount of women’s labor increases as their agricultural labor decreases(Ember1983).

If we surveyed the world of 2000 years ago, when virtually all of the food crops now in use were domesticated and in use somewhere, we would find centers of irrigation agricul-ture inChina,Mesopotamia,Egypt, and India,with laterdevelopments coming in theAndesandMesoamerica.PlowagriculturewaspracticedextensivelyinareasoftheMiddleEastandEurope.Butwhereagriculturewasnecessary,swiddenagriculture,ifpopulationlevelsandstatedemands for tribute permitted it, must have been by far the most common. Moreover, until the twentieth century, there was little change or improvement in agricultural techniques.

capitalism and agriculture

The next great revolution in food production was a consequence of the growing importance of world trade in the sixteenth through eighteenth centuries and the gradual increase in the num-ber of people living in cities and not engaged in food production. The expansion of trade and growth of the nonfarming population had at least four profound consequences for agricultural production.

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First, food became a commodity that, like any other commodity, such as silk, swords, or household furniture, could be produced, bought, and sold for profit. Second, the growth of trade and the number of people engaged in nonagricultural production created competition for labor between agricultural and industrial sectors of the economy. Third, the growth of the nonagri-cultural workforce created greater vulnerability on the part of those who depended on others for food. The availability of food no longer depended solely on a farmer’s ability to produce it but also on people’s wages, food prices, and an infrastructure required for the delivery, storage, and marketing of food products. Finally, the increasing role of food as a capitalist commodity resulted in the increased intervention of the state in food production. For example, food prices needed to be regulated; if they were too high, people might starve and industrial wages would need to increase; if they were too low, agricultural producers might not bring their food to market. Import quotas or tariffs needed to be set to maximize food availability on the one hand and protect domestic food producers on the other. New lands needed to be colonized, not only to produce enough food but also to keep food production profitable. The state might also regulate agricultural wages or, as in the United States, not regulate them. (Although the United States has had a minimum wage for industrial workers since 1937, there is still no minimum wage for farm workers.)

As it turned out, the most important change in food production inspired by the trans-formation of food into a capitalist commodity was the continual reduction of the amount of human energy and labor involved directly in food production and the increase of the amount in nonhuman energy in the form of new technologies, such as tractors, reapers, and water delivery systems. The results of this trend continue to define the nature of agricultural production in most of the world.

Reducing labor demands in agriculture and increasing technology accomplishes a whole range of things that contribute to trade and profit in both the agricultural and industrial sectors. First, substituting technology for human labor and reducing the number of people involved in agriculture makes agriculture more profitable. Labor costs are reduced and agricultural wealth is concentrated in fewer hands. Increasing technology also creates a need for greater capital investments. As a result, those people with access to capital—that is, the more affluent—are able to profit, forcing the less affluent to give up their farms. This further concentrates agricul-tural wealth. The increase in the need for capital also creates opportunities for investors (banks, multilateral organizations, and commodity traders) to enter the agricultural sector, influence its operation by supplying and/or withholding capital, and profiting from it.

Second, reducing the number of people in agriculture and concentrating agricultural wealth to ensure profits of those who remain helps keep food prices and, consequently, industrial wages relatively low. This creates a danger of food monopolies and the potential for a rise in prices. For example, cereal production in the United States is controlled by only a few companies, and the prices of processed cereals such as cornflakes and oats are exorbitant as 0.04 cents of corn gener-ates $4.00 of cornflakes Yet, as long as consumers are able to pay, the government is content not to intervene. As it is, food cost as a percentage of the cost of living in the United States is among the lowest in the world.

Third, reducing agricultural labor frees labor to work in industry and creates competition for industrial jobs, which helps keep wages low—that is, the more the number of people who are dependent for their livelihood on jobs, the lower the wages industry needs to pay.

Finally, to keep labor costs down and increase the amount of technology required for the maintenance of food production, the state must subsidize the agricultural sector. In the United States, for example, the government has financed irrigation and land reclamation projects, conducted agricultural research, and subsidized farm prices and/or energy costs. The U.S. gov-ernment also subsidized agriculture by investing billions of dollars in food aid, buying surplus U.S. farm products, and using them for foreign aid (although this aid often created a dependence on U.S. farm products while forcing local producers out of business).

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In sum, the results for the capitalist economy of the reduction of agricultural labor and the subsequent increase in technology are:

• acapital-intensiveagriculturalsystemdependentontheuseofsubsidizedenergy• theexploitationofdomesticfarmlaborandofforeignlandandlabortokeepfoodprices

low and agricultural and industrial profits high• alargelaborpoolfromwhichindustrycandrawworkers,whosewagesarekeptdownby

competition for scarce jobs and the availability of cheap food

It is important to note that until the 1950s, the technological intensification of agricul-ture did not substantially increase yield—that is, though an American corn farmer needed only 100 hours of labor to produce one hectare (2.41 acres) of corn, the amount of corn produced was no greater than that produced by a Mexican swidden farmer, working ten times as many hours using only a machete and hoe. In other words, although mechanization made the American farm more economical by reducing labor energy and costs, it did not produce more food per hectare (Schusky 1989:115). One question we need to ask is, What happens when we export the American agricultural system to developing countries?

The neocaloric and the Green revolution

The culmination of the development of capitalist agriculture, a system that is technologically intensive and substitutes nonhuman energy for human energy, was dubbed the neocaloric revolutionbyErnestSchusky.ForSchusky,themajorcharacteristicoftheneocaloricrevolutionhas been the vast increase in nonhuman energy devoted to food production in the form of fertil-izers, pesticides, herbicides, and machinery.

DavidPimentelandMarciaPimentel(1979)providedauniqueperspectiveontheneocalo-ric. Their idea was to measure the number of kilocalories1 produced per crop per hectare of land and compare it to the amount of both human and nonhuman energy expended in kilocalories to produce the crop. Their work dramatized both the efficiency of traditional forms of agriculture and the energy use required of modern capitalist agriculture.

For example, to produce a crop of corn, a traditional Mexican swidden farmer clears land withanaxandmachetetoprepareitforburningandusesahoetoplantandweed.PimentelandPimentel(1979:63)figuredthatcropcaretakes143daysandtheworkerexertsabout4,120kilo-caloriesperday.Thus,laborforonehectareamountsto589,160kilocalories.Energyexpendedfor ax, hoe, and seed is estimated at 53,178 kilocalories, for a total of 642,338 kilocalories. The corn crop produced yields about 6 million kilocalories, for an input–output ratio of one to eleven—that is, for every kilocalorie expended, eleven are produced, a ratio that is about average for peasant farmers. Nonhuman energy used is minimal, consisting only in the fossil fuel (wood, coal, or oil) used in producing the hoe, ax, and machete.

Now let’s examine plow agriculture with the use of an ox. One hour of ox time is equal to four hours of human time, so labor input for one hectare drops to 197,245 kilocalories from 589,160 kilocalories. But the ox requires 495,000 kilocalories to maintain. Moreover, the steel plow requires more energy in its manufacture, so fossil fuel energy used rises to 41,400, with energy for seeds remaining at 36,608, for a total of 573,008. However, the corn yield drops significantly to half, so the input–output ratio drops to 1:4.3. The reason for the drop is likely

1 A calorie or gram calorie is the amount of heat needed to raise the temperature of one gram of water from one degree Celsius to fifteen degrees Celsius. The kilocalorie (kcal) or kilogram calorie is 1,000 gram calories or the amount of heat needed to raise the temperature of one kilogram of water from one degree Celsius to fifteen degrees Celsius. It can also be conceptualized as follows: One horsepower of energy is the same as 641 kilocalories; one gallon contains 31,000 kilocalories; if used in a mechanical engine that works at 20 percent efficiency, one gallon of gasoline is equal to 62,000 kilocalories of work, or one horse working at capacity for a ten-hour day, or a person working eight hours per day, five days per week, for 2.5 weeks.

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the lowering of soil fertility. If leaves, compost, or manure is added to the soil, yields might increase, but so would the energy required to gather and spread the fertilizer.

Finally, if we consider a corn farmer in the United States in 1980, we find that, using modern farming machinery, herbicides, insecticides, fertilizers, transport, and irrigation, the farmer produces about 7,000 kilograms of corn per hectare, almost seven times that produced by the Mexican swidden farmer but at a cost of almost 25 million kilocalories. Consequently, the input–output ratio is 1:3.5, far below the ratios of most “primi-tive” swidden farmers. In fact, in the United States, the ratio of kilocalories used in crop production to kilocalories produced declined from 3.7:1 in 1945 to 2.8:1 in 1970. The question is, Why has modern agriculture become so energy intensive?

The intensification of the use of technology in agriculture is largely the result of what has been called the green revolution. The green revolution began with research conducted in Mexico by American scientists in the 1940s and 1950s sponsored by the Rockefeller Foundation. Their goal was to develop higher-yielding hybrid strains of corn and wheat suit-able for Mexican agriculture. Soon the research produced dramatic results all over the world as farmers began using specially produced strains of crops such as wheat, corn, and rice, called high-yielding varieties (HYVs). The productivity of the new seeds lay largely in their increased capacity for using fertilizer and water. Whereas increased use of fertilizer and water did not increase the yields of old varieties (in fact, it might harm them), it vastly increased the yields of the new varieties. Consequently, more and more farmers around the world adopted

them. Use of these new varieties was encouraged by the petrochemical industry and fertilizer production plants, which sought to expand their markets. Thus, research efforts to develop HYV plantswereexpandedinIndia,thePhilippines,andTaiwan,encouragedbytheU.S.AgencyforInternational Development (USAID) and the Rockefeller Foundation.

But the green revolution soon ran into some problems. First, the new plants required greater inputs of fertilizer and water. Because of the added energy costs, farmers often skimped on fertilizer and water use, resulting in yields similar to those prior to the adoption of the new crops. Consequently, farmers returned to their previous crops and methods. Second, the Organization ofPetroleumExportingCountries(OPEC)oilembargoin1973raisedoilprices,andbecausefertilizers, irrigation, and other tools of the green revolution were dependent on oil, costs rose even higher. Some people began to refer to HYV as energy-intensive varieties(EIVs).

Theexpensewas increased furtherby theamountofwaterneeded for fertilizers.Earlyadaptations of the new technology tended to be in areas rich in water sources; in fact, most of the early research on HYV was done in areas where irrigation was available. When the techniques were applied to areas without water resources, the results were not nearly as dramatic. It also became apparent that the energy required for irrigation was as great in some cases as the energy required for fertilizer.

In addition, the green revolution requires much greater use of chemical pesticides. If farm-ers plant only a single crop or single variety of a crop, it is more susceptible to the rapid spread of disease, which, because of the added expense, could create catastrophic financial losses. Consequently, pesticide use to control disease becomes crucial. Furthermore, because the crop is subject to threats from insect and animal pests at all stages of production—in the fields, storage, transportation, and processing—pesticide costs rise even further.

Finally, the new fertilizers and irrigation favor the growth of weeds; therefore, herbicides must be applied, further increasing energy expenditure.

One result of the change from subsistence farming, in which the major investment was land,toaformofagriculturethatishighlyland,water,andenergyintensiveis,asErnestSchusky(1989:133) noted, to put the small farmer at a major disadvantage because of the difficulty in












Chapter6 • Hunger,Poverty,andEconomicDevelopment 175

raising the capital to finance the modern technological complex. The result in the United States and elsewhere is the concentration of agricultural wealth in fewer hands and a constant reduction in the number of small family farms (see Table 6.1).

It is in livestock production, however, that the neocaloric revolution really comes into focus. One innovation of the past hundred years in beef production was feeding grain to cattle. By 1975, the United States produced about 1,300 kilograms of grain for every person in the country. But 1,200 kilograms of that was fed to livestock. Dairy cows are relatively productive compared to beef cattle; it takes about 190 kilograms of protein to produce sixty kilograms of milk or about thirty-six kilocalories of fossil energy to produce one kilocalorie of milk protein. Beef get about 40 percent of their protein from grazing and 60 percent from grain. If we calculate the energy that goes into grain production and the operation of feedlots, the productive ratio is as low as one kilocalorie produced for every seventy-eight kilocalories expended.

If we factor in processing, packaging, and delivery of food, the energy expenditure is evenhigher.DavidPimentelestimatedthattheAmericangrainfarmer,usingmodernmachin-ery, fertilizer, and pesticides, uses eight calories of energy for every one calorie produced. Transportation, storage, and processing consume another eight fossil calories to produce one calorie (see Schusky 1989:102).

As Schusky said, in a world short on energy, such production makes no sense, but in a world of cheap energy, particularly oil, especially if it is subsidized by the nation-state, it is highly profitable. The real problem comes when agricultural production that substitutes fossil fuel energy for human energy is exported to developing countries. To begin with, there is simply not enough fossil energy to maintain this type of production for any length of time. One research project estimated that if the rest of the world used energy at the rate it is used in the United States, the world’s petroleum resources would be exhausted on the food supply alone in the next ten to twelve years (Schusky 1989:119).

Furthermore, in countries with large rural populations, the substitution of energy-inten-sive agriculture for labor-intensive agriculture will throw thousands off the land or out of work, resulting in more people fleeing to the cities in search of employment. And because modern agriculture is capital intensive, the only farmers who can afford to remain will be those who are relatively wealthy, consequently leading to increasing income gaps in rural as well as urban areas. Where the green revolution has been successful, small-farm owners have been driven off the land to become day laborers or have fled to cities in search of jobs, as commercial inves-tors bought up agricultural land. Or more wealthy farmers have bought their neighbors’ farms because only they had the capital to invest in fertilizers and irrigation.

Then there is the potential for green revolution II, the application of genetic engineering to agriculturalproduction.Geneticallyengineeredcropsarecontroversial,largelybecauseofclaimsthat they have not been rigorously tested and because we do not know yet what effects the crops may have on the environment or on the people who eat them. Clearly, claims by agribusiness

Table 6.1 Changes in Number of U.S. Farms by Size, 1950–1992

Size of Farm (in acres) 1992 1969 1950 Percent Change

1–59 1,310,000 1,944,224 4,606,497 -172

260–499 255,000 419,421 478,170 -47

500–999 186,000 215,659 182,297 +0.08

1,0001 173,000 150,946 121,473 +58

Total 1,925,000 2,730,250 5,388,437 -166

Source:AdaptedfromEricRoss,Beyond the Myths of Culture: Essays in Cultural Materialism. New York, Academic Press,1980;and1992USDACensusofAgriculture.

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concerns, such as Monsanto Corporation, that such crops will help us feed the hungry are, as we shall see, disingenuous at best. Furthermore, in some cases, genetically engineered crops simply try to correct the damage done by capitalist agriculture. For example, there is the much touted “golden rice,” a genetically engineered variety with vitamin A that is a cure for blindness that afflicts some 300,000 people a year. Yet, as Vandana Shiva (2000) notes, nature ordinarily pro-vides abundant and diverse sources of vitamin A; rice that is not polished provides vitamin A, as do herbs such as bathua, amaranth, and mustard leaves, which would grow in wheat fields if they were not sprayed with herbicides.

Overall it is clear that we have developed a system of food production that is capital intensive, favors large, state-subsidized agribusiness, minimizes the use of labor, and subsequently makes more people dependent on wage labor with which to obtain food. In the culture of capitalism, access to food is determined almost entirely by the ability to pay, not by the need to eat.

The PoliTics of hunGer

The obvious consequence of the reduction of labor needed for food production and the concen-tration of food production in fewer hands is that the world’s population is more dependent on wage labor for access to food. Consequently, people are more vulnerable to hunger if opportu-nities for employment decrease, if wages fall, or if food prices rise; they can starve even in the midst of food availability. This is not to say that lack of food is never a factor in hunger, but it is rare for people to have economic resources and not be able to acquire food.

The role of food in a capitalist economy has other important consequences. For example, food production is not determined necessarily by the global need for food; it is determined by the market for food—that is, how many people have the means to pay for it. That is why world food production is rarely at its maximum and why it is difficult to estimate how much food could be produced if the market demand existed. The problem is that there are not enough people with sufficient income to pay for all the food that could be produced, and so-called overproduction would result in lower prices and decreased profitability. For that reason, in many countries, food production is discouraged. Furthermore, land that could be used to grow food crops is gener-ally dedicated to nonfood crops (e.g., tobacco, cotton, and sisal) or marginally nutritious crops (e.g., sugar, coffee, and tea) for which there is a market. Finally, the kind of food that is produced is determined by the demands of those who have the money to pay for it. For example, meat is notoriously inefficient as a food source, but as long as people in wealthy countries demand it, it will be produced in spite of the fact that the grain, land, and water required to produce it would feed far more people if devoted to vegetable crops. Thus, people in Mexico go hungry because land is devoted to the production of beef, which few Mexicans can afford, but which brings high prices in the United States.

In sum, we need to understand the economic, political, and social relations that con-nectpeopletofood.EconomistAmartyaSen(1990:374)suggestedthatpeoplecommandfoodthroughentitlements—thatis,theirsociallydefinedrightstofoodresources.Entitlementmightconsist of the inheritance or purchase of land on which to grow food, employment to obtain wages with which to buy food, sociopolitical rights such as the religious or moral obligation of some to see that others have food, or state-run welfare or Social Security programs that guaran-tee adequate food to all. Not all of these kinds of entitlements exist in all societies, but some exist in all. From this perspective, hunger is a failure of entitlement. The failure of entitlement may come from land dispossession, unemployment, high food prices, or lack, suspension or collapse of state-run food security programs, but the results are that people may starve to death in the midst of a food surplus.

Viewing hunger as a failure of entitlements also corrects ideological biases in the cul-ture of capitalism, the tendency to overemphasize fast growth and production, the neglect of the problem of distribution, and hostility to government intervention in food distribution. Thus, rather than seeing hunger or famine as a failure of production (which it seems not to be), we can

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focus on a failure of distribution (see Vaughn 1987:158). Furthermore, we are able to appreciate the range of possible solutions to hunger. The goal is simply to establish, reestablish, or protect entitlements, the legitimate claim to food. Seeing hunger as a failure of entitlement also focuses on the kinds of public actions that are possible. For example, access to education and health care are seen in most core countries as basic entitlements that should be supplied by the state, not by a person’s ability to pay. And most core countries see basic nutrition as a state-guaranteed entitlement, in spite of recent attempts in countries such as the United States to cut back on these entitlements. Thus, by speaking of entitlements, we can focus on the importance of public action in dealing with world hunger.

To understand the range of solutions to hunger, we also need to distinguish between the more publicized instances of famine, generally caused by war, government miscalculations, civil conflict, or climatic disruptions; food poverty, in which a particular household cannot obtain sufficient food to meet the dietary requirements of its members; and food deprivation, in which individuals within the household do not get adequate dietary intake (Sen 1990:374).

To illustrate, let’s take a look at two situations of hunger: first, the more publicized instance of famine and then the less widely publicized endemic hunger.

The anatomy of famine

Famines have long been a part of history. As early as the fourth century b.c., administrators in India wrote of measures to avert famines, and the people of India have been subject to massive famines throughout its history. China has also suffered major famines. The latest occurred in 1958–1961, when 15 million to 30 million people starved to death.

Many historic famines were caused by crop failures, climatic disruptions, and war. Archaeologists have speculated that widespread climatic changes reduced the yields of Mayan agriculturists and resulted in the destruction of Mayan civilization. Yet it is clear that, even historically, famines resulted from entitlement failures rather than insufficient food (Newman 1990).EvenduringtheIrishpotatofamineof1846–1847,whenone-eighthof thepopulation

An image that emerged from the famine in Somalia in 1992. (Bernard Bisson/Sygma/Corbis.)

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starved to death, shiploads of food, often protected from starv-ing Irish by armed guards, sailed down the Shannon River, boundforEnglishportsandconsumerswhocouldpayforit.

We can better appreciate the dynamics of famine and the importance of entitlements by examining a famine crisis in the African country of Malawi in 1949. It was by no means the most serious famine in Africa in the past sixty years, but Megan Vaughn (1987), in her analysis of it, provides answers to the key questions, Who starves and why?

The famine began with a drought. The lack of rain was first noticed after Christmas 1948 and drew serious attention when in January, normally the wettest month of the year, there was no rain at all; it remained dry until some rain fell in March. In some areas the first and second plantings of maize, the main

food crop, failed completely, and wild pigs, baboons, and hippos devastated the remaining crops. Old people who remembered the last famine in 1922 said there were signs of a major crisis, and within a few months it was apparent that people were starving. The British colo-nial government began to organize relief efforts, sending agricultural representatives into the countryside to organize the planting of root crops, replanting of crops that failed, and opening food distribution camps. By the time the rains came in October, there were reports of real mal-nutrition and of hundreds of children and adults starving to death. Many died, ironically, at the beginning of 1950 as the maize crop was being harvested, many from eating the crop before it ripened (Vaughn 1987:48).

According to Vaughn, women suffered most from the famine. The question is, What happened to women’s food entitlements that resulted in their being the most severely affected? To answer this question, we need to know a little about food production, the role of kinship in Malawi life, and the changing role of women in African economies.

Malawi at the time was under British control; agriculture was divided between cash crop agriculture—tobacco was the most important crop—and subsistence agriculture, the growing of such crops as maize, sorghum, and a few root vegetables. In addition, many people worked at wagelabor,eitherintheformalemploymentsector,forEuropeanorIndianfarmersormerchants,or the government, or in the informal employment sector, working on farms owned or worked by Africans. Cash could also be earned through migrant labor, almost exclusively a male domain, although women could earn money making and selling beer or liquor.

The predominant form of kinship structure was matrilineal—that is, people traced rela-tions in the female line. The most important kin tie was between brother and sister, and the basic social unit was a group of sisters headed by a brother. Under this system, rights to land were passed through women, men gaining rights to land only through marriage. Traditionally, women would work their land with their husbands, who lived with them and their children. In this system, a woman’s entitlement to food could come from various sources: her control of land and the food grown on it, sharing of food with matrilineal kin, wages she might earn selling beer or liquor or working occasionally for African farmers, or wages her husband or children might earn. In addition, during the famine, the government established an emergency food distribution system from which women could theoretically obtain food. What happened to those entitlements when the crops failed?

ChangesintheagriculturaleconomyandtheintroductionofwagelaborunderEuropeancolonial rule had already undermined women’s entitlements (Boserup 1970). The British colo-nial government was under pressure, as it was in other parts of Africa, to produce revenue to pay the cost of maintaining the colonies. Consequently, they introduced cash crops such as coffee, tea, cotton, and tobacco. The latter proved to be the most profitable in Malawi and was the major cash crop when the famine struck. But cash cropping was generally a male prerogative and pro-videdwagesforAfricanmenonlywhentheyworkedforEuropeansorIndians.Cashcropping














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byEuropeansandIndiansalsotooklandthatmighthavebeenusedforfoodcrops,contributingto a growing land shortage for Africans. Thus, in addition to providing new ways for men to gain economicpower,Europeanpracticesledtothedecreaseofwomen’spowerintheagriculturalsector. This combination of changes in access to land, decreasing amounts of land available for Africans, and the growing importance of wage labor for men made women more dependent on men for their food entitlements when the famine struck.

When the famine became evident to the British authorities, they took measures that further reduced women’s entitlements. First, partly to conserve grain and partly because of a fear of social disorder, they forbade the making and sale of beer, removing a major source of income for women. Next, they assumed the family unit consisted of a husband, wife, and children, presided over by the husband, and, consequently, refused to distribute food relief to married women, assuming they would obtain food from their husbands. However, many husbands were trav-eling to seek work elsewhere to buy food, and they might or might not send food or money home. Next, the government food distributions gave preference to those, mostly urban people, whowereemployedintheformaleconomybyEuropeans,Indians,orthegovernment,neglect-ingthoseintheruraleconomysuchaspart-timewomenlaborers.Furthermore,EuropeansandIndians, who had ample food supplies during the famine, often shared with their workers who, again, were mostly men. Many of these men, of course, were conscientious husbands, fathers, brothers, and uncles and shared the food they received. But some did not, either keeping it for themselves or selling it at high prices on the black market.

To make matters worse, as the famine wore on, social units began to fragment. This is a common feature of famines. Raymond Firth (1959) reported that during the early phases of a famine on the island of Tikopia, families recognized extended kin ties in the sharing of food, but as the famine wore on, food was shared only within individual households. In Malawi, the situ-ation was even worse; at the beginning of the famine, there seems to have been sharing within the main matrilineal kin group, but as it wore on, the sharing unit became smaller and smaller until people ate secretly. Because one of a woman’s entitlements consisted of food received from relatives, this would have further reduced the amount of food she received. Finally, divorce rates apparently increased significantly, particularly in families where the husband was a migrant laborer, further isolating women and reducing their food entitlements.

In sum, then, the most vulnerable portion of the population was women without male support but for whom the colonial authorities took no responsibility, married women whose husbands had abandoned them, and wives of long-term migrants who did not remit money (Vaughn 1987:147). In addition, of course, the children of these women suffered and died disproportionately.

The lesson of the Malawi famine is that starvation can be very selectively experienced withinapopulationbecauseofthedistributionoffoodentitlements.Giventheamountoffoodalready available in the areas most affected by the famine and the food available through relief efforts, it is unlikely that anyone had to starve. But many did.

The anatomy of endemic hunger

Although famine as a cause of hunger has decreased, endemic hunger caused by poverty has increased. One problem with endemic hunger is that it goes largely unnoticed or ignored, particularly by the press who prefer to cover the more spectacular instances of famine and by governments whose economic and social policies might be held responsible for the hunger. Yet endemic hunger is a far more serious problem. India, for example, which has done an excellent job of famine prevention, has done poorly in solving the problem of endemic hunger. Consequently, every eight years, more Indians die as a result of hunger than Chinese died in the famine of 1958–1961. Yet the deaths in India do not receive nearly the public attention that is given to famine. One of the questions we need to ask is, How and why is endemic hunger ignored, unrecognized, and sometimes denied by state agencies, as well as by the hungry themselves?

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Governments often refuse to recognize hunger becauseit marks an admission of failure to provide adequately for its citizens. And hunger sometimes goes unrecognized because it is assumed to be a medical problem, rather than a problem of food entitlements. Doing anthropological fieldwork in Mali, Katherine A. Dettwyler (1994:71–73) encountered a little girl with swelling of the face, hands, feet, and abdomen, classic symptoms of kwashiorkor, a disease that results from a diet that is sufficient in calories but deficient in protein. The girl’s mother said she had funubana, “swelling sickness,” and asked Dettwyler for medicine for her daughter, failing to recognize that what her daughter needed was extra meat or milk. When Dettwyler suggested just that, the mother responded by saying the little girl wasn’t hungry and that she needed medicine. For

the mother it continued to be a medical problem, not a food problem.The denial of hunger prevents the development of programs to alleviate it. More insidi-

ously, when hunger goes unrecognized or unacknowledged, problems that are a consequence of hunger, such as poor work performance, poor academic achievement, and stunted growth, are attributed to other factors, such as lack of motivation or cultural background.

To illustrate how social, economic, and cultural factors converge to produce hunger in the midst of plenty, as well as the complexity of identifying hunger and even admitting it exists, let’s examine the case of starvation in Brazil in the 1980s. Brazil was not and is not a poor country; in fact, it is presently among the top ten to fifteen economies in the world rank-ing with India and China as a growing economic power. During the period of great optimism

following World War II, Brazil was one of the first of the so-called underdeveloped countries to embark on a concerted policy of economic and industrial development. A large number of Brazilians have become very wealthy, yet 40 percent of its population lives in poverty, and, until recently,ithadoneofthehighestratesofinfantmortalityinLatinAmerica.Exploringwhythishappened will help us understand the dynamics of world hunger.

Brazil set out to develop economically by imitating the pattern followed by core countries suchasEngland,France,andtheUnitedStates.Thestrategywastobuildindustry,exportcashcrops, and create jobs, with the idea that the wealth created would “trickle down” to others in society. However, that didn’t happen. Instead, peasants once able to secure a reasonable subsis-tence through simple agriculture are deprived of land, through either expropriation of land or privatization of communal land, and forced to work as wage laborers on the surviving farms or to flee to cities to seek work, often ending up in the shantytowns that surround the cities. Their wages are insufficient to buy food, and structural adjustment policies imposed by international lending institutions forced the reduction of social support programs. One thing stands out: The vast majority of the population becomes dependent on others for food, food they must buy and which must be affordable. Unfortunately, in many cases, they do not have the means to buy food, or prices keep it out of reach. The problem of hunger and poverty was, in the 1980s, particularly severe in northeastern Brazil.

Sugar dominated the economy of northeastern Brazil for more than 400 years. Fueled by agrowingEuropeandemandforsugar,Portuguesecolonistsestablishedplantationsinthesix-teenth century and imported slaves to grow and process sugarcane. The colonization of Brazil and the nature of the economic relations created by sugar production created a pattern of class relations that remained largely intact through the mid-twentieth century. A plantation-owning elite ruled over a large peasant population that cut sugarcane for wages, using unused land to grow their own food crops. A few others worked for wages in the sugar mills and refineries. However, as the sugar industry expanded and as technological improvements were made in the 1950s and 1960s because of government policies to expand production for export, many peasants wereevictedfromtheland,fleeingtothecitiesinsearchofjobs.Povertywaswidespread,and











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even people with jobs did not earn enough to meet family expenses. For example, in northeastern Brazil in 1989, the legal minimum monthly income was forty dollars, whereas food expenses alone for a family of four were four times that amount.

To make matters worse, in the mid-1980s, Brazil and other countries could not keep up their payments to the World Bank and other Western financial institutions from which they had borrowed to industrialize and, consequently, threatened to default on their loans. To help these countries avoid default, the World Bank allowed them to renegoti-ate their loans. These countries had to agree to change their economies by, among other things, reducing government spending on such things as public education, welfare, hous-ing, and health, entitlement cutbacks that resulted in still greater hardships for the poorest portion of the population.

In 1982, Nancy Scheper-Hughes returned to the shan-tytown Alto do Cruzeiro, located in the city of Bom Jesus daMata,whereshehadworkedasaPeaceCorpsvolunteerin 1965. The shantytown consisted of 5,000 rural workers, one-third of whom lived in straw huts. The vast majority of residents had no electricity, and water was collected by the women twice a day from a single spigot located in the center of the community. Most men and boys worked as sugar-cane cutters during the harvest season. A few men and some women worked in the local slaughterhouse. Other than this part-time work, there was little employment. Many women found jobs as domestics among the middle- and upper-class families or sold what they could in the market. Many women and children worked in the cane fields as unregistered work-ers at less than minimum pay.

The economics of hunger in the shantytowns is simple—there is not enough money to buy food. Because of the economic situation in Brazil, Scheper-Hughes reported that in 1987–1988, groceries cost twice what they did in 1982. Furthermore, a basic subsistence costs one and a half times minimum wage. Many of the residents do not make minimum wage and are unemployed from February to September when there is no cane to cut. Furthermore, fresh vegetables that some used to grow or that were avail-able from relatives in the countryside are no longer available because so many have been forced off the land by the sugarcane growers. In the 1960s, brown beans cooked with slices of native squash, pumpkin, and onions were a staple; now the beans are cooked with only a little salt and flavoring. Dried beef was once available but is now prohibitively expensive and has been replacedbysaltedfishcaughtinthepollutedriverthatpassesthroughtown.Evendriedbeanshave become prohibitively expensive, and dried cornmeal has taken its place.

With jobs scarce, available wages inadequate, land unavailable to grow food, and govern-ment assistance inadequate or nonexistent, residents of the shantytown scramble as best they can to acquire food. In fact, according to Scheper-Hughes, slow starvation is a primary motivat-ingforceinthesociallifeoftheshantytowns.Peopleeateveryday,butthedietissomeagerthat they are left hungry. Women beg while their children wait for food, and children’s growth is stunted by hunger and malnutrition. Children of one and two years of age cannot sit unaided and cannot or do not speak. Breastbones and ribs protrude from taut skin, flesh hangs in folds from arms, legs, and buttocks, and sunken eyes stare vacantly. The plight of the worker and his

A homeless mother and child trying to survive on the streets of a Brazilian city. (Sean Sprague.)

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or her family is, according to Scheper-Hughes (1992:146), “the slow starvation of a population trapped … in a veritable concentration camp for more than thirty million people.”

Perhapsthemosttragicresultofhungeristhedeathofinfants.Approximately1million children younger than five years of age died each year in Brazil. Northeastern Brazil, which accounted for 25 percent of child deaths, had an infant mortality rate of 116 of every 1,000 live births, one of the highest in the world at the time. And not all deaths were reported. Scheper-Hughes estimates that in northeastern Brazil, two-thirds of infants who died do so without a medical diagnosis.

Scheper-Hughes found that reliable statistics on infant mortality in the shantytowns were difficult to acquire. She finally obtained statistics for selected years in the 1970s, all of which indicated an infant mortality rate of 36 percent to 41 percent. From information she collected by combing public records, Scheper-Hughes found the following infant mortality rates for Bom Jesus da Mata: 49.3 percent in 1965; 40.9 percent in 1977; 17.4 percent in 1985; and 21.1 percent in 1987.

Although the infant mortality rate in northeastern Brazil has generally declined, the decline, said Scheper-Hughes (1992:280), is misleading. Instead of a decline in infant mortality, there is a “modernization of child mortality,” characterized by containing child death to the poor-est families and by a change in the major reported causes of child death from the “old killers” (diseases now controlled by immunization) to “new killers,” especially infant malnutrition and dehydration caused by diarrhea.

News reports and government studies about poverty in Brazil do mention the problem of infant mortality, but they generally attribute it to malnutrition and disease. But Scheper-Hughes’sstudyrevealedamorebasicproblem:People,especiallyinfantsandchildren,arenotonly malnourished, a term that implies simply a poor diet, but are also in fact starving to death. Yet even medical authorities rarely mention starvation. When Scheper-Hughes examined medi-cal records of children and infants who died, she found that in 34.8 percent of cases, the cause of death was cessation of heartbeat and respiration; in 22.2 percent it was listed as dehydration. Only 3.4 percent were attributed to malnutrition and only 1.7 percent to diarrhea. One wonders, wrote Scheper-Hughes (1992:303),

amid the sea of froth and brine that carried away the infants and babies of the Alto do Cruzeiro, what kind of professional prudery it was that “failed to see” what every mother of the Alto do Cruzeiro knew without ever being told. “They die,” said one woman going to the heart of the matter, “because their bodies turn to water.”

One way to mask the evidence of starvation is to turn it into a medical problem; the medi-calizationofhungerisexactlywhatScheper-HughesdiscoveredinBrazil.Peopleinterpretthesymptoms of starvation, even in children, as conditions that require medical treatment rather than food.

One of the things anthropology teaches about the human capacity for culture is that people place experiences in systems of meaning that allow them to make sense of their experiences. Illness and disease are no exception; different people define differently what constitutes illness as opposed to something that is not illness. Moreover, people will define what constitutes a medical problem (e.g., infant diarrhea) as opposed to, say, a social problem (e.g., hunger). In northeastern Brazil, hunger, a social problem, has been redefined as a medical problem. How and why this has been done reveals much about how human beings construct their own world of experience and how people construct systems of meaning that best enhance their social or political interests.

One of the major traditional illness syndromes in Brazil, and indeed in much of Latin America, is nervos, assumed to be a wasting sickness that leaves the victim weak, shaky, dizzy, tired, depressed, and disoriented. When people are suffering from these symptoms, they say they are sick with nervos.Peoplebelievenervos is the result of an innately weak and nervous body. In years past when people thought they suffered an attack of nervos, they drew on their traditional

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store of herbal medicines and the practical knowledge of elderly women in the household. Today they seek medical help from one of the local clinics; now nervos, a traditional disease category, is thought to be treatable by modern medicine.

But there was another more insidious change in how people defined their physical condi-tion: Symptoms associated with hunger began to be talked about as nervos—that is, hunger and nervos became synonymous. This was not always the case. Starvation and famine have long been a feature of life in northeastern Brazil; people frequently complained of fome (hunger) and its terrifying end, delirio de fome, the madness that signaled the end of life from starvation. But hunger is rarely mentioned today. If a person is weak, tired, or dizzy, he or she will not com-plain of hunger and seek food but instead complain of nervos and seek medicine to cure it. In other words, people who may be suffering from hunger and who twenty years ago would have defined themselves as suffering from fome now define themselves as suffering from nervos, an illness separate from hunger that simply happens or is the result of innate weakness. Moreover, if weakness, fatigue, dizziness, and other symptoms that may be related to slow starvation simply happen, then no one is at fault and social causes of the problem can be ignored.

Nancy Scheper-Hughes (1992:174) said a hungry body represents a potent critique of the nation-state in which it exists, but a sick body implicates no one and conveys no blame, guilt, or responsibility. Sickness simply happens. The sick person and the sick social system are let off the hook. A population suffering from starvation, however, represents a threat to the state that requires economic and social solutions—social programs, jobs, or land redistribution. Nervos, a sickness, is a personal and “psychological” problem that requires only medical intervention and faults no one, except perhaps the person suffering from it. Sickness requires little state action, other than supplying the occasional prescription of tranquilizers, vitamins, or sleeping pills. Instead of the responsible use of state power to relieve starvation and hunger, there is a misuse of medical knowledge to deny that there is a social problem at all.

Scheper-Hughes (1992:207) related the story of a young single mother who brought her nine-month-old child to the clinic, explaining that the baby suffered from nervoso infantil. She complained that the small, listless, and anemic child was irritable and fussy and disturbed the sleep of family members, especially the grandmother, who was the family’s economic mainstay. Herbal teas did not work, and the grandmother threatened to throw them out if the child did not sleep. The doctor refused to give her sleeping pills for the child and instead wrote a prescription for vitamins. The doctor failed to acknowledge the mother’s real distress, as well as the child’s state of malnutrition, and the vitamins served virtually no purpose other than to redefine the infant’s condition from starvation to sickness or malnutrition.

On other occasions, children will be brought to doctors with severe diarrhea, a classic symptom of starvation. Simple rehydration therapy, feeding the child special fluids, will usually cure the diarrhea for a time. But the child is still returned to an environment where, with lack of food, the problem is likely to recur until after being “saved” perhaps a dozen times the child finally dies of hunger.

The question, said Scheper-Hughes, is how do people come to see themselves as primarily nervous and only secondarily hungry? How do they come to see themselves as weak, rather than exploited? How does overwork and exploitation come to be redefined as a sickness for which the appropriate cure is a tonic, vitamin A, a sugar injection? Why do chronically hungry people “eat” medicines and go without food?

One reason is that since hungry people truly suffer from headaches, tremors, weakness, irritability, and other symptoms of nervous hunger, they look to doctors, healers, political lead-ers, and pharmacologists to “cure” them. They look for strong-acting medicines, so they line up at clinics and drugstores until they get them. One cannot, said Scheper-Hughes, underesti-mate the attractiveness of drugs to people who cannot read warning labels and who have a long tradition of “magical medicines.”

Furthermore, she said, health is a political symbol subject to manipulation. Slogans such as “health for all by the year 2000,” or “community health,” filter down to poor, exploited

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communities where they serve as a cover for neglect and violence. There is power and domi-nation to be obtained by defining a population as sick or nervous and in need of the power of politicians and doctors:

The medicalization of hunger and childhood malnutrition in the clinics, pharmacies, and political chambers of Bom Jesus da Mata represents a macabre performance ofdistortedinstitutionalandpoliticalrelations.GraduallythepeopleofBomJesusda Mata have come to believe that they desperately need what is readily given to them, and they have forgotten that what they need most is what is cleverly denied. (Scheper-Hughes 1992:169–170)

Conspiracy by medical workers is not necessary to effect this transformation. Doctors and clinic workers themselves accept the magical efficacy of cures; either that or they are demor-alized to the extent that they prescribe drugs as the only solution they have to ills they are ill-prepared to solve but called on to treat. As one doctor (cited Scheper-Hughes 1992:204) said:

They come in with headaches, no appetite, tiredness, and they hurt all over. They present a whole body in pain or in crisis, with an ailment that attacks them every-where! That’s impossible! How am I to treat that? I’m a surgeon, not a magician! They say they are weak, that they are nervous. They say their head pounds, their heart is racing in their chest, their legs are shaking. It’s a litany of complaints from head to toe. Yes, they all have worms, they all have amoebas, they all have parasites. But parasites can’t explain everything. How am I supposed to make a diagnosis?

soluTions and adaPTaTions To PoverTy and hunGer

What solutions are there to the problem of world hunger and the poverty that ultimately causes it? Is it best to focus on economic development or, as some call it, growth-mediated security systems, assuming so-called market mechanisms will improve people’s lives? Or are famine and endemic hunger best addressed by public support systems in the form of state-financed food and nutrition programs, state-financed employment, or cash distribution programs? And, more importantly, in the absence of any effective solution, how do the poor adapt to their plight? The answers to these questions are not easy. Some argue, for example, that state-run programs take money needed for economic development and divert it to programs that may in the short run alle-viate poverty and hunger but in the long run will simply aggravate the problem by undercutting the growth of private enterprise. This is the position generally taken by multilateral organizations, such as the World Bank and the International Monetary Fund (IMF), which insist on limitations or cutbacks in state spending as conditions for loans or structural adjustment programs to assist countries in debt. Others respond that state-run antipoverty programs represent an investment in the human capital necessary for economic development—that a population that is hungry, under-nourished, and subject to disease is less productive. To answer these questions, we first examine the role of economic development in reducing poverty and hunger, then examine what has been termed the informal economy and how people adapt and sometimes take advantage of economic activities outside the purview of the nation-state.

economic development

The concept of “economic development” can be traced to U.S. president Harry S. Truman’s inaugural address before Congress in 1949 in which he referred to the conditions in “poorer” nations and described them as “underdeveloped areas.” At that point, multilateral institutions, such as the World Bank and the IMF, were mobilized to further development goals, often recom-mending massive economic and social changes and a total reorganization of societies deemed

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to be “undeveloped.” For example, the 1949 World Bank report sent back from Colombia (and similar to that of hundreds to be issued in subsequent years) advised that

piecemeal and sporadic efforts are apt to make little impression on the general picture. Only through a generalized attack throughout the whole economy on edu-cation, health, housing, food, and productivity can the vicious circle of poverty, ignorance, ill health, and low productivity be decisively broken. (International Bank for Reconstruction and Development [IBRD]1950:xv)

Proponentsofeconomicdevelopmentpoint tosuccessesinraisinglifeexpectancyratesworldwide, lowering infant mortality rates, and raising literacy rates. They can point to the devel-opment of successful national economies in South Korea, Malaysia, and Brazil, among others.

Critics, however, paint a different picture. They argue that the goal of economic develop-ment to raise the living standards of people in the periphery, sixty years after its inception, has largely failed. A higher percentage of the world’s population, they say, is hungrier today than in 1950. Studies by the very institutions at the forefront of development, such as the World Bank and IMF, conclude that the goals of development have not been met. Although poverty rates haddeclinedsomewhatinEastAsia(from26.6percentin1987to15.32percentin1999)andtheMiddleEast(from4.3percentto1.95percent),elsewheretheyhaveremainedthesameorincreased. The poverty rate in Latin America and the Caribbean remains at 15.57 percent, at 39.99 percent in South Asia, and at 46.30 percent in sub-Saharan Africa (Chen and Ravallion 2000).IneasternEurope,thenumberlivinginpovertyhasclimbedfrom0.24percent(1.07mil-lion) in 1987 to 5.14 percent (24 million) in 1999. Furthermore, the absolute number living in poverty in the periphery increased over the same period from 1.1 billion to almost 1.2 billion. If the number of people living on less than two dollars a day is added, those living in poverty number 2.8 billion people.2 Furthermore, the projects that were to promote “development” have notably decreased people’s quality of life. Hundreds of millions of people have been displaced from their communities and homes or thrown off their land by World Bank hydroelectric and agricultural megaprojects. Instead of lifting the standard of living of peripheral countries, there has been a doubling of the degree of economic inequality between rich and poor countries in the past forty years. As one study concludes,

there is no region in the world that the [World] Bank or [International Monetary] Fund can point to as having succeeded through adopting the policies that they promote—or, in many cases, impose—in borrowing countries. (Weisbrot, Naiman, and Kim 2000:3)

In addition, the economic crash of 2007 threatens to negate any economic gains of the past ten to twenty years. As we noted earlier, worldwide unemployment could rise by at least 30 million people, and possibly as much as 50 million people, while more than 200 million peo-ple,mostlyindevelopingeconomies,willfallintopoverty(seeBlankenburgandPalma2009).

The question, then, is, Why, up to this point, has the economic development initiative largely failed?

2 The figures of $1.25 and $2.00 a day used by the World Bank, the United Nations, and other international agencies to measure poverty may also be misleading. In the United States, for example, poverty is measured, not by an arbitrary dollar amount, but by the costs of necessities such as food, clothing, shelter, and education. In 1996 in the United States,thatamountedto$11adayperperson.ThepovertystandardusedbytheUnitedNationsDevelopmentProgram(UNDP)reportsalowerpovertyrateinMexicothantheUnitedStates,andalowerrateforJamaicathanCanada(see,e.g., Chossudovsky 1997, n.d.). Furthermore, most declines in global poverty rates are due largely to China where the number in poverty has been reported reduced by almost 400,000 people since 1981. The problem is that by shifting from a largely socialist to a market economy, people with little or no income, but who nevertheless received food, housing, and other benefits, now had to earn money to acquire necessities. Therefore they may or may not be better off.

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There are three features of the economic development program that we need to examine. The first is the tendency to define the goals of development and an acceptable standard of living in the very limited terms of income and gross national product(GNP).Incomeandthelevelofproduction has become the measure of the worth of a society.

Second, economic development embodies an ideology that assumes that the culture and way of life of the core is universally desirable and should be exported (or imposed, if necessary) on the rest of the people of the world. As Wolfgang Sachs (1999:5) notes, “development meant nothing less than projecting the American model of society on the rest of the world.”

Third, the concept of development greatly increased the power of core governments over the emerging nation-states of the periphery. If development was to be the goal, then “undevel-oped” or “underdeveloped” countries must look to the expertise of the core for financial aid, technological aid, and political help. Furthermore, by embracing development as a goal, leaders of peripheral states gain military assistance and support that permit many of them to assume dictatorial powers over the rest of the population.

In his book Seeing Like a State: How Human Schemes to Improve the Human Condition Have Failed (1998), James C. Scott examines a series of failed development projects. Among these, says Scott, are the design and building of cities such as Brasilia, the Soviet collectiviza-tion of agriculture, the Russian revolution itself, and compulsory villagization in Tanzania. All were characterized, he says, by the same basic features, as previously mentioned, of economic development programs.

First, all these projects engaged in a form of economic reductionism; social reality was reduced to almost solely economic elements, ignoring institutions and behaviors essential to the maintenance of societies and environments. Reductionism of this sort is attractive to nation-states because it makes populations and environments more “legible” and, consequently, amenable to state manipulation and control. The guiding parable for understanding this reductive tendency is, for Scott, that of the “scientifically” managed forest.

ScientificforestryemergedinPrussiaandSaxonyinthelasthalfoftheeighteenthcentury.It viewed the forest almost solely as a source of revenue for the timber that might be annu-ally extracted. Missing in this view was the foliage that might be fed to animals, game that might be hunted by farmers, or social interactions for which the forest served as a backdrop. Consequently, the first scientifically planted forests were set only with “productive” trees; anything that was thought to interfere with timber production was eliminated. Underbrush was cut, flora and fauna eliminated, and so on. The result in the first generation of trees was impres-sive; however, forestry officials soon found that the new forest was living off the capital of rich soil created by the disordered forest, and by the second and third generations, timber production had declined dramatically and the soil itself lost the capacity to produce. Thus, without all of the “worthless” elements of the forest, the forest itself collapsed.

The language of capitalism, says Scott, constantly betrays its tendency to reduce the world to only those items that are economically productive. Nature, for example, becomes “natural resources,”identifyingonlythosethingsthatarecommodifiable.Plantsthatarevaluedbecome“crops”; those that compete with them are stigmatized as “weeds.” Insects that ingest crops are called “pests.” Valuable trees are “timber,” whereas species that compete with them are “trash” trees or “underbrush.” Valued animals are “game,” or “livestock,” whereas competitors are “predators” or “varmints” (Scott 1998:13). In the language of economic development, the focus isonGNP,income,employmentrates,kilowattsofelectricityproduced,milesofroads,laborunits, productive acreage, and so on. Absent in this language are items that are not easily mea-sured or that are noneconomic (e.g., quality of social relations and environmental aesthetics).

The second ingredient in failed projects, says Scott, is what he refers to as “high modern ideology.” This ideology is characterized by a supreme (or, as Scott refers to it, a “muscle-bound”) version of self-confidence in scientific and technical progress in satisfying human needs, mastering the environment, and designing the social order to realize these objectives. This ideol-ogy emerged as a by-product of unprecedented progress in the core and was attributed to science

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and technology. High modern ideology does not correspond to political ideologies and can be found equally on the left and the right.Generally,however,itentailsusingstatepowertobringabout huge, utopian changes to people’s lives.

The idea of economic development is a product of high modern ideology. It represents an uncritical acceptance of the idea of scientific and technological progress, and an unre-strained faith in the wisdom of core economic, scientific, and technological principles. The green revolution and the attempt to widely apply the technology of genetic engineering discussed earlier are but two other products of high modern ideology.

Scott is careful not to reject outright the application of high modern ideology. In some cases it can and has led to significant improvements in peoples’ lives. Thus, economic reductionism and high modern ideology are not, in themselves, sufficient to contribute to a failed project. For failure to occur, there is a third ingredient—an authoritarian state. When high modern ideology and the nation-state’s tendency to reduce the world to legible, manipu-lative units is combined with an authoritarian state willing, and able to use the full weight of its coercive power, to bring these high modernist designs into being, along with a civil society that is unable to resist its manipulations, the stage is set for a development disaster. As Scott says,

the legibility of a society provides the capacity for large-scale engineering, high-modernist ideology provides the desire, the authoritarian state provides the determination to act on that desire, and an incapacitated civil society provides the leveled social terrain on which to build. (1998:5)

To illustrate how the goals of economic development and modernization can lead to disruption, Scott describes the ujamaa village campaign in Tanzania from 1973 to 1976. It rep-resented a massive attempt to permanently settle most of the country’s population in villages planned, partly or wholly, by officials of the central government (Scott 1998:221).

Clearly, the village scheme emerged from a desire of the Tanzanian state to make its popu-lation more legible and manipulable. At the beginning of the development scheme, there were some 11 million to 12 million rural Tanzanians living in scattered settlements, growing crops and herding animals, using techniques developed over generations. As the natural forest con-tained elements to sustain it, so these settlements sustained themselves with local knowledge and practice built up over the years. From the viewpoint of the state, however, these popula-tions were economically unproductive, disordered, and, somehow, primitive. The project, which succeeded in moving more than 13 million people into 7,684 villages (Scott 1998:245), was to transform the citizenry into producers of exportable crops, strung out along paved roads where state services could be easily delivered and where the population could be easily monitored. Furthermore, the success of the villagization program could be easily tracked by counting the number of people moved, the number of villages built, and so on.

Clearly, the project was driven by a high modern ideology imported from the West that assumed that “modern” settlement patterns, agricultural techniques, and modes of commu-nication were clearly superior to those practiced by the indigenous population. In fact, notes Scott (1998:241), thesepremiseswereholdovers fromthecolonialera.Projectdesignersand supporters assumed that African cultivators and pastoralists were backward, unscientific, and inefficient. They assumed that only through the supervision or, if necessary, coercion by special-ists in scientific agriculture could they contribute to a modern Tanzania.

Finally, as with most development schemes, there had to be an authoritarian state to impose the program and to suppress resistance to it. From the beginning, Tanzanians were skeptical















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about villagization. Whereas they had knowledge of the areas in which they lived, the new, selected sites were chosen without consideration of water or fuel resources, and they feared that being in villages would result in overcrowding for people and domestic animals. To meet this resistance, the state moved its machinery into place to force compliance. It was, said officials, for the people’s own good. “We cannot tolerate,” said Tanzanian president Julius Nyerere, “see-ing our people live a ‘life of death’ ” (Scott 1998:230). All of this was keeping with World Bank reports, such as one in 1964 that said,

How to overcome the destructive conservatism of the people and generate the drastic agrarian reform which must be effected if the country is to survive is one of the most difficult problems political leaders of Tanzania have to face. (Scott 1998:241)

Giventhesituation,violencewasinevitable.Thepoliceandmilitiaweregivenauthorityto move people, first threatening that they would not be eligible for famine relief if they did not move, later forcing them to tear down and load houses and belongings onto trucks. In some cases, houses were burned or run over with trucks. When people realized that resistance was futile, they saved what they could move and fled the new villages at the first opportunity (Scott 1998:235–236).

As might be expected, the results of villagization were disastrous. Huge imports of food were necessary from 1973 to 1975 because of the immediate decline of agricultural production, the cost of which would have bought a cow for every Tanzanian family. Some 60 percent of the newvillageswerebuiltonsemiaridlandthatrequiredlongwalkstoreachfarmplots.Peasantswere moved from fertile farmlands to poor lands or land on which the soil was unsuitable for the crops the government demanded farmers grow. Villages were located at a distance from crops, which left the crops open to theft and pests. The concentration of people and livestock resulted in cholera and livestock epidemics, while herding cattle in concentrated areas devastated both rangeland and livelihoods (Scott 1998:247). Instead of achieving legitimacy, the villagization campaign created an alienated and uncooperative peasantry for which Tanzania would pay a huge financial and political price.

Of course, the scheme was not totally Tanzanian. It resembled hundreds of colonial schemes, built on the supposed promise of modern science and technology, as well as projects still supported by the World Bank, the USAID, and other development agencies. That it was a disaster should come, in retrospect, as no surprise, in spite of the conviction of virtually every-one involved that it would vastly improve the life of the subjects. More disturbing yet is that the Tanzanian government, at the urging of the World Bank and the U.S. government, continues to relocate indigenous peoples with similar negative results (see, e.g., Fratkin 1997a;1997b).

Based on his examination of failed projects, Scott (1998:348) concludes that the major fault is that the project planners thought they were smarter than they really were and that they regarded the subjects of their plans as far more stupid and incompetent than they really were. By trying to impose a vision of modernization and progress built largely on economic criteria and a vision of life that emerged in the West, high modern ideologues fostered the social and cultural equivalent of unsustainable, impoverished, monocropped, and “scientifically managed” forests, environments devoid of the social stuff that enable people in communities to form cooperative units and work together to achieve common goals.

The nature and Growth of the informal economy

Havingajobinamarketeconomyisessential.Employmentis,forthevastproportionoftheworld’s population, the major means of entitlement to necessary goods and services. But what happenswhentherearenotenoughjobs?Presentlythereareatleast195.2millionpeopleunem-ployed in the world, along with some 1.37 billion working poor—those working but living on less than the equivalent of U.S.$2.00 per day. Unemployment most affects people aged 15 to

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24  (some 86.3 million of them), representing 44 percent of total unemployed (International Labor Organization 2007). There are various reasons for unemployment other than the obvious fact that there are not enough jobs. Many of the unemployed are recent migrants fleeing eco-nomically depressed rural areas and moving to cities in search of jobs. In 2007, for the first time, more than half of the world’s population lived in cities, a percentage that is expected to climb to two-thirds by 2030. But what happens in areas where people go in search of employment, but there are no jobs? More to the point, what steps do people take independent of the nation-state to escape poverty?

Economicpolicymakers,aswellasthemedia,oftenconveytheimpressionthatthepoorpassively accept their economic circumstances or are in poverty because they somehow lack initiative. Missing from these conceptions is the consideration of how the poor and unem-ployed adapt by tapping into the informal or underground economy and surviving on income that never appears in any government accounts. The informal economy consists of economic activities that are illegible to the state, which is one reason why it is difficult to track the income earned from these sources. These activities range from babysitting, to auto repair, to begging, to the sale of children and women, to the incredibly complex and global enterprise of illegal drug sales. In the United States, activities forming part of the underground economy might include a plumber taking cash for a repair, a gang member selling cocaine, a pawnbroker fencing stolen goods, farmers employing illegal immigrants, textile manufacturers running a sweatshop, border dwellers smuggling cigarettes, or people selling fake Rolexes or pirating CDs (Schlosser 2003:4). The informal economy is often the residue of nation-state attempts to regulate a commodity or activity by banning or taxing it or by controlling its distribution. Such attempts provide spaces for the informal economy by providing people the opportunity to either sell a banned commodity (e.g., illegal drugs) or provide the commodity or activity at lower costs (e.g., smuggled cigarettes).

Anthropologist Keith Hart (2000) was one of the first to name and draw attention to the informaleconomy.DuringhisresearchinthecityofAccrainGhana,henotedthatthemassesof surplus laborers were not “unemployed” but rather worked for erratic and low returns. The streets of Accra, Hart said, were

teeming with life, a constantly shifting crowd of hawkers, porters, taxi-drivers, beggars, pimps, pickpockets, hustlers—all of them doing their best to get by without the benefit of a real job of the sort found in national economic statistics. (2000:149–150)

Participants in this informal economy were not limited to the poor, although they, particularly women (see Carr and Chen 2001), depended on it for their survival more than anyone else; virtually everyone, even those who were part of the formal economy, took part. Informal opportunities included everything from market gardening and brewing to gambling, theft, and political corruption. Hart (2000:151–154) describes the case of Atinga who, getting out of the army, invested his last salary payment to divide his living quarters in two by setting up a parti-tion and opening a bar in which he sold gin. He would buy a barrel of gin for about four or five poundsandsellitbythedrinkorbottle.Profitswereminimalbecausemanyofhisclientscouldonly pay on credit, if at all, but he managed to make a little while looking for a more permanent job. He finally got a job as a night watchman, turning the bar over to his wife to run. However, business declined and his wife drank most of the gin. Occasionally his income would rise when he was able to purchase a stray dog for meat and soup sold at the bar, but ultimately he left with his family while his landlord’s wife took over the enterprise.

While activities such as these might seem a minor feature of an economy, in totality, they representasignificantpartoftheglobalGDPandhaveamajorimpactonotheraspectsoftheeconomy. While there is no agreement on the size of the informal economy, most acknowledge that it is vast and growing. The International Monetary Fund estimates that illicit funds amount tobetweenU.S.$590billionandU.S.$1.5trillion,or1percentto5percentoftheworldGDP.

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And that is probably a significant underestimate. In the United States alone, it is estimated to be some 9.4 percent of the total economy, or some $650 billion. In other countries it is even larger,rangingfrom12.5percentoftheGDPinGreatBritain;27percentinItaly;40percentinBrazil; 45 percent in Russia; and 51 percent in the Ukraine (Schlosser 2003:5–6). The informal economyinAsiaisestimatedtorangefrom45percentto85percentofthenonagriculturalGDPand80percentofthenonagriculturalGDPofAfrica(CarrandChen2001).TheUNestimatesthat the money generated by organized and unorganized crime alone—illicit gambling, illegal arms trade, human smuggling, traffic in body organs, car theft, prostitution and racketeering, and, most of all, drug sales—is about U.S.$1 trillion. Furthermore, the money-laundering activi-ties that accompany illegal enterprises have a significant impact in the global economy, even being implicated in the financial crises that hit Mexico in 1994–1995 and Thailand in 1997 (Fabre 2002).

AnthropologistChristianGeffray’s(2002)courageousworkexaminingillegaldrugnet-works in the Amazon provides us with an excellent case study of how informal economies develop, how they intersect with the formal economy, and how they impact local and regional economies. In the 1970s, the World Bank financed construction of the BR 364 highway in Brazil, throughtherainforestsofthestateofRondônia.Priortotheroadconstruction,theforestswereoccupied only by indigenous groups and caboclos, local populations that lived along the rivers and worked for entrepreneurs (e.g., rubber merchants) who lived in the towns. But the roads brought in hundreds of thousands of mostly poor people who wanted to try out their luck on the frontier. The first phase of the emergence of an informal economy comprised the activities of Bolivian cocaine traffickers who set up laboratories on the Bolivian side of the Mamoré River and began smuggling supplies (e.g., ether, kerosene, and acetone) for coca processing from Rondônia in exchange for processed cocaine. Among those involved in the smuggling were gold prospectors (garimpeiro) working on the river. The garimpeiro worked on balsa rafts pumping alluvialdepositsfromtheriverbedandprocessingitonthesurface.AsGeffray(2002:34)putit,the cocaine producers and dealers and “thousands of often penniless Brazilian gold prospectors, isolated in the forest and abandoned by society, faced each other on either side of the river.”

The divers were under severe mental and physical stress and often relieved their tension of working underwater for hours at a time by crossing the river and getting coca paste to smoke. These workers would occasionally trade gold for cocaine and spread it among the poor and working-classpopulationsof thearea.Gradually thecocainemade itsway toBrazilian citieswhere the unemployed and working-class population could engage in small-scale dealing. Meanwhile, in Rondônia, the drug traffic led to a lively trade in stolen goods (vehicles, aircraft, farm machinery, electronic equipment, cattle, etc.) exchanged for cocaine. Larger traffickers in drugs or stolen goods then began to invest their money in legal enterprises as a means of launder-ing the money earned in the informal economy. (Money laundering is a process in which funds that are obtained illegally are made to appear as though they originated from a legitimate source [e.g., see Steel 2006]. For example, drug traffickers laundered money by investing in balsa rafts used by gold prospectors so they could claim that the money they earned in the drug trade came from gold prospecting.)

Thus, the money brought in through the informal economy began to feed the formal econ-omy. The process by which formal and informal economies intersect is illustrated in Rondônia by the career of Jabes Rabelo. His family owned coffee warehouses, and Jabes Rabelo began to use money he earned as a drug trafficker to purchase coffee from local producers. Since his goal was not to make money in the coffee trade but to exchange his illegal drug money into legal coffee money, he paid coffee producers well above the market value of their coffee and sold the coffee to processors at prices below what others were selling it at. This had a number of side effects: First, it drove legitimate coffee dealers (those not using drug money) out of business because they couldn’t pay the high prices that drug traffickers were willing to pay, and it artifi-cially raised the profits of the coffee producers. In effect, coffee production was being subsidized by cocaine money. It also ingratiated the drug traffickers with local coffee producers and others

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in the population who benefited directly or indirectly from the illegal trafficking in drugs and other goods. Finally, it provided those who succeeded in the informal economy with money with which to either bribe government officials (another feature of the informal economy) or to run for elected office themselves. Thus, Jabes Rabelo invested his dirty money into rural trade that allowed him to take control of the whole coffee market and, in the process, establish a network of alliances within the elites. His role in subsidizing the coffee business led the elites to elevate him to a “Citizen of Honour,” bragging that one of its citizens was the state’s biggest buyer and exporter of coffee. Rabelo’s control and subsidization of the producers enabled him to build broad support and become the de facto benefactor of thousands of people in rural areas; conse-quently,hehadlittledifficultybeingelectedafederaldeputy.EachyearatChristmasandEasterhe would send out trucks full of toys, chocolate eggs, and other gifts to children of the poor and provide drinks at charity events. The arrest in 1991 of his brother, who possessed 540 kilos of cocaine,didnothingtoaffectRabelo’spopularity(Geffray2002:39).

Geffray’s description of the evolution of the informal economy of Rondônia—one hecharacterizes as a “society ruled by drug trafficking” (2002:45)—illustrates how an informal economy emerges, the extent to which thousands of people come to depend on it, and how it can dominate a local economy. It also illustrates how the informal economy can allow the emergence of new elites who, financed by their profits from the informal economy, gain power through patronage and election to public office.

The nature and scope of the informal economy of drugs

Illegal drugs are clearly one of the most important commodities produced, distributed, and sold in the global informal economy. Drugs, in general, have been a mainstay of the global economy for well over 300 years. Tobacco is a good example. It originated in the Americas and was first observedbyEuropeansduringColumbus’sfirstvoyagewhensailorssawTainoIndianssmokingleaves rolled into large cigars. Itwas brought back toEurope, but formost of the sixteenth century, it was largely a novelty item until its cultivation became global and the increased sup-ply annually drove down the price. By 1670, the Dutch were using on average 1.5 pounds per person,andtheEnglishoverapound.Itsusespreadrapidly,particularlyaspricesdecreased,andwasfashionableinEuropeinthenineteenthcentury;by1925,theFrenchwereusingaboutthreepounds per person. By 1950, American men and women were purchasing 15,000 cigarettes a second, and by the mid-1990s, there were 1.1 billion smokers in the world, about one-third of the population over fifteen, smoking 5.5 trillion cigarettes a year, or a pack a week for every person on the planet (Courtwright 2001). But tobacco, as with other widely traded addictive substances such as coffee and tea, has never been deemed illegal. It has, however, been widely taxed and regulated, its addictive quality guaranteeing nation-states a steady income. The state’s attempt at extracting income from tobacco’s sales also cemented its status in the informal economy as people sought to evade the taxes and fees associated with its use.

Three other widely traded addictive substances—opium, cannabis, and coca, which were widely used in products such as cough syrups, soft drinks, and various tonics—were ultimately declared illegal, first in the United States in 1914. However, by making opium, cannabis, and coca illegal, the state created a group of commodities that became the pillars of the informal economy.

It is difficult to calculate the place of illegal drugs in the global economy. The United Nations Office on Drugs and Crime (UNODC 2006:17) estimates that the global drug trade gen-erates$320billionayearinrevenue,orsome0.9percentoftheworld’sGDP,equaltotheGDPofallbut12percentofthecountriesintheworld.Putanotherway,thesaleofdrugsisequalto12 percent of the global export of chemicals (U.S.$794 billion), 14 percent of global agricultural exports (U.S.$674 billion), and exceeded the global exports of ore and minerals (U.S.$79 bil-lion). Cannabis is the most widely grown and used drug (some 162 million people), followed by amphetamine-type stimulants (some 35 million people), and ecstasy (almost 10 million people). Opiate users number some 16 million, of which 11 million use heroin and 1.3 million cocaine

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(United Nations 2005:9). In all, some 200 million people, or some 5 percent of the global popu-lation,usedanillegaldrugatleastonce.Practicallyspeaking,ifthelegalsuppressionofthedrugtrade actually succeeded, much of the world economy from Bolivia to Afghanistan to Northern California could collapse (Henson 2005).

In many ways, the informal economy in drugs is simply another economic sector that works like any other. There are the producers, generally small farmers in Afghanistan, Colombia, or the United States, doing what they have to do to make a living; there are the buyers and processors, often organized into large gangs or cartels; and there are the large-scale distributors and the small retailers, whose profits are small and risks great.

To understand the importance of drugs in the informal economy, especially for the poor, let’s examine the role they played in two different places and eras: London in the early eigh-teenth century and New York in the late twentieth century.

London may have provided the first “drug craze.” The drug involved was gin. Distilled beverageshadbeenavailabletotheEnglishworkingclassessincethelatesixteenthcenturybutwere too expensive to be used for other than medical purposes among the poor. But when grain productioninEnglandincreased,cheapginproducedfromthegrainbecameavailableandtheamount of it consumed increased annually from about a third of a gallon per person in the early 1700s to about 2.2 gallons per person in 1743. Seeking to raise revenue, the government placed an excise tax on drinks and required licenses for those who sold gin, thus providing an opportu-nity for small sellers to hawk drinks at cheaper prices.

Taking advantage of the opening created by the government’s attempt to tax gin were the thousands of new immigrants arriving in the city without employment or housing, driven off thelandbyenclosuremovements.Ginwasappealingfirstasasourceofsolaceandsecondasasource of employment. These immigrants were mostly young and poor with few ties to family, employers, or the larger community, and, as such, were a worry to the elite. But the increased use of and thriving informal economy in gin led to the passage of a series of legislative acts attempt-ing to further control both the sale of gin and the people who could use it. Most of the early gin acts were rarely enforced (London had no formal police force in the eighteenth century), but the GinActof1736,whichrequiredsellerstopurchasealicenseforfiftypounds,alsoofferedafeeof five pounds for information leading to a conviction of someone selling gin without a license. This created an army of informers made up of essentially the same strata of society from which the gin sellers came.

But the informal economy in gin continued to thrive. For many, the selling of gin made the difference between poverty and destitution. They sold gin in hovels; “gin shops”; or out of wheelbarrows, baskets, and even boats. And women were among the major peddlers. As Jessica Warner describes it in her book Craze: Gin and Debauchery in an Age of Reason, selling gin appealed to women because it required little or no capital, it did not require membership in pro-fessional organizations, and it was one of the few occupations that women were not excluded. It was, as Warner (2002:51) put it, a means of economic survival. But women were also at greater risk; while they accounted for only about 20 percent of the known gin retailers in London, they accountedfor70percentofthepeoplechargedundertheGinActof1736.

With so many dependent on the informal economy for gin and the addictive quality of the commodity feeding its sales, the London elite and the government became more concerned about its consumption. However, they had to contend with not only the informal sellers and consum-ers, but also with those among the elite who profited from gin sales. These included the grain growers and sellers whose product was converted into gin. It also included the state, which used themoneyfromgintaxestofinanceEngland’swarwithFrance.Butthosearguingforincreasedregulation of gin generally prevailed. They reasoned that drunkenness was a direct cause of such things as robberies, assaults, and even murders, their claims given credence by the occasional deaths, injuries, and fights attributed to gin consumption reported widely in newspapers and pamphlets. They also felt that the poor’s consumption of distilled beverages was above their station in life. They argued that by reducing drunkenness, they could reduce lawlessness and

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increase the respect of the working poor for their employers. Hard work and low wages, they thought, would keep down the cost of British exports and keep the poor in their place (Warner 2002:112). Ironically, there was never any attempt to regulate beer consumption in spite of the fact that the average Londoner consumed some thirty gallons a year. The conflicting attitudes toward gin and beer are evident in two prints by William Hogarth—Gin Lane and Beer Street. The former depicts lives of misery and destitution, while the latter a street filled with productive enterprise (see illustration).

But the attempts to control gin by unleashing an army of informers turned neighbor against neighbor, creating attitudes of mistrust and provoking riots and protest. In other words, the attempts at regulation created, in many ways, a worse situation than the offense it was supposed to stop (Warner 2002:159–160).

The protests and riots that ensued after the passage of theGinAct of 1736 led to thegradual nonenforcement of the regulation and a gradual increase in gin consumption to about twoandahalfgallonsayearperperson.ThenpublicconcernledtothepassageoftheGinActof 1751, which raised excise tax on gin to 4.5 pence a gallon, barred distillers form selling gin, and banned it in prisons, workhouses, and poorhouses. It enacted stricter standards for eligibil-ity to obtain a license. Consumption dropped, as it had in 1736, but began to rise again in 1756 until the government banned altogether the manufacture of spirits from domestic grains because of crop failures.

There are a number of lessons to be learned from the gin craze in eighteenth-century London, such as the role of drugs in the informal economy and attitudes toward and attempts to regulate addictive drugs. But before we examine those, let’s go to New York City of the 1980s

The different attitudes of the British toward gin and beer, and people who used each, are depicted in these eighteenth-century prints by William Hogarth, Gin Lane (left) and Beer Street (right). (Left: Gin Lane is a print issued in 1751 by William Hogarth (1697–1764) an English painter, printmaker, in support of what would become the Gin Act. It depicts the evils of the consumption of gin/Universal History Archive/UIG/The Bridgeman Art Library. Right: William Hogarth (1697–1764), Beer Street in London, engraving, 1751/De Agostini Picture Library/A. Dagli Orti/The Bridgeman Art Library)

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andPhilippeBourgois’sstudyofthedrugeconomyofEastHarlem,orel Barrio. Like London oftheearlyeighteenthcentury,EastHarlemwasthedestinationforhundredsofthousandsofimmigrants, largely fromPuertoRico.Likemostof themigrants toLondon,manyhadbeensemisubsistence peasants on private plots or haciendas or were workers on sugar plantations or assembly plants. And like the arrivals in London, many found it difficult to get jobs in the formal economy (the area had a 40 percent unemployment rate), turning instead to the informal sector to survive.

For women, activities in the informal economy included babysitting, working “off the books” as seamstresses, tending bar at social clubs, taking in boarders, or engaging in prostitu-tion. Men’s jobs tended to be more visible: street-corner car repairs, working for unlicensed contractors, selling “numbers,” or selling drugs. Drugs were the multibillion-dollar foundation of the underground economy in el Barrio. Cocaine, crack, and heroin were the most prevalent drugs and were easily accessible, says Bourgois:

The street in front of my tenement was not atypical, and within a two block radius I could … obtain heroin, crack, powder cocaine, hypodermic needles, methadone, Valium, angel dust, marijuana, bootleg alcohol, and tobacco. Within one hundred yards of my stoop there were three competing crack houses selling vials at two, three, and five dollars. Just a few blocks farther north down, in one of the local “pill mills,” a doctor wrote $3.9 million worth of Medicaid prescriptions in only one year, receiving nearly $1 million for his services. Ninety-four percent of his “medicines” were on the Department of Social Services’ list of frequently abused prescription drugs. (1995:3–4)

The 1980s drug scene in the United States was dominated by the use of crack cocaine, a combination of cocaine and baking soda that could be smoked and that delivered an almost instantaneoushigh.AsLondonhadthe“ginshop,”EastHarlemhadthe“crackhouse.”Thesewere run by dealers who would hire managers and lookouts for a share of the income, often bringing in hundreds of dollars a night, although, as Bourgois (1995:91) points out, most street-level dealers remained penniless because of their need to spend lavishly. In addition, working in the informal drug economy was dangerous. Bourgois indicates that when you calculate the risks (getting beat up or killed), the off-time (jail or crack house closings by police), the poor working conditions, the conditions of the clientele, and legal costs, employment in the crack economy is generally much worse than legal employment. Thus, many of the drug dealers that Bourgois worked with sought jobs or business opportunities in the formal economy, generally with little success.

As in London, women were a significant part of the drug underground economy of el Barrio. Women, says Bourgois, were forced into a balancing act between the two state agencies thatdominatedtheirlives—thepenalsystemandthewelfaresystem.Giventheattackonwelfareof the 1980s launched by the Reagan administration, it was virtually impossible to maintain a family on welfare alone. Consequently, women had to supplement their income with off-the-books jobs, maintain two or more Social Security cards, or sell drugs. Those who became drug users themselves often turned to prostitution to maintain their habit. Welfare was complicated by the city practice of requiring recipients to requalify every six months and cutting off benefits if they couldn’t supply accurate documentation. As a result, some 10 percent to 15 percent of New York City recipients were being terminated each year.

Thus,thepoorofEastHarlemwerehitbyadoubleeconomicplague:Becauseofglobaltrade liberalization, manufacturing jobs for which the new migrants were most qualified were being sent overseas, some 800,000 of them from the 1960s through the early 1990 in New York City alone. At the same time, the government was reducing its support for the poor. These con-ditions created a situation where desired commodities (crack and other drugs), easy (although restricted) availability, and a surplus supply of laborers created a thriving informal economy.

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But participation in the informal economy carried a stigma and, at the same time, provided the state with an opportunity to blame the victims and diminish its responsibility for poverty and hunger. In the cases of both gin and crack, a drug and those associated with it were blamed for societal problems for which the drugs were symptoms rather than causes. For example, children were prominent in both the gin and crack debates; in Hogarth’s Gin Lane, a baby is plunging to its death as its mother drinks, while another sits uncared for by the coffin of its mother. In the late 1980s, critics started claiming that our children were being taken from us by crack. Politiciansjoinedwithjournaliststocondemnthemothersofbabiesaddictedtocrackcocaine.The San Jose Mercury News noted that “the image of bad women destroying their babies in the womb fits perfectly with the politics of demonizing drugs and regulating pregnancy” (Warner 2002:210). Rather than demonizing an ethnic group or social class, the crack epidemic of the late 1980s and 1990s, says Warner (2002:278–279), assaulted women, the family, and motherhood. Inner-city women who smoked crack were accused of having lost the “mother-nurture instinct.” One reason for this was the fact that for the first time in U.S. history, women comprised half the addicts on the streets, and because they were often the only family providers, they brought toddlers and newborns with them to the crack houses.

In commenting on Hogarth’s print Gin Lane, Warner says,

It is a remarkable print—easily Hogarth’s best—and it succeeds as propaganda because it identifies cause and effect in terms that are as stark as they are seem-inglyirrefutable.Giniscauseandpovertyitseffect.Itisaveryappealingequation:take away gin and away goes poverty and in comes the jolly prosperity of Beer Street. The converse is a little trickier, for it forces us to do something about it. This approachwas, of course, even lesspopular in eighteenth centuryEngland than itis today.Povertyandginwereinextricablylinked,butwhichcamefirst?MostofLondon’s working poor led lives of unspeakable misery before the advent of gin; moreover, their lives, as measured by real wages, were even more wretched after its demise. It was not gin that made people poor; it was poverty that made them drink. (2002:213)

The problem, says Warner (2002:212), is assuming that any drug such as gin or crack cocaine is the cause of the poor health and behavior of users. Such an assumption removes the nation-state from any responsibility for the environments that make drugs attractive as com-modities. It is, to some extent, the equivalent of “medicalizing” hunger. If it is the weakness and criminality of the poor that is responsible for their condition, then the nation-state and those who control it are absolved of responsibility.

But the criminalization of certain commodities and activities has another insidious consequence. The history of drugs is characterized by the association of certain commodities or activities with marginalized groups of people. In eighteenth-century London, gin was associ-ated with the poor, while beer and other distilled beverages were associated with the elite or the working class. Likewise, in the United States, specific drugs have been selectively associ-ated with marginalized groups: Opium at the turn of the century was associated with Chinese immigrants, marijuana with Mexican immigrants, and cocaine with African Americans, while other drugs, alcohol, coffee, and tobacco were associated with mainstream populations and considered acceptable.

But by criminalizing only those drugs associated with marginalized populations, the nation-state may bring judicial authorities to bear on those groups; they become objects of legitimate suspicion, surveillance, and control. Thus, to the extent that marginalized populations engage in activities that are criminalized, it permits the state to selectively deprive them of many rights held by other members of society. The case of marijuana is illustrative. It was perfectly legal until the 1920s when it became associated with Mexican immigrants. In the 1930s, when Mexican immigrants were competing for scarce jobs, marijuana was demonized as the “evil

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weed” and criminalized in the Marijuana Tax Act. The 1936 film Reefer Madness tells the story of high school students who are lured into trying marijuana, which results in a hit-and-run acci-dent, a suicide, a rape, and a descent into madness. Then in the 1960s and 1970s, marijuana began to be associated with the white middle-class student counterculture. Consequently, marijuana laws were relaxed, and government commissions removed marijuana from the list of danger-ous drugs. In the 1980s, conservative parent groups convinced the government to criminalize marijuana once again, although the black arrest rate for marijuana offences are 2.5 times the rate for whites, probably reflecting the degree of discretion that allowed the police in making arrests (NORML 2000).

As a consequence of the criminalization of drugs, the United States has the largest prison population in the world—over 2.2 million people, or 1 of every 136 people. In 2005 in the United States, 1,846,351 people were arrested for drug violations; of those, 786,545 were marijuana related, and 696,074 (37 percent of all drug arrests) were for possession alone (Office ofNationalDrugControlPolicy2007).


It is apparent that hunger is not caused by a lack of food, but rather by some people’s lack of ability to purchase food. It is also apparent that the poverty that causes hunger is a consequence of global economic forces, such as the financial debt that peripheral countries accumulated in the 1970s. Other instances of hunger and famine are generally a consequence of political unrest. Eveninrelativelywealthycountries,suchasBrazil,thegrowinggapbetweenrichandpoorthathas seemingly resulted from growing integration into the world economy results in thousands dying of starvation.

We have seen, furthermore, that economic policies of the wealthy countries are not designed to help the poor countries but to further the interests of corporate and political agendas. As we have seen, economic development programs have, by and large, done very little to help their intended beneficiaries, and in many cases have created enormous suffering, economic hardships, and environmental devastation.

However, we examined the types of adaptations the poor sometimes make to their condi-tion, engaging the informal economy and the financial opportunities it offers, as well as the price they sometimes pay in government surveillance and prosecution.


If the life-supporting ecosystems of the planet are to survive for future generations, the consumer society will have to dramatically

curtail its use of resources—partly by shifting to high-quality, low-input durable goods and partly by seeking fulfillment through

leisure, human relationships, and other nonmaterial avenues.

—Alan Durning, How Much Is Enough?

A man is rich in proportion to the things he can afford to let alone.

—Henry David Thoreau, Walden

“Sustainable,” we think, has now to be understood ideologically, as the effects that the majority of people can be persuaded to find tolerable, as the necessary environmental consequence of an ever

more necessary growth process.

—Elaine Hartwick and Richard Peet

C h a p t e r

7 Environment and Consumption

All animals alter their environments as a condition of their existence. Human beings, in addition, alter their environments as a condition of their cultures—that is, by the way they choose to obtain food, produce tools and products, and construct and arrange

shelters. But culture, an essential part of human adaptation, can also threaten human existence when short-term goals lead to long-term consequences that are harmful to human life. Swidden agriculture alters the environment but not as much as irrigation agriculture and certainly not as much as modern agriculture with its use of chemical fertilizers, pesticides, and herbicides. Domesticated animals alter environments, but keeping a few cattle for farm work or cows for dairy products does far less damage than maintaining herds of thousands to supply a meat- centered diet.

The degree to which environments are altered and damaged is determined in part by popu-lation and in part by the technology in use. Obviously, the more people in a given area, the more potential there is for environmental disruption. Tractors and bulldozers alter the environment more than hoes or plows. But the greatest factor in environmental alteration—in the use of raw

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materials, the use of nonhuman energy, and the production of waste—is consumption. Because of our level of consumption, the average American child will do twice the environmental dam-age of a Swedish child, three times that of an Italian child, thirteen times that of a Brazilian child,thirty-fivetimesthatofanIndianchild,and280timesthatofaChadianorHaitianchild(Kennedy 1993:32).

The United States alone uses over 20 percent of the world’s energy and accounts for over 20 percent of the world’s carbon emissions that are responsible for global warming (see Table 7.1).TheUnitedStatesandCanadahavebyfarthehighestpercapitaratesofenergyusage and carbon emissions of any countries on earth. They are also the countries most resist-ing the implementation of the Kyoto Accord, an international agreement negotiated in 1992 to reduce global carbon emissions to 1990 levels. One of the questions that we must ask is, why are some of the most powerful nations on earth resisting measures to preserve it?

One of the best ways to appreciate the impact of lifestyle on the environment is through the method of the ecological footprint developed by Mathis Wackernagel and William E. Rees (1996). The ecological footprint calculates the amount of land available to supply neces-sary resources and absorb waste given the consumption patterns of individual countries. They estimate, for example, that some 15 acres (6.4 hectares) of land are required to maintain the con-sumption level of the average person from a high-consumption country. The problem is that in 2006, worldwide there were only 4.5 acres (2.1 hectares) of ecologically productive land for each person (see Table 7.2). For example, each person in the United States requires some 22.3 acres to maintain his or her consumption levels; but the country as a whole can support only 10.9 acres for each person, leaving a deficit of 11.3 acres. If we calculate how many acres a U.S. consumer uses by considering the number of acres available to each person on earth, the deficit increases to 17.8 acres. Wackernagel and Rees conclude that the deficit is made up in core countries by draw-ing down the natural resources of their own countries and expropriating the resources, through trade, of peripheral countries. In other words, someone has to pay for our consumption levels, and it will either be our children or inhabitants of the periphery of the world system.1

Figure 7.1 illustrates that, globally, we are already drawing on more than the total biocapacity available to us, and, in effect, requiring almost one and half earths to meet our total consumption needs.

Our consumption of goods obviously is a function of our culture. Only by producing and selling things and services does capitalism in its present form work, and the more that is pro-duced and the more that is purchased the more we have progress and prosperity. The single most importantmeasureofeconomicgrowthis,afterall,thegrossnationalproduct(GNP),thesumtotal of goods and services produced by a given society in a given year. It is a measure of the success of a consumer society, obviously, to consume.

The production, processing, and consumption of commodities, however, require the extrac-tion and use of natural resources (wood, ore, fossil fuels, and water) and require the creation of factories and factory complexes, which create toxic by-products, whereas the use of com-modities themselves (e.g., automobiles) creates pollutants and waste. Yet, of the three factors to which environmentalists often point as responsible for environmental pollution—population, technology, and consumption—consumption seems to get the least attention. One reason, no doubt, is that it may be the most difficult to change; our consumption patterns are so much a part of our lives that to change them would require a massive cultural overhaul, not to mention severe economic dislocation. A drop in demand for products brings on economic recession or even depression, along with massive unemployment.

Thus, given the need to maintain economic growth, convincing people to significantly reduce their consumption patterns, or convincing governments to implement policies to reduce consumption is no easy task.Consumption is asmuch a part of our culture as horse raiding

1You can calculate your individual footprint at


Table 7.1 Population, Energy Use, and Carbon Emissions of Selected Countries, 2004, 2009

Population in 1000s

Total Energy Consumption (in quadrillion BTU*)

Percentage of World


Per Capita Consumption (million BTU

Total Carbon Emissions (million

metric tons)

Percentage of World


Motor Vehicles per 1,000 People

Country 2004 2009 2004 2009 2004 2009 2004 2009 2004 2009 2004 2009 2009

United States

298,213 307.006 100.414 94.546 22.5 21.0 342,7 0.308 5,912.21 5,427.06 21.9 17.0 802

China 1,315,844 1,323.591 59.573 90.257 13.3 16.1 45,9 0.068 4,707.28 7,204.885 17.4 22.7 47

Russia 143,202 140.041 30.062 26.816 6.7 6.3 208,8 0.191 1,684.84 1,448.460 6.2 4.6 271

Japan 128,085 127.078 22.624 20.597 5.1 4.7 177,7 0.162 1,262.10 1,104.603 4.7 3.5 589

Germany 82,689 82.329 14.693 13.460 3.3 2.9 178,3 0.163 862.23 762.952 3.2 2.4 564

India 1,103,371 1,156.897 15.417 21.688 3.5 3.9 14,5 0.018 1,112.84 1,622.698 4.1 5.1 18

Canada 32,268 33.487 13.600 13.042 3.0 2.9 418,4 0.389 587.98 551.246 2.2 1.7 607

France 60,496 62.982 11.250 10.657 2.5 2.3 186,1 0.169 405.66 395.504 1.5 1.3 598

United Kingdom

59,668 62.258 10.038 8.905 2.2 1.9 166,5 0.143 579.68 518.969 2.2 1.6 384

Italy 58,093 58.157 8.265 7.319 1.9 1.7 142,3 0.125 484.98 408.462 1.8 1.3 672

Brazil 186,405 198.739 9.078 10.287 2.0 2.1 49,3 0.051 336.71 414.662 1.2 1.3 209

Mexico 107,029 111.211 6.609 6.995 1.5 1.6 63 0.062 385.46 432.37 1.4 1.4 276

Saudi Arabia

24,573 25.328 6.100 7.834 1.4 1.5 236,5 0.309 233.44 438.246 0.9 1.4 —

Indonesia 222,781 240.271 4.686 6.052 1.0 1.0 19,7 0.025 307.68 417.586 1.1 1.3 79

Nigeria 131,530 149.229 1.012 0.772 0.2 0.2 8,1 0.005 93.95 74.142 0.3 0.23 —

Bangladesh 141,822 153.700 0.658 0.947 0.1 0.2 4,7 0.006 37.90 54.388 0.1 0.2 3

Guatemala 12,599 13.276 0.180 0.215 0.04 0.1 15,4 0.016 10.68 12.681 0.04 0.04 98

World Total 6,464,750 6,776.917 446.442 482.972 — — 70,1 66.1 27,043.57 29,777.65 — — 95

*BTU = British thermal unit. It is the amount of heat that increases the temperature of a pound of liquid water one degree.

Sources: U.S. Energy Information Administration,; Vehicle Information from the World Bank,

200 PartII • TheGlobalImpactoftheCultureofCapitalism

Table 7.2 Ecological Bio-Capacity and Footprint for World and Selected Countries, 2006

Population (in millions)

Bio-Capacity (in acres)

Ecological Footprint of

Consumption (in acres)

Ecological Deficit or Reserve

(by national capacity)

Ecological Deficit

or Reserve (by global capacity)

World 6,592.9 4.5 6.4 -1.9 —

High-Income Countries 1,022.1 8.3 15.0 -6.7 -10.6

Middle-Income Countries 4,281.1 4.2 4.4 -0.2 0.1

Low-Income Countries 1,277.0 2.5 2.5 -0.1 2.0

Selected Countries

United States 302.8 10.9 22.3 -11.3 -17.8

Canada 32.6 42.2 14.2 28.0 -9.7

China 1,328.5 2.1 4.6 -2.5 -0.1

India 1,151.8 0.9 1.9 -1 2.6

Japan 128.0 1.5 10.2 -8.6 -5.7

United Kingdom 60.7 3.9 15.1 -11.2 -10.6

Greece 11.1 3.4 14.2 -10.9 -9.7

Italy 58.8 2.6 12.2 -9.6 -7.7

Ireland 4.2 10.5 20.2 -9.7 -15.7

Netherlands 16.4 2.6 11.4 -8.8 -6.9

Russian Federation 143.2 15.6 11.0 4.7 -6.5

Germany 82.6 4.6 10.0 -5.4 -5.5

France 61.3 7.0 11.4 -4.4 -6.9

Qatar 0.8 9.7 23.9 -14.2 -19.4

Saudi Arabia 24.2 3.2 8.6 -5.4 -4.1

Korea, Republic of 48.1 0.7 9.2 -8.5 -4.7

Egypt 74.2 0.8 3.5 -2.7 1.0

Algeria 33.4 2.0 4.7 -2.7 -0.02

Angola 16.6 8.3 2.3 6.0 2.2

Nigeria 144.7 2.2 4.0 -1.8 0.05

Turkey 73.9 3.6 7.0 -3.4 -2.5

Argentina 39.1 17.4 7.4 10.0 -2.9

Chile 16.5 10.1 7.6 2.5 -3.1

Peru 27.6 10.1 4.4 5.6 0.1

New Zealand 4.1 29.8 18.7 11.0 -14.2

Mexico 105.3 4.2 8.0 -3.8 -3.5


Chapter7 • EnvironmentandConsumption 201

and buffalo hunting were part of Plains Indian culture;itisacentralelement.Consequently,there is no way to appreciate the prob-lem of environmental destruction without understanding how people are turned into consumers and how luxuries are turned into necessities—that is, Why do people choose to consume what they do, how they do, and when they do? How are our tastes formed? Take sugar, for example. In 1997, each American consumed in his or her soft drinks, tea, cof-fee, cocoa, pastries, breads, and other foods sixty-six pounds of sugar (USDA 2000). In addition, Americans consume almost 200  grams, or fifty-three teaspoonfuls, of caloric sweeteners each day (Gardner andHalweil 2000:31). Why? Liking the taste might be one answer. In fact, a predilection for sweets may be part of our biological makeup. But that doesn’t explain why we consume it in the form of sugarcane, beet sugar, and high- fructose corn syrup and in the quantities we do. Then there is meat. Modern livestock production is one of the most environmentally damaging and wasteful forms of food produc-tion the world has known. In 1961 the world produced 71 million tons of meat. In 2007, it was estimated to be 284 million tons, and it is expected to double by 2050 (Bittman 2008). And Americans eat more meat per capita than all but a few other peoples.

Some environmentalists argue that we can change our destructive consumption patterns if we desire. But is our pattern of consumption only a matter of taste and of choice, or is it so deeply embedded in our culture as to be virtually impervious to change?

To begin to answer this question, we shall examine the history of sugar and beef, com-modities that figure largely in our lives but involve environmental degradation. The combination of sugar and beef is appropriate for a number of reasons:

1. The production and processing of both degrade the environment; furthermore, the history of sugar production parallels that of several other things we consume, including coffee, tea, cocoa, and tobacco, that collectively have significant environmental effects.

2. Neitheristerriblygoodforus,atleastnotinthequantitiesandforminwhichweconsumethem.

3. Both have histories that closely tie them to the growth and emergence of the capitalist world economy. They are powerful symbols of the rise and economic expansion of capitalism; indeed, they are a result and a reason for it.

4. With the rise of the fast-food industry, beef and sugar, fat and sucrose have become the foundations of the American diet, accounting for more than one-half of the caloric intake ofNorthAmericansandEuropeans(GardnerandHalweil2000:15).Indeed,theyarefoun-dationfoodsofthecultureofcapitalismsymbolizedinthehamburgerandCoke,ahotdogand soda, and the fat-and-sucrose dessert—ice cream.

How many planets we’d need if everyonelived like a resident of the following:

Balanced Budget Global Deficit

United States5 planets


1.7 planets

World Average1.4 planets

India0.4 planet


1.0 planet

South Africa1.5 planets

United Kingdom3.4 planets

Figure 7.1Number of Planets Required to Support Different LifestylesSource: Info Grafik (with permission).

M07_ROBB7655_06_SE_C07.indd 201 5/18/13 5:29 AM

202 PartII • TheGlobalImpactoftheCultureofCapitalism

The Case oF sugar

The history of sugar reveals how private economic interests, along with economic policies of the nation-state and changes in the structure of society combined to convert a commodity from a luxury good believed to have health benefits into a necessity with overall harmful health consequences. In the process, it vastly increased the exploitation of labor (first in the form of slavery, then in migrant labor), converted millions of acres of forest into sugar production (in the process expelling millions from their land), and changed the dietary habits of most of the world. It illustrates how our consumption patterns are determined in capitalism and why we engage in behavior that may be environmentally unsound and personally harmful. The story of sugar is an excellent case study of how the nation-state–mediated interaction of the capitalist, the laborer, and the consumer produces some of our global problems.

sugar origins and Production

Sugarcane,untilrecentlythemajorsourceofsugar,wasfirstdomesticatedinNewGuinea,thengrown in India and the Middle East. The processing of sugarcane into sugar is complex and environmentally damaging. There are various kinds of sugar plants, most of which grow quickly after regenerating from cuttings left in the fields after harvests or from the controlled planting of cuttings. The stalk matures in nine to eighteen months and must be cut when the juice in the stalk contains the most sucrose. The juice must be extracted quickly before it rots or fer-ments; it is squeezed from the cane by chopping, pressing, or pounding, then heated to evaporate the liquid, leaving crystals from which centrifugal machines extract most of the molasses. The molasses may be used as a sweetener or, more importantly, processed into rum. The raw sugar that remains after the molasses is extracted can be consumed as is, turned into a liquid syrup, or processed further to obtain the granular white sugar that most Americans and Europeans favor.

Sugar production alters the environment in a number of ways. Forests must be cleared to plant sugar, wood or fossil fuel must be burned in the evaporation process, waste water is pro-duced in extracting sucrose from the sugarcane, and more fuel is burned in the refining process. When Spain sought to expand sugar production into the Atlantic islands in the sixteenth century, itcolonizedtheCanaryIslands,theninhabitedbytheGuanche.TheSpaniardstransformedtheCanarianecosystem,clearingtheforestsandhillsidestomakewayforcanefieldsandtoobtainfuel for the fires of the ingenio, or sugar house. Within a few decades, wood was so scarce that thegovernmenttried,invain,toprotecttheforestsfromthelumberjacks(Crosby1986:96).TheGuanchewerealsogonewithinacentury.Whensugarproductionexpandedintheseventeenthcentury, the sugar refineries of Antwerp caused so much pollution that the city banned the use of coal.ContemporarysugarproductioninHawaiihasdestroyedforests,andwasteproductsfromprocessing have severely damaged marine environments. “Big sugar,” as the sugar industry is called in Florida, is largely responsible for the pollution, degradation, and virtual destruction of the Everglades.

Sugar, therefore, like virtually all commodities, comes to us at a heavy environmental cost. Yet people did not always crave sugar. For that to happen, a luxury had to be converted into a necessity; a taste had to be created.

uses of sugar

By i.�. 1000, when sugar was grown in Europe and the Middle East, it was a highly valued trade item and a luxury. Sugar was used largely as a spice and a medicine and was available only to the wealthy. In Arabian medical works from the tenth and fourteenth centuries, for example, sugar was an ingredient in virtually every medicine. So useful was sugar as a medicine that one way of expressing desperation or helplessness was the saying, “Like an apothecary with-out sugar” (Mintz 1985:101). According to one source, “nice, white sugar” from the Atlantic islands cleaned the blood and strengthened the chest, lungs, and throat; when used as a powder,

Chapter7 • EnvironmentandConsumption 203

it was good for the eyes; and when smoked, it was good for the common cold. Mixed with cinnamon, pomegranate, and quince juice, it was good for a cough and fever (Mintz 1985:103).

Sugar was also used for decoration, mixed with almonds (marzipan) and molded into all kinds of shapes, the decorations becoming central to celebrations and feasts. And it was used as a spice in cooking and, of course, as a sweetener. It was also used as a preservative. We still use sugar to preserve ham, and it is often added to bread to increase its shelf life. But through the seventeenth century, even with its diverse uses, it was an expen-sive luxury item reserved for the upper classes.

The Development of the sugar Complex

As a luxury item, sugar brought considerable profits for those who traded in it. In fact, it was the value of sugar as a trade item in the fifteenth and sixteenth centuries that led Spain and Portugal to extend sugarcane production, first to the Atlantic Islands, then totheCaribbeanislands,andfinallytoBrazil,fromwhich,begin-ning in 1526, raw sugar was shipped to Lisbon for refining.

Modern economists like to talk about the spin-off effects of certain commodities—that is, the extent to which their pro-duction results in the development of subsidiary industries. For example, production of automobiles requires road construction, oil and petroleum production, service stations, auto parts stores, and the like. Sugar production also produced subsidiary eco-nomic activities; these included slavery, the provisioning of the sugar producers, shipping, refining, storage, and wholesale and retail trade.

The slave trade was a major factor in the expansion of the sugar industries. Slaves from Europe and the Middle East were first used on the Spanish and Portuguese plantations of the CanaryIslandsandMadeira,butbytheendofthefifteenthcentury,slavesfromWestAfricawere working the fields. The growing demand for and production of sugar created the planta-tioneconomyintheNewWorldandwaslargelyresponsiblefortheexpansionoftheAtlanticslave trade in the sixteenth, seventeenth, and eighteenth centuries. From 1701 to 1810, almost 1 million slaves were brought to Barbados and Jamaica to work the sugar plantations.

Money was to be made also from the shipment of raw sugar to European refineries, more yet from the wholesale and retail sale of sugar, and probably more yet from the sale by European merchants of necessary provisions to the plantation owners. Investors in Europe, especially England, put money into the sugar industry in the development of plantations, the sale of provisions to the colonial plantations, in shipping, or in the slave trade. Attorneys, gro-cers, drapers, and tailors invested small amounts to form partnerships to finance slave-buying expeditions to Africa and the subsequent resale of slaves to buyers from the sugar plantations of theNewWorld.Thus,itwasduringthesixteenthandseventeenthcenturiesthatsugarbecamethe focus of an industry, a sugar complex that combined the sugar plantations, the slave trade, long- distance shipping, wholesale and retail trade, and investment finance.

The expansion of sugar Production

It was not until the late seventeenth century that sugar production and sales really began to influ-ence sugar consumption in Europe. Sugar consumption increased fourfold in England and Wales from 1700 to 1740 and doubled in the next thirty-five years. From 1663 to 1775, consump-tion increased twentyfold. Sugar consumption rose more rapidly than that of bread, meat, and

The increased demand for sugar in the eighteenth and nineteenth centuries represented a boom for West Indies sugar plantations and created a demand for more laborers, including slaves and children. (Lordprice Collection/Alamy.)

204 PartII • TheGlobalImpactoftheCultureofCapitalism

dairy products in the eighteenth century. Although the per capita annual consumption in 1809 of eighteen pounds of sugar per person does not compare to our present consumption of almost seventy pounds, it was more than sufficient to generate large profits.

Why did people in England begin to consume sugar in greater and greater quantities? First, increased sugar production led to reduced prices, making it accessible to more people, although its use was still largely confined to the upper and emerging middle classes of English society. One reason prices remained as high as they did was the imposition of high import tariffs on sugar produced in other countries. Second, the benefits of sugar were widely touted by various authorities, notably popular physicians. Dr. Frederick Slare found sugar a venera-ble cure-all. He recommended that women include at their breakfast—bread, butter, milk, and sugar.Coffee,tea,andchocolateweresimilarly“endowedwithuncommonvirtues,”hesaid,adding that his message would please the West Indian merchant and the grocer who became wealthy on the production of sugar. Slare also prescribed sugar as a dentifrice, a lotion, a substitute for tobacco in the form of snuff, and for babies. Sidney Mintz (1985:107–108) said of Slare that although his enthusiasm for sugar is suspect, it is more than a curiosity because it relates to so many aspects of what was then still a relatively new commodity; furthermore, by stressing sugar’s value as a medicine, food, and preservative, he was drawing additional attention to it.

A third reason that sugar consumption increased in the eighteenth century was its use as a sweetener for three other substances, all bitter and all technically drugs (stimulants)—tea, coffee, and cocoa. All of these were used in their places of origin without sugar, in spite of their bitterness. All three initially were drinks for the wealthy; by the time they were used by others, they were generally served hot and sweetened.

Fourth, sugar’s reputation as a luxury good inspired the middle classes to use it to emulate the wealthy—sugar was a sign of status. The powerful used sugar for conspicuous consumption, as a symbol of hospitality and the like. When sugar was a luxury, the poor could hardly emulate these uses, but as the price declined and as its use expanded, sugar became available to the poor to use in much the same way as their social betters.

Finally, sugar consumption increased because the government increased its purchase of sugar and sugar products. After the capture of Jamaica and its sugar plantations from the French in 1655, the British navy began to give its sailors rum rations, set in 1731 at half a pint per day and later increased to a pint per day for adult sailors. The government also purchased sugar to distribute to poorhouse residents.

Thus, sugar production and consumption increased, as did the amount of land devoted to its production and the number of sugar mills and refineries, distilleries producing rum, and slaves employed in the whole process. Most importantly, the profits generated by the sugar trade increased dramatically.

The Mass Consumption of sugar

By 1800, British sugar consumption had increased 2,500 percent since 1650, and 245,000 tons of sugar reached European consumers annually from the world market. By 1830, production had risen to 572,000 tons per year, an increase of more than 233 percent. By 1860, when beet sugar production was also rising, world production of sucrose increased another 233 percent to 1.373 million tons. Six million tons were produced by 1890, another 500 percent increase (Mintz 1985:73).

Two acts by the British government helped spur this massive increase in sugar produc-tion and consumption. First, the government removed tariffs on the imports of foreign sugar. This made foreign sugar more accessible to British consumers and forced domestic produc-ers to lower their prices, making it affordable to virtually all levels of British society. Second, England abolished slavery during the years 1834–1838 (it had abolished the slave trade in 1807). This had the effect of forcing technological improvements, but it also spurred the creation of a

Chapter7 • EnvironmentandConsumption 205

labor pattern that exists to the present. The freed slaves were without land and tools and were dependent on whatever labor they could get. As Mintz (1985:176) noted, although freed from the discipline of slavery, they were reduced to laborers by the discipline of hunger. The surplus supply of labor was increased when the British Foreign Office went to the aid of the planters in theWestIndiesbyhelpingthemimportcontractedlaborersfromIndia,China,andelsewhere.The freed slaves, unable to secure a livelihood independent of the sugar industry or to use collec-tive bargaining, settled into obscurity until they reentered British consciousness as migrants to England more than a century later.

The lower price of sugar increased its use in tea and stimulated a dramatic rise in the production of preserves and chocolate. More importantly, it must have been apparent to sugar producers and sellers that there was a fortune to be made by increasing the availability of sugar to theworkingmassofEngland.Certainly, therewere thosewhoworkedhard to expand itsavailability.

Sidney Mintz’s history of sugar reveals how much social, political, and economic power had to do with increased sugar consumption. Planters, slavers, shippers, bankers, refiners, grocers, and government officials, all profiting in one way or another from increased sugar consumption, exercised power to support the rights and prerogatives of planters, the maintenance of slavery, the availability of sugar and its products (molasses, rum, and preserves) and products associated with it (tea, coffee, and cocoa), and to supply it to the people at large at prices they could afford. Thus, the consumption of sugar was hardly only a matter of taste—it had to do with investments, taxes, the dispensation of sugar through government agencies, and a desire to emulate the rich, among other things. It also had to do with convenience and the changes in household structure, labor, and diet that accompanied the Industrial Revolution.

Rural workers in England in the eighteenth and nineteenth centuries typically had diets that consisted of oatmeal, porridge, milk, homemade bread, and vegetable broth. Although it was simple, the diet was relatively nutritious. In the industrial cities, however, it could be costly. Fresh food in general would have been more costly in the city, and food preparation, especially if it needed cooking, required fuel, which cost yet more money. Furthermore, urban women were, as noted earlier, also working in the factories twelve to fourteen hours per day, reducing the time they could spend on food preparation.

As a result, the diet of the urban working class and poor was transformed to one domi-nated by tea, sugar, store-bought white bread, and jam. Hot tea replaced vegetable broth. Jams (50 percent to 65 percent sugar) were cheaper than butter to put on bread, were easily stored, and could be left open on shelves for children to spread on bread in the absence of adults. In other words, the cultural and social constraints of time and cost created in the urban, indus-trial setting combined with the convenience of sugar and the prodding of those who profited from its sale to shape the diet of the British working class. It was an ideal arrangement, for, as E. P. Thompson (1967) noted, after providing profits to plantation and refinery investors, sugar provided the bodily fuel for the working people of Britain. Sugar is also what Sidney Mintz referred to as a “drug food,” a category that includes coffee, tea, cocoa, alcohol, and tobacco—foods that deaden hunger pangs and stimulate effort without providing nutrition and do so cheaply. That is one reason why they have been transformed from upper-class luxuries to working-class necessities.

Modern sugar

Sidney Mintz (1985:180–181) suggested that the consumption of goods such as sugar is the result of profound changes in the lives of working people, changes that made new forms of foods and of eating seem “natural,” as new work schedules, new sorts of labor, and new conditions of life became “natural.” This does not mean that we lack a choice in what we con-sume but that our choice is made within various constraints. We may have a choice between a McDonald’shamburgerandaColonelSanderschickenlegduringahalf-hourlunchbreak.The

206 PartII • TheGlobalImpactoftheCultureofCapitalism

time available acts to limit our choice, removing, for example, the option of a home-cooked vegetarian lunch.

Sugar has become, as it did for the nineteenth-century British laborer, a mainstay of the fast-food diet in the United States, the perfect complement to fat. Both fat and sugar are made more attractive by the clever use of language. The fat side of our diet is advertised with words like “juicy,” “succulent,” “hot,” “luscious,” “savory,” and “finger-licking good.” The sugar side is advertised as “crisp,” “fresh,” “invigorating,” “wholesome,” “refreshing,” and “vibrant.” And the sugar in soft drinks serves as the perfect complement to hamburgers and hot dogs because it possesses what nutritionists call “go-away” qualities—removing the fat coating and the beef aftertaste from the mouth.

Thus, sugar fits our budgets, our work schedules, and our psychological needs while at the same time generating monetary profits and growth.

The sTory oF beeF

The story of beef is very much like that of sugar, except that livestock breeding has been indicted for even greater environmental damage than sugar production, largely because of the vast amount of land needed to raise cattle. As an agricultural crop, sugar is quite efficient; although it has little nutritional value, it is possible to get about 8 million calories from one acre of sugar-cane; to get 8 million calories of beef requires 135 acres. In addition, much of the beef we eat is grain fed to produce the marbling of fat that makes it choice grade and brings the highest prices; as mentioned earlier, 80 percent of the grain produced in the United States is fed to livestock. In addition, two-thirds of U.S. grain exports go to feed livestock in other countries. Thus, to the amount of land needed for rangeland, we must add the farmland devoted to animal feed; moreover, aswe saw inChapter 6, this grain production requires tons of chemical fertilizer, pesticides, and herbicides, all of which negatively alter the environment.

Cattleraisingconsumesalotofwater.Half thewaterconsumedintheUnitedStatesisused to grow grain to feed cattle; the amount of water used to produce ten pounds of steak equals the household consumption of a family for an entire year. Fifteen times more water is needed to produce a pound of beef protein than an equivalent amount of plant protein. There are also environmental problems associated with beef waste products; a feedlot steer produces forty-seven pounds of manure per day (Ensminger 1991:187), not to mention the methane gases that contribute to the destruction of the ozone layer. Even more pollution is produced by the slaughter, refrigeration, transport, and cooking of beef.

Cattle raisinghas alsobeen criticized for its role in thedestructionof tropical forests.Hundreds of thousands of acres of tropical forests in Brazil, Guatemala, Costa Rica, andHonduras, to name only a few countries, have been leveled to create pasture for cattle. Because most of the forest is cleared by burning, the extension of cattle pasture also creates carbon dioxide and contributes significantly to global warming. In addition, with increasing amounts of fossil fuel needed to produce grain, it now takes a gallon of gasoline to produce a pound of grain-fed beef.

Much of the rangeland of the United States has been devastated by livestock herding to thepointthatithasbecomedesert.Currently,2millionto3millioncattlegrazeon306millionacresofpublicland.AccordingtotheGeneralAccountingOffice(GAO),moreplantspeciesarebeing threatened by cattle grazing than by any other single factor, and populations of pronghorn, antelope, and elk have virtually disappeared from Western rangelands.

The same problems are occurring in areas of Africa that have a long tradition of cattle raising. When cattle populations were managed by traditional means and for traditional consump-tion, there was little environmental damage. When attempts were made to introduce Western livestock-raising practices and technologies to increase the number of cattle and develop a larger beef export industry, pasture was turned to desert and wild animals disappeared, largely because of overgrazing by cattle (Rifkin 1992:216).

Chapter7 • EnvironmentandConsumption 207

In addition, beef is terribly inefficient as a source of food. By the time a feedlot steer in the United States is ready for slaughter, it has consumed 2,700 pounds of grain and weighs approximately 1,050 pounds; 157 million metric tons of cereal and vegetable protein are used to produce 28 metric tons of animal protein. Finally, beef in the quantities that Americans con-sume it is unhealthy, being linked to cardiovascular disease, colon cancer, breast cancer, and osteoporosis.

Americans are among the highest meat consumers in the world and the highest consum-ers of beef. More than 6.7 billion hamburgers are sold each year at fast-food restaurants alone. Furthermore, we are exporting our taste for beef to other parts of the world. The Japanese, who in the past consumed only one-tenth the amount of meat consumed by Americans, are increas-ing their consumption of beef. McDonald’s sells more hamburgers in Tokyo than it does in New YorkCity.

Historically, few societies have made meat the center of their diet. If we look around the  world, we find that most diets center on some complex carbohydrate—rice, wheat, manioc, yams, and taro—or something made from these—bread, pasta, tortillas, and so on. To these are added some spice, vegetables, meat, or fish, the combination giving each culture’s food its distinctive flavor. But meat and fish are generally at the edge, not the center, of the meal (Mintz 1985). Moreover, regardless of whether we simply like meat, Why do American preferences run to beef? Anthropologists Marvin Harris and Eric B. Ross (1987b) have some interesting answers that may help us understand why, in spite of the environmental damage our beef consumption causes, we continue to eat it in such quantities. The answers involve understanding the relationships among Spanish cattle, British colonialism, the American government, the American bison, indigenous peoples, the automobile, the hamburger, and the fast-food restaurant.

Creating a Taste for beef

The story of the American preference for beef begins with the Spanish colonization of the NewWorld.TheSpanish,asnotedearlier,introducedtheso-calledcattlecomplextotheNewWorld,whereitbecameestablishedinArgentina;areasofCentralAmerica,particularlynorth-ernMexico; andTexas.By the1540s, cattlewere sonumerousaroundMexicoCity that theSpaniardshadto trainNativeAmericans tohandle them.Fortunesweremadeincattle in thesixteenth century on meat and leather.

In Argentina, the number of feral cattle increased so rapidly on the pampas that by the seventeenth century, meat was eaten three times a day, and animals were killed for their hides and the meat left to rot. One seventeenth-century traveler wrote of Argentina,

All the wealth of these inhabitants consists in their animals, which multiply so pro-digiously that the plains are covered with them … in such numbers that were it not for the dogs that devoured the calves … they would devastate the country. (Rifkin 1992:49)

In colonial America, however, pigs, not beef, were the meat of choice. Eric Ross (1980) pointed out that the preference for beef or pork is related in part to environmental factors. Pigs tend to be raised in forested areas and can be maintained in areas of relatively dense populations becausetheyeatthesamefoodashumanbeings.IndenselypopulatedWestGermanyin1960,the ratio of cattle to hogs was 0.06 to 1, whereas in sparsely populated Argentina, with its large tracts of rangeland, it was 11.2 to 1. Another reason pork was preferred in America was that the preservation process—smoking, salting, and pickling—improved the flavor of the meat, whereas for beef it did not. In fact, pork was the meat of choice in the United States until the 1960s, when beef overtook it. Although meat consumption in the United States has declined since the 1970s, beef is still preferred (see Table 7.3).

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The emergence of the american beef industry

On the eve of the Industrial Revolution, England was the beef-eating capital of the world, with 100,000 head of cattle slaughtered annually in London. But in the nineteenth century, with its population increasing and more people migrating to the factory towns and cities, England began to look toward its colonies and ex-colonies for food, especially meat. Eric Ross (1980) suggested that the motivation was not simply to get food but to keep meat prices low in order to keep wages lowandallowindustryinGreatBritaintoremaincompetitivewithindustriesinothercountries.As we saw earlier, the British increased cattle production in Ireland by increasing the amount of land devoted to pasture, pushing people onto smaller plots of land and increasing dependence on the potato. When the potato blight hit Ireland in 1846–1847 and millions starved, the export of Irish grain and livestock intensified. In fact, because of the massive out-migrations caused by the famine, English landlords were able to intensify cattle production even more; from 1846 to 1874, the number of Irish cattle exported to England climbed from 202,000 to 558,000, and more than 50 percent of the total landmass of Ireland was devoted to cattle raising.

England next turned to Argentina, where the development of the refrigerated steamer per-mitted the shipment of fresh beef to England. In the 1870s, English, Scottish, and Irish colonists already owned 45 percent of the sheep and 20 percent of the cattle herds in Argentina, and English demand and English capital helped develop the Argentine beef business. One of the

Table 7.3 U.S. per Capita Meat Consumption, 1900 to 2015 (in pounds)

Year Beef Pork

2015 (projected) 62.9 48.4

2009 60.4 48.0

2008 65.8 49.1

2007 66.5 50.9

2006 65.5 49.5

2005 65.3 50.0

2004 65.0 51.0

2000 67.0 51.0

1998 64.9 49.1

1996 65.0 49.9

1993 61.5 48.9

1990 64.0 46.4

1977 125.9 61.6

1975 120.1 54.8

1970 113.7 66.4

1960 85.1 64.9

1950 63.4 69.2

1940 54.9 73.5

1920 59.1 63.5

1900 67.1 71.9

Source:Ross(1980:191);U.S.BureauoftheCensus(1990,1993,1994);USDA/NASSAgriculturalStatistics (2000),;;

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greatest nineteenth-century fortunes made in England, that of the Vesteys, was made by domi-nating the Argentine meat market.

Who was eating all this meat? It was not the working class, whose breakfast consisted of little more than bread, butter or jam, and tea with sugar and whose dinner might include a meat by-product, such as Liebig’s extract (made from hides and other residue), or inferior cuts. The gentry, however, apparently consumed vast quantities. Beef, in fact, had been for some time the choice of the British well-to-do. For example, in 1735 a group of men formed the Sublime Society of Beef Steaks, most renowned for the invention of the sandwich by one of its members. The society consisted largely of members of the British elite but also included painters, merchants, and theatrical managers. It existed until 1866. Twice a year the group would meet for dinner, at which, according to the society’s charter, “beef steaks shall be the only meat for dinner” (Lincoln 1989:85).

A typical breakfast in1887 for British nobility might contain a variety of fish, poultry, game (probably killed on the estate), sausage, mutton cutlets, along with filets of beef, with a side table of cold cuts such as tongue and ham, and perhaps a round of spiced beef (Harris and Ross 1987b:35–36).

The army and navy consumed enormous amounts of meat, each sailor and soldier getting by regulation three-fourths of a pound of meat daily; in fact, the diet of the military was vastly superior to that of the bulk of the population. Between 1813 and 1835, the British War Office contracted for 69.6 million pounds of Irish salted beef and 77.9 million pounds of Irish salt pork; as Harris and Ross (1987a:37–38) noted, Irishmen were able to eat the meat of their own country only by joining the army of the country that had colonized theirs. Furthermore, the British military, by distributing rum and meat to their men, helped to subsidize both the sugar and meat industries.

Lying largely untapped in the latter half of the nineteenth century, by either the British ortheAmericans,weretheAmericanGreatPlainsandthevastherdsofTexaslonghorns.Thelonghorn was the remnant of the Spanish herds that ran wild. It was uniquely adapted to the extremes of heat and cold of the prairies; it could eat almost anything, including leaves and prickly pear, and by the 1830s and 1840s, cowboys began to round up the strays and herd them toNewOrleans.Inthe1830s,therewere100,000headofcattleroamingTexas;by1860,therewere more than 3.5 million.

But cattle traders faced three problems in trying to make a profit from longhorn cattle. The first problem was shipping cattle to areas in the Midwest from where they could be distributed. They could be driven overland, but that was too costly. The second problem was the availability of rangeland; in the 1860s, the plains were occupied by indigenous peoples and their major food source, the buffalo. The third problem was the quality of the beef; longhorn beef was too lean and tough for British tastes. The solutions to these problems would define the American taste for beef and a good part of the history of the American West.

The problem of transporting cattle to the Midwest and East was solved by a young entre-preneur, JosephMcCoy,whoconvinced theUnionPacificRailway toconstructa sidingandcattlepenat its remotedepot inAbilene,Kansas,andagree topayMcCoyacommissiononevery animal he delivered for shipment. The animals would be driven from Texas to Abilene on theChisholmTrail.McCoyfirstneededandgotthegovernorofKansastoliftaquarantineonTexas cattle that had been imposed because of the spread of Texas fever; then he persuaded the Illinoislegislaturetoallowhisshipmentofcattleintotheirstate.OnSeptember5,1867,McCoyshipped twenty railway cars of cattle east from Abilene. By 1871, he was shipping 700,000 cattle annually.Throughthe1870s,theChisholmTrailwastraveledbyherdafterherdheadedfortheslaughterhouses, tables, and leatherworks of the East.

But as the demand for meat, leather, and tallow grew, more land was needed for cattle; the plains,onceconsideredtheGreatAmericanDesert,werebeingpromotedasalandofa“fairy-tale” grass that required no rain and could support millions of head of cattle (Rifkin 1992:73). Onlytwothingsstoodinthewayofitsuse—buffaloandNativeAmericans.

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Cattlemen,Easternbankers,therailroads,andtheU.S.Armybelievedthesolutiontobothproblems could be effected by the extermination of the buffalo, and they joined in a systematic campaign to that end. In a period of about a decade, from 1870 to 1880, in one of the world’s greatest ecological disasters, buffalo hunters ended 15,000 years of continuous existence on the plains of the American bison, reducing herds of millions to virtual extinction. Stationed in Kansas,ColonelRichardHenryDodgewrotethatin1871,buffaloaroundthepostwerevirtuallylimitless; by the fall of 1873, “there was now myriads of carcasses. The air was foul with a sick-ening stench, and the vast plain, which only a short twelve months before teemed with animal life, was a dead, solitary, putrid desert” (Rifkin 1992:74).

Buffalo hunters were getting one to three dollars a hide, and heroes such as William F.  Cody (Buffalo Bill) were entertaining European royalty on buffalo hunts, while railroad passengers, armed with rifles provided by the conductors, shot the animals from the moving trains.Noteveryoneapprovedof the slaughter, and somenewspapereditorials condemned itbut to no avail. Even the bones were ground up for fertilizer and sold for eight dollars a ton. The “white harvest,” as it was called, even engaged indigenous groups, who would bring the bones in wagons for sale at the railroad depots; meat met sugar as “fresher bones” were made into char and used in the refining process to remove the brownish coloration of sugar. In a speech to the Texaslegislaturein1877,GeneralPhillipSheridansaidofthebuffalohunters,

These men have done … more to settle the vexed Indian question than the entire regular army has done in the last thirty years. They are destroying the Indians’ com-missary; and it is a well-known fact that an army losing its base of supplies is placed at a great disadvantage. Send them powder and lead if you will; but for the sake of lasting peace let them kill, skin, and sell until the buffalo is exterminated. Then your prairies can be covered with speckled cattle and the festive cowboy who follows the hunter as a second forerunner of an advanced civilization. (Wallace and Hoebel 1952:66)

With the buffalo went the Indians of the plains. With their major food and source of ritual and spiritual power removed, they were soon vanquished and confined to reservations on land granted to them by the U.S. government—land that had been taken away from them in earlier treaties.

In one of the great ironies of history, cattlemen made fortunes selling beef to the U.S. governmentfordistributiontoNativeAmericansforcedontoreservationsandhungrybecauseofthebuffaloslaughter.Furthermore,cattlemengrazedtheiranimalsonwhatremainedofNativeAmerican land, paying them in beef or cash only a fraction of what the grazing rights were worth.

The final problem in the story of England and the Texas longhorn involved the toughness or leanness of plains cattle. The British liked their beef generously marbled with fat. This prob-lem was solved by a historic bargain; Western cattle would be transported to the Midwestern farmbelt and fed corn until their meat was speckled with fat, then shipped by rail and steamer to English ports (Rifkin 1992:58–59). The integration of the plains and the prairie, rangeland and farmland, was so complete that to this day the price of corn is closely linked to the demand for and price of cattle.

As a consequence of the merger of cattle and corn in the 1870s, British banks were pouringmillionsintotheAmericanWest.TheyformedtheAnglo-AmericanCattleCompanyLtd.with£70,000ofcapital;thentheColoradoMortgageandInvestmentCompanyofLondonbought 10,000acresofrangelandnorthofDenver; theScottish-AmericanCompanyinvested£220,000 in land in Wyoming and the Dakotas. Cattlemen associations were formed that controlled millions of acres and often became spokespersons for foreign cattle barons. In all, the British invested some $45 million in Western real estate, and by the 1880s, America was responsible for 90 percent of beef imported to England (Harris and Ross 1987b:38). By the mid-1880s,43,136tonsoffreshbeefwerebeingshippedyearlytoGreatBritain(Rifkin1992:95).

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The takeover of the West by the British so alarmed some Americans that in the 1884 presidential election, both parties included planks that would limit “alien holdings” in the United States. The Republican campaign slogan of 1884, “America for Americans,” was directed not at poor Latin Americans or Asian migrants or European minorities, as it would be later, but at the British elite. But the British invasion of the American cattle industry had one other long-lasting effect: It defined for the next 100 years the American taste in beef.

In response to both British tastes and Midwestern farm interests, the U.S. Department of Agriculture (USDA) developed a system of grading beef that awarded the highest grade—prime—to the beef with the most fat content, choice grade to the next fattiest, select grade to the next, and so on. Thus, the state participated in creating a system that inspired cattle raisers to feed cattle grain and add fat because it brought the best price, while at the same time communicating to the consumer that, because it was most expensive, the most marbled cuts of beef must be the best.

The federal inspection and grading standards also aided another important sector of the beef industry: the meatpackers. Beef packers wanted to centralize their operations, to bring live ani-mals to one area to be butchered, but most states had laws that required inspection of live  animals twenty-four hours before slaughter. Butchers were opposed to the centralized slaughter of beef because, since most animals were slaughtered and butchered locally, centralizing the operation would put many of them out of business. The beef-packing industry lobbied successfully to convinceCongresstopassafederalmeatinspectionsystemthat,unlikestateinspectionsystems,would not affect out-of-state centralized operations (Harris and Ross 1987b:202).

Aided by the government, the meatpacking business proceeded to dominate the produc-tion and distribution of beef. Refrigeration technology and the new federal inspection standards allowedindividuals,suchasGeorgeH.Hammondin1871,GustavusSwiftin1877,andPhilipandSimeonArmourin1882,toslaughterbeefinoneareaofthecountry—Chicago—andshipitfresh to any other area of the country. Their growth and domination of the meatpacking industry resulted in the concentration of production in five companies that by World War I handled two-thirds of all meatpacking in the United States. By 1935, Armour and Swift controlled 61 percent of meat sales in the United States.

One of the great technological innovations in meatpacking was the assembly (or, as Jeremy Rifkin [1992] called it, “disassembly”) line. Henry Ford is generally credited with developing assembly line technology in the construction of his Model T Ford in 1913. However, even Ford said that he got his idea from watching cattle hung on conveyor belts passing from worker to worker, each assigned a specific series of cuts until the entire animal was dismembered. The working conditions in the meatpacking industry were then, and remain, among the worst of any industry in the country. At the turn of the century, they prompted Upton Sinclair to produce his quasifictional account The Jungle (1906), whose descriptions of the slaughterhouses promoted such public outrage that the government acted to regulate the meatpacking industry.

The state has also heavily subsidized our taste in beef by allowing cattlemen to graze cattle on public lands at a fraction of market costs for grazing on private land, thus making beef more affordable and encouraging its consumption. As early as the 1880s, cattlemen were fencing millions of acres of public land—to which they had no title—with the newly invented barbed wire. In fact, at that time, most of the cattle companies grazing their cattle on public land were British. After objections to the practice were raised, the government passed the Desert LandActof1887,whichawardedlandtoanyonewhoimprovedit.TheUnionCattleCompanyof Cheyenne dug a thirty-five-mile-long ditch, called it an irrigation canal, and claimed 33,000 acres of public land (Skaggs 1976:62).

In1934,CongresspassedtheTaylorGrazingAct,whichtransferredmillionsofacresofpublic land to ranchers if they took responsibility for improving it. In 1990, some 30,000 cattle ranchers in eleven Western states grazed their cattle on 300 million acres of public land, an area equaltothefourteenEastCoaststatesstretchingfromMainetoFlorida(Rifkin1992:105–106).These permit holders pay a third to a quarter less than they would pay on private lands.

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The victory of beef, however, was not yet complete. To appreciate the story of American beef consumption, we need to understand the role of the American government in creating the legal definition of a hamburger and the infrastructure that encouraged the spread of the automobile.

Modern beef

Legend has it that the hamburger was invented by accident when an Ohio restaurant owner ran out of pork sausages at the Ohio Fair in 1892 and substituted ground beef on his buns. The hamburgerwastherageoftheSt.LouisWorld’sFairof1904,andby1921,WhiteCastlehadopeneditshamburgerchaininKansasCity.Butthehamburgerstillneededanassist,anditgotitfrom the automobile and the government.

Henry Ford’s Model T began the American romance with the automobile, and the number of Americans with cars grew enormously in the twentieth century. There are now as many automobiles as there are licensed drivers in the United States. But it was the surge in highway construction after World War II (a $350 billion project to construct a network of 41,000 miles of superhighways) that made the automobile boom possible. This led to the growth of the suburbs and the fast-food restaurants that were to make beef, and particularly the hamburger, king.

Pork, as mentioned earlier, had always competed with beef for priority in American meat tastes.Whereasbeefwasmorepopular in theNortheast and theWest,porkwas themeatofchoice in the South; however, in the Mid-Atlantic states and the Midwest, they were relatively evenly matched. But by the 1960s, beef clearly became the meat of choice for most Americans.

One advantage of beef was its suitability for the outdoor grill, which became more popular as people moved to the suburbs. Suburban cooks soon discovered that pork patties crumbled and fell through the grill, whereas beef patties held together better. In addition, because the USDA does not inspect pork for trichinosis because the procedure would be too expensive, it recom-mended cooking pork until it was gray, but that makes pork very tough. Barbecued spare ribs are one pork alternative, but they are messy, have less meat, and can’t be put on a bun. In 1946, the USDA issued a statute that defined the hamburger:

Hamburger. “Hamburger” shall consist of chopped fresh and/or frozen beef with or without the addition of beef fat as such and/or seasonings, shall not contain more than 30 percent fat, and shall not contain added water, phosphates, binders, or extenders. Beef cheek (trimmed Beef cheeks) may be used in the preparation of hamburgers only in accordance with the conditions prescribed in paragraph (a) of this section. (Harris 1987:125)

Marvin Harris (1987:125–126) noted that we can eat ground pork and ground beef, but we can’t combine them, at least if we are to call it a hamburger. Even when lean, grass-fed beef is used for hamburger and fat must be added to bind it, the fat must come from beef scraps, not from vegetables or a different animal. This definition of the hamburger protects not only the beef industry but also the corn farmer, whose income is linked to cattle production. Moreover, it helps the fast-food industry because the definition of hamburger allows it to use inexpensive scraps of fat from slaughtered beef to make, in fact, 30 percent of its hamburger. Thus, an international beef patty was created that overcame what Harris called the “pig’s natural superiority as a con-verter of grain to flesh.”

The fast-food restaurant, made possible by the popularity of the automobile, put the final touch on the ascendancy of beef. Ray Kroc, the founder of McDonald’s, tapped into the new temporal and work routines of American labor. With more women working outside the home, time and efficiency were wed to each other as prepared foods, snacks, and the frozen hamburger patty became more popular. In many ways, the fast-food restaurant and the beef patty on a bun were to the American working woman of the 1970s and 1980s what sugar, hot tea, and preserves were to the English female factory worker of the latter half of the nineteenth century. They

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both offered ease of preparation and convenience at a time when increasing numbers of women worked outside the home.

As with sugar, therefore, our “taste” for beef goes well beyond our supposed individual food preferences. It is a conse-quence of a culture in which food as a commodity takes a form defined by economic, political, and social relationships. We can, as many have done, refuse beef. But to do so requires a real effort, as those who try to follow a strictly vegetarian diet can attest.

In addition, as with much of what Americans do, the matter of beef does not stop in the United States. The United States produces about 9 percent of the world’s beef but con-sumes 28 percent of it. In 2009, Americans consumed 61 pounds of beef per person, and although consumption per capita is declining, the total amount of beef consumed is increasing. The consumption of beef in core countries is having more of an impact on countries in the periphery, and this is likely to worsen asothercountries,suchasJapanandChina,begintoemulateAmerican and European dietary patterns.

The iMPaCT oF ProDuCTion on The environMenT: The eFFeCTs oF CliMaTe Change

There are various environmental threats posed by our produc-tion of stuff: unhealthy air and water, deforestation, the accu-mulation of both toxic and nontoxic waste, to name just a few. But the one measure that, to a certain extent, encompasses all of those is climate change.

The major source for information on climate change is the Intergovernmental Panel on Climate Change (IPCC), agovernmental andUnitedNations clearinghouse that evaluatesscientificdataandreportsitsfindings.Giventhepoliticalimplicationsofitsfindings,theytendtobe conservative. But they conclude, nevertheless, that the temperature of the earth is rising, that the rise is caused by human activities, and that the cause is the emission of carbon from the burn-ingoffossilfuels—oil,gas,andcoal.Carbongasesactmuchlikeagreenhouse,allowingthesun’sheat into the atmosphere, but preventing much of it to radiating back into space. These gases are essential to life on earth: without them the earth would be ice cold and incapable of supporting life. But too much of these gases causes the earth’s surface to heat and threatens life in other ways.

TheIPCCconcludesthattheburningoffossilfuelshasincreasedtheconcentrationofcarbondioxide(CO2)in the atmosphere from about 280 parts per million (ppm) at the start of the Industrial Revolution to about 390 ppm today. Examining the concentration of CO2 in ice cores, they conclude also that 390 ppm is the highest it has been in 10,000 years. As a result, the earth’s aver-agetemperaturehasincreasedby1.4percentsincetheearlytwentiethcentury.Climatescientistsbelieve that anything beyond a 2 degree centigrade increase will lead to dangerous climate change which can lead to food shortages, desertification, increased incidences of disease, coastal flooding, anderraticclimatedisturbances(seeIPCC2007:30,37;Parenti2011:58–580).(SeeTable7.4).

TheIPCCconcludesthatasaresultofchangesoverthepastfiftyyears,extremeweatherevents have increased in frequency and intensity; cold days and nights have increased in fre-quency, while hot days and nights have become more frequent; heat waves have become more frequent and intense; and the frequency of heavy rainfall, and subsequent flooding have increased along with a rise in the sea level both from increased precipitation and the melting of polar ice-caps(IPCC2007:30).

The row of fast-food restaurants that line streets in virtually every American town and city represents not only the union of sugar and fat but also the fast-paced lives required in a consumer-oriented society. (Bill Bachmann/Alamy.)

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Table 7.4 Some Likely Regional Impacts of Climate Change

Africa By 2020, between 75 million and 250 million of people are projected to be exposed to increased water stress due to climate change. By 2020, in some countries, yields from rain-fed agriculture could be reduced by up to 50 percent. Agricultural production, including access to food, in many African countries is projected to be severely com-promised. By 2080, an increase of 5 percent to 8 percent of arid and semiarid land in Africa is projected under a range of climate scenarios.

Asia By the 2050s, freshwater availability in Central, South, East, and South-East Asia, particularly in large river basins, is projected to decrease. Coastal areas, especially heavily populated megadelta regions in South, East, and South-East Asia, will be at greatest risk due to increased flooding from the sea and, in some megadeltas, flooding from the rivers. Endemic morbidity and mortality due to diarrheal disease expected to rise in East, South, and South-East Asia due to projected changes in the hydrological cycle.

Australia and New Zealand By 2020, significant loss of biodiversity is projected to occur in some ecologically rich sites, including the Great Barrier Reef and Queensland Wet Tropics. By 2030, water security problems are projected to intensify in southern and eastern Australia and, in New Zealand, in Northland and some eastern regions. However, in New Zealand, initial benefits are projected in some other regions.

Europe Climate change is expected to magnify regional differences in Europe’s natural resources and assets. Negative impacts will include increased risk of inland flash floods and more frequent coastal flooding and increased erosion. In southern Europe, climate change is projected to worsen conditions (high temperatures and drought) in a region already vulnerable to climate variability, and to reduce water availability, hydropower potential, summer tourism, and, in general, crop productivity. Climate change is also projected to increase the health risks due to heat waves and the fre-quency of wildfires.

Latin America By mid-century, increases in temperature and associated decreases in soil water are projected to lead to gradual replacement of tropical forest by savanna in eastern Amazonia. Semiarid vegetation will tend to be replaced by arid-land vegetation. There is a risk of significant biodiversity loss through species extinction in many areas of tropical Latin America. Productivity of some important crops is projected to decrease and livestock productivity to decline. Overall, the number of people at risk of hunger is projected to increase.

North America Warming in western mountains is projected to cause decreased snowpack, more winter flooding, and reduced summer flows, exacerbating competition for over-allocated water resources. In the early decades of the century, moderate climate change is projected to increase aggregate yields of rain-fed agriculture by 5 percent to 20 percent, but with important variability among regions. Cities that currently experience heat waves are expected to be further challenged by an increased number, intensity, and duration of heat waves during the course of the century, with potential for adverse health impacts.

Island Communities Coastal communities and habitats will be increasingly stressed by climate change impacts interacting with development and pollution. Sea level rise is expected to exacerbate inundation, storm surge, erosion, and other coastal hazards, thus threaten-ing vital infrastructure, settlements, and facilities that support the livelihood of island communities.


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Having concluded that climate change is occurring, and that it is caused by the increased use of carbon-based fuels, the question is, what effects is it having and is likely to have, and who stands to lose the most from the changes, and who, if anyone, stands to gain? For example, one studyby theGlobalHumanitarianForum(GHF)—The Anatomy of a Silent Crisis—estimates that climate change adversely affects 300 million people a year, killing 300,000 of them because of floods, droughts, forest fires, and new diseases, and that the economic costs of these changes couldreach$600billionannually(GHF2009).

Morespecifically,theIPCCpredictsthatbecauseofchangesinrainfallandotherweatherevents, crop productivity at lower latitudes in dry and tropical regions will decrease and increase the risk of hunger, although it will rise in mid- and high latitudes for some crops. By the 2080s, more people will experience annual flooding, especially in the low-lying river deltas of Asia and Africa. The health status of people will be affected by malnutrition, there will be increased deaths due to diarrheal diseases, and the range of tropical diseases such as malaria will expand.

Overall, the area of the world most likely to be impacted by climate change is the earth’s mid-level latitudes which are, therefore, labeled the Tropic of ChaosbysociologistChristianParenti (2011). While the physical impacts of climate change in these areas—rising sea levels, desertification, freak storms, and flooding—are frightening, more so may be the social and polit-ical chaos that accompanies these events.

While humanitarian groups have voiced concerns about the impact of climate change in these areas, the potential instability has also drawn attention from government intelligence agen-cies. They report that weak or failed states will not be able to cope with the effects of climate change and will produce authoritarian governments and terrorist groups, and that the wealthier countries will face a flood of immigrants from the south. They predict that Africa and parts of Asia will face political and social instability from climate change. In Kenya, for example, droughts are becoming more common; whereas seventy or eighty years ago they occurred every ten years, they have been happening every five years now. Since 2000, there have been three major droughts and people are killing each other over water.

Droughts have plagued Uganda since the 1960s and their intensity is increasing put-tingUganda,accordingtotheUN,ontheedgeofahumanitariancatastrophewithfoodoutput

Increased flooding, such as occurred in New York and New Jersey as a result of Superstorm Sandy in 2012, is one expected outcome of climate change. (US Air Force Photo/Alamy.)

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declining by 30 percent in some areas (see Smith and Vivekananda 2007:79, 82). Over 80 percent of Uganda’s 31 million people rely on rain-fed subsistence farming, and with rainfall declining more than 38 percent of children younger than 5 are stunted and 23 percent are underweight (Smith and Vivekananda 2007:38).

Drought in eastern Afghanistan is linked to climate change which has led to a rise in temperature in the mountains and slightly decreased precipitation. The drought was broken by the 2010 monsoon that flooded 20 percent of Pakistan, killing 2000 people and destroying 2.4 million hectares of crops. The economic loss was estimated at $43 billion. It was drought that led to insurrection in the 1970s, which ultimately led to the rise of Taliban. It was also climate change–fueled drought that has led to the failure of food crops resulting in farmers in Afghanistan growing more opium poppies, which are largely drought resistant. A half an acre of poppies, which require one-sixth the amount of water as wheat, can bring about $5,000. The same area of wheat will bring $100 (Parenti 2011:98–99).

EgyptdependsontheNileRiver,buttheNileisfedbytributariesthatpassthroughnineother countries, each, to one degree or another, anxious to capture some of that water source. EgypthasusedrecurringmilitaryforcetocontroltheupperreachesoftheNile,and,untilnow,agreements with other countries, such as Sudan, apportioning a certain amount of water to each, have prevented full-scale war. But a combination of an increasing demand for water by these countries, along with recurring droughts in the area fueled by climate change, threaten one-third of Africa with economic, social, and political instability (Klare 2001:148ff.).

In 1960, under pressure from the World Bank, India and Pakistan signed the Indus Water Treaty guaranteeing Pakistan 80 percent of the water flowing from the Indus and its main tribu-taries. According to the treaty Pakistan was to receive 55,000 cusecs (a flow of 1 cubic foot of water per second). But recently Pakistan has complained that India has cut the flow to 13,000 cusecs in the winter and 29,000 in the summer damaging agriculture and needed electric energy. Compoundingtheproblem,Pakistanreportsadecliningrainfallandoveruseofgroundwater.Italso reports that per capita use of water has fallen over the past fifty years by 80 percent from 5,600 to 1,038 cubic meters a person and is expected to decline to 89 meters per person by 2025 (Parenti 2011:129).

U.S. intelligence services reported toCongress that Indiacandealwithclimatechangeuntil 2030 but, beyond that, its ability to cope will be reduced by declining agricultural pro-ductivity because of decreasing water supplies and increasing cross-border migrations into the country (Parenti 2011:139).

Noareaoftheworldwill likelyescapesomenegativeconsequencesofclimatechange.Increases in global temperatures have increased the incidences of heat waves, leading to dehy-dration and heat stroke. In 2003, a heat wave in Europe killed 35,000 people, the majority over seventy-five years of age, in five countries. It has been estimated that anthropogenic warming has increased fourfold the probability of a weather-related disaster such as the 2003 European heat wave. The likelihood is projected to increase hundredfold over the next four decades (Smith and Vivekananda 2007:33).

Many of these disasters still can be avoided if we can reduce our use of carbon-based fuels. But to do so would require reducing our economic activities and rates of economic growth, and that could lead to massive economic dislocation and ruin. The other option is to make more use of alternative technologies to fuel our economy’s productive engines. But there is little likeli-hood of replacing carbon-based fuels with alternative forms of energy production anytime in the near future.

In 2009 the world produced and consumed 84.4 million barrels of oil a day (mbd) or 30.8 billion barrels for the year. To get the same amount of energy from nuclear power, a pop-ular energy alternative, would require 6,800 reactors, or roughly more that 6,400 more than were operating worldwide in 2009. Or it would require 6 million new wind towers, operating at maximum efficiency, every day of the year, or 17 million running at the efficiency of presently operating towers. Or to get the equivalent amount of energy from solar PV panels, also operating

Chapter7 • EnvironmentandConsumption 217

at maximum efficiency, would require covering 2,000 square miles. And, finally, if we con-verted to biofuel, it would mean converting 16 billion acres of farmland to soybean production, or 135 percent of the total amount of world agricultural land (Martenson 2011:160).

So there is a dilemma; if no effective action is taken to reduce the use of carbon-based fuels, their by-products—largely carbon dioxide—will, to some degree, alter the climate and create widespread suffering and dislocation on a scale no one is prepared to address. The ques-tion then, is, why are governments, particularly in the nations most responsible for creating the problem, so resistant to doing anything about it?

The environment, sustainability, and the nation-state

Our eating habits and tastes are, of course, only a single dimension of how our lifestyles, and the need for perpetual growth affect our earth, water, and air. And while most people recognize the dangers posed to the environment and the lives dependent on it, there is disagreement regard-ingwhattodoaboutit.Neoliberalsclaimthatthesolutiontoourenvironmentalproblemsliesin maintaining and even accelerating economic growth and global economic expansion. More money, they claim, will lead to new solutions and new technologies that will solve environmen-tal as well as social problems. They point to research that suggests that while countries in the initial stages of economic growth may experience increased environmental degradation, once per capita income reaches a certain point, the environment improves (see, e.g.,Chua 1999).Criticsofglobalization,ontheotherhand,suggestthatunrestrainedgrowthwillresultin,amongother things, even greater deforestation, the acceleration of harmful climate change, and further degradation of farmland and water supplies. They point out that even if the research that shows reductions in pollution with a rise in per capita income is useful, and there is much evidence that it is not (see, e.g., Harbaugh, Levinson, and Wilson, 2002), estimates of per capita income at which the environment improves range from about $4,000 to $13,000. Since more than half the world’s population earns $5,000 per capita or less, billions must then try to survive in increas-ingly devastated environments. This issue is likely one of the most important of the twenty-first century. Do we need to accelerate growth and assume that more money and newer technologies will alleviate environmental damage, or do we seek to transform our economic and social lives to reduce those activities that lead to environmental destruction?

The problem is that when nation-states have had a choice between growth and environ-mental destruction, they almost always choose growth. The major goal of government, as pres-ently defined, is to advance trade and do whatever it takes to maintain economic growth. This does not mean that citizen action is ineffective. In the United States, after the publication in 1962ofRachelCarson’sSilent Spring, which documented the devastating impact of DDT on the environment, voters demanded governmental action to ensure clean air and water, along with the preservation of other environmental resources. These demands for a cleaner environment led tothepassageoftheCleanAirActof1970andFederalWaterPollutionControlActof1972.However, both pieces of legislation, along with virtually every other attempt to pass environ-mental regulations, have been vigorously opposed by corporate interests. Moreover, any envi-ronmental legislation must deal with the negative impact that it may have on economic growth. Democratic governments all over the world, then, face a dilemma: How do they respond to citi-zen demands to protect the environment while, at the same time, respond to pressure from cor-porate interests not to pass legislation that might affect corporate profits and economic growth? (see Kroll and Robbins 2009).

Generallyspeaking,governmentshaveadoptedthreestrategiestoaddressthisdilemma.The first is to pay lip service to environmental concerns by emphasizing sustainable growth. The idea of sustainable growth gained popularity as a result of the report issued in 1987 by a com-missionheadedbyNorwegianprimeministerGroHarlemBrundtland(TheWorldCommissionon Environment and Development 1987). The Brundtland Report, Our Common Future, defined sustainable development as development that “meets the needs of the present without

218 PartII • TheGlobalImpactoftheCultureofCapitalism

compromising the ability of future generations to meet their own needs.” The problem is, as we noted, whenever economic growth clashes with environmental concerns, economic growth almost always wins. Furthermore, as Hartwick and Peet (2003:209) note, the notion of sustain-ability itself may simply be an ideological device to convince a majority of citizens that the greatest negative environmental impact is necessary to maintain growth. Sustainability in this sense, they say, may have a number of meanings, including keeping growth going using state intervention, swapping pollution rights in the market, or just minimizing pollution enough to inhibit organized political action. Unorganized action can be dismissed as “deranged anarchism” (Hartwick and Peet 2003:209).

A second strategy that can be adopted by governments to avoid responding to public demands for environmental protection is to displace regulatory power to unelected and largely remote global governance institutions such as the WTO. For example, when researchers discov-ered that dolphin populations were endangered by tuna fishing, the U.S. government reacted by issuing rules to protect dolphins and banning the importation of tuna from countries whose fish-ing fleets did not follow those rules. Mexico claimed that this law violated articles of the WTO and appealed to the WTO to have the United States rescind the rules or permit retaliatory tariffs to be applied to U.S. exports. The WTO ruled that the laws protecting dolphins were unnecessary barriers to trade, and the United States had to abandon its dolphin-friendly legislation. The WTO does have a provision (Article XX) ensuring that nothing in the agreement “shall be construed to prevent the adoption or enforcement by any contracting party of measures … [n]ecessary to protect human, animal, or plant life or health,” or “[r]elating to the conservation of exhaustible natural resources …” However, in every instance in which an environmental rule was challenged as a barrier to trade, the WTO Dispute Settlement Panel ruled in favor of trade and against the environment (Hartwick and Peet 2003:201–202).

Thus, by assigning the legal right to decide cases in which environmental protection con-flicts with economic growth to dispute panels of the WTO, governments can absolve themselves of failing to respond to citizen environmental demands. Allowing multilateral institutions such as the WTO to dictate environmental policy may explain the reluctance of some governments, such as the United States, to enter into multilateral agreements addressing the environment, such astheKyotoAccordtocontrolglobalwarmingortheBaselConventionregulatingthedisposalof toxic waste. What would occur if two multilateral bodies, one designed to protect the global economy and the other to protect the global environment, disagreed with each other? It may also explainwhyeffortstoformaGlobalEnvironmentalMechanism(GEM),asproposedbyDanielC.EstyandMariaH.Ivanova(2003),havebeensodifficulttoimplement.Yet,thefailureofgovernments tosupport thedevelopmentofaGEMasvigorouslyas theyhavesupported theWTO is indicative of global governmental priorities.

Finally, the third governmental strategy to avoid taking significant environmental action that conceivably could endanger continued economic growth is to free corporations and the mass media to spin environmental events and news to allay public fears and interests regarding the environment. Beginning in the 1970s, corporations, as Sharon Beder (2002) documents in her book Global Spin: The Corporate Assault on Environmentalism, began spending huge amounts on public relations campaigns to convince the public that they were environmentally conscious, while also spending additional millions trying to minimize governmental regulations and coun-tering scientific findings regarding the deterioration of the environment and its consequences on humanhealth.Nowherewasthisclearerthaninthedebateoverglobalwarming.Scientistsarevirtually unanimous in their judgment that global warming is occurring and that it is due largely to human activities (see, e.g., Emanuel 2007) and that it may have serious environmental and economic consequences.2 Yet the media and some governmental spokespersons in the United States convey the impression that the conclusions about global warming are uncertain and that

2Someofthemoreup-to-dateinformationiscontainedintheIntergovernmentalPanelonClimateChange(IPCC)andcan be accessed at:

Chapter7 • EnvironmentandConsumption 219

globalwarming is still being debated in the scientific community.Yet, one study byNaomiOreskes (2004) of 928 papers on climate change in refereed scientific journals found that not one disagreed with the general consensus that global warming was occurring and was the result of human activity. Another study (Boykoff and Boykoff 2004) of global warming reporting in over 3,500 stories from the major media outlets (e.g., the New York Times,Washington Post,Wall Street Journal, and Los Angeles Times) found that in the interest of “balanced reporting,” 53 percent of the stories gave roughly equal treatment to the view that global warming is caused by human activity and the view that it is the result of natural fluctuations. Thirty-five percent emphasized the role of human activity, but presented both sides of the debate, and 6 percent emphasized the doubts about the claim that human activity causes global warming. Thus, skeptics, financed largely by oil, coal, and gas corporations, who cannot gain an outlet through the normal scientific channels, are given equal weight in the mass media, creating the impression that there is no consensus in the scientific community. Of course, the media also thrive on controversy; conse-quently it is also in their interest to make it appear that there is no consensus.

John Bellamy Foster concluded that capitalism will never sacrifice economic growth and capital accumulation for environmental reform. Opposition will develop, as we shall see in later chapters, and some changes will be made, as have been made in the United States during the past thirty years, but environmental concerns will never be allowed to threaten the system itself. As Foster concluded (1993:19),

Where radical change is called for little is accomplished within the system and the underlying crisis intensifies over time. Today this is particularly evident in the eco-logical realm. For the nature of the global environmental crisis is such that the fate of the entire planet and social and ecological issues of enormous complexity are involved, all traceable to the forms of production now prevalent. It is impossible to prevent the world’s environmental crisis from getting progressively worse unless root problems of production, distribution, technology, and growth are dealt with on a global scale. And the more that such questions are raised, the more it becomes evident that capitalism is unsustainable—ecologically, economically, politically, and morally—and must be superseded.


We began this chapter by asking why people choose to consume what they do, how they do, and when they do. We concluded that our tastes are largely culturally constructed and that they tend to serve the process of capital accumulation. There is no “natural” reason why we engage in consumption patterns that do harm to the environment. Furthermore, we suggested that of all the contributing factors to environmental pollution, the most difficult to “fix” is our consumption behavior because it serves as the foundation of our culture.

To illustrate, we examined how the American taste for sugar and fat was historically constructed largely to serve the interests of sugar and beef producers. We examined how anthro-pological research is trying to help peripheral countries in their effort to meet Western demands for products such as beef without destroying their environmental resources.

We examined the issue of climate change, specifically in relation to the social, economic, and political effects. Some areas, particularly the global south, may threaten to become the “tropic of chaos,” as changing rainfall patterns may create intense conflict of such things as water resources.

We also examined the dilemma of choosing between economic growth and the envi-ronment, concluding, generally, that when there is a choice between maintaining growth and protecting the environment, historically the choice has been growth. We also examined ways that nation-states can resist citizen pressure for environmental protections and the role that sustainability may play to placate citizen demands without sacrificing the imperative for growth.


In the halcyon days after World War II, when the advance of science and economic prosper-ity inspired government leaders and leading academics to predict a coming era of worldwide peace and prosperity, medical professionals were predicting the end of infectious disease.

Universal health was set as a realistic and achievable goal. In 1967, the U.S. Surgeon General said it was time to close the door on infectious disease. There was some reason for this optimism. As a result of a worldwide vaccination campaign, smallpox had been completely eliminated, the last case in the world being diagnosed in 1979. Malaria, one of the world’s major killers, had been reduced worldwide and even eliminated in some areas by controlling the vector—the mosquito—that spread the disease and through the development and massive distribution of curative drugs. Tuberculosis, the major killer of the nineteenth century, was disappearing. The U.S. Surgeon General declared that measles would be eliminated by 1982 with an aggressive immunization campaign. Jonas Salk developed a vaccine for poliomyelitis, the scourge of child-hood, and the development of antibiotics promised to rid us of every infirmary from pneumonia to bad breath. Then, in the space of a decade, everything changed.

C h a p t e r

8 Health and Disease

We live in a globalized world, filled with shared microbial threats that arise in one place, are amplified somewhere else through

human activities that aid and abet the germs, and then traverse vast geographic terrains in days, even hours—again, thanks to

human activities and movements. If there is blame to be meted out, it should be directed at the species Homo sapiens and the manifest ways in which we are reshaping the world ecology, offering germs like the influenza virus extraordinary new opportunities to evolve,

mutate and spread.

—Laurie Garrett, The Path of a Pandemic

A thorough understanding of the AIDS pandemic demands a commitment to the concerns of history and political economy:

HIV … has run along the fault lines of economic structures long in the making.

—Paul Farmer, AIDS and Accusation

Chapter8 • HealthandDisease 221

AIDSwasoneoftheshocksthatchangeduniversaloptimismtowhatMarcLappé(1994)called “therapeutic nihilism,” an attitude common today among hospital personnel that noth-ing will work to cure patients. But there were other reasons for the change: the emergence of antibiotic-resistant strains of disease; the reemergence of malaria, cholera, and tuberculosis in even deadlier forms; the emergence of other new diseases, particularly Lyme disease, dengue-2, severeacute respiratory syndrome (SARS), avian influenza (H5N1)virus, swine flu (H1N1),and hemorrhagic fevers such as Ebola that result in massive internal bleeding and have mortality rates of up to 90 percent. Measles, supposed to have been eradicated from the United States in 1982, was ten times more prevalent in 1993 than 1983. These developments and others have required medical researchers in biology, epidemiology, and anthropology, among others, to reexamine the relationship between human beings and the microbial world, particularly those pathogens that cause disease. It is clear that we underestimated the ingenuity of microbes to adjust to our adaptations to them and failed to appreciate how our patterns of social, political, and economic relations affect the emergence and transmission of disease.

Each age, it seems, has its signature disease. Bubonic plague in the fourteenth and fifteenth centuries emerged as a result of the opening of trade routes to Asia and was carried by merchants and warriors from the middle of what was then the world system west to Europe and east to China. Syphilis spread in the sixteenth and seventeenth centuries through increased sexual contact of people in towns and cities. Tuberculosis was the disease of the nineteenth century, spread through the air in the densely packed cities and slums of Europe, the United States, and the periphery.

Aswe shall see, AIDS is verymuch the signature disease of the latter quarter of the twentieth and the beginning of the twenty-first century, serving as a marker for the increasing disparities in wealth between core and periphery and the accompanying disparity in susceptibil-itytodisease.Morethan98percentofdeathsfromcommunicabledisease(16.3millionayear)occur in the periphery. Worldwide, 32 percent of all deaths are caused by infectious disease, but in theperiphery, infectiousdisease isresponsiblefor42percentofalldeaths,comparedwith1.2 percentinindustrialcountries(Platt1996:11).

Table 8.1 provides some indicators of health by country for the year 2006. It is obvious that income plays a major role in such things as life expectancy, infant mortality, years lost to

AIDS has become the signature disease of the culture of capitalism, striking particularly hard in the poor countries of the periphery, such as Uganda, where this sign advises people to practice safe sex. (Malcolm Linton/Liaison/Getty Images.)

Table 8.1 Health Indicators of Selected Countries by per Capita Income, 2006

CountryPer Capita Income ($)

Per Capita Health


Health Expenses as Percent

of GDP

Adult Mortality Fifteen to Sixty Years (per 1,000


Infant Mortality per 1,000

Live BirthsLife


Prevalence of HIV per


Under-5 Mortality Rate per


Years Lost to Communicable

Diseases (percent)

Percentage of Access to

Improved Drinking Water

Percentage of Access to

Improved Sanitation

United States 44,070 6,714 15.3 109 7 78 508 8 9 99 100

Canada 36,280 3,672 10 72 5 81 222 6 6 100 100

Sweden 34,310 3,119 8.9 64 3 81 107 4 4 100 100

United Kingdom 33,650 2,784 8.4 80 5 79 137 6 10 100 100

Japan 32,840 2,514 7.9 67 3 83 <100.0 4 8 100 100

France 32,240 3,554 11.1 91 4 81 263 5 6 100 100

Spain 28,200 2,388 8.1 75 4 81 380 4 6 100 100

Saudi Arabia 22,300 607 3.4 178 21 70 — 26 22 89 100

Czech Republic 20,920 1,490 6.8 108 3 77 <100.0 4 3 100 99

Russia 12,740 638 5.3 300 10 66 775 13 8 97 87

Mexico 11,990 756 6.2 122 29 74 244 35 27 95 81

Argentina 11,670 1,665 10.1 124 14 75 456 17 18 96 91

Chile 11,300 697 5.3 91 8 78 229 9 17 95 94

Venezuela 10,970 396 5.1 142 18 74 598 21 24 89 83

Iran 9,800 731 7.8 138 30 71 133 35 22 94 83

Cuba 9,500 363 7.1 104 5 78 52 7 10 91 98

Costa Rica 9,220 743 7 95 11 78 235 12 22 98 96

South Africa 8,900 869 8.6 564 56 51 16,579 69 77 93 59

Brazil 8,700 765 7.5 176 19 72 454 20 30 91 77

Jamaica 7,050 240 5.1 177 26 72 1,371 32 30 93 83

Colombia 6,130 626 7.3 131 17 74 509 21 25 93 78

Algeria 5,940 188 3.6 135 33 71 82 38 50 85 94

China 4,660 342 4.5 116 20 73 62 24 23 88 65

Bolivia 3,810 204 6.6 208 50 66 120 61 55 86 43

Indonesia 3,310 87 2.2 212 26 68 106 34 41 80 52

India 2,460 109 4.9 241 57 63 747 76 58 89 28

Pakistan 2,410 51 2 206 78 63 86 97 70 90 58

Vietnam 2,310 264 6.6 155 15 72 421 17 40 92 65

Kenya 1,470 105 4.6 416 79 53 6,125 121 81 57 42

Nigeria 1,410 50 4.1 423 99 48 3,547 191 83 47 30

Malawi 690 70 12.3 533 76 50 12,528 120 89 76 60

Ethiopia 630 22 4.9 326 77 56 — 123 82 42 11

Afghanistan 400 29 5.4 473 165 42 <100.0 257 76 22 30


Chapter8 • HealthandDisease 223

infectious disease, and so forth. However, income is not the only factor; in the United States, withthemostamountofspendingpercapitaonhealth,manyindicators(adultmortalityfrom15 to60,infantmortality,lifeexpectancy,etc.)arebelowthatofothercountries,whichspendfarlessonhealth.Nevertheless,oneofthemajorfeaturesofglobalhealthisthegreatinequalityinthehealthrisksthatpeoplefacefromcountrytocountry(seeTable8.2).

Table 8.2 Health Risk Factors by Country1


Per Capita Alcohol Consumption


Percentage of Adult

Female Obesity

Percentage of Adult

Male Obesity

Adolescent Tobacco Use


Adult Tobacco Use


Afghanistan 0.01 — — 9.8 —

Algeria 0.15 — — 13.8 15.2

Argentina 8.4 — — 24.9 30

Bolivia 3.23 15.1 — 20.8 31.7

Brazil 5.76 13.1 8.9 17.2 —

Canada 7.8 13.9 15.9 — 21.6

Chile 6.6 25 19 35.5 37.9

China 5.2 3.4 2.4 5.5 31.8

Colombia 5.68 16.6 8.8 32.8 —

Costa Rica 5.65 — — 18.7 16.8

Cuba 2.26 — — 10.3 35.9

Czech Republic 12.99 16.3 13.7 35 31

Ethiopia 0.86 0.7 — 7.9 4.3

France 11.43 — — — 31.7

India 0.29 2.8 1.3 13.7 18.6

Indonesia 0.09 3.6 1.1 13.5 35.4

Iran 0 19.2 9.1 26.6 17.6

Jamaica 1.74 — — 19.5 15

Japan 7.59 3.3 2.9 — 29.4

Kenya 1.51 6.3 — 15.1 14.7

Malawi 1.41 2.4 — 18.4 15

Mexico 4.57 28.1 18.6 28.6 24.7

Nigeria 10.57 5.8 — 18.1 7.1

Pakistan 0.01 — — 10.1 21.1

Russia 10.32 — — 27.3 48.5

Saudi Arabia 0 — — 15.9 14.7

South Africa 6.72 — — 23.6 18.4

Spain 11.68 13.5 13 — 33.7

Sweden 5.96 9.5 10.4 — 22

United Kingdom 11.75 23 22.3 — 35.7

United States 8.61 33.2 31.1 — 23.9

Vietnam 0.85 — — 2.2 24.3



224 PartII • TheGlobalImpactoftheCultureofCapitalism

The fact that each historical epoch has its characteristic illness reveals clearly that how we live—the social and cultural patterns at any point in time and space—largely define the kinds and frequencies of diseases to which human beings are susceptible. The questions we need to ask are, What do we do that exposes us to disease? What do we do that exposes others to disease? How do we create the conditions for unique interactions between pathogens, their environments, and their hosts? Furthermore, what features of human societies make pathogens more or less lethal?

Many of the things we discussed in previous chapters are relevant. For example, increases in population density clearly relate to the emergence and frequency of disease, as does the divisionoftheworldintorichandpoor.Ruralworkersandpeasantscrowdingintocities,asagricultural land becomes concentrated in the hands of a few, influence disease susceptibility. Public policy that makes economic growth a priority and neglects health programs encour-ages the spread of disease, as do International Monetary Fund structural adjustment programs in peripheral countries that demand the cutting of health, sanitation, and education programs. The alteration of the environment has enormous consequences for the spread and emergence of disease.

As food is available to those who can pay for it, so, too, are medical cures available largely to those with the money to buy them. In a capitalist medical system, as in a capitalist food system, market demand, not need, determines what and how much is produced. Of the 1,233 newmedicines patented between 1975 and 1997, only thirteen—1 percent—were fortropical diseases. One American drug company stumbled on a drug for sleeping sickness, cur-rently infecting some 300,000 people a year, largely in sub-Saharan Africa. The drug company that now owns the patent for the drug, however, has decided not to market it because of the poor profitpotential.ItdiddonatethepatenttotheWorldHealthOrganization(WHO),butWHOlacks the financial resources to develop it (see Tardieu 1999).Malaria infects an estimated500,000andkillsfrom1millionto3millionpeopleayear,mostlyinpoorcountries,yetdrugcompanies invest little to find cures because there is little profit in addressing the needs of thepoor.“Thepoorhavenoconsumerpower,sothemarkethasfailedthem,”saidDr.JamesOrbinski, international presidentofDoctorswithoutBorders/MédecinsSansFrontières:“I’mtired of the logic that says, ‘Hewho can’t pay, dies’” (McNeil 2000).Thus, although drug companies invest some $27 billion a year in research, most of that is for drugs to grow hair, relieve impotence, fight cholesterol, control depression and anxiety, and relieve arthritis and high blood pressure, all problems of the wealthiest 10 percent or 20 percent of the world’s popu-lation. Those priorities make good economic sense in the short term but, given the rapidity of the spread of disease, endanger everyone.

Infectious disease, of course, is not the only health problem we face. Environmental pollutants, often a direct outgrowth of industrialization, cause sickness. For example, asthma, often aggravated by industrial pollutants, is on the rise. Millions of people face malnutri-tion and starvation, conditions that further expose them to disease. Commercially promoted products, such as alcoholic beverages and tobacco, endanger health. Cigarette manufacturers produce some five and a half trillion cigarettes a year—almost 1,000 cigarettes for every man, woman,  and child on the planet. Asia, Australia, and the Far East are the largest consumers (2,715billioncigarettes),followedbytheAmericas(745billion),EasternEuropeandFormerSovietEconomies(631billion),andWesternEurope(606billion)(WorldHealthOrganization2002).Ascigarettesalescontinuetofallinthecoreinresponsetoantismokingcampaignsandstate legislation, cigarette companies, with the support of core governments, have intensified their efforts to sell their products to people in other countries, particularly to women and the young. For example, the United States has used free trade arguments and the threat of economic sanctions to pressure other nations—Thailand, Taiwan, and South Korea—to open their markets to American cigarettes. In such cases it is easy to see a direct connection between the capitalist world system and the onset of disease. However, the relation that exists between the culture of capitalism and infectious pathogens is often more subtle and hidden.

Chapter8 • HealthandDisease 225

a Primer on How To Die from an infecTious Disease

Human beings swim in a sea of microbes; we eat them, breathe them, and absorb them through skin openings and membranes. Most do us no harm, and many are useful. Millions of bacteria live in our intestinal system to aid digestion, and in nature they serve as catalysts for decomposi-tion of material that can then be reused by plants and animals. Many we never meet because they exist in distant parts of the world. Some microbes, however, do harm us. Harmful or pathogenic microbes include bacteria, viruses, and parasites that invade our bodies and cause illness and, in some cases, death. The question we need to ask is, What determines the relationships that we have with the infectious pathogens whose world we share?

To answer this question, let’s ask what is required for a pathogen to kill us—that is, What does it take for us to die of an infectious disease? At least four things have to happen. First, we must come into contact with the pathogen or a vector—such as a mosquito, tick, flea, or snail—that carries it. Second, the pathogen must be virulent—that is, have the capacity to kill us. Third, if we come into contact with a deadly pathogen, it must evade our body’s immune system. Finally, the pathogen must be able to circumvent whatever measures our society has developed to prevent it from doing harm. As we shall see, human actions are critical in each step.

What actions of human beings increase their likelihood of coming into contact with an infectious pathogen? Various behaviors may serve to expose an organism to an infectious agent. For example, carnivorous animals create an opportunity for pathogens to spread when the animals eat the flesh of other animals; animals that congregate create opportunities for the spread of pathogens by physical contact. Because human behavior is dictated largely by our culture, cultural patterns that characterize human populations play a major role in creating or inhibiting opportunities for pathogens to spread. Actions that change the environment or change the size, density, and distribution of human settlement patterns increase or decrease the likelihood of our meeting an infectious parasite or influence the size of the parasite population. The emergence of Lyme disease is a good example of many of these factors.

Lymediseasewasfirstreportedin1975,whentwowomen,inOldLymeandHaddam,Connecticut, reported to a Yale physician that their children had strange symptoms, including aching bones, malaise, and neurological symptoms such as poor memory and concentration. Studies revealed that the disease, now spread throughout much of the United States, is carried by four varieties of ticks. The question is, Why did it suddenly become a major health problem? The reason apparently has to do with human alterations of the environment along with human settlement and recreational patterns.

Intheseventeenthandeighteenthcenturies,muchoftheNewEnglandforestwasclearedfor farming. As farming declined, the forests grew back but with a very different ecology than the one that existed originally: Gone were certain species of animals, such as wolves, bears, and mountain lions, and populations of deer and mice, once controlled by these predators, increased dramatically. Also increasing were the populations of ticks associated with deer and mice and, with the ticks, the Borrelia organism, a pathogen they carried in their salivary gland. As human beingsbuiltsettlements(suburbs)alongtheforestsandventuredintothemforrecreationalactiv-ities, they were exposed to the tick. The result was Lyme disease.

As previously noted, coming into contact with a pathogen is not sufficient in itself to kill us. The pathogen must be virulent enough to disrupt critical bodily functions or reproduce so extensively in the body that the damages it causes will result in death. There is obviously a big difference between “catching” a cold and “catching” HIV. We seem to take for granted that some diseases are more severe than others, but the reality is far more complex. A pathogen that is harmless to one host may be lethal in another. There is a herpes virus, for example, that has evolved to survive, spread, and do no harm in one type of monkey but is 100 percent lethal when itinfectsanothertype(Garrett1994:573).

Generally, it is not in the best interest of a parasite, bacteria, or virus to seriously harm its host; it is far better to allow the host to survive, to provide an environment for the pathogen

226 PartII • TheGlobalImpactoftheCultureofCapitalism

to survive, reproduce, and spread. Furthermore, it is a distinct advantage to the pathogen if the host remains mobile to help the pathogen spread to new hosts. The rhinoviruses that cause the common cold, for example, reproduce in the cells that line the nasal passages; they are shed by sneezing or by a runny nose. If a person with a cold wipes his or her nose with a finger and then touches the finger of another person, the exposed person may inhale the contaminated air or touch the finger to his or her mouth. However the pathogen is spread, it requires the host to move, so killing or disabling the host is counterproductive.

Thus, most microbes that we come into contact with and even those that infect us do us little or no harm. However, there are certain exceptions to the rule that microbes should not harm their host. First, the newer the disease, the more deadly it is likely to be because microbe and host will not have had sufficient time to adapt to each other. Anything that human beings do that exposes them to diseases to which they haven’t been previously exposed increases the likelihood that the disease can kill them. As we saw in Chapter 3, thedestructionofthepeoplesofNorth,South, and Central America in the sixteenth and seventeenth centuries is a case in point. Having never been exposed to such diseases as smallpox, measles, influenza, and in some cases even a common cold, millions died. Something as simple as increased travel can bring people into contact with a disease that is far more lethal for them than for the people who share their environ-ment with the pathogen. Intestinal illnesses that are the bane of travelers are but one example; the traveler can be devastated by a pathogen that people native to the area harbor in their bodies with little or no effect. HIV-2 is carried in the bodies of African green monkeys with apparently little effect, but when it “crossed over” to human beings, the result was fatal.

A second exception to the rule that pathogens should do no harm is when the disease is carried and spread by a vector. When a disease is spread from human to human by another spe-cies such as the mosquito, flea, or tick and does not depend on human beings for its existence, reproduction, or transmission, the pathogen is under no selective pressure to spare human beings and can be as virulent as it likes. In fact, extensive multiplication in the human host might be beneficial to the microbe because it increases the likelihood of the vector picking it up and continuing the microbe’s reproductive cycle. It might be even better for the host to be disabled if, for example, the host would be less able to protect itself from the vector. As we might expect, pathogensaregenerallyverykindtovectors,generallycausingthemnoharmwhatsoever(Lappé1994:25).Whatthismeansisthatanythingthathumanbeingsdotoincreasetheirexposuretovector-borne pathogens will increase their likelihood of contracting a deadly disease.

A third exception to the “do-no-harm” rule is when a pathogen is spread by contaminated water or another external medium. For example, diarrheal diseases tend to be more virulent if they are spread by water systems and do not require person-to-person contact. The reason, suggestedbiologistPaulEwald(1993:88),isthatdiseasesthatarespreadbycontaminatedwaterlose nothing by incapacitating their host, but they gain a great deal by reproducing extensively in the host. Their large numbers make it more likely that they can contaminate water supplies through the washing of sheets or clothing or through bodily wastes. Thus, human activities that create contaminated water supplies are likely to create more virulent forms of diarrheal diseases.

Finally, the fact that diseases are spread by vectors or external mediums suggests that the virulence of a disease is affected also by the ease of transmission: The easier a disease is to transmit, the more virulent it is likely to be; or, conversely, the more difficult a pathogen is to transmit, the less virulent it will be. If a disease is difficult to transmit, the microbe that can lurkinthebodywithoutharmingit(thusallowingthehosttosurviveuntilanopportunityarisestojumptoanotherhost)hasadecidedadvantageoveramicrobethatquicklykillsordisablesits host. Thus, chronic diseases, such as tuberculosis, can lie dormant for years without doing damage to the host, waiting for an opportunity first to infect the host and then spread to another. However, reasoned Ewald, if the disease is easy to transmit, then it is under no selective pressure tosparethehost.DiseasessuchasEbola,forexample,reproducesorapidlyinthebody,andinfect virtually every organ, that anyone who comes into contact with any of the victim’s bodily fluids is likely to contract the disease.

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The notion that diseases that are difficult to transmit are likely to be less lethal has important implications. For example, sexually transmitted diseases in generally monogamous populations should be less virulent, according to Ewald, because the pathogens have to wait longer to be transmitted from host to host. If sexual activity increases, however, it is to the pathogen’s advantage to increase rapidly in the body to take advantage of the increased likeli-hood of transmission. This seems to fit with some developments with HIV, the virus that causes AIDS.Inpopulationsinwhichtransmissionwasmoredifficultbecausepeoplehadfewersexpartners or were more likely to use condoms, the disease evolved into a less virulent form (Garrett1994:587).

Even if Ewald’s hypothesis that diseases that are easier to transmit are more lethal does not applyuniversally,itsimplicationsarestriking.Itmeans,asEwald(1993:93)suggested,thatweshould be able to make a pathogen less lethal by increasing the price it pays for transmission; in other words, by making the pathogen more difficult to transmit, we should be able to force it to evolve toward a less lethal form. Thus, by cleaning up water supplies, protecting ourselves from mosquitoes, and reducing the likelihood of the spread of sexually transmitted diseases, we are working to prevent the disease and to make it less deadly when it does occur.

Having examined how human actions bring us into contact with a pathogen and help deter-mine how lethal it is, let’s move on to the next step toward our death. Let’s assume we have come into contact with a pathogen that is highly virulent to human beings. Is there anything that can save us? Fortunately, the human body has evolved a highly sophisticated immune system that generally prevents microbes from harming us. When a microbe infects the body, specific cells of the immune system, T cells, attach themselves to the invader, signaling other cells, macrophages, to envelop and destroy it. Once destroyed, other cells of the immune system call off the attack, lest the system overreacts and destroys its own cells.

It is an ingenious system and, under stable conditions, one that will hold in check most microscopic invaders. However, if an immune system is weakened, for example, by hunger, it is less able to fight off disease. Furthermore, in unstable conditions, when the opportunity exists for rapid changes in the number and type of microbes, the microbes have a decided advantage. Microbes are extremely adept at evolving ways to escape the body’s immune system. The reason is that viruses and bacteria mutate and reproduce at a much faster rate than larger organisms, such as human beings. Consequently, if a microbe evolves that can somehow get around the immune system, that particular variety of microbe will have a distinct adaptive advantage, and more of its offspring will survive. Ultimately, this will lead to the emergence of a microbe for which our bodies have no defense.

Simple arithmetic demonstrates how quickly microbes can adapt to changed or threaten-ing environments. Let’s assume that a variety of an organism—let’s call it X—emerges with a characteristic that gives it only a 1 percent reproductive advantage over another variety—Y—of the same organism. That means that 101 of the X variety will survive in each generation to only 100 of Y. Arithmetically, this means that X will become the dominant form of the organism in only thirty generations. In human terms, thirty generations is a long time—700 to 800 years. But for microorganisms, thirty generations is a very short time—for bacteria that reproduce every twenty to thirty minutes, thirty generations can elapse in a day, at the end of which two bacteria have produced 1 billion.

Because of this ability to adapt so quickly, some microbes have developed the capacity to evade the immune system. The bacterium that causes dengue hemorrhagic fever has evolved to use the immune system to spread from the blood systems to the vital organs. The virus that causes influenza changes so rapidly that infection by one strain does not confer any immunity to subsequentstrains.TheAIDSvirusesevolvedtoattackanddestroythebody’simmunesystem,not only allowing the virus to survive and spread but also creating the opportunity for other dis-eases, such as tuberculosis, to take root and thrive. In fact, one of the major threats of HIV is that the rapid change in its genetic structure, about 1 percent per year in some varieties, will allow it to evolve resistance to whatever defenses the body or medical researchers may develop.

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Assuming, then, that we have met a lethal pathogen and that the body’s immune system is unable to destroy it, what next? As far as we know, human beings have always sought tocurewhatever illnessafflicted them.Ritualandceremonialcuresareknowninsocietiesthroughout the world, as are the use of plants and other natural resources. However, there is little question that one of the major success stories of the culture of capitalism is the develop-ment of measures to protect people from and cure them of infectious disease. The discoveries of the causes of infectious disease and then the development, manufacture, and distribution of vaccines and antibiotics have, in general, extended the human life span in societies through-out theworld.Worldwide, lifeexpectancyatbirthwasforty-eightyears in1955,fifty-nineyearsin1975,sixty-fiveyearsin1995,and68.9in2007(WorldBank,WorldDevelopmentIndicators2009).

Unfortunately, just as microbes can quickly adapt and evade the natural defenses of our immune system, they can also quickly evolve to render modern drugs useless. When antibiotics are overused or used incorrectly or prescribed for viral infections against which they are useless, new varieties that are resistant to existing antibiotics may evolve. Some researchers claim thathalfofthe150millionantibioticprescriptionswrittenbyAmericandoctorseachyearare misprescribed or misused in this way. Patients often take a portion of the prescribed dosage and, once they feel better, neglect to take the rest. This results in killing the bacteria most susceptible to the antibiotic but may leave unaffected those that are more resistant. Those resistant bacteria then gradually become the dominant strain of the microbe; even if 99.9 percent of the original strain is destroyed, the survivor is likely to be a superstrain on which existing antibiotics have no effect(Platt1996:54).

Furthermore, half of the antibiotics used in the United States are used for livestock, aqua-culture, and other biological industries. Monocultural farming is a major source of the problem. When only one kind of animal or one kind of crop is grown, a disease outbreak can decimate a business. A commercial chicken farm, for example, may have 100,000 chickens; an aquaculture facility may have thousands of salmon. To protect themselves, growers use antibiotics to fend off disease, creating an opportunity for evolution of drug-resistant strains of pathogens, some ofwhichmaybecapableofinfectingpeople.AnneE.Platt(1996:52)summeduptheproblemwhen she wrote,

Today, almost all disease-causing bacteria are on the pathway to complete drug resistance. More than a half century after the discovery of antibiotics, humanity is at risk of losing these valuable weapons and reverting to the pre-antibiotic era.

One of the greatest risks we face may come from drug-resistant tuberculosis that is finding its way from poor countries to the rich. The most dangerous source for this disease was the former countries of the Soviet Union. Because of the economic collapse in the 1990s, prison doctors treating tuberculosis were unable to give a full course of drug treatments to patients. The partial treatment triggered the rise of a new dominant strain of the disease thatwascausing10,000newdrug-resistantcasesayear,each250timesmoreexpensivetotreat than the old strain of the disease. And tuberculosis spreads quickly. More than a dozen passengersonaflightfromParis toNewYorkwere infectedbya loneUkrainianinfectedwith thedrug-resistant strain (York1999).Someestimate that, if tuberculosis isnotprop-erly treated,1billionpeoplewillbenewly infected—and35millionwilldie—in thenexttwo decades.

Thus, we get some idea of how human actions can influence the relationship between infectious pathogens and human bodies, and what it takes in a general sense for us to die of an infectiousdisease.Nextlet’sexaminehowthistranslatestotherelationshipbetweendiseaseandculture, and more specifically, how people’s behavior in the culture of capitalism contributes to the creation and transmission of infectious disease.

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THe relaTionsHiP beTween culTure anD Disease

As we have seen, our world is filled with organisms that can cause us harm. Whether we come into contact with them, how deadly they are for us, and whether we can help the body fight them off or reach a mutually beneficial arrangement are greatly influenced by the kinds of lives we lead or, more specifically, the cultures and patterns of social relations that we construct, main-tain, and reproduce. Let’s examine this a little further and identify some of the specific cultural adaptations of human beings that either encourage or inhibit disease. One of the questions we want to consider is, How has the emergence of consumer capitalism influenced the spread of disease? Put another way, how does the behavior appropriate to our culture expose people to the risk of disease or create opportunities for the creation and spread of infectious pathogens? To illustrate the relationship between culture and disease, between our behavioral choices and how they affect our relationships with the world of microbes, let’s examine what happened to disease during another great cultural transformation in human history—the shift from gathering and hunting to agriculture.

Gathering and Hunting to early agriculture

Early gathering and hunting societies were likely afflicted by a range of diseases far different from our own. Small, geographically scattered human populations did not afford infectious diseases the same opportunity for infection and transmission as do large, densely populated mod-ern societies. Most pathogens in early human societies must have depended for their survival on nonhuman hosts. When they infected human beings, it was when people got in the way of the reproductive cycle of the nonhuman host, not because the microbe depended on human beings for its survival.

Contact with wild animals likely exposed early human societies to such diseases as rabies, anthrax, salmonellosis, botulism, and tetanus (Cohen 1989:33).Worm parasites that infestedanimals’ bodies would have been encountered by hunters. Malaria and yellow fever were transmitted by mosquitoes and other diseases by ticks. As Mark Cohen noted in Health and the Rise of Civilization (1989), thesediseasesstrikerarely,cannotspreaddirectlyfrompersontoperson, and do not claim many victims. But because human beings would not have built up an immunity to these diseases and because the offending microbes would not have depended on human transmission, the diseases were often fatal.

There were also categories of disease that could be transmitted from person to person; these would have had to live in hosts for a long time to have the opportunity to spread and must have been transmitted fairly easily by touch; breathing, sneezing, or coughing; and in food or other shared items. Yaws was probably one such disease, as may have been the herpes virus andavarietyofintestinalillness(Cohen1989:37).Becausediseasestendtoevolvetowardless virulent forms the longer they coexist with a population, diseases that we recognize today as mild may have been more serious in earlier human populations.

However, it was during the transition of human societies from gatherers and hunters to sedentary agriculturists that began some 10,000 years ago that whole new relationships devel-oped between culture and disease. By remaining sedentary, people probably came into contact with fewer pathogens, and by remaining in one place, people likely developed greater immuni-ties to localized bacteria, viruses, and parasitic infection. Being sedentary also makes it easier to care for the sick. But, as Cohen pointed out, being sedentary also has some major disadvantages. First, sedentary societies are more likely to engage in long-distance trade, which may increase contact between groups and, as a consequence, spread disease from one group to another. Second, sedentary populations create more favorable conditions for pathogens to spread; per-manent shelters attract vermin—insects and rodents—that may carry disease, while the buildup of garbage and human waste may serve in sedentary societies to harbor and spread microbes, especially if water sources are infected with human waste.

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Third, alteration of the landscape through horticulture, animal husbandry, and agriculture exposed people to new disease. Malaria-bearing mosquitoes would have thrived in the ponds and bodies of stagnant water created by human environmental intervention. Ponds and irrigation ditches would have provided opportunities for expansion of the snail that carries schistosomiasis.

Fourth, improvements in cooking technology, particularly pottery, may have helped cook food more thoroughly and destroyed disease-carrying microbes, but porous pots may have encouraged the growth of some bacteria. Storage of food for extended periods increased the possibility of bacteria buildup and fungal contamination and attracted disease-carrying vermin.

Finally, regular contact with domesticated animals exposed human populations to additional infections. Living in close contact with animals gives parasites, such as tapeworms, opportunities to involve human hosts in their life cycles as they pass between humans and domestic animals. There is evidence that most human respiratory disease arose after animals were domesticated, and a whole range of diseases now or once common in human beings—measles, smallpox, influenza, and diphtheria—are thought to have had their origins in domestic animals(Cohen1989).

Today it is estimated that spread of diseases from wild and domesticated animals are responsibleforaround2.5billioncasesofhumanillnessand2.7millionhumandeathsperyear(MacMillan2012;Robbins2012).

cities: “Graveyards of mankind”

As much as agriculture changed the relationship between microbes and humans, the voluntary or involuntary decisions of people to move to cities shifted the balance in favor of infectious disease. Simply put, the more people per square mile, the more easily an infectious agent could passfromonepersontoanother.Forexample,asearlyas2,000to4,000yearsago,writerstoldof infestations of lice, bedbugs, and ticks that they associated with dense housing conditions and theonsetofdisease.ThechancesofacitizenofancientRomelivingtotheageofthirtyyearswasoneinthree,whereas70percentofruralresidentssurviveduntilthirty(Garrett1994:236).In430b.c., an epidemic of an unknown disease in Athens killed half the population.

Although cities have existed for at least 6,000 to 7,000 years, they began increasing dra-matically in size during the expansion of the capitalist world system. Cities became the hubs of financial activities and were themselves one of the main reasons for the growth of trade—city residents relying on food from rural agricultural areas and trade items from distant places. Cities also grew as a consequence of the commercialization or capitalization of agriculture because more people were pushed off the land and forced to seek sustenance in the cities of the core and then the periphery.

Five diseases in particular seem to have benefited from the expansion of urban environments—bubonicplague,leprosy(Hansen’sdisease),cholera,tuberculosis,andsyphilis.Bubonic plague, as we saw in Chapter 3, was spread in the fourteenth century by traders and invaders from Central Asia west into Europe and east into China and periodically reemerged with disastrous demographic, economic, and social consequences. Cities tried to protect themselves by banning travelers from entering and by finding scapegoats on which to blame the disease. Tens of thousands of Jews and alleged devil worshippers were slaughtered for this reason, with the city of Strasbourg alone killing 16,000 of its Jewish residents. The Brotherhood of Flagellants, a society of Christian men, beat themselves with leather straps embedded with ironspikestodriveoutthesinstheybelievedresponsibleforthedisease(Garrett1994:238).In1665,theplaguehitLondon,killingasmanyas3,000peopleperday.

Leprosy is a particularly good example of an apparent adaptation of a parasite. The disease swept over Europe in 1200, aided by the growing density of cities, disdain for bathing, wool clothing, and sharing of bedding with others to stay warm. The disease is caused by a bacterium passed by human contact that attacks the nerves of the extremities, causing them to go numb. Because there is no feeling in the fingers, toes, and other extremities, injuries go unnoticed by

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the victim, leading to the characteristic disfigurement and stigmatization of victims. By 1980, mostoftheworld’s5billionpeoplehadantibodiestothebacterium,indicatingtheyhadbeenharmlesslyexposedtothedisease(Garrett1994:239).

Cholera struck the world’s cities in four devastating pandemics between 1830 and 1896, spreading throughcontaminatedwater and sewage systems. InSt.Louis in1849,10percentof thepopulationperished; in thecityofMecca in1847, some15,000 residentsandMuslimpilgrimsdied,andanother30,000diedin1865;inLondonin1847,53,000died.Becausethedisease seemed to affect the most impoverished segments of the population, those in power assumeditwasaresultoflower-class“immorality.”Itwasnotuntil1849thatLondonphysicianJohn Snow demonstrated that the disease was transmitted via water supplies. Snow removed the handle of a pump that was the sole water supply for a cholera-ridden neighborhood, and the local epidemic ended. Yet it was years before authorities were convinced that the disease was trans-mitted through the water supply and took measures to protect it.

Tuberculosis was the most deadly disease of the nineteenth century. Like others, the bacterium responsible for the disease, Mycobacterium tuberculosis, was ancient, dating back to atleast5000b.c. Tuberculosis is a slow-growing disease, causing illness only after months or years of infection and then ultimately killing the host; however, only about 10 percent of those infected actually develop the disease. It is transmitted through microscopic droplets exhaled by victims, making people who inhabit densely populated, closed spaces—the kind typical of urban slums—particularly susceptible.

The effect of population density on the incidence of tuberculosis is evident in its history in the United States. In 1830, Boston had a crude death rate from tuberculosis of 21 per 1,000, half that of London,which had a far larger population. By 1850,whenBoston’s population hadgrown,thedeathratewas38per1,000.InMassachusetts,tuberculosisratesincreasedby40 per-centfrom1834to1853.Then,towardtheendofthenineteenthcentury,forunknownreasons,tuberculosis rates began to decline. In 1900, tuberculosis killed about 200 of every 100,000 Americans;by1940,beforetheadventofantibiotictherapy,theratewas60per100,000.

A number of hypotheses have been offered in the ensuing debate over why tuberculosis death rates declined. Some claim that better nutrition enabled people to withstand infection better.ReneDubos,whose1952bookThe White Plague pioneered the study of the connection between human behavior and disease, claimed that the elimination of the deplorable working conditionsofmen,women,andchildrenduringtheIndustrialRevolutionalongwithimprovedhousing resulted in the decline.

LaurieGarrett(1994:244)suggestedthatacluetothedeclineintuberculosiscanbefoundin the experience of South Africa. Even with the increased availability of antibiotics and an understanding of the transmission of the disease, death rates for tuberculosis rose 88 percent from1938to1945.CapeTownsawariseof100percent,Durban172percent,andJohannesburg140percent.Urbanratesofinfectionwereashighas7percentofthetotalpopulation,whereasinruralareas,despitepovertyandhunger,therateswerelessthan1.4percent.Virtuallyallcasesstruck the black and Asian, or “colored,” population.

Housing,accordingtoGarrett(1994:245),seemedthemostlikelyculpritresponsiblefortheoutbreak.Duringthatperiod,SouthAfricahaditsownindustrialrevolutionand,asinEuropein the eighteenth and nineteenth centuries, required inexpensive labor. Blacks and coloreds, by far the major source of cheap labor, were required by law to live in areas designated by the government and to carry identity cards that stipulated where they could and could not go. The government subsidized housing for the white population, but government-sponsored housing projectsforblacksactuallydeclinedby471percentduringthisperiodofexpansion,resultingin abysmal living conditions. The South African medical authorities blamed the outbreak on an imagined genetic susceptibility of blacks, thus blaming the victim for an affliction caused by the expansion of the capitalist economy.

Cities also seemed to provide ideal conditions for the emergence of sexually transmitted diseases such as syphilis. The density of population, anonymity of urban life, and influx of single

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people, especially men, in search of work, promoted greater sexual activity, experimentation, and prostitution.

Thereissomedebateovertheoriginsofsyphilis(seeBakerandArmelagos1988).Itiscarried by a bacterium transmitted in sexual intercourse or at birth from an infected woman to herchild. Itwasfirst reported inEurope in1495amongFrenchsoldiers(explaining itsearlydesignationasthe“Frenchdisease”)fightingagainstNaplesandwithintwoyearshadspreadthroughout the world, apparently existing in a deadlier form than it does today. Because the out-breakofthediseasecoincidedwiththereturnofColumbus’ssailorsfromtheNewWorld,manyscholars believe its origin lay in the Americas, from which it was spread by European conquerors to the rest of the world. Others argue that the rate at which the disease killed indigenous people oftheNewWorldsuggestedalackofanyimmunitythatwouldlikelyhavebeenconferredifthediseasewerenativetothatareaoftheworld.Stillothers(seeHudson1965)suggestthatsyphilisis caused by the same bacterium that causes yaws, a common but easily cured childhood skin disease with a worldwide distribution, and that local sanitary conditions determined whether thediseasemanifesteditselfasyawsorsyphilis.Regardlessofitsorigins,itspreadthroughoutEuropean cities from the sixteenth through the twentieth centuries.

The pace of urbanization from the fifteenth to the nineteenth centuries that created conditions for diseases such as plague, leprosy, cholera, tuberculosis, and syphilis to spread has dramaticallyincreasedinthetwentiethcentury,especiallyintheperiphery.In1950therewereonlytwomegacities—urbanareaswith10millionormorepeople—NewYorkandLondon.By1980,therewereten:BuenosAires,RiodeJaneiro,SãoPaulo,MexicoCity,LosAngeles,NewYork,Beijing,Shanghai,Tokyo,andLondon.Currently,over50percentoftheworld’speopleliveincitiesof2,000ormore(PopulationReferenceBureau2009).Manyoftheseurbandwell-ers will be new migrants from rural areas flocking to cities, as they have for centuries, in search of jobs, often after being forced off their land by the continuing concentration of agricultural production and wealth in a few hands and by government policies that function to create cheap labor to fuel economic growth. These densely packed populations will continue, as they have for centuries, to be prime breeding grounds for the creation and dissemination of disease.

WhenNewYorkandLondonwerereachingmegacitystatus,theyweredoingsoincoun-tries that were the richest in the world. That wealth allowed them to adjust to their growth by building sanitation services, public health networks, and medical services to accommodate grow-ing numbers of people and the special problems created by increasing population density. For the mostpart,thenewmegacities,withtheexceptionofsomeinEastAsia,lackthatluxury.Notonlyhave they grown at unprecedented rates, but they are also in countries on the brink of economic ruin. The international debt of countries such as Brazil, Egypt, Mexico, and India prevents them frombuildingfacilitiestoaccommodatethegrowingurbanpopulations.Residentsliveinhastilyconstructed shantytowns and slums that rival any of those in eighteenth- and nineteenth-century Europe and America for the extent of poverty and disease. Even the richer cities cannot keep up withthegrowth;inTokyoin1985,lessthan40percentofdwellingswereconnectedtopropersewage, and tons of untreated human waste was dumped into the ocean. Hong Kong, another of the more wealthy cities, was dumping 1 million tons of untreated waste each day into the China Sea. In the poor cities, of course, the situation is far worse. In 1980, 88 percent of Manila’s popu-lation lived in squatter settlements with houses built of scrap wood, cardboard, tin, or bamboo. Nairobi’s slums,where 40 percent of the population lived,were deliberately left off officialmapsofthecity(Garrett1994:251).

AUnitedNations report reveals that the averagechildgrowingup inoneof theurbanslums of the periphery is forty times more likely to die before his or her fifth birthday of a preventable infectiousdisease thana ruralchild in thesamecountry.Nocountry is immune;the extent of neglect of inner-city children in the United States was underscored in 1993 when the WHO announced that the United States had fallen behind Albania, Mexico, and China in childhood vaccination rates, largely because of the collapse of health services to inner-city poor (Garrett1994:512).

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Therefore, human demographic patterns, largely a consequence of labor movement and commerce, continue to generate environments that harbor pathogens and provide ample oppor-tunity for their spread, and help opportunistic pathogens expand their base of operations. A case in point is cysticercosis, a disease produced by tapeworms found in undercooked pork and other animal flesh, which in some forms can infect the brain. Epidemiologists observed that in Mexico City, people were being infected not from eating undercooked pork—those infected could not affordtoeatmeat—butfromthewateroftheTulaRiver,highlypollutedandthecity’sprimarywater source. Tens of thousands of people living in shantytowns downriver from the city’s sewage system were being infected. Once a parasite adapts to a new environment, it may easily spread. By 1980, this pathogen had found its way to Los Angeles, carried back by travelers to Mexico, immigrants, or visitors to the United States.

Diseases of environmental change

Urban centers emerged as a natural outgrowth of the expansion of commerce, increased industrialization, and the need for financial hubs to serve as links between commercial and indus-trial centers. However, the environmental and social changes of the past fifty years that have influencedthespreadofdiseasehavebeenmoremethodicalandcontrolled.Disease,itseems,isbecominganenvironmentalproblem.EmergingdiseasessuchasHIV/AIDS,Ebola,WestNileVirus, and, as we discussed, Lyme disease are all the result of human alteration of nature.

We carefully plan and build massive hydroelectric projects that result in the flooding of millions of acres, in the process creating new environments for waterborne infectious parasites. We methodically destroy millions of acres of rain forests, in the process creating new habitats to be exploited by disease vectors. We plan and build roads that bring people into areas where they have never been, thus exposing them to new pathogens. We expand habitats, consequently changing the delicate ecological balances and promoting evolution of microbes that once infected only nonhuman species to infect human beings. We knowingly dump raw sewage into our oceans and waterways, not only spreading disease worldwide but also creating a massive evolutionary medium for new pathogens to develop. In modern warfare, we devastate environments in ways that past armies were incapable of doing, in the process creating opportunity for pathogens to thrive.

Forexample,in1985,theDaimaDamwasbuiltontheSenegalRiverbytheMauritanian,Senegalese, and Malian governments. The dam made possible the irrigation of 10,000 hectares of desert soil, converting it into fields of sugarcane, potatoes, mint, and rice. As a result of agri-culturalexpansion,afewmembersofalocaltribebecamemillionaires(Platt1996:45).Butwiththe dam came infectious disease. Sanitation in the area is poor, and the irrigation canals, from which people drink, bathe, and wash their clothes, have become infected with strains of diarrheal bacteria. The dam also halted the flow of salt water that once penetrated up to 200 kilometers inland. The salt water had kept the snail population in check, but the dam created ideal condi-tions for an epidemic of snail-borne schistosomiasis. The first cases were detected in 1988, and by 1990, 60 percent of the population exhibited symptoms. In one village that had profited from growing mint, 91 percent of the people were infected.

Schistosomiasis is an ancient disease. Egyptian mummies have evidence of infection, and the disease was common in China around 200 b.c. during a time of expanding rice cultivation. Today, it ranks second only to malaria among diseases in tropical regions. It infects farmers and fishers who wade in shallow water infected with the snails that carry the disease. It is transmitted when people defecate the larvae of the parasite, which then travels through water supplies and infectsothersnailsandpeople(Platt1996:47).

Insomeareasthediseaseissoprevalentthatitgoesunrecognized.KatherineA.Dettwyler(1994:46)wasdoinganthropologicalworkondiseaseinMaliandtakingurinesampleswhenshe received one from a young boy that appeared to be full of blood. The urine contained over 500 Schistosoma eggs per milliliter, the highest count measurable with the technique she used. Whenshegavehimalookofconsternation,heasked,“What’sthematter?”“Doesyoururine

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alwayslooklikethis?”sheasked.“Yes,”hereplied.“Isn’titsupposedto?Doesn’teveryone’s?”She later learned that in some communities, the first appearance of red urine in boys was believed to be equivalent to the onset of menstruation in girls and was thought to indicate sexual maturity. In some communities, celebratory rites of passage were held when boys reached this milestone.

When Brazil completed its highway through the Amazon, a new disease, oropouche, began tostrikeresidentsofBelém;itaffected11,000people.Whensettlersclearedtheforestforcacaoplanting, they disturbed the habitat of a midge that harbored the virus that caused the disease. Discardedcacaoshellsprovidedanewbreedinggroundfortheinsect,andtheexplosionoftheirpopulation in association with human settlements created the opportunity for disease spread.

One reason forest, especially rain forest, destruction unleashes disease is because of the variety of species that exist in forests. A single hectare of rain forest contains more insect species than the entire New England area or all of Great Britain.When human beings destroy that habitat, it brings them into contact with insects and pathogens that are then searching for new habitatsandnewhosts.Epidemiologicalstudiesshowthatincreasingdeforestationby4percentincreasestheincidenceofmalariaby50percent(Lozano,Pinedo-Cancino,Patz,2006).

Thus how human beings alter their surroundings and create new ones has a profound effect ontheexposuretodisease(seeTable8.3).

Table 8.3 Causes of Infectious Disease Emergence and Representative Disease Examples

Cause of Emergence Infectious Disease

Changing Environmental Conditions

Deforestation Malaria, hemorrhagic fever, rabies, Lyme disease

Agriculture and Irrigation Argentine hemorrhagic fever, Japanese encephalitis, Bolivian hemorrhagic fever, schistosomiasis, influenza (pandemic)

Dam building, road building Schistosomiasis, malaria, Rift Valley fever

Poor sanitation and hygiene Diarrheal diseases, malaria, schistosomiasis, lymphatic filariasis, river blindness, dengue, yellow fever, cholera, Guinea worm disease, Japanese encephalitis, salmonella, hemolytic uremic syndrome, cryptosporidiosis, giardiasis

Climate change Hanta virus, plague, malaria, schistosomiasis, other vector-borne disease

Demographic Changes

Urbanization Yellow fever, malaria, dengue, acute respiratory illness, plague, cholera

Increased trade, travel, migration Cholera, yellow fever, influenza, dengue, dengue hemorrhagic fever, pneumonia, HIV/AIDS, influenza

Deteriorating Social Conditions

Breakdown in Public Health Measles, diphtheria, pertussis, tuberculosis, cholera, influenza, HIV/AIDS, other sexually transmitted diseases

War and civil disorder Malaria, cholera, diphtheria, waterborne diseases

Increased sexual activity Hepatitis B and C, HIV/AIDS, other sexually transmitted diseases

Intravenous drug use HIV/AIDS

Overuse of antibiotics Antibiotic-resistant malaria, tuberculosis, staphylococci, pneumococci, enterococci, gonorrhea, others


Air-conditioning systems Legionnaires disease

Ultra-absorbent tampons Toxic shock syndrome

Unknown Streptococcus Group A, Ebola

Chapter8 • HealthandDisease 235

We can see another example of how human beings construct their exposure to disease in the yearly influenza epidemics that fly around the world.

Diseases of Human ecology: chickens, Pigs, and wild birds

Influenzaisaregularphenomenon;eachyear,theCentersforDiseaseControl(CDC)triestoestablish the strain of influenza that would circulate most widely that year, and develop a vaccine to protect people. The influenza virus is highly contagious, with every droplet emitted by an infectedpersoncontaining50,000to500,000virusparticles.Influenzaattackstheupperrespira-tory tract, targeting the hairlike cells that line the upper respiratory tract, destroying them, and allowing infection to enter.

The first definitive description of influenza appeared in a.d. 1173 in Europe. The first pandemic,thatis,aworldwidespreadofthedisease,tookplacein1580(Crosby1976),spread-ing fromAsia to Africa and ultimately North America. There were likely some six to ninepandemicsfrom1600tothedeadlypandemicof1918.Thatepidemickilledfrom50millionto100 million people worldwide, almost 700,000 in the United States alone. Some countries were devastated;Ghanalost5percentofitspopulationandWesternSamoa20percent.Therewerealsoseriousepidemicsin1957–1958inwhich70,000diedintheUnitedStatesalone.TheCDCestimates that even in a normal flu season 200,000 Americans are hospitalized and 38,000 die, most of whom are over sixty-five.

But what are the chances of another epidemic on the scale of the 1918 influenza, and how deadly would it be? A flu as deadly as the 1918 variety would probably kill some 2 million in the UnitedStatesalone,whiletheCDCestimatesthata“medium-levelepidemic”wouldhospital-ize740,000peopleandkill207,000.Somemorerecentinfluenzastrains,suchastheso-called“avian”or“birdflu”(H5N1), if itmaintainedthe30percentmortalityrateevidencedamongthose who contacted it, would kill 16 million people. And if it could spread as easily as the more recentH1N1or“swineflu,”itcouldbeevenmorelethal.But what is influenza, where does it come from, and how does human behavior, particularly the expansion of trade, contribute to its occurrence and spread?

The origin of influenza: avian flu and H1n1

Influenza, generally, is a perfect example of a disease of human ecology, involving the transmis-sion of genetic material between wild aquatic birds such as migratory ducks; herons and geese; domestic fowl such as chickens, ducks, and turkeys; domesticated mammals, largely pigs and sometimes horses; and human beings. The influenza virus usually originates in wild birds and does them no harm. As the birds migrate, they can pass on the viruses to domesticated birds via feces,orduringcompetitionsoverterritory,food,orwater(seeGarrett2005).Thedomesticfowlcan then spread the virus to other domestic animals, such as pigs, from where it can then spread to human beings. However, it can also spread directly to human beings from wild or domestic birds,aswasthecasewithH5N1,avianflu.

Asia, particularly southern China, has always been a major incubator of influenza for a number of reasons. First, farms commonly combine large numbers of domestic fowl with pigs in pens surrounding people’s homes, providing opportunities for the passage of a virus from birds to pigs and to humans. Second, China’s dense population has altered the migration routes of wild birds, forcing them to seek food and water in farms, industrial sites, or public parks. But, as we will see, the increased global demand for meat is creating incubators of disease all over the world.

The key to understanding the spread of a flu virus from one species to another and its ability to alter its form regularly lies in its genetic structure. The viruses are made of eight genes composedofRNAwrappedlooselyinproteins.Eachgeneoftheinfluenzaviruscontainsacodethatproducestwosurfaceproteins,onecalledhemagglutinin(H),whichactsasagrapplinghookto anchor the virus to receptor cells of the host. From there it enters the host cell and begins to

236 PartII • TheGlobalImpactoftheCultureofCapitalism

reproduce. The other protein is neuramindase (N),whichenablesthevirustomovefromcellto cell in the host. There are fifteen different HsandninedifferentNs,whichareused toclassify each subtype of influenza virus. Thus itwasanN1H1subtypethatcausedthe1918pandemic, and an H5N1 subtype that wasresponsible for the1997epidemic (Sherman2006:398;Barnes2005:341).

The influenza virus reproduces sloppily and can fall apart and easily absorb genetic material from whatever cells it is infecting. Thus, if another virus is present, the material from one can recombine with the other, and it may switch from being an avian virus to a pig virus, or from a pig virus to a human virus. Pigs generally act as the primary “mixers” for creating hybrid subtypes. They easily get infected by both human and bird subtypes of the same viruses, and when infected by both at the same time, the different subtypes can swap genetic segments to produce a hybrid virus(Barnes2005:343).Thegeneticchangethat enables a flu strain to jump from one animal species to another is called antigenic shift, illustrated in Figure 8.1.

The viruses also readily change to adapt to the immune properties of the host they infect. Thus each subtype can develop its own variants;differentvariantsoftheH1N1havepersisted in pig populations for decades, so that the subtypeH1N1 that caused the1918pandemic reemerged in a less deadly variety of H1N1 in 2009, causing the epidemic of“swine flu.” The ability to recombine, change, and reproduce rapidly is one of the influenza virus’ adaptive features, for if they remained the same, hosts would develop immunity and no longer be able to spread the virus along the wild bird/poultry/pig/human cycle and it would die out. Constant change, in other

words, provides a way around the hosts’ immune systems. Generally it seems that every twenty-fiveyearsaninfluenzavirusoccursforwhichthereisnoimmunity(Sherman2006:398).

The avian flu first was identified in Hong Kong in 1997, killing six people and sickening another eighteen. It rampaged through the Asian chicken populations killing 11 million chickens inVietnamandThailand,and,by2004,120millionchickenshaddiedorbeenexterminated,costingtheAsianpoultryindustrysome$15billion.By2005,itwasappearinginpigs.Humanswere generally infected by coming into contact with an infected bird. It was extremely virulent, killing some 30 percent of the people it infected. Another strain that appeared in 2003 killed 68 percent of its victims. Fortunately there were only a few suspected cases of human-to-human transmission, the others requiring direct contact with an infected bird. However, the fear is that

fiGure 8.1Antigenic ShiftSource: Used with permission. Michael Linkinhoker, Link Studio, LLC, and the National Institutes of Allergy and Infectious Diseases.

Chapter8 • HealthandDisease 237

given the propensity of the influenza virus to change and recombine, a more easily transmitted strain could emerge that could pass easily between human hosts, as in the case of “swine” or H1N1flu.

Swineflu,whichthroughFebruaryof2010infectedsome59millionAmericansandkilledanestimated12,000(seeTable8.4),wasfirstidentifiedinMarchof2009.Thefirstcaseswereidentified in La Gloria, Mexico, in a town adjacent to a hog farm or concentrated animal feed operation (CAFO).The first reports speculated thatH1N1originatedat theCAFO,but thosereports were dismissed as other cases appeared; however, Mexico suffered an immediate decline in tourist revenue as well as losses from closed shops and the cessation of other social activities.

Theactual storyof theemergenceof the recent strainofH1N1 is aperfect illustrationof the way the influenza virus is constantly reconstructing itself and exploiting opportunities createdbygloballifestylestorecombineinavailablehosts.TracingthepathofH1N1,LaurieGarrett(2009)beginsin2005inaWisconsinslaughterhousewhereateenagedboyhelpedhisbrother-in-law butcher thirty-one pigs and a week later pin down another pig while it was gutted. PreparingforThanksgiving,thefamilyboughtachickenandkeptitintheirhome.OnDecember7 the boy came down with flu; on visiting a local clinic, he fully recovered. As Garrett describes the incident, it would have gone unnoticed except that the influenza virus that infected the boy was unlike any other seen, being a combination of a wild-bird flu, a human type, and a variant found in pigs. When a five-year-old in La Gloria, Mexico, was infected in 2009, it was found to be similar to the swine/bird/human flu first identified in Wisconsin. To illustrate the global reach of the influenzavirus,CDCscientists discovered that theH1N1hadpiecesof geneticmate-rialthatmatchedahumanflufirstindentifiedinNewCaldoniain1999,alongwithtwoswine

Table 8.4 CDC Estimates of 2009 H1N1 Cases and Related Hospitalizations and Deaths in the United States from April 2009 to February 13, 2010, by Age Group

2009 H1N1 Mid-Level Range1 Estimated Range1


0 to 17 years ~19 million ~14 million to ~28 million

18 to 64 years ~34 million ~24 million to ~50 million

65 years and older ~6 million ~4 million to ~8 million

Cases Total ~59 million ~42 million to ~86 million


0 to 17 years ~85,000 ~60,000 to ~125,000

18 to 64 years ~154,000 ~109,000 to ~226,000

65 years and older ~26,000 ~19,000 to ~38,000

Hospitalizations Total ~265,000 ~188,000 to ~389,000


0 to 17 years ~1,250 ~890 to ~1,840

18 to 64 years ~9,200 ~6,530 to ~13,500

65 years and older ~1,550 ~1,100 to ~2,280

Deaths Total ~12,000 ~8,520 to ~17,620

1Deathshavebeenroundedtothenearestten.Hospitalizationshavebeenroundedtothenearestthousand,andcaseshavebeen rounded to the nearest million.


238 PartII • TheGlobalImpactoftheCultureofCapitalism

types identified in Asia and Wisconsin, and an unknown avian-flu virus. Furthermore, scientists believe that there are genetic elements of the virus that can be traced back to an Indiana pig farm in 1987. In other words, the teenager in Wisconsin was infected by a new virus with bits of genes from three species—birds, pigs, and humans—and the virus had been emerging for possibly twenty years.

The virus also spread from humans to pigs; in 2006 herds in the Midwest were infected withatypeofH1N1thatwasaclosematchoftheWisconsinH1N1variety.

Themostsignificantfeatureoftheemergenceofthe2009varietyofH1N1istheextenttowhich human beings have created industrial environments for the raising of pigs, cattle, chickens, and other animals that serve as disease sinks for the mixing and emergence of new diseases with the potential for creating pandemics in the human populations.

Furthermore, large-scale animal-raising operations are continuing to grow in response to the growing demand for meat in the emerging economies of the world such as China, India, and Brazil. In 1980, per capita meat consumption in China was about forty-four pounds a year: It now tops 110 pounds. In 1983 the world consumed 152 million tons of meat a year. By 1997, consump-tion had risen to 233 million tons. And the United Nations Food and Agriculture Organization estimates that by 2020 world consumption could top 386 million tons of pork, chicken, beef, and farmed fish. And that means more large-scale animal-raising operations and greater opportunities for various strains of bird, pig, and human viruses to recombine and produce new varieties that could be deadlier than any other we have seen, perhaps rivaling the 1918 pandemic.

aiDs anD THe culTure of caPiTalism

WementionedearlierthatAIDSisverymuchthesignaturediseaseofourage.Bythiswemeanthe conditions for its development and spread were essentially created by our patterns of beliefs, attitudes,andbehaviors.AIDSburstontheworldin1981,whenphysiciansinSanFranciscoandNewYorkbegantoencountersymptomsinyoungmenthateitherhadbeenseenpreviouslyinolder men or were so rare most physicians had never seen them. They turned out to be oppor-tunistic infections, such as rare forms of pneumonia, cancer, and other diseases that attacked bodies whose immune systems had been destroyed. The new disease was first called gay-related immunodeficiency disease (GRID) because of its early diagnosis among gaymen, butwhenit was acknowledged to occur in heterosexual populations, the name was changed in 1982 to acquired immunodeficiency syndrome(AIDS).In1983thediseaseappearedinZaire,andsomeEuropean researchers thought they had unearthed cases in European hospitals as early as 1967 andpossibly1959.

Theearly1980swasaturbulenttimeforAIDS.Researcherswerecompetingtobethefirsttoisolateandidentifythevirus.ResearchersinEuropeandAfricacouldnotpublishtheirarticlesin the leading medical journals because the peer review panels did not believe the disease was transmitted heterosexually and claimed the researchers had missed some other mode of transmis-sion.TheReaganadministration,whichhadmademillionsofdollarsavailableforresearchinLegionnaires’disease,wasreluctanttoreleasefundsforAIDSresearch,education,andservices.Leaders of the religious right in the United States opposed using federal funds for a disease theyclaimedwasGod’sjudgmentagainstimmoralityandcorruption.PatRobertson,aBaptistminister, founderof theChristianBroadcastingNetwork, andpresidential candidate in1988,claimedscientistswere“frankly lying”when they saidAIDScouldbe spreadheterosexuallyandthatcondomswouldpreventinfection.Inthemeantime,AIDScontinuedtospreadamongheterosexuals, gay men, intravenous drug users, and hemophiliacs given HIV-infected transfu-sions(Garrett1994:469).

As of 2008, an estimated 28million people have died fromAIDS since the epidemicbegan,andtheJointUnitedNationProgramonHIV/AIDS(UNAIDS)andtheWHOestimatethat therearepresentlyalmost34millionto40millionpeopleworldwideinfectedwithHIV/AIDS(seeTable8.5).

Chapter8 • HealthandDisease 239

Table 8.5 Region HIV and AIDS Statistics, 2001 and 2008

Adults and Children Living

with HIV

Adults and Children Newly

Infected with HIV

Adult Prevalence (percent)

Adult and Child Deaths Due to AIDS

Sub-Saharan Africa

2008 22.4 million 1.9 million 5.2 1.4 million

2001 19.7 million 2.3 million 5.8 1.4 million

Middle East and North Africa

2008 310,000 35,000 0.2 20,000

2001 200,000 30,000 0.2 11,000

South and Southeast Asia

2008 3.8 million 280,000 0.3 270,000

2001 4.0 million 310,000 0.3 260,000

East Africa

2008 850,000 75,000 <0.1 59,000

2001 560,000 99,000 <0.1 22,000


2008 59,000 3,900 0.3 2,000

2001 36,000 5,900 0.2 <1,000

Latin America

2008 2.0 million 170,000 0.6 77,000

2001 1.6 million 150,000 0.5 66,000


2008 240,000 20,000 1.0 12,000

2001 220,000 21,000 1.1 20,000

Eastern Europe and Central Asia

2008 1.5 million 110,000 0.7 87,000

2001 900,000 280,000 0.5 26,000

Western and Central Europe

2008 850,000 30,000 0.3 13,000

2001 660,000 40,000 0.2 7,900

North America

2008 1.4 million 55,000 0.6 25,000

2001 1.2 million 52,000 0.6 19,000


2008 33.4 million 2.7 million 0.8 2.0 million

2001 29.0 million 3.2 million 0.8 1.9 million


240 PartII • TheGlobalImpactoftheCultureofCapitalism

Sub-SaharanAfricahasthehighestratewithover22millioninfected,orover5percentof the population, whereas Eastern Europe and South and Southeast Asia have the fastest rate of growth.InNorthAmerica,thereareover1.4millioncasesofHIV.Thistotalisheavilyskewedtoward the poorest segments of the population with the incidence of AIDS being 6.5  timesgreater for blacks and four times greater for Hispanics than for whites.

WenowthinkweknowtheoriginofAIDS—thatitlikelycrossedoverfromnonhumanprimates in Central and West Africa sometime after World War II, infecting only a few people until the late 1970s, when it made its breakthrough worldwide. But there are many questions we need to explore to understand the effects of human culture on the disease. For example, What features of global culture influenced the spread of the disease? What features of our culture determined the people most at risk for AIDS? How did our culture influence the way people choose to react to the epidemic and to those affected by it?

How Did the Disease spread?

AIDSrevealstheextenttowhichweareinterconnectedinglobalspace.AsgeographerPeterGould(1993:66–69)noted,weliveinaworldinwhichNewYorkisclosertoSanFranciscothan it is to towns 200 miles away; in which Los Angeles is closer to Miami and Houston than itistotownsinNevada;andinwhichKinshasa,Zaire,isclosertoParisthantovillagesinthecenter of the country. Gould meant that people located at the hubs of the capitalist world system, those cities connected by rapid air travel, are more likely to come into contact with each other than they are with people located physically much closer to them. Viewed another way, patterns of contact are characterized by what Gould called “hierarchical diffusion” rather than “spatially contiguousdiffusion.”InthehierarchicaldiffusionthatcharacterizesAIDS,or“AIDSspace,”asGould called it, the disease jumps from travel hub to travel hub.

This is not the first time global space has been redefined by revolutions in trade and travel. In the earlier eras of sea travel, seaports became economic hubs as well as the major points of distribution for disease. Today,with rapid air travel, economic centers such as Tokyo,NewYork,Paris,Jakarta,SanFrancisco,London,SãoPaulo,Bombay,Johannesburg,andMoscowform the geographic center of the world system and, as a consequence, the epicenters of the spreadofAIDS.

Withtheexceptionofinfectedbloodsupplies,AIDShastobecarriedfromplacetoplacebypeopleandtransmitteddirectly.ThereisnovectorinvolvedinAIDSasinplague,malaria,ordengue. But human travel provides an effective means of transmission. Therefore, to understand thespreadofAIDS,weneedtoaskwhyinthecultureofcapitalismdopeopletravel?Generally,they travel for one of four reasons: tourism, business, labor migration, and war, all of which have hadamajorroleinthespreadanddistributionofAIDS.

Tourism is essentially a product of industrial capitalism of the nineteenth century. Although the wealthy of Europe had their country estates and cottages for centuries, travel and tourism were relativelynewphenomena for theemergingmiddleclass (Hobsbawm1975:203).Madepossible by the development of steamboats and railways, the tourist industry grew through-out the nineteenth and early twentieth centuries. For the British middle class, holiday travel became a serious enterprise in the 1860s and 1870s; this transformed the British coastlines with promenades and piers. In Europe, mountain resorts such as Biarritz were becoming fashionable. Tours through Europe became popular, creating an industry and a form of travel that was prob-ablyunique.Forthepoor,daytripsdominated;AmericanresortssuchasConeyIslandinNewYork became popular for new immigrants to the United States. In the twentieth century, tourism evolved into a major industry, and most people, certainly in the core, have at one time or another been tourists. Tourism is one of the world’s largest industries with tremendous annual growth rates.Theindustry’sgainsgrewto$439billionin1998(PeraandMcLaren1999).

Tourism has always been associated with disease, as any traveler can tell you who has sampled food and water laden with bacteria to which his or her system had no resistance. It is

Chapter8 • HealthandDisease 241

likely that such perils have confronted travel-ersforcenturies.ButintheageofAIDS,itisnot only the traveler who is at risk, but also the people in the host country who are equally susceptible.

We have no figures on the number of peoplewhohavecontractedAIDSasacon-sequence of tourist travel, but researchers suggest that it has had a major impact on at least two countries hit the hardest by the epi-demic, Haiti and Thailand. One reason for their susceptibility is that both were targeted for “sex tours.”

Anthropologist and physician Paul Farmer (1992) suggested that the history ofHIV/AIDSinHaitiislinkedtoitshistoryasa tourist destination. In the 1970s, Haiti, the poorest country in the Western Hemisphere, becameamajortouristattractionwiththeclosingofCubain1959toAmericantourists.TouristvisitstoHaitiincreasedto100,000peryearby1970andto143,538by1979.(Later,thetouristindustrywasacasualtyoftheHaitianAIDSepidemic:Touristvisitsdroppedto75,000inthewinterof1981–1982andtobelow10,000thefollowingwinter.)

Tourism in Haiti brought with it an increase in institutionalized prostitution. Poverty and 60 percent to 80 percent unemployment rates made prostitution for males and females one of the only economic alternatives available. The country, particularly the Carrefour area of the capital city Port-au-Prince, gained a reputation for cheap sex. Travel guides published for homosexual men recommended Haiti to tourists.

WhetherAIDSwasbroughttoHaitibyAmericantourists,assomeresearcherssuggest,orin some other fashion is a matter of debate, but it is clear that tourism accelerated the spread of the disease among Haitians and, probably, among tourists. By the late 1980s, the rate of HIV in hotel workers catering to tourists was 12 percent, and Haiti had one of the highest rates of infec-tionintheworld.ButevenwhenHaitianworkersbecameawareofAIDS,theyseemedtotreatitasjustan“occupationalhazard”(Farmer1992:145).


Thailand had for years an active trade in both drugs and prostitution, trades that acceler-ated when Thailand became a major rest and recreation zone for American military personnel during the Vietnam War. Both drugs and prostitution were, and continue to be, major sources of foreignexchangeforThailand’seconomy.By1990,Thailandwasattracting5.3million tour-ists a year, with a high proportion of single men from Malaysia, Japan, and Taiwan and with special “sex tours” arriving in Bangkok from Japan, the Middle East, and Europe, particularly Germany.As a consequence of the growth in the sex industry, there are 500,000 to 800,000prostitutes representing some 10 percent of the female population between the ages of fifteen andtwenty-four.Intheearly1990sinsomeareasofBangkok,therewasanAIDSinfectionrateof 90 percent.

Probably because of the economic importance of the sex industry, particularly for attracting tourists, government authorities in Thailand were slow to respond to the threatened epidemic. As casesbegantoincreasein1987,thegovernmentdecidednottolaunchananti-AIDScampaign

Advertisements for sex tours, such as this one in Thailand, attract tourists from Europe, North America, and other parts of Asia and create fertile breeding grounds for the AIDS virus and other sexually transmitted disease. (Andrew Aitchison/In Pictures/Corbis.)

242 PartII • TheGlobalImpactoftheCultureofCapitalism

forfearof“incitingpanic.”By1989,0.5percentofallpregnantwomen were HIV-seropositive, with some northern provinces reporting rates of 3 percent. In 1991 the government reevalu-ated its policy and noted again that they did not want to create panic. A Bangkok newspaper reported that HIV/AIDS wasspread only by anal sex and intravenous drug use, when in fact there were forty times more heterosexual cases than homosex-ualcasesreported.TheWHOestimatedthat,by1992,450,000people in Thailand were infected.

Another form of travel that characterizes the capitalist cul-ture is labor migration. At least since the increase in slave trade in the seventeenth and eighteenth centuries, the world economy has required massive shifts of laborers from one area to another. Although it is difficult to determine exactly the extent of the

worldwide transmissionofAIDSbymigratingworkers, there isconsiderableevidence thatthis typeof travelwasamajorcauseofAIDStransmission inAfrica.Maleworkers travelfrom rural areas to urban areas in search of work, sometimes visiting prostitutes whose infec-tion rate in some areas approaches 90 percent and sometimes bringing the disease back to their rural villages.

Commercial andbusiness travelwere also instrumental in the spreadofAIDS.Theroutes of infection in Africa pass along well-traveled truck and commercial transportation routes.Thenorth–southalignmentofAIDSstartsatDjiboutiatthemouthoftheRedSea,the port city and railway terminal for the city of Addis Ababa, the capital of Ethiopia, to which goods, andAIDS, flow. In 1991 some 50 percent to 60 percent of prostitutes and

1 percent of the general population were reportedly infected with HIV. In the Sudan, 80 percent of the “bar girls” were seropositive for HIV-1. From Uganda to Mozambique, samples of truck drivers indicate that 30 percent to 80 percent are infected. Estimates are that Tanzania has 1.4 millioninfectedpeopleofatotalpopulationof18million,Zimbabwehas1.5million,andKenya1.6 million.ThehighwaybetweenMalawiandDurban,SouthAfrica,isknownasthe“HighwayofDeath,”truckershavinganinfectionrateof90percent(Gould1993:75).

Patterns ofAIDS distribution seem to follow commercial routes inNorthAmerica aswell. Paul Farmer (1992:149) noted that the incidence ofAIDS in theCaribbean correlateswith the degree to which a country is economically integrated into the “West Atlantic system.” ExcludingPuertoRicobecauseitisnotanindependentcountry,thecountrieswiththehighestratesofAIDS—theDominicanRepublic,theBahamas,Trinidad/Tobago,Mexico,andHaiti—are also the countries most dependent on trade with the United States and most linked to the Americaneconomy.ThecountrywiththehighestratesofAIDS—Haiti—wasmostdependenton U.S. exports.

Finally, the movement of soldiers and refugees precipitated by conflict played a role in the spread ofAIDS.Researchers speculating about the origins ofAIDS and the factors thatmay have contributed to its breakout in Central and East Africa have concluded that something dramaticmusthavehappenedaround1975tocausetheemergenceoftheepidemic.Theperiodof1970to1975wascharacterizedbyguerrillawarfare,civilwar,tribalconflicts,massrefugeemigrations, and striking dictatorial atrocities. Laurie Garrett suggested that such social upheaval mayhaveaffectedthecourseofAIDSbothdirectlyandindirectly.Forexample,mostAfricanconflict was characterized by rival forces trying to cripple each other economically, politically, socially, spiritually, and militarily. In such conflicts, civilian casualties are high. In any number ofmilitarycampaignsofthepasttwotothreedecadesinCentralAfrica,rapewasused(asitwasinBosnia)systematicallytoterrorizeanddominatetheenemy.Somearmieshavetestedupto50percentHIV-positive.Otherhumanactivitiesresultingfromsocialdisruption—includingincreased multiple-partner sexual activity, famine and malnutrition that further stressed immune systems, large-scale migrations and concentrations of people in refugee camps, increased













Chapter8 • HealthandDisease 243

prostitution, and destruction of health care services—could have furtherspreadthedisease(Garrett1994:367–368).

who Gets infected with aiDs?

ReneDubos(1968)wroteinthe1950sand1960softhespecialvulnerability of the poor to infections; malnutrition, substan-dard housing, dense population, and lack of access to health care all promote the spread of infectious disease. Paul Farmer in Infections and Inequality(1999)documentsthelinkbetweeneconomic inequality and susceptibility to infectious disease. Certainly poverty played a role in the spread of tuberculosis, cholera, and syphilis.ButAIDShas affected the economicallymarginalized as well as those who are socially and politically marginalized—homosexuals, women, and children.

PublicandgovernmentalresponsestotheAIDSepidemic,especially in the United States, were greatly influenced by the mistaken assumption that it was a disease of homosexual men, in spite of the fact that there was clear evidence of heterosex-ual transmission in the United States; Europe; and particularly Africa, where it was almost exclusively transmitted by hetero-sexual relations. We may never know to what extent the asso-ciation of the disease with a socially marginalized portion of American society delayed research and education efforts, but it is clear that it didn’t help.

It is also clear that the poor, globally and in the United States, have been the most frequent victims of the disease. Africa, the poorest area of the world, has by far the highest incidence of AIDS, whereas Eastern Europe, economically devastated with the collapse of socialist economies and cutbacks in health services, has the highestrateofgrowthinHIV/AIDS.Poorcountriesinotherareasoftheworldaretheothersmost affected. For a particularly apt illustration of a poor and socially marginalized country that suffersdisproportionatelywithAIDS,let’sreturntoHaiti.

Haiti is very much a creation of the capitalist world system. In the sixteenth and seventeenth centuries, the indigenous population (theTaino)were exterminated and the country resettledwith African slaves ruled by a European elite. Haiti passed from Spain to France in 1697 and was renamedSaint-Dominique.In1804,aslaverevoltledbyToussaintL’Ouverturesucceededindefeating the French, establishing the country of Haiti, the first, as Paul Farmer referred to it, of the Third World countries.

The new country found itself in a world hostile to the idea of self-governing blacks, a nightmare to every country in which slavery endured, particularly the United States. Every effort was made to undermine black rule in Haiti. The French demanded that Haiti compensate planters for the loss of land, and in the nineteenth century, European gunboats would periodically appear in Haitian ports demanding compensation. By 1900, 80 percent of national revenue was used to pay off international debts, and by the late 1920s, Haiti was being advertised in Financial America as a place where “easily directed” Haitian labor could be had for twenty cents per day, as opposed to three dollars per day in Panama.

American domination has continued throughout the twentieth century, as Haiti has lived with a series of despotic rulers supported by the United States. This history left Haiti in 1983 with anannualpercapitaincomeof$315overalland$100inthecountryside.Theagriculturalsitua-tion was so bad that Haiti was a net importer of food, even sugar. Even when Haiti had promise asarecreationalplaygroundforotherNorthAmericans,thetouristindustrycollapsedbecauseof

Women, particularly in Africa, comprise the majority of AIDS victims. (imagebroker/Alamy.)

244 PartII • TheGlobalImpactoftheCultureofCapitalism

Haiti’sreputationastheoriginatorofAIDS.TherewerefewavenuesoutofpovertyinHaiti.The60 percent unemployment rate combined with the country’s dependence on the United States set thestageforwhatFarmer(1992:189–190)calledthe“WestAtlanticpandemic.”

AIDSisnotonlyamarkerofpoverty,butitisbecomingamarkerofgenderandageaswell. We saw in our discussion of famine and hunger that women and children are particularly atrisk.IntheinstanceofAIDS,womenworldwiderepresentthemajorityofallreportedcases.The fact that women, who were at the fringe of the epidemic in the mid-1980s, have frequently become victims reflects the role of women in global capitalist culture. Women seem to become infected at younger ages. Inmany countries, 60 percent of newAIDS infections are amongwomen between the ages of fifteen and twenty-four; in surveys of several African and Asian countries,womenyounger thantwenty-fiveaccountfor30percentofnewAIDScases,com-paredwith15percentformenyoungerthantwenty-five.

Women contract the disease largely through heterosexual intercourse; many of these are among women who are monogamous but have male partners who are not. This is in part because of the sexual subordination of women in many countries where men initiate sexual relations and women, especially wives, have little say. The attitudes toward women and sex in many countries inhibit conversation about sexualmatters andvirtuallyprohibitAIDSeducational campaignsdirected toward women. Furthermore, education is hampered by the higher illiteracy rates among women in many countries. Even in countries with well-developed campaigns to educate women abouttheriskofAIDS,menstilloftenresistcondomusebecauseofdecreasedsensitivity,igno-rance about how to use them, or fear that their use will cause sterility.

Women also contract the disease through prostitution, itself a reflection of the limited options available towomen, especially in poor countries.As LaurieGarrett (1994:368) saidaboutAIDSandprostitutioninUganda,

[a]s a business, prostitution was second only to the black market. For most women there were only two choices in life: have babies and grow food without assistance from men, livestock, or machinery, or exchange sex for money at black-market rates.

Finally,themorewomenareinfectedwithAIDS,themorelikelychildrenwillbeinfected.Childrenareatriskofacquiringthediseaseatbirth.AIDScanbetransmittedbyinfectedhypo-dermic needles; yet, many countries that depend on intravenous drugs are too poor to afford new needles. In someAfrican countries, needles are reused. Intravenous transmissionofAIDS tochildrenisnotsolelyaproblemoftheperiphery.InRussia,thecollapseofcommunismandthesocial and economic chaos that followed virtually destroyed the country’s health care system. Syringes were unavailable, and medical personnel, especially in rural areas, were forced to use thesamesyringesagainandagain,upto400timesinsomecases.In1988,AIDSemergedinElistya,capitalof theKalmykRepublicon theCaspianSea.Ababyhadbeeninfectedbyitsmother. The baby was treated by staff who used the same syringes to draw blood samples and administer drugs to all the babies in the hospital’s nursery for three months; HIV was unknow-inglyinjectedintoallthebabiesonthewardandsomeoftheirmothers(Garrett1994:501).

Socially marginalized members of the capitalist world system face another danger: Once infected with HIV, they are the ones least likely to receive treatment or to receive information to enablethemtotakemeasurestoavoidtheonsetofAIDS.AsAIDSresearcherRenéeSabatier(Garrett1994:475)notedinreferencetoAIDSeducationcampaigns,

I think there is a very real danger that we’re going to end up as a [world] society divided between those who were able to inform themselves first and those who were informed late. Those who have access to information and health care, and those who don’t. Those who are able to change, and those who aren’t. I think there is a real dangerofhalfofusturningintoAIDSvoyeurs,standingaroundwatchingothersdie.

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The announcement in the summer of 1996 of a new drug treatment that restores the body’s immune system and holds theAIDS virus at bay is a further development in the ghettoiza-tionofAIDS.Althoughtheannouncementwasgreetedwithgreatenthusiasm,andtheuseofthedrughascutmortalityratesintheUnitedStatesby75percent,thetreatmentcostsatleast$10,000 to $20,000 per year and is, therefore, beyond the reach of the world’s poor. When South AfricamovedtomakegenericversionsofHIV/AIDSdrugs,orproposedimportingthedrugsfromcountrieswiththelowestprices,actionsthatcouldhavehelpedcutthecosts50percentto90 percent, the United States raised objections and drug companies sued, although, under heavy publicpressure,withdrewthethreats.Drugs,however,remainlargelyunavailabletothepoor.Of the 1 million people in Malawi who are HIV-positive, only thirty are on the new drug therapy (Finkel2000).

who Gets blamed?

We saw the phenomenon of blaming the victim when we examined population growth, poverty, hunger, and environmental degradation. Problems generated by core exploitation of the periph-ery are blamed on the periphery itself. However, nowhere is the phenomenon of blaming the victimmoreclearlyillustratedthaninthecaseofHIV/AIDS,andnowherewasthatmoreclearthaninthecaseofHaiti.WhentheAIDSepidemicwasidentifiedintheearly1980s,HaitianswithAIDSwerea“wildcard”:theydidn’tfitthecategoriesofhomosexuals,hemophiliacs,andheroin users. So they were added as a whole category, thus completing the early four-H club (homosexuals,hemophiliacs,heroinusers,andHaitians).Butthiswasclearlyracist:Therewasno reason, based on some thirty-four cases, to place all Haitians in a risk group. This would be analogoustoclaimingthatallSanFranciscansorallNewYorkerswereatspecialrisktocontractandspreadthedisease.Riskdesignationwasakintobeinglabeledacarrier.Then,inaleapthatsurprisedfewHaitians,AIDSwassaidtohaveoriginatedinHaiti.

BruceChabneroftheNationalCancerInstitutewasquotedin1982assaying,“HomosexualsinNewYorktakevacationsinHaiti,andwesuspectthatthismaybeanepidemicHaitianvirusthatwasbroughtbacktothehomosexualpopulationintheUnitedStates”(Farmer1992:201).This epidemic of blame led to widespread discrimination against Haitians in job hiring and a rapid decline in the Haitian tourist industry.

TheHaitiangovernmentwasangrywiththeCDCbecause,evenwhenitbecameevidentthattherateofinfectionwashigherinotherCaribbeanIslandsandmostU.S.cities,theCDCrefusedtoabandonthedesignationofHaitiansasahigh-riskgroup.In1985theCDCfinallyremoved the designation but without comment, refusing to admit it made an error. Then in 1990, theFDAruledthatHaitianscouldnotdonateblood.Itwasanabsurdruling;asoneBostonnews-papereditorialpointedout, if theFDAwasconsistent, itwouldhavebanneddonations fromall San Franciscans,NewYorkers,Bostonians, and emigrants from otherCaribbean Islands,someofwhomhadratesofAIDS/HIVasmuchastentimesgreater thanHaiti’s(seeFarmer1992:220).

Why was Haiti singled out? According to Paul Farmer, largely because the U.S. folk model of Haitians included images of superstitious natives, blacks, immigrants, and the like thatsymbolizedthestigmaassociatedwithAIDS.Themodelwasdriventosomeextentbythemedia. The New York Times wrote that “Haitian voodooists may be unsuspectingly infected with AIDSbyingestion,inhalation,ordermalcontactwithcontaminatedritualsubstances,aswellasbysexualactivity”(Farmer1992:3).Thisviewwasfurtheredbythemedicalcommunity.JeffreyViera, senior author of the paper that put Haitians at risk, blamed the media for stigmatizing Haitians, but he himself made reference to voodoo rituals, the drinking of menstrual blood, and the like. An article in the Journal of the American Medical Associationentitled“NightoftheLivingDead” considered these voodoo origin theories, askingwhether necromantic zombiestransmitHIV/AIDS (Farmer1992:3).BlamingHaiti forAIDSwasaclassiccaseofblamingthe victim.

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The view from the periphery concerning the origins ofAIDSwas quite different thanthe view from the core. As researchers focused on Africa as the origin of the disease, African officials became sensitive to what they saw as a Western campaign to blame their countries for theepidemic.OneresultwasofficialgovernmentdenialsthattherewasanyAIDSinAfricancountries, even after the epidemic had clearly become established. One African health minister wasfiredafteradmittingtointernationalhealthagenciesthatAIDSwaspresentinhiscountry.Not surprisingly, conspiracy theories abounded.One theorywas that theAmericanCIAhadintroducedthedisease;another,popularalsoincorecountries,wasthatAIDSwastheresultofAmerican germ warfare experiments gone awry.


When asked if they thought the United States did what they did on purpose, Haitian teen-agersintheUnitedStatesalmostuniversallysaidyes.OtherssaidthatAIDSwascreatedinU.S.laboratories.

Paul Farmer (1992:58), in AIDS and Accusation, concluded that questions asked by Haitians and Americans such as

IsAIDSaproductofNorthAmericanimperialism?CanonepersonsendanAIDSdeath to another through sorcery? Are Haitians a special AIDS risk group? Are“boat people” disease-ridden and a risk to the health of U.S. citizens? … under-score several of the West Atlantic pandemic’s central dynamics—blame, search for accountability,accusation,andracism—thathaveshapedbothresponses toAIDSand the epidemiology of a new virus.


The disease factors that we examined in this chapter have practical consequences. For example, knowledge of the effects of culturally defined human behavior can help us predict as well as treat disease. Might more careful application of this principle have made a difference? Could wehaveanticipatedtheemergenceofAIDS,asmanymedicalanthropologistsonceposited?Would we have let multidrug-resistant tuberculosis get out of hand? Would we have allowed so many antibiotic-resistant strains of disease to develop or relied so much on antibiotics? Would drug-resistant malaria be out of control? Would new diseases such as Lyme disease spread so quickly?

Even if we were to predict, as some scientists did, the dangers of overuse of antibiotics and otherthings,couldwereallyhavedonesomethingaboutit?EvenknowingthedangersofAIDS,the U.S. government moved slowly in releasing research funds. Even when it was known that analsexcouldtransmitAIDS,manyinthehomosexualcommunityrefusedtoheedadviceforsafesex,believingAIDSwassimplyatactictodiscredittheirlifestyles.

We continue to create “disease sinks,” populations of poor and marginalized people among whom infectious pathogens thrive and who may serve as breeding grounds for new diseases. If there was some omnipotent microbe responsible for the survival and spread of all infectious pathogens, it could hardly improve on the actions of human beings in the culture of capitalism whose cumulative behavioral choices relegate some of their numbers to these sinks.

The lesson is that although we must be aware of how our behavior puts us in danger of contracting disease, we must also be aware of the factors that promote adoption or rejec-tion of therapeutic regimes necessary to lower our risk of becoming ill, cure us, or inhibit the creation of new and more deadly strains of disease. If biologist Paul Ewald is correct and diseases become more lethal the more easily they are spread, then given the increase in

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travel, the increase in the number of poor, the cutback of medical and public health services for structural adjustment programs, the ecological destruction of habitats such as rain forests, and the emergence of drug-resistant strains of new and old killers, we are truly on the verge ofapandemiconascaleofthatwhichstruckthepeoplesofNorthandSouthAmericainthesixteenth and seventeenth centuries.

What can be done? That is difficult to say, but it seems that political, religious, and social associations that can marshal forces against largely imaginary social, political, and religious enemies certainly could rally populations to cope with the pathogens that threaten to over-whelm us.


There is a museum exhibit in Jakarta, Indonesia, of a Javanese wedding; the guests are arranged around the bride and groom, each dressed to represent a different Indonesian ethnic group, of which there are hundreds. The exhibit is reminiscent of an early nine-

teenth-century painting we mentioned earlier by the British painter Sir David Wilkie, Chelsea Pensioners Reading the Gazette of the Battle of Waterloo, in which all the various groups that made up the British nation-state and empire—Welsh, Scottish, Irish, black, and so on—are depicted together reading about Wellington’s victory over Napoleon. Indonesia is one of the most culturally diverse countries in the world. It is also one of the most officially tolerant toward ethnic diversity. Ethnic tolerance is incorporated into education programs, and “hate speech” is a crime. But it is a tolerance with definite limits. Java is the dominant island in Indonesia, and the museum exhibit suggests, said Anna Lowenhaupt Tsing (1993:24), that minority groups are “invited” into the nation, but only as long as they bow to Javanese standards.

One of the casualties of the expansion of the culture of capitalism is cultural diversity. As noted in Chapter 4, one of the functions of the nation-state is to integrate, peacefully if possible, violently if necessary, the diverse peoples within its borders into a common culture. At best,

C h a p t e r

9 Indigenous Groups and Ethnic Conflict

At the present time indigenous societies that believe it is immoral not to share with one’s kin or with those less fortunate than oneself are … considered backward, for this surely hampers capital accu-mulation and therefore “progress” as the modern world defines it.

—David Maybury-Lewis, Indigenous Peoples, Ethnic Groups, and the State

Official statements frequently justify the extension of government control over tribal populations as an effort to bring them peace,

health, happiness, and other benefits of civilization.… But, undoubt-edly, the extension of government control was directly related to

protecting the economic interests of nonindigenous peoples moving into formerly exclusive tribal areas.

—John Bodley, Victims of Progress

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minority cultures are integrated into the larger culture in superficial ways—dress, art, dance, music, and food are maintained and represented as the culture itself. At worst, however, poli-cies of the nation-state may lead to ethnocide, the destruction of culture, or, in more extreme instances, genocide, the destruction of a people.

The dilemma of minority groups in the modern nation-state is particularly evident in Indonesia because it officially recognizes and celebrates diversity, but this does not stop the nation-state from systematically destroying the culture of indigenous peoples. In her book In the Realm of the Diamond Queen (1993), Anna Lowenhaupt Tsing described the fate of the Meratus Dyak, who subsist on swidden agriculture and gathering and hunting, and, although relatively isolated in the Meratus mountains, they frequently trade with other groups. Their culture requires that they frequently move to establish new garden plots. Individuals also travel to maintain political contact with other Meratus groups, travel being a source of prestige.

According to Tsing (1993:41), however, the Indonesian government sees the Meratus as uncivilized, stuck in a timeless, archaic condition outside modern history. Furthermore, the government attributes their condition to their mobility and travel across the forest landscape. From the state’s perspective, Meratus mobility constitutes “semi-nomadism” and labels them as runaways from state discipline and a threat to national security. For the Meratus, however, mobility is a sign of personal autonomy.

In Indonesia, there are more than 1.5 million members of what the government calls “isolated populations.” Most, like the Meratus, live in small, scattered mountain settlements. To transform these societies into forms acceptable to the Indonesian government, they estab-lished the Management of Isolated Populations, a program that operates, to quote one official document, to guide “the direction of their social, economic, cultural and religious arrange-ments in accord with the norms that operate for the Indonesian people” (Tsing 1993:92). To meet the goals of the project, the government devised various strategies that amount largely to attempts to discipline these populations and bring them under government control. One strategy is resettlement.

The government builds clustered housing and moves isolated populations to them. The state justifies this housing by saying it is more modern, but in fact it makes everyone visible,

Although Indonesia officially recognizes and celebrates cultural diversity, the dominant culture is still Javanese, represented here in the wedding of the son of Indonesian ex-president Suharto (on the far left), Hutomo “Tommy” Mandala Putra (third from left), with Ardhia “Tata” Pramesti Rigita Cahyani (fourth from left). (AP Photo/Pool.)

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keeps them in one place, enables government control, and in some cases creates settlements designed specifically for military security. The Meratus quickly caught on to the govern-ment’s game and built their villages with clustered housing so they would “look good if the government comes to visit” (Tsing 1993:93). The government also initiated nutrition programs to reorganize the eating habits of isolated populations. The Meratus were given a demonstration in which locally unavail-able meats and vegetables were prepared “the right way.” The Meratus were considered unordered in their eating habits; as one village head explained, “[Indonesians] drink in the morn-ing,” referring to the typical morning diet of coffee or tea and a pastry, “and then have two meals during the day. We [Meratus] sometimes eat five times a day and sometimes once a day. It’s

not ordered” (Tsing 1993:93). But eating habits are dictated by work schedules, and in farming or hunting communities, one can eat at very different times. For government planners, even the way food is prepared is supposed to follow national standards; one government official complained that the Meratus butchered a chicken but cooked it without sour spices or chili peppers. To please government authorities, the Meratus leaders now see to it that the chickens are cooked “properly when authorities visit.”

The government also exercised control over isolated populations by introducing family planning programs. Once again, there was a distinct difference in how the government saw the program and how the Meratus viewed it. The program was essentially an attempt by the nation-state to discipline the population into following state-mandated views of family form

and reproductive practices. In the early 1980s, the state began a program to encourage women to use IUDs or take birth control pills. To advance the program, the government encouraged a local male leader, Pa’an Tinito, to enroll women in the program. He signed up women, but it became apparent that they had little idea of what the program was about and expressed shock when Tinito explained to the men the purpose of contraception. The men were shocked; how could the government possibly want them to limit the size of their population? Weren’t commu-nities already too small and weak? The program was ridiculous, and there must be some mistake. Pa’an Tinito responded that the government wanted only a list of women; nothing was said about limiting reproduction. When the supply of oral contraceptives arrived some months later, Pa’an Tinito brought them back to his house and hung them in the rafters, where they stayed (Tsing 1993:109).

In developing relocation, nutrition, and family planning programs, the nation-state was, in effect, imposing standards of social structure and family authority. There should be a fixed and stable “village” consisting of individual families, each with a family “head,” generally a man. For the government, to get to women one must go through men. But this is not the way the Meratus were organized, nor was it the way the Meratus saw the situation. Their view of the world differed significantly from that of the nation-state in which they are subjects. The dilemma faced by the Meratus, as well as other indigenous and ethnic groups, is whether one can be simultaneously outside and inside the nation-state. As Tsing (1993:26) put it,

Marginals stand outside the state by tying themselves to it; they constitute the state locally by fleeing from it. As culturally “different” subjects they can never be citizens; as culturally different “subjects,” they can never escape citizenship.

However, whereas nation-states have systematically destroyed the culture of indigenous people, there has been, at the same time, growing divisions among ethnic groups. This problem is most severe in instances where, for one reason or another, one ethnic group enjoys an economic advantage over another. In some instances, as we’ll see, the result is genocidal violence.













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In this chapter we examine the dilemma of cultural and ethnic divisions in the nation-state. We need to ask, Why were indigenous cultures destroyed, and what is likely to be the fate of the indigenous cultures that remain in the world? And what is the cause of ethnic conflict and attempted genocides?

The FaTe oF IndIgenous PeoPles

Who are indigenous or tribal peoples? They certainly include the aboriginal peoples of Australia; the Native Americans of North, South, and Central America; and the peoples of most of the African continent. At the second general assembly of the World Council of Indigenous Peoples, indigenous peoples were defined as follows (Bodley 1990:153):

Indigenous people shall be people living in countries which have populations composed of different ethnic or racial groups who are descendants of the earliest populations which survive in the area, and who do not, as a group, control the national government of the countries within which they live.

David Maybury-Lewis (1997:7) says the difficulty with this definition is it assumes that should indigenous people gain control of the government, they would no longer be indigenous; however, it is clear they are native to the countries they inhabit and that they claim they were there first and have rights of prior occupancy to their lands. They also have been conquered by peoples racially, ethnically, or culturally different from themselves; they generally maintain their own language and, most importantly, “are marginal to or dominated by the states that claim jurisdiction over them”—that is, indigenous peoples are defined largely by their relationship to the state. Maybury-Lewis (1997:55) concluded that

many people are stigmatized as “tribal” … because they reject the authority of the state and do not wish to adopt the culture of the mainstream population that the state represents. They are in fact stigmatized as being “tribal” because they insist on being marginal.

Maybury-Lewis estimated that approximately 5 percent of the world’s population fit the description of indigenous peoples; these are the descendants of peoples who have been marginal-ized in the global capitalist economy.

One of the problems faced by indigenous peoples, as we saw with the Meratus, is that their cultures often conflict with the culture of capitalism. Consequently, the first question we need to explore is, How is the culture of indigenous peoples incompatible with the culture of capitalism?

some Characteristics of Indigenous Peoples

The cultures of indigenous peoples are vulnerable to destruction from capitalist expansion partly because their way of life differs so significantly from that in the culture of capitalism. Although there are significant differences among these cultures, they do tend to share certain characteris-tics. For example, they tend to be mobile; they may be nomads who threaten state integrity by traversing international boundaries or shifting agriculturists who require large tracts of land or whose frequent movements make them difficult to control.

A second characteristic of small-scale indigenous societies, and one that is quickly under-mined by capitalist culture, is their communal ownership of valuable resources, particularly land. Communality creates all kinds of problems in the culture of capitalism. For example, commu-nally held land is not readily sold or purchased, instead requiring group consensus. Financial institutions cannot use communally held land as collateral for an individual’s debts because it cannot be repossessed. Furthermore, contrary to some writers’ views (see Hardin 1968; Hardin

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and Baden 1977), communally held lands tend to be subject to greater conservation measures and less subject to exploitation for short-term financial gain. Finally, communal resources and discoveries that are not legally incorporated cannot be protected from capitalist exploitation. For example, the Urueu-Wau-Wau peoples of the Amazon developed from plant extracts an anticoagulant that Merck Pharmaceuticals “discovered” and is attempting to develop, yet no benefits accrue to the Urueu-Wau-Wau, who are threatened with extinction. Thus, as Darrell Posey (1996:7) noted, traditional and communal knowledge that would be recognized as prop-erty if held by an individual or a legally designated “natural person,” such as a corporation, is deemed in the culture of capitalism to be free for the taking.

A third characteristic of small-scale indigenous groups that is incompatible with capitalist culture is kinship-based social structure. In small-scale societies, most relationships are defined by a person’s kin links with others, and the primary social unit tends to be the extended family. The large network of relations that each person can call on for help promotes the sharing of resources and reduces the need to consume and to work to make money. The small, socially isolated nature of family units, such as the nuclear family, makes them more susceptible to state control and discipline. As we shall see, one of the first features of indigenous societies to come under attack is the pattern of kinship relations. This does not mean kinship cannot be used as a basis for control and accumulation of capital; early business enterprises were family based, as noted in Chapter 3, and small family businesses still thrive. Yet, perhaps because of the need for a mobile and socially unattached labor force, extended family units do not do well in the culture of capitalism.

Fourth, most small-scale indigenous societies tend to be relatively egalitarian. As John Bodley (1990:4) notes, equality in social relations reduces the incentive and need to consume because people have far less need to use material possessions to mark their status. Furthermore, nation-states require a political hierarchy to govern effectively. Without a recognized local leader with the power to make decisions, who, for example, will collect the taxes? Who will enforce government directives? Who will ensure that the laws of the nation-state are enforced? As we shall see, one of the first things that nation-states do to control indigenous peoples is to impose a new pattern of authority.

Finally, and perhaps most importantly, indigenous peoples tend to control resources or occupy land desired by members of the capitalist nation-state or the nation-state itself. Thus, as John Bodley (1990:4) writes,

the struggle between tribes and states has been over conflicting systems of resources management and internal social organization. Tribes represent small-scale, classless societies, with decentralized, communal, long-term resource management strategies, whereas states are class-based societies, with centralized management systems that extract resources for the short-term profit of special interest groups. Understandably, then, the political conquest of tribal areas often brings rapid environmental deterio-ration and may impoverish tribal peoples.

The Process of ethnocide

In Victims of Progress, Bodley describes the various ways nation-states acted to transfer the rights of resources from indigenous peoples to settlers wishing to exploit the resources for them-selves. The process occurs in stages, generally beginning with the establishment of a frontier situation and advancing through military intervention, the extension of government control, and the gradual destruction of indigenous culture through land takeovers, cultural modification, and economic development. Bodley’s analysis provides insight into why indigenous peoples have disappeared and gives ample evidence that their “integration” into the modern world was neither voluntary nor beneficial to them.

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The FronTIer sITuaTIon Often the destruction of an indigenous culture begins with the establishment of a frontier, an area perceived to be abundant in natural resources that can be easily exploited but seems not to be controlled by a nation-state. Prior ownership rights and interests of indigenous peoples are considered irrelevant by both the nation-state and invading settlers. For example, in 1909 the London magazine Truth published the account of a young American engineer, Walter Hardenburg, describing the brutality of the managers of a British- and Peruvian-owned rubber company in the Putumayo River region separating Peru and Colombia (see Taussig 1987). The article, which described the enslavement, torture, and killing of Indian rubber gatherers, caused a sensation and led the British government to send Roger Casement, then a consular representative in Rio de Janeiro, Brazil, to investigate the charges. Casement had already written a report describing the horrors inflicted by rubber traders on native workers in the Congo, horrors depicted in Joseph Conrad’s fictional account Heart of Darkness (1972[1902]).

InhisreporttoSirEdwardGrey,headoftheBritishForeignService,Casementdescribedagain and again the horrors inflicted on the indigenous peoples of the Putumayo region, accounts that he collected from black workers recruited by the rubber companies from Barbados, who themselves,underthreatofdeath,hadinflictedthehorrors.Forexample,hewrotetoGreyofthefate of Indians who did not fill the quota of rubber allotted to them (Taussig 1987:35):

The Indian is so humble, that as soon as he sees that the needle of the scale does not mark the ten kilos, he himself stretches out his hands and throws himself on the ground to receive the punishment. Then the chief [of the rubber station] or a subordi-nate advances, bends down, takes the Indian by his hair, strikes him, raises his head, drops it face downwards on the ground, and, after the face is beaten and kicked and covered with blood, the Indian is scourged. This is when they are treated best, for often they cut them to pieces with machetes.

Casement said that 90 percent of the Indians he saw carried scars from floggings. He described other ways the company managers disciplined and controlled their Indian workers, including deliberately starving them, burning alive those who tried to run away, killing children, and inflicting virtually every form of torture imaginable. Casement’s report became the center-piece of a British House of Commons Select Committee called to investigate the charges against British-owned rubber companies operating in the Putumayo region. Yet virtually nothing was done to change the situation, partly because the British could not assert political control over the region; in fact, one of the most brutal of the company managers later became a head of state.

The kinds of frontier situations described by Hardenburg and Casement almost a century ago, common in most areas of the periphery, still exist today. For example, consider what is happening to the Yanomami Indians of Brazil. Yanomami is the name given the Indians who live along the border between Brazil and Venezuela; in 1980 there were 10,000 Yanomami. They were protected somewhat by their isolation until the 1970s, when the Brazilian military govern-ment built a road that passed through Yanomami territory. The highway was never finished, but the traffic it brought to Yanomami country carried with it disease, starvation, and death. The highway brought gold miners, who forced some Yanomami out of their villages and massacred others; federal police were unable or unwilling to expel the miners, and the governor of the area refused to take judicial action against the murderers. Even the Brazilian Indian Service (FUNAI) was literally under attack by uniformed gunmen hired by the miners.

In 1986 the military enlarged a small airstrip that had been used by FUNAI and missionaries, ostensibly to protect the borders against drug trafficking and subversion, but resulting in inten-sification of the gold rush into Yanomami territory. As a result, by 1988 at least one-fourth of the Yanomami had died and the majority of survivors were sick and starving. When the situation caused an international outcry, the president of Brazil declared that it was impossible to expel the miners from the territory and even proposed demarcating three reserves in the area, not for the

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Yanomami group but for the miners (Maybury-Lewis 1997:27). Alcida Ramos (1995:312) in a recent book on the situation among one Yanomami group, the Sanumá, concluded,

I didn’t expect to be around, only ten years after my immersion into an autonomous and healthy culture such as I found among the Sanumá, to see one of the worst examples of cultural devastation in the recent history of Brazilian Indigenism.

MIlITary InTervenTIon Military force was another means of destroying indigenous populations. Clearly, the superiority of European weaponry made the difference in their confrontation with indigenous cultures, although not without some notable losses and defeats at the hands of less-well-armed peoples. In 1860, when the Maori of New Zealand resisted the work of a survey team subdividing a large block of their land, the governor declared martial law and sent in the military to subdue them. The Maori managed to fight for twelve years against a force that at one time numbered 22,000 soldiers, costing the colony 500 people and 1.3 million pounds (Bodley 1990:50).

It was military intervention, of course, that finally subdued the Native Americans on the American Plains in the period from about 1850 to 1880. When Plains nations resisted take-over by Euro-Americans of their land and resources, the U.S. government sent in the military to control them, succeeding, as noted in Chapter 7, only after they destroyed the buffalo herds on which the Native American nations depended.

The exTensIon oF governMenT ConTrol Once indigenous nations were militarily subdued, the next step in the process of cultural transformation was the extension of government control. When the nation-state is able to extend its authority, the indigenous society ceases being an autonomous “nation” and becomes incorporated into the state. In most cases, rulers of the nation-state justified control as bringing to indigenous peoples the benefits of civilization. As John Bodley (1990:58) noted, however, it was directly related to protecting the economic inter-ests of nonindigenous peoples moving into indigenous territory.

Various techniques were used to establish political control. One was simply direct rule, in which a person from the dominant group was appointed, after the military had subdued a population, to administer the subjugated group. The French did this in Africa, appointing French commissioners or heads. More common, and probably more effective, was the technique pioneered by the British in Africa, called indirect rule. This involved maintaining and strength-ening the role of traditional leaders or creating them when they did not exist and governing through them (Bodley 1990:71).

The base camp program used by Australia to extend governmental control in Papua New Guineaprovedtobeparticularlyeffective.TheterritoryofPapuaNewGuineawasrelativelyisolated; even into the 1940s there were indigenous groups that had never been in direct contact with outside areas. To extend their control, the Australian government would send an armed patrol with trade goods to establish a base camp in an area already under government influence. While the patrol was in camp, they offered highly prized trade goods such as salt, steel tools, and cloth to visitors to establish contact with surrounding villagers. Then they would move out to the villages and ask permission to build a rest house to allow longer visits by the patrol. Although these requests were not always welcome, the villagers were generally convinced by native interpreters. Then more distant villagers would come for trade goods, and the officer would agree to give the goods, but only if the villagers would build a road for the office. When new villagers were visited, gifts would be distributed and perhaps a government-sponsored feast would be given. Peace agreements were drawn up, and native police were strategically placed, after which village chiefs were appointed to act as intermediaries between the village and the government. Then annual visits by patrols were made. The Australian government con-sidered the efforts at pacification successful when labor recruiters seeking workers for coastal plantations were allowed to operate freely in a village. In areas where resistance was more

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determined and where villagers might desert their homes when patrols were in the area, the patrols might kidnap old people left behind in the village until communications were estab-lished with resisters.

This process of peaceful penetration began in the 1920s and has continued uninterrupted, except during World War II, to the present. In 1950, for example, 168,350 square kilometers were not yet fully controlled. By 1970, only 1,735 square kilo-meters remained uncontrolled (Bodley 1990:66).

land PolICIes The policies of nation-states toward land ownership are some of the more delicate issues in the process of incorporating indigenous peoples or the resources they control into the nation-state. International law, and most governments, generally recognizes that aboriginal inhabitants possess rights to the lands they use. For example,in1787theU.S.governmentdeclaredintheOrdinancefortheGovernmentoftheNorthwest Territory (Fey and McNickle 1970:56)

[t]he utmost good faith shall always be observed towards the Indians; their lands and property shall never be taken from them without their consent; and in their property rights and liberty, they never shall be invaded or disturbed, unless in just and lawful wars authorized by congress.

However, that policy was honored only as long as the Native Americans had a viable political presence and only as long as there was land that Euro-Americans did not want. Most early treaties recognized Native Americans’ rights to land and designated large areas in the West as Native American. However, as European migration increased and as Native American land became desired, the government pressed to renegotiate old treaties, generally finding someone to negotiate with who would sign such treaties. However, even treaties could not protect Native American land from the U.S. Congress, as we saw in Chapter 3; in 1887 Congress passed the Native American Allotment Act (Dawes Act), which led to the appropriation of almost 100 mil-lion acres of Native American land (Jaimes 1992:126).

CulTural ModIFICaTIon PolICIes After destroying the autonomy of indigenous peoples and gaining control of their lands and resources, the next step for the nation-state was to modify the culture. Any native custom considered immoral, offensive, or threatening was abolished. Indigenous kinship systems and social organization were particularly threatening to colonists. At various times, such things as the payment of bride price, infant betrothal, polygamy, levirate (a man marrying his brother’s widow), secret societies, and traditional kinship duties and obligations in general were attacked or banned. Even into the 1960s, the extended family was particularly criticized by economic development agents as a “drag on economic development and a serious obstacle to economic progress” (Bodley 1990:96).

Unfortunately, in retrospect, anthropologists played an important role, unwittingly or not, in the efforts to modify indigenous cultures and incorporate them into the nation-state. Even Margaret Mead (1961:19–20), one of the great spokespersons for tolerance and understanding of indigenous peoples, was convinced that tribal peoples she worked with wanted to “modernize”: “We do not conceive of people being forcibly changed by other human beings. We conceive of them as seeing a light and following it freely,” she said.

Development theorists (Goulet 1971:25–26) suggested that “traditional peoplemust beshocked into the realization that they are living in abnormal, inhuman conditions as psychologi-cal preparation for modernization.”




Papua New Guinea

256 PartII • TheGlobalImpactoftheCultureofCapitalism

WardGoodenough(1963:219),oneofthemostrespectedfiguresinanthropology,notedinhis book Cooperation in Change that

the problem that faces development agents … is to find ways of stimulating in others a desire for change in such a way that the desire is theirs independent of further prompting from outside. Restated, the problem is one of creating in another a sufficient dissatisf