Accessible and honestly pragmatic introduction to key institutions in modern economies.
This book is set up as a series of letters for Yanis's teenage daughter Xenia. Though Yanis admits several times that she realistically won't read them all, the format works really well and elevates the fundamentally technical discussion to something more engaging.
Yanis begins the book by listing some of his bigger sources of inspiration, among which is Guns, Germs, and Steel by Jared Diamond. Though I haven't read it yet, I have read some of its critiques (e.g., from The Dawn of Everything). And I saw how some paragraphs from Yanis clearly came from GGS, including parts on the why of European countries conquering native societies around the world. Diamond writes as if European colonizers had some form of pre-determinism on their side; microbes and germs that natives were not resistant against. This underplays the infinitely more subtle—and human—reality of history. Europeans benefitted significantly more from alliances with native groups, for example. Ultimately, European imperialism stems more from political decisions than from pre-determinism, and its crimes are not absolved by the mere fact that Europeans "had the means" for global imperialism.
Yanis's writing also tied very nicely into my developing understanding of economies' complexities, as I've been reading Democratizing Finance by Fred Block and Robert Hockett. The latter is admittedly much more technical (though not on the level of actual scientific work in this field), but I found both to be revelatory with respect to the same subjects and ideas.
Yanis uses the term market society to mean a capitalistic society, contrasting it against societies with markets, which, after all, have existed for much longer. He also distinguishes between exchange value (market value) and experimental value (e.g., a sunset, a joke, a dive).
Market societies really began with the enclosure of the commons. People were driven from their lands, which were divided up among a new class of landowners, who then hired back people to work on their lands. Labour became commodified (i.e., gained exchange value).
The role of debt is another key point for understanding today's economies. It's something I would prefer to come back to in more detail when I'm done with Democratizing Finance, but let me quickly sketch some thoughts on debt as I currently understand it. Public debt is the enabler of our modern economy. It serves as the lifeblood of commercial financial institutions (i.e., government bonds being robustly trusted). Debts create money from thin air, and commercial banks split the inherent risk up and sell it off. States remain with the ultimate liability, because they are basically the only non-profit actor in the system. Debts are timetraveling devices. Also reminds me that I should still read Debt by David Graeber.
Economies and markets seem to be eternally trapped in irrational dilemma's and self-fulfilling suboptima. Again, it is only with the existence of the state as player that some of these deadlocks can be broken out of.
To divert society's course away from The Matrix-esque scenarios, Yanis argues that parts of the surplus value generated from increased automation should be public-owned (or worker-owned). I tend to agree with this, which is basically a reformulation of collective ownership of the means of production.
I also loved how Yanis gravitates towards using Greek mythology as a metaphorical device while explaining the admittedly abstract concepts in this book. Makes me want to read Stephen Fry's Great Mythology series.
I'll close with some sections I highlighted from the book.
While it is true that too much public debt can cause major headaches, too little is also a problem. Even Singapore, whose government is forced by law not to spend more than the money it receives in taxes, finds it essential to borrow money. Why? Because a market society's bankers need public debt as surely as fish need water to swim in. Without public debt, market societies can't work.
[..] bankers love government bonds: not only is a bond a loan that earns a nice rate of interest very safely (so much so, in fact, that it can also be used as collateral for taking out further loans from other banks), it can also be used as a commodity—a piece of property exactly like a painting or a vintage car that can be sold immediately if the bank is in urgent need of cash. Bonds are, in bankers' parlance, 'the most liquid of assets'. As such, they lubricate the banking system to keep its cogs and wheels turning.
If the economy is the engine of society and debt is its fuel, then labour is the spark, the life-breathing force that animates that engine, while money is the lubricant without which that engine would seize up.
[..] John Maynard Keynes, wrote the following: "The love of money as a possession .. will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease."