Comment by m-ee
18 hours ago
It never did.
In debt the first 5000 years Geaeber makes the case that pure “free market” trade has never really existed in “the west”. The closest to this ideal that’s ever happened was during the Islamic golden age enabled by religious prescriptions against usury.
>The closest to this ideal that’s ever happened was during the Islamic golden age enabled by religious prescriptions against usury.
How does are bans against consensual financial exchanges close to the "ideal" of the free market? It just sounds like you have an axe to grind about the financial system rather than describing free markets.
Usury and debt based economy creates a dynamic where being competitive in production is secondary to financialistion.
In short, instead of market being driven by demand and productivity, it is driven by financier curving out monopolies.
Peak Examples are Uber and AirBnB.
What makes this view more correct than say, "economies with marketing creates a dynamic where being competitive in production is secondary to marketing" and concluding that nothings a free market until we ban all advertising? After all, you can make a vaguely plausible argument about how marketing isn't really about the merits of the product, and therefore allowing it is antithetical to the free market or whatever
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No access to capital can and does constrain supply to a very high degree.
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...except Uber STILL faces competition, and I went back to hotels after finding AirBnB too pricy.
It is good and proper that people aim to create monopolies, as long as they want to do that in a productive and legal way! Monopolies are inherently dangerous, but the truth is that acquiring and maintaining one is not straightforward unless you can get the government to ban your competitors.
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Expand. I am typically against hard money gold bug libertarian arguments but your description seems interesting and I am open to being persuaded.
Usury (i.e. taking interest) sounds like free market to me. If you don't like my interest rates, borrow somewhere else.
>religious prescriptions against usury.
Without interest why would anyone loan money? Even the Islamic banking alternatives all just hide the interest charges.
Shares and Goodwill. You loan money for good well or share of an enterprise which comes with benefits and risks.
Usury is so delicious to many that it’s unfathomable to consider any other incentive comparing to it
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So equity instead of debt.
a stranger is asking you to risk $100k on his half-baked plan in exchange for nothing, and you say "sure go ahead take my money!"? no. it doesn't work like that in the islamic world.
as a borrower who's not allowed to compensate for your lenders' risk monetarily, your access to loans is severely restricted. Essentially you have to rely on your extended family. and instead of paying for the risk with interest payments, you have to pay with loyalty and subservience.
it restricts social mobility far more than the western model. it incentivizes clan structures. which incentivize cousin marriage.
power concentrates in the patriarchs of a million little family kingdoms. which causes all kinds of economic inefficiencies.
in the US, even if you're born without any family connections, as a healthy 20 year old you can find a job (hard work) that allows you to save $70k per year and invest it. when you're 30 you have $1M and a good credit history, you can easily leverage that to get a $2M loan at low interest rates, which allows you to start any kind of productive venture you want.
and you can do all this without owing your clan's patriarch access to e.g. your most profitable clients, or your daughters hand in marriage to his retarded son, or anything else he wants in exchange for his generosity.
Loaning money as per Islamic Law is a charitable act, not one of exploitation.
Nice to get a callback to previously acquired knowledge with what I assume is an arabizi (sp?) handle.
Islamic trade is certainly one of the best models out there but I think in many cases in practice it is still applied subversively.
It is not enough to ban mechanisms like usury, designed and intended to exploit.
One has to go after the very subversion of legitimate practices for illegitimate goals.
reasonable interest rates aren't exploitation. Business Loans serve a critical role in economic activity by putting free cash to more productive use.
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That's not true. Islamic finance forbids indefinitely growing interest. Sharia finance agreements involve fixed fees or equity shares. Late penalties can be collected but must be donated, not profit. In all cases, the borrower never owes to the lender for the lender to keep more an a fixed amount determined at the strat.
You can read Adam Smith if you're looking for definitions, there's no need to read charlatans.
Graeber was a confabulator with a very loose grasp of the facts, though.