Cheers in France as economist Tirole wins Nobel

Yahoo – AFP, Hugues Honore, 13 Oct 2014

French economist Jean Tirole, seen here in June 2008, was awarded the Nobel

 Economics Prize "for his analysis of market power and regulation", according to the

Royal Academy of Sciences (AFP Photo/Eric Cabanis)

Stockholm (AFP) - Jean Tirole won the Nobel Economics Prize on Monday for research on reining in corporate giants, a second French award this season hailed as a slap in the face for "France bashers".

"One of the most influential economists of our time," the jury called Tirole, whose fellow countryman Patrick Modiano took the prize for literature last week.

"Most of all he has clarified how to understand and regulate industries with a few powerful firms," it said of the 61-year-old professor at Toulouse 1 Capitole University.

Taming huge corporations, and ensuring they don't reap huge profits at the expense of ordinary consumers, has emerged as a growing concern in recent years.

The global financial crisis -- triggered by a small number of giant players in the banking sector -- has further pushed the complex issue up the agenda for global policymakers.

"Banking is a very hard thing to regulate, and we economists have to do more work on this," Tirole told the Nobel Committee after learning he had won the prize, worth eight million Swedish kronor ($1.1 million, 878,000 euros).

Thumbing noses at 'French-bashing'

News of his win triggered delight in Paris -- as well as a note of vindication from the French prime minister, irked by a string of articles decrying the morose state of the nation.

"After Patrick Modiano, yet another Frenchman has come to the fore: Congratulations to Jean Tirole!" Manuel Valls tweeted after the announcement. "Talk about thumbing your nose at 'French-bashing'."

Modiano's win last week was already hailed as a boost for a country in the doldrums with a stagnating economy and deeply unpopular government.

President Francois Hollande said the prize puts the spotlight on "the quality of the research carried out in our nation."

Tirole's work, the Nobel jury said, has provided a framework for designing policies for a range of industries from banking to telecommunications.

His citation comes amid growing controversy over the market power of such companies as Amazon and Google.

"Drawing on these new insights, governments can better encourage powerful firms to become more productive and, at the same time, prevent them from harming competitors and customers," the jury said.

The concentration of corporate power has been a key concern for policymakers since the 1980s, when advanced countries moved progressively to allowing markets a freer role.

The trend has been strengthened across industries by technological advances and globalisation, which produced unprecedented wealth but also exacerbated inequality.

Dominate thy neighbour

Laureate of the 2014 Nobel Prize in

Economics, French economist Jean Tirole and

his wife Nathalie are seen at the Toulouse

School of Economics (TSE) on October 13, 

2014 in Toulouse (AFP Photo/Remy Gabalda)

A lot of Tirole's research has focused on motivation and salary, with regard to large companies and the rise in pay among the top tiers of leadership -- like Wall Street chief executives.

But his Nobel Prize came for his work on oligopoly and game theory -- or the study of how strategic interactions affect an outcome.

An oligopoly is a state of limited competition, a popular example being the cellular companies Verizon, AT&T, Sprint and T-Mobile, which together control around 90 percent of the market. A monopoly, on the other hand, is the dominance of one seller in the market.

Tirole's research has also shown how some companies -- for example producers of widely-used but patented software -- are able to dominate not just their own industry, but also related ones further down the production chain.

One of his chief contributions is the notion that market dominance works differently in different industries, according to the Nobel jury.

His research suggests, for example, that it can sometimes make sense to allow firms to undercut each other by setting prices below production costs -- something traditionally disciplined under competition, or anti-trust, law.

"The best regulation or competition policy should therefore be carefully adapted to every industry's specific conditions."

American near-monopoly

The prize will be awarded at a ceremony in Stockholm on December 10, the anniversary of the death in 1896 of the prizes' creator, Swedish scientist and philanthropist Alfred Nobel.

Appropriately for an economist who has dedicated much of his career to the study of monopolies, Tirole's award reduces an American near-monopoly over the Nobel economics prize in recent years.

Over the past decade, 18 out 20 economics prize laureates have been from the United States, including one Israeli-American.

Last year, US scholars Eugene Fama, Lars Peter Hansen and Robert Shiller won for their work on spotting trends in the asset markets.

The economics prize winds up this year's Nobel season, marked by the award Friday of the peace prize to 17-year-old Pakistani Malala Yousafzai and India's Kailash Satyarthi.

Related Article:

"Recalibration of Free Choice"–  Mar 3, 2012 (Kryon Channelling by Lee Carroll) - (Subjects: (Old) Souls, Midpoint on 21-12-2012, Shift of Human Consciousness, Black & White vs. Color, 1 - Spirituality (Religions) shifting, Loose a Pope “soon”, 2 - Humans will change react to drama, 3 - Civilizations/Population on Earth,  4 - Alternate energy sources (Geothermal, Tidal (Paddle wheels), Wind), 5 – Financials Institutes/concepts will change (Integrity – Ethical) , 6 - News/Media/TV to change, 7 – Big Pharmaceutical company will collapse “soon”, (Keep people sick), (Integrity – Ethical)  8 – Wars will be over on Earth, Global Unity, … etc.) - (Text version)

“… 5 - Integrity That May Surprise…

Number five: There will be those who think it impossible to have a search for integrity and fairness in all things. In other words, Human Beings will not simply go with what they are told is the status quo. They will look at it and they will say, "Well, I think it could be better. I'm going to look around for something that has more integrity and fairness." Yes, there will be those who tell you, "Look, the institutions hold all the cards and you have to do it their way. If you want health insurance or you want loans from the banks for your home, you better do it their way." I have news for you. Even this is going to change.

"What are you going to do?" the Human asks. "They hold all the power!" In the past, there was nothing you could do. Now I'll tell you what the potentials are. You're going to pull out the puzzle and look past the walls of the maze. You're going to say, "Well, then I'll start my own institution." And some will. The new institutions, based on integrity, will sweep right past an old energy. In other words, there will be those who are young today who are going to start a new way of banking, a new way of health care, and a new way of insurance. And when you see these plans, you'll say, "Why didn't we think of that?"

Have you seen innovation and invention in the past decade that required thinking out of the box of an old reality? Indeed, you have. I can't tell you what's coming, because you haven't thought of it yet! But the potentials of it are looming large. Let me give you an example, Let us say that 20 years ago, you predicted that there would be something called the Internet on a device you don't really have yet using technology that you can't imagine. You will have full libraries, buildings filled with books, in your hand - a worldwide encyclopedia of everything knowable, with the ability to look it up instantly! Not only that, but that look-up service isn't going to cost a penny! You can call friends and see them on a video screen, and it won't cost a penny! No matter how long you use this service and to what depth you use it, the service itself will be free.

Now, anyone listening to you back then would perhaps have said, "Even if we can believe the technological part, which we think is impossible, everything costs something. There has to be a charge for it! Otherwise, how would they stay in business?" The answer is this: With new invention comes new paradigms of business. You don't know what you don't know, so don't decide in advance what you think is coming based on an old energy world. …”

Online news attracts star power and big money

Google – AFP, Rob Lever (AFP), 23 March 2014

Journalist Katie Couric speaks during a keynote address by Yahoo! President

 and CEO Marissa Mayer at the 2014 International CES on January 7, 2014

in Las Vegas, Nevada (Getty/AFP/File, Ethan Miller)

Washington — The news media is generating some big news of its own, as a growing number of star US journalists move online, bringing followers and financial backers with them.

Online news sites have been around for years, but in recent months the trend has gained momentum, defying predictions of a troubled media industry.

The latest was the relaunch of FiveThirtyEight, headed by Nate Silver, a statistician and journalist who made his own headlines with his accurate prediction of the 2012 presidential election.

Yahoo! Vice President of Editorial David

Pogue speaks during a keynote address by

 Yahoo! President and CEO Marissa Mayer

at the 2014 International CES on January

7, 2014 in Las Vegas, Nevada (Getty/

AFP/File, Ethan Miller)

The site, which covers a range of news with a statistician's eye, is backed by the sports broadcaster ESPN, after Silver left The New York Times with his blog.

Also joining the fray was The Intercept, a news site backed by tech entrepreneur Pierre Omidyar with an editorial team led by Glenn Greenwald, the former Guardian reporter who broke news with documents leaked by former National Security Agency contractor Edward Snowden.

Omidyar has pledged to invest $250 million in his First Look Media, which includes a not-for-profit news operation and a separate technology arm for new media.

The Washington Post's popular "Wonkblog" columnist Ezra Klein meanwhile left the newspaper to start a news website backed by Vox Media.

Yahoo wooed television news star Katie Couric and former New York Times tech writer David Pogue. And journalists at The Wall Street Journal-backed tech blog AllThingsD broke off in January to create Re/code, a separate website with support from Comcast's NBCUniversal.

The new energy in Internet news comes as the entrenched news industry faces deepening financial woes, and the model for online profits remains unclear.

Dying or reviving?

So is the news business dying or being reborn?

Alan Mutter, a former Chicago newspaper editor who consults for journalism and technology ventures, said that while traditional newspapers are withering, online news sites may be working.

But the digital news business is likely to be "vertical," covering a segment such as technology, sports or politics, unlike a newspaper, which aims to cover all sectors. Online news can get money from subscriptions, premium content or links to shopping, for example.

"The future of digital publishing is the antithesis of traditional publishing," Mutter told AFP.

Journalist Ezra Klein speaks

during the opening plenary

session of Families USA's 

Health Action 2014 conference 

January 23, 2014 in 

Washington, DC (Getty/

AFP/File, Alex Wong)

Newspapers try to get a broad audience by offering comics, coupons and recipes, while covering news ranging from local crime to politics to walks on the moon, and online sites are changing that model.

The shift is similar to what happened in retailing, with multi-sector department stores hammered by specialty apparel, housewares or electronics stores.

"Newspapers are basically following a publishing-model mindset that is locked in 1958," Mutter said.

"They take the same content and put it on a website or put it on mobile and they say they have a digital strategy."

Low cost of entry

Ken Doctor, a media analyst with Outsell who writes the Newsonomics blog, said it has become easier to launch news sites.

"The technology has gotten much better and cheaper in the past few years," Doctor said.

"And once you create the content, the social world is able to find new audiences at practically no incremental cost."

News startups can expand internationally and gain a far larger audience than they would with a local or even national US newspaper, he noted.

"You can ramp up one of these businesses and create a national or international brand for $5 million to $10 million," Doctor said.

Without the legacy costs of newspapers like printing, distribution and longstanding pensions, websites can become profitable relatively quickly.

While not all ventures will succeed, they are attracting venture capital because "you could double or triple your money if you pick a winner," Doctor said.

The startups are often personality driven -- Klein has 441,000 Twitter followers and Silver 680,000. Former Daily Beast journalist Andrew Sullivan got 35,000 paid subscribers for his "The Dish" blog.

'Golden age of journalism'?

One of Silicon Valley's most prominent venture capitalists, Marc Andreessen, sees huge potential.

Glenn Greenwald testifies in Brasilia on

 October 9, 2013 before the investigative

 committee of the Senate that examines

 charges of espionage by the United States 

(AFP/File, Evaristo Sa)

"I am more bullish about the future of the news industry over the next 20 years than almost anyone I know," said a blog post by Andreessen, who founded the early Internet group Netscape Communications.

"Maybe we are entering into a new golden age of journalism, and we just haven't recognized it yet."

Andreessen said the news business is breaking free of the "monopolies and oligopolies" that controled it for much of the post-World War II era and that the Internet is allowing new businesses to get to a scale where they can support high-quality journalism.

"On the Internet, there is no limitation to the number of outlets or voices in the news chorus," he said.

The economics of online news has allowed some sites to move beyond the practice of "aggregation," and into more in-depth reporting traditionally seen as the domain for newspapers.

But analysts point out that while Internet news outlets which can gain readers nationally and internationally can thrive, the same is not true for local news organizations, which many Americans rely on for coverage of their communities.

"It's a tale of two worlds," Doctor said. "Local newspapers are still in a death spiral, with layoff after layoff."

Related Articles:

Pierre Omidyar commits $250m to new media venture with Glenn Greenwald

Greenwald quits Guardian for 'dream' project

WeFightCensorship publishes banned articles

Washington Post sold to Amazon founder Jeff Bezos for $250m

"Recalibration of Free Choice"–  Mar 3, 2012 (Kryon Channelling by Lee Caroll) - (Subjects: (Old) Souls, Midpoint on 21-12-2012, Shift of Human Consciousness, Black & White vs. Color, 1 - Spirituality (Religions) shifting, Loose a Pope “soon”, 2 - Humans will change react to drama, 3 - Civilizations/Population on Earth,  4 - Alternate energy sources (Geothermal, Tidal (Paddle wheels), Wind), 5 – Financials Institutes/concepts will change (Integrity – Ethical) , 6 - News/Media/TV to change, 7 – Big Pharmaceutical company will collapse “soon”, (Keep people sick), (Integrity – Ethical)  8 – Wars will be over on Earth, Global Unity, … etc.) - (Text version)

“…6 - The News

Number six. I'll be brief. Watch for your news to change. It has to. When the media realizes that Human Beings are changing their watching habits, they're going to start changing what they produce for you to watch. Eventually, there's going to be something called "The Good News Channel," and it will be very attractive indeed. For it will be real and offset the drama of what is today's attraction. This is what families at night, sitting around the table, will wish to watch. They'll have something where the whole picture of a situation is shown and not just the dramatic parts. You will hear about what's happening on the planet that no one is telling you now, and when that occurs [we have no clock, dear one], it's going to compete strongly with the drama. I keep telling you this. Human nature itself is starting to be in color instead of black and white. Watch for it. And that was number six ….”

"The Recalibration of Awareness – Apr 20/21, 2012 (Kryon channeled by Lee Carroll) (Subjects: Old Energy, Recalibration Lectures, God / Creator, Religions/Spiritual systems  (Catholic Church, Priests/Nun’s, Worship, John Paul Pope, Women in the Church otherwise church will go, Current Pope won’t do it),  Middle East, Jews, Governments will change (Internet, Media, Democracies, Dictators, North Korea, Nations voted at once), Integrity (Businesses, Tobacco Companies, Bankers/ Financial Institutes, Pharmaceutical company to collapse),  Illuminati (Started in Greece, with Shipping, Financial markets, Stock markets, Pharmaceutical money (fund to build Africa, to develop)), Shift of Human Consciousness, (Old) Souls, Women, Masters to/already come back, Global Unity.... etc.) - (Text version)

“…  Government

Let us speak of government. We're not speaking of your government, but of any government - the way it works, how it survives, how it has survived, the way it campaigns, and how it elects leaders. It's going to change.

Years ago, I told you, "When everybody can talk to everybody, there can be no secrets." Up to this point on this planet, government has counted on one thing - that the people can't easily talk to each other on a global scale. They have to get their information through government or official channels. Even mass media isn't always free enough, for it reports that which the government reports. Even a free society tends to bias itself according to the bias of the times. However, when you can have Human Beings talking to each other all at once, all over the planet without government control, it all changes, for there is open revelation of truth.. ”

The new robber barons: how taxpayers subsidise CEOs' multimillion salaries

A new report finds many top executives are taking home more than their corporations pay in taxes – at our expense

guardian.co.uk, Pratap Chatterjee, Sunday 19 August 2012

In 1980, CEO pay was 42 times an average worker's wage; today,
that multiplier is 380. Photograph: Charlie Skelton

Lanai, a tiny resort island in Hawaii, has 18 miles of secluded beaches, no traffic lights and a population of just over 3,000. This summer, Larry Ellison, the CEO of Oracle, a California-based software company, bought 98% of the island for a sum reported to exceed $500m.

The Institute for Policy Studies, a Washington DC thinktank, says that a chunk of the money Ellison spent buying Lanai should have paid for elementary school teachers and clean energy jobs, instead of fulfilling the billionaire CEO's vacation fantasies. That's one conclusion of their new report, "The CEO Hands in Uncle Sam's Pocket: How Our Tax Dollars Subsidize Exorbitant Executive Pay", which points out that Oracle took advantage of a 1993 loophole in tax law to designate $76m of Ellison's income as "performance-related pay", which allowed him to avoid paying any taxes on the money.

Dozens of US CEOs have cashed in on this major tax incentive at an estimated cost to US taxpayers of $9.7bn last year. Statistics provided by National Priorities Project suggest that the same amount of money could have paid for 142,625 elementary school teachers, or healthcare for 4.96 million low-income children.

"At a time of austerity, it's beyond absurd that billions of our tax dollars are pouring into executive pockets," says Sarah Anderson, a report co-author.

In 1980, the average US CEO was paid 42 times as much as the average worker when tax rates for the richest stood at 70%. Today, that ratio has widened to 380 times – exacerbated in part, no doubt, by the fact that CEOs are able to dramatically reduce their tax burdens by a reduction in top tax rates, as well as several new loopholes introduced in recent years.

In fact, some companies paid their CEOs more money than they paid in taxes. Take Aubrey McClendon, CEO of Oklahoma-based Chesapeake Energy, who was paid $17.9m in 2011, while his company gave Uncle Sam just $13m on sales of $11.64bn.

Chesapeake achieved this startlingly low tax liability by claiming a "drilling-costs tax benefit" that allows generous income tax deferrals in case an oil well comes up dry. Yet, this decades-old tax incentive to encourage oil companies to prospect far and wide is now largely irrelevant since sophisticated technologies allow them to accurately gauge where to drill.

"McClendon's primary goal is not to solve America's energy problems, but to build a pipeline directly from your wallet into his," writes Jeff Goodell of Rolling Stone this past March, describing the CEO as "a rightwing billionaire who profits more from flipping land than drilling for gas".

McClendon is not alone. The Institute for Policy Studies found that 26 of the 100 highest-paid US CEOs took home more in pay than their companies paid in federal income taxes. On average, each of these company bosses was paid $20.4m last year.

Another scam that CEOs pull on the taxpayer is called "deferred compensation". The way that works is simple – most taxpayers are expected to pay 35% of their income in taxes the year they earn it. But a CEO does not have to pay the tax until they claim the cash which can be earning interest in the mean time. Depending on how the money is invested, CEOs can engineer a substantial profit.

This allowed Michael Duke, CEO of Walmart, to sock away $17,028,615 tax free in 2011, roughly 774 times more than one of his employees would have been allowed to do under normal tax rules.

Yet the money these CEOs makes shrinks into insignificance compared to the money that hedge fund managers make. Take Raymond Dalio, who was paid an astronomical $3bn in 2011. This titan of Wall Street had to pay just 15% in taxes because the money was considered "capital gains", as opposed to the average citizen who would be required to pay 25% (in income tax). Cost to the taxpayer in 2011: $450m.

"Some tax breaks do have a redeeming social value. Most don't," write report authors Sarah Anderson, Chuck Collins, Scott Klinger and Sam Pizzigati.

"In fact, most create incentives for things companies would have done anyway or reward corporate behaviors that deserve no encouragement from taxpayers, especially at a time of fiscal crisis."

The report proves the case made by thousands of protesters who took to the streets last September as part of the Occupy movement, and that of investors who stormedannual meetings this year as part of the "Shareholder Spring" to reclaim enterprises from many overpaid CEOs.

The authors of the new report have an even better solution: make these executives pay their fair share of taxes, just like the rest of us.

Related Article:

Study: Companies paid more to CEOs than in US tax

Bristol goes rogue: British city launches own currency

AFP/Google, by Judith Evans (AFP), 16 Aug 2012

Bristol pound banknotes, which all contain symbols of local pride 

(AFP/File, Handout)

BRISTOL, United Kingdom — As Britain loses faith in its banks and feels shockwaves from the euro crisis, one city is trying to keep local wealth in local pockets with the launch of its own currency.

The Bristol pound -- usable only with member businesses in the city in southwest England -- is to launch in September, and organisers are deluged with local firms wanting to sign up.

"The perception of banking and money is that it's a very ruthless system: people are out for what they can get," co-founder Ciaran Mundy told AFP.

"This is about saying yes to something new. It's tapping into a different set of values about money."

The scheme has "captured people's imaginations", he added, in a recession-hit year when British banks have been beset by scandals and ministers talked openly of a possible euro collapse.

Hundreds of businesses have joined, from the acclaimed Arnolfini arts centre to the Chandos deli chain, and the launch had to be postponed from May to September 19 because of the level of interest.

Bristol is the first big city in

 Britain to launch a local currency.

(AFP/File, Adrian Dennis)

Security professional Richard Wright signed up his company Wright Guard as soon as he heard about the Bristol pound, hoping it would help him fight back against encroaching security giants.

"I'm Bristol born and bred, and I always want to support local businesses," he told AFP. "I'll want to keep the Bristol pound flowing."

The notes feature symbols of local pride from nineteenth-century religious writer Hannah More to the Concorde aircraft, partly developed in Bristol, and images of the St Paul's Carnival Caribbean street festival.

Evoking a long history of dissent, one side of the £5 note shows a tiger writing on a wall in graffiti: "O Liberty!"

Other British towns have launched local currencies, but Bristol, home to half a million people, is the first big city, and its scheme is ambitious.

Businesses can pay local taxes in Bristol pounds and the council has offered its 17,000 staff the option of receiving part of their pay in the currency.

Mundy's team -- funded initially by grants -- have designed an electronic system for payments by text message, plus what they say are forgery-proof notes.

Stores selling products from cider to skate shoes said they were considering joining the scheme, which Mundy believes will have a tangible economic effect.

"Eighty percent of the money leaves the area if it is spent with a multinational -- but 80 percent stays if it is spent at a local trader," he said.

Such localism might seem strange in a city that grew to prosperity as an international port and is now a centre for aircraft manufacture.

But Bristol is also a left-wing haven with an activist tradition. The People's Republic of Stokes Croft, an urban renewal group, made headlines last year with a campaign that became a riot in protest at the opening of a Tesco supermarket.

They have greeted the Bristol pound warmly.

"We need to run things from the bottom up and from the grassroots, so that people have control over how things happen where they live," said spokesman Chris Chalkley.

But Louisa Jones and Joh Rindom, co-owners of Stokes Croft vintage clothing store Shop Dutty, thought the scheme would just add to their administrative burden.

"We're sceptical that having a micro economy within a macro economy is a bit backward," Rindom said.

Ben Yearsley, investment manager at Bristol-based financial services firm Hargreaves Lansdown, also won't be rushing to convert his sterling.

"It's just a big gift voucher scheme... I'm sceptical that it's going to make any difference," he told AFP.

"Local businesses need to compete on quality and service."

The Bristol pound will not be legal tender and must be exchanged through the Bristol Credit Union, with a three percent charge for conversion back to sterling.

This and charges on electronic transactions will pay its running costs.

Despite the naysayers, Mundy hopes hundreds of thousands of Bristol pounds will be traded in its first year, increasing to "double figures of millions" by the third.

A man holds euro notes and the

 "Chiemgauer", the local currency of the

 southern German city of Raubling.

 (DDP/AFP/File, Lennart Preiss)

His model is the Chiemgauer, a German complementary currency of which millions of euros' worth is traded yearly.

Online database complementarycurrency.org lists more than 225 such minority currencies worldwide, of which 102 are in Europe.

They have won a high-profile advocate in Bernard Lietaer, a Belgian economist who helped design and implement the convergence mechanism for the euro.

"We will never have a stable, sustainable monetary system with a single monopoly of a single type of currency, whoever manages it," he said in a lecture in Brussels.

"Everybody can do something at their own scale... sustainability requires diversity," he added.

Mundy said that the ultimate test of his system would be the market.

"If people freely decide to market and trade with each other (in the currency), they should be able to do it," he said.

"If we're not doing a good job they won't use the system. Consumers will decide." 

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Totnes: the town that declared war on global capitalism

Child's Play: Indian street youth develop model banking system

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Jamie Hirst has been able to borrow money at a

cheaper rate than from his bank

"The New Paradigm of Reality" Part I/II – Feb 12, 2011 (Kryon channelled by Lee Carroll)  (Subjects: Who/What is Kryon ?, Egypt Uprising, Iran/Persia Uprising, Peace in Middle East without Israel actively involved, Muhammad, "Conceptual" Youth Revolution, "Conceptual" Managed Business, Internet, Social Media, News Media, Google, Bankers, Dictators, Global Unity,..... etc.)


"Recalibration of Free Choice"–  Mar 3, 2012 (Kryon Channelling by Lee Caroll) - (Subjects: (Old) Souls, Midpoint on 21-12-2012, Shift of Human Consciousness, Black & White vs. Color, 1 - Spirituality (Religions) shifting, Lose a Pope “soon”, 2 - Humans will change react to drama, 3 - Civilizations/Population on Earth,  4 - Alternate energy sources (Geothermal, Tidal (Pedal wheels), Wind), 5 – Financials Institutes/concepts will change (Integrity – Ethical) , 6 - News/Media/TV to change, 7 – Big Pharmaceutical company will collapse “soon”, (Keep people sick), (Integrity – Ethical)  8 – Wars will be over on Earth, Global Unity, … etc.)

Occupy author examines archeology of debt

Deutsche Welle, 25 June 2012

Few books have provoked the kind of media hype, discussion and praise as David Graeber's "'Debt: The Last 5,000 Years" has in the past few weeks. DW looks at the movement and the man behind the book.

He doesn't stay in one place for long. One minute David Graeber is in London, where he teaches at anthropology at Goldsmith College, the next he's in Frankfurt at Blockupy, then in Cologne and Berlin for book releases, next stop New York. It's no wonder that Graeber is so busy: He's published three books in 40 days.

The best-known of the three, "Debt: The First 5,000 Years," was described by journalist and political talk show host Maybritt Illner and culture presenter Dieter Moor as "perhaps the most important book of the year." With the three publications, the man whose slogan is "We are the 99 percent" - now deeply ingrained in the system-critical Occupy movement - has managed to attract more attention than any of his fellow-campaigners before him.

He's an activist, anarchist and anthropologist who appears in all the most influential feuilletons. But what does Graeber have to say for himself?

Chronicling the history of debt 

"Debt: The Last 5,000 Years" is a
 radical look at the roots of the current
economic crisis

In 400 pages, Graeber chronicles the history of debt and, with that, the history of humanity. He begins the book with a slick, but provocative sentence: "Debt doesn't have to be repaid."

He then goes on to describe the economic systems of various indigenous groups and the invention of coinage, finally landing in the present. The assumption that barter trade was initially in existence before it was simplified with the introduction of coinage and later the credit system is, he concludes, idiocy.

Credit systems were in existence long before the invention of money. People who live together in a community are constantly lending things and helping each another, so everyone owes a debt in one way or another. But these debts have nothing to do with money, argues Graeber.

Graeber shows that debt has a moral dimension. He finds it remarkable that the moral imperative that debt must be repaid is now considered more important than other moral and ethical obligations. Why else could it be that governments in poor countries prioritize debt repayments over the basic nutritional requirement of their citizens? Debt, says Graeber, is a moral principle merely enforcing the power of the ruling classes, leading to the repression of the masses.

This system can't function forever. When too many people are in debt, uprisings and revolutions occur. The solution? Debt cancellation, says Graeber.

Success story 

FAZ editor Frank Schirrmacher described
Graeber's book as a "revelation"

This demand is in keeping with Graeber's style, having in the past represented a number of radical positions. He has no allegiance to any political party, calls himself an anarchist, is a member of the union Industrial Workers of the World and has researched power and the meaning of history and slavery in Madagascar. Graeber taught at Yale until 2007 when his contract was controversially not renewed. Critics believe the decision was politically motivated.

The 51-year-old American has secured himself a place on the bestseller list of Germany's prominent news magazine Der Spiegel, reaching fourth place last month. The success story of the book began in fall 2011 with the English edition. The editor of the Frankfurter Allgemeine Zeitung, Frank Schirrmacher, wrote that the book was "a revelation because the author has shown that one is no longer obliged to react in the system of apparent economic rationality." This review made Graeber's risqué theses socially acceptable.

But the media hype really began when the German translation of the book was published in May, in conjunction with the release of Graeber's "Inside Occupy," a monograph about the Occupy movement. The book reveals much about Graeber's political background: He was involved in the Occupy protests as an organizer and follower right from the start, while simultaneously analyzing, promoting and shaping the movement.

All of the major German newspapers were talking about Graeber - Süddeutsche Zeitung, TAZ, the Frankfurter Allgemeine Zeitung, Die Welt, Der Spiegel and Stern to name just a few. Most critiques of the book were benevolent. Graeber's theories were described as brilliant, illuminating, exciting. Graeber translated between worlds, between critics and supporters of the system, between academics and the media. He presented his complex theories in bite-size, easy to understand sections. He interrupts analyses to build strands of thought, while still remaining entertaining.

Playing by the rules 

The media have called Graeber the
"brains" behind the Occupy
movement

But it's not just the content of the book. It's Graeber, the person. The idea of the "99 percent" in the slogan "We are the 99 percent" comes from him. And even though he himself is one of the 99 percent, he knows the language of the one percent. He also knows the unwritten rules of getting heard in public.

On Maybritt Ilmer's talk show, Graeber was smartly dressed in a black suit-jacket. It was his 67th interview with the German press. Still, he remained polite, succinct and never looked bored. As radical as his thinking may be, his appearances are always in keeping with convention. He's well aware of how much conformity is necessary to inspire interest in non-conformist thinking. He's no madcap revolutionary; rather, he fits into the protocol of primt-time programming.

Above all, he's a figurehead for the so-called 99 percent. The media have bestowed a range of attributes upon him, from "mentor" to "brains" behind the Occupy movement, but also the moniker "intellectual superstar."

Reading his "Inside Occupy," one thing is clear: The last thing that Occupy wants is a leader. "Direct Action," basic democracy and no hierarchy are central to the movement. But Graeber is already easily available for the media. Just as he explains the history of debt, he can also easily formulate what Occupy is all about. Slogans such as "We explain why the system doesn't work" are more likely to be taken seriously when they come from the mouth of a Yale professor than from a 20-year-old with a hoodie and dreadlocks.

In the meantime, the media hype has trailed off, the financial system in still in place, and the reluctance to cancel debt hasn't changed. The revolution hasn't happened yet. Will it take another 5,000 years to rethink the financial system?

Author: Ruth Krause / hw

Editor: Kate Bowen