© 2004, Takahiro Asawa.
It should be recognized that most relationships between people can be interpreted as forms of exchange. Exchange is the purest and most developed kind of interaction, which shapes human life when it seeks to acquire substance and content. – Simmel
Introduction: Three Basic Types of Exchange
The contents of social relations and the forms of them are different. With sheer glances at phenomena, people usually notice only the contents. What are the forms in here? They refer to the material or social conditions in which contents are created, circulated, or exchanged. For example, Hannah Arendt, in her critique of Karl Marx, refers to the difference of glaborh and gwork.h According to her distinction, labor merely engages in reproductions of the things existed, while works produce something new – attesting human creativity. But, this critique is missing the essence of Marxfs theory. Not that he ignored the difference between labor and work and focused on the former, but essentially the gformh blurs such a distinction. It does not matter whether a production is a work or a labor, if the capitalist forms of relations maintain the productions or circulations of its products (services or information) – wage-labor and the grasp of surplus value by capitalists. In this sense, itis important to see which forms of social relations the products go through – such as free contracts, wage-labor, aristocratic patronage, feudalistic forced labor, or reciprocal gift exchanges. Marx wrote:
What is a Negro slave? A man of the black race. The one explanation is as good as the other.
A Negro is a Negro. He only becomes a slave in certain relations. A cotton-spinning jenny is a machine for spinning cotton. It becomes capital only in certain relations. Torn from these relationships it is no more capital than gold in itself is money or sugar the price of sugar.
This relational view certainly influenced Georg Simmelfs distinction between the gcontenth and gform,h as clear from my quotation at the beginning of this chapter. I will also interpret economy through the analyses of various forms of exchanges. In this regard, Karl Polanyi, in his essay gThe Economy as Instituted Process,h categorizes three essential types of exchanges.
Empirically, we find the main patterns to be reciprocity, redistribution, and exchange. Reciprocity denotes movements between correlative points of symmetrical groupings; redistribution designates appropriational movements toward a center and out of it again; exchange refers here to vice versa movements taking place as between ghandsh under a market system.
Kojin Karatani applies this analysis of three types of exchange for his insightful study of what he calls gCapitalist-Nation-State.h His contention is that each one of these categories performs each type of the exchanges. Capitalism derives from the market exchange, the nation the reciprocal, and the state the appropriation-redistribution.
As the works of Marcel Mauss and other anthropologists have well documented, exchanges within an agrarian community are reciprocal. In the archaic world, such gift-like exchanges also characterized the constant and stable relationships among two or more communities. They were bound to reciprocate traditionally determined gequivalents.h Here, the relationship among members are mutual supportive, but the codes of communitarian reciprocity restrict everyday conducts of each individual.
The second exchange of appropriation-redistribution was conducted by feudal lords. In fact, feudal lords, with its military power – violence – enjoyed plundering, yet, in order to continue this appropriation, they had to redistribute some portions of their loot. In this way, they could behave as if they were the protectors of the people. This redistribution was, in a sense, similar to gift-giving. Justification of appropriations came from this similarity to reciprocity. They were also aware that such redistribution in fact would help the increase of productions among their subjects and lands, thus maximizing the amount they could appropriate.
The market exchange was different from these two exchanges. In fact, the people who were excluded from the above reciprocal communities started this exchange. Markets started in realms between communities. The development of cities and trades was the cause of modern capitalism.
But it is crucial to see the role of the absolutist states that helped the inter-regional market activities (mercantilism). Both absolutist states and merchants had the same adversaries: feudal lords. Now, the state took over from feudal lords the role of appropriation-redistribution exchanges. Merchants could engage in their international trades and the reorganizations of national industries as the state projects. When this merge of capitalism and the state was consolidated, in order to repress revolts from the other type of exchange – reciprocity of agrarian communities – the states attempted to subject people under its sway. The states tried to control the people as the subjects united to the statesf causes – usually invasions of other lands. The state-led nationalism was tried. Only after popular uprisings for human rights (in fact, the gnationfsh rights),however, was nationalism in the modern sense consolidated. Through the process of these movements, people idealized the nation as reciprocal. Such idealization to connect oneself with the imagined reciprocity also could not occur without linguistic or art movements.
Now, this gimagined communityh (Benedict Anderson) became the source of mutual supports. Here, people had to support each other, and those who were classified as outsiders were eliminated or discriminated. In order to reciprocate the unlimited gifts from national lands, they voluntarily fought against an enemy. The chief of the state was no longer a man detached from people, but the one chosen from the members of the nation – usually by election – as the peoplefs representative.
This was the consolidation of the nation-state. This term is a common word; but actually it should be described as the capitalist-nation-state – each one of them became the central institution of the three exchanges. The trinity of the capitalist-nation-state is almost unbeatable, basically because all these three are based on the essential exchanges and, together, they could supplement each otherfs failures (such as unequal distribution of wealth by capitalism is compensated by the gwelfareh state, or the tax levy of the state appropriation is veiled by the mutual supporting ideal of the nation). The only other possible way would be to create an alternative exchange to these three exchanges. That it would be the gassociationh – similar to reciprocity but combined with the flexibility of market exchanges and the democratic redistributions of common trust – is the contention of Karatani. I will substantiate, supplement and develop his theory. I will also refer to the related studies of several preceding thinkers here. The purpose of this chapter is, therefore, to show that it is difficult to overcome the trinity and the possible alternative would be associational exchanges.
In this chapter, I will analyze the modern forms of these three types of exchanges in detail in the following order: the nation, the state and capitalism. As Karatani has emphasized, these three represent their distinct types of exchanges; they are, therefore, disparate. However, they form the trinity – collaborations of each other. Hence, the combination between the two, or among three must be also analyzed. They are separated, yet connected.
Among the three types of exchanges, the reciprocal exchange stands at the core. This exchange exists even among group-oriented animals. Its essence is to return the equivalent of gifts one has received. The quality and the quantity of this gequivalenth is culturally and traditionally determined. Within agrarian communities, reciprocal exchangesare dominant. Such gift exchanges are compulsory and increasing bonds among members. Here is from Marcel Mauss:
First, it is not individuals but collectivities that impose obligations of exchange and contract upon each other. c Moreover, what they exchange is not solely property and wealth, movable and immovable goods, and things economically useful. In particular, such exchanges are acts of politeness: banquets, rituals, military services, women, children, dances, festivals, and fairs, in which economic transaction is only one element, and in which the passing on of wealth is only one feature of a much more general and enduring contract. Finally, these total services and counter-services are committed to in a somewhat voluntary form by presents and gifts, although in the final analysis they are strictly compulsory, on pain of private or public warfare. We propose to call all this the system of total services.
The gsystem of total serviceshwasindispensable for agrarian communities in order to maintain customs and to reproduce the same natural environments (plots for subsistence and the inheritance to children).
In the second exchange – appropriation and redistribution – the essence of gift giving is sustained in the form of redistribution. In return of being redistributed, people allow central authorities to continue to appropriate them. It is not only materials or services authorities redistribute. They maintain orders among their subjects. In spite of its similarity to the first exchange, the ability to appropriate and distribute huge gifts bestows the center a special position. This position enables them to stand above gift-exchanging communities. They seem to have objectified views, detached from everyday menaces.
Equivalent value in reciprocal exchanges is stable, because people have to continue tradition. This consistency maintains the feeling of fairness among all the community members – even though such uniformity means strict obligations at the same time. The maniac pursuits of exchanging equivalents also categorize market exchanges – but this time, the value equivalent is constantly shifting and determined every time in each exchange. But at least, in each exchange, markets can claim the fair reciprocity of equivalents – in this sense, the third exchange has the basis in gift exchanges. But also the legal power the second exchange produces is indispensable to secure the market contracts.
In this sense, these three exchanges are not only disparate, but connected and dependent on each other. In essence, reciprocal exchange supports two other types by being their basis. But it does not mean that they always collaborate harmoniously. Because they are different forms of exchange, the chance of conflict always exists. For example, popular people could revolt by claiming the reestablishment of the gmoral economyh – reciprocal and gfairh exchanges. This would happen when they believed that the institutions based on the exchanges other than reciprocity had threatened their lives. The other exchanges tend to overgrow the limit set by traditional reciprocity. The modern era has been full of these concessions and turnovers. But in reality, the aspirations for reciprocity usually fail to create gfair exchangesh as people have hoped. The state and capitalists often repress peasantsf revolts or revolutionary attempts by citizens. Then, the failures of the actualizations force the people to discover instead gimaginedh communities – the nations. These are, unfortunately, imagined ones. Without realizing the gfairh exchange in reality, popular sentiment for reciprocity will continue to gimagineh and gidealize.h
1. Agrarian Community, Reform and the Commons
The main concern of Emile Durkheim was the moral and normative unity of society. In his early ages, he envisions that the modern gorganich solidarity will derive from the functional interdependence of individuals. Because of the division of labor, these individuals lost gcommonality,h which was the central source of the primitive gmechanicalh solidarity. His analysis of this latter essence resulted in his later analysis of rituals. Rituals provide communitiesthe experiences of ecstatic and collective submissions to higherand sacred symbols. These symbols and memories of rituals galvanize the members for the social cohesion. This is g[a] society whose members are united by the fact that they think in the same way in regard to the sacred world and its relations with the profane world, and by the fact that they translate these common ideals into common practices.h But the fact gthey think in the same wayh is rigorously an unscientific description – something nobody can prove. They only gimagineh that they think in the same way or they tell so to interviews. What we have to focus on is that they engage in gcommon practices.h In other words, it has to be explained in material forms, or economical terms. Rituals reinstate communal definitions of reciprocity – traditionally understood equivalents.
Max Weber, in Sociology of Religion, traces the historical development of religion – from the ancestral cult to a more grationalizedh version. It is, however, wrong to consider that the history of religion took a linear development in reality. Generally speaking, the reciprocal exchange creates the form of cult. Complex ranks of gods and taboos set the stable rules of equivalency for community members without allowing them to question its order. On the other hand, the rationalized form of religion guarantees that even if detached from onefs communities, as long as staying in the same religion, one can trust others. It will also guarantee the universal mode of civilized manner or conducts – civility. Then, the both forms of religion – the cult and the rational salvation religion –are tied to the three essential forms of exchange. Cult-like beliefs have remained in the modernity, as long as reciprocal exchanges stay as the necessity of life. Rationalized religions existed in antiquity if the appropriation-redistribution exchanges guaranteed inter-communal trades.
The expansion of the capitalist economy induced the commercialization of agriculture – especially in England, landowners carried out enclosure, thus excluding peasants out of farm lands. Detached from any means of production, former peasants had to seek for someone who owned the means. The state also helped the disintegration of agrarian communities through taxation. Needs to pay tax compelled peasants to seek for sourcesto attain money. Thus, they became wage-laborers. Certainly, this commodification of labor power was giving certain freedom to peasants. But it also put workers in a weak position of a seller – selling their labor power commodities.
These land reforms dissolved agrarian communities. This process caused, on the one hand, anxiety among peasants, who had followed grituallyh determined reciprocal exchanges, but on the other, emancipated them from communitarian constraints. In this regard, land reforms were not entirely negative events. This process had, however, dissolved another custom of agrarian communities – gcommons.h They were similar to communitarian reciprocity, but the uses of them were more or less dependent on individual necessities. They can be categorized as the social trust wealth – the mixture of reciprocal and gassociationalh exchanges. Of course, there existed certain limits to such uses to avoid the over-consumption of natural resources – gthe tragedy of the commons.h Such places were greatly important for adjusting seasonally or other shifts in peoplefs needs – especially for the relief of poor people. The major blow to the people in agrarian communities was the loss of – the privatization of – these commons, more than the dissolution of communities themselves. Here from Barrington Moore Jr.fs analysis of land reforms:
c innumerable peasants lost their rights on the common lands of the villages as the great landlords absorbed these lands. This was an age of improvement in agricultural techniques, such as the increased use of fertilizer, new crops, and crop rotation. New methods could not be applied at all in fields subject to the rules of common cultivationc
the rights of common played a large part. For cottagers and certainly for the landless laborers who had only customary but not legal usage of the common, the loss of this right or privilege meant disaster.
cgenerally only the young, the unmarried, or the village craftsmen were willing to leave home—and only such individuals were wanted by the new industrial employers. Mature men with families were not as trainable nor could they as easily tear themselves completely out of the fabric of rural life. Remaining on the soil, they had recourse to their glast righth—the right of poor relief.
In the above quotation, Moore insightfully analyzes the process of dissolution of gcommon landsh and how the peasants started to rely on gpoor relief.h Obviously, the modern state took over this role – redistribution to the poor. Because of its own interest in maximizing its revenues – appropriation, however, the state was impossible to eliminate the discontents among the populace completely. Strong demands or even revolts from the people were inevitable.
In reciprocal exchanges, it is gmoralh to follow the codes of communities. Then, the market exchange, which compels the constant shift of value, would be gimmoral.h The popular sentiments for reciprocity – mutual support and dependence – have been backfiring against the robust activities of profit-maximizing economy. We find a good example in what E.P. Thompson rightly callsthe gmoral economy.h It is unnatural gthat any man should profit from the necessities of others... [I]n time of dearth, prices of enecessitiesf should remain at a customary level, even though there might be less all aroundh. This is ga consistent traditional view of social norms and obligations, of the proper economic functions of several parties within the community, which, taken together, can be said to constitute the moral economy of the poor.h Because the fairness is tied to the reciprocating of traditional equivalents, constantly shifting value judgment appears as unfair.
But again, it is important to see the difference between conservative demands for returning to idealized reciprocity and the sense of fairness contained in the commons. Even though people repeatedly fail the attempts to recover commons, the necessity of social trust wealth is universal. The popular cry for the fairness in economy – the moral economy – arises from the indispensability of the commons. The problem is that, because of their similarities, people often mix up reciprocities with the associational commons. This is the reason why modern attempts for fair exchanges end up in the rituals of idealized commonality – the nation. This idealist concept does not have concrete units. It is merely an gimagined community.h Even though the nation is an idealized reciprocity, it does restrain the conducts of the people significantly – sometimes people are even gwilling to die for the nation.h One of the reasons is that in an imagined community, people feel that they are receiving unidirectional gifts. The form of reciprocity is the never-ending repetition of the same amounts of gifts:
x quantity of the product X – y quantity of the product Y – xX – yY – xX –
This form is idealized and the concrete connection of gift-exchange becomes missing. Now, the people stay at the position before giving back the reciprocal gift:
xX – yY – xX - - - - yY
This divided line (- - -) indicates that this gift-return is idealized and never realized. The people at this position of returning feel the endless aspiration to give back the gift – obligation to contribute to the idealized gcommunity.h
There is another reason why the strong restraints of the nation work. The process of gimaginingh or gidealizingh itself involves people in attaching themselves to the nation. I will call this process the gsocial anesthetizationh and analyze it in the next section.
2. Commons Idealized – Reciprocity and the Social Aesthetization
In the long course of modernization, feudal or aristocratic ideals – human sentimentsor passions for heroic acts – had shifted to those for economic interests, as Albert Hirshman analyzed. Economic interests compelledpeople to gdisinteresth in religious or customary judgment of value – reciprocal exchanges of traditional equivalents. Use value of commodities is usefulness for each individual purchaser. Value judgments of equivalents are only temporary now.
But this detachment, on reverse, became the potential for the idealization –gbracketingh the economic interests again and pursuing gdisinterestedh exchanges – art.
From Romanticism on, artists have aimed at the autonomy of art (art for artfs sake)– the detachment from religious, courtly or bourgeois patrons. As Pierre Bourdieu points out, this movement went parallel with the development of markets for art works. In this sense, romanticistsf autonomy was dependent on the development of capitalism. Because art markets provided the income, they could proclaim the autonomy. Before making simple critiques of commercialization of art, we have to keep in mind these roles of markets for the independence of artists.
At any rate, the concept of autonomous art itself was the critique against the development of the capitalist economy. In fact, similar to the Romantic art, the modern concept of gcultureh had emerged only after capitalism compelled the detachment of individuals from reciprocal or feudal human relationships (such as agrarian communities, religious communities or court societies). Through gcultureh people imagined that they could establish reciprocal or associational exchanges against the capitalist market. For example, against the global power of the US economy and Soviet communism, Nazis emphasized the solidarity of German ethnicities. They tried to embed global economy within the control of the national culture and the state power. Fascism was a degenerated form of the anti-globalization movement. Its peculiarly strong concerns for morality and aesthetics were natural outcomes of their essential character – the idealized recovery of the moral economy.
Walter Benjaminfs essay eWorks of Art in the Age of Mechanic Reproductionf points out the liquidation of aura that was attached to the goriginalh artworks by ggeniuses.h  The development of reproductive techniques had decreased the importance of originals or gauthenticity.h The reproduction undermined authorfs originality. In other words, gaurah was the outcome of a certain social setting.
But, the mechanic reproduction was not the phenomenon that started neither in Benjaminfs era nor with photographs. Print mechanism Gutenberg devised (around 1450) was the beginning of reproductive techniques. In fact, reproductions did not gliquidateh the aura, but transformed it into another gidealizationh or gimagination.h For example, when Luther translated and published the Bible in a German dialect (1522), people suddenly started to view this dialect as something sacred – aura. This gidealizedh aura was influential for this dialect to become the gnationalh language. Here is Peter Bürgerfs critique on Benjamin:
For Benjamin, art with an aura and individual reception (absorption in the object) go hand in hand. But this characterization applies only to autonomous art, certainly not to the sacral art of the Middle Ages (the reception of the sculpture on medieval cathedrals and the mystery plays was collective). Benjaminfs construction of history omits the emancipation of art from the sacral, which was the work of the bourgeoisie. One of the reasons for this omission may be that with the lfart pour lfart movement and aestheticism, something like a resacralization (or reritualization) of art did in fact occur.h
But again, Bürgerfs gconstruction of historyh here misses the gresacralizationh that happened before the emergence of the romanticism. The existence of potential new readers, for example, compelled Luther to gresacralizeh a dialect of a local community by making the God speak through it. What happened in Romanticism was to treat gthish sacralization as self-evident – something always existed since the beginning of the history. New readers – merchants – welcomed Lutherfs religious reform, which meant the negation of Catholic rituals – stable reciprocity – and instead recommended the individual reading of the Bible. Its interpretation is inevitably temporary shifting. This gresacralizationh was different in character from the former feudal or cult gaurah – local religious communities. Kojin Karatani, referring to the Kantian concept of the sublime, explains its difference from cult or greligious aweh:
the sublime is gself-alienationh in the act of discovering an infinity of reason in the object that is contradictory to the self. It goes without saying that the sublime is not a manifestation of religious awe. An object that overpowers a human – lightning in the night sky, for instance – is deemed sublime only insofar as its cause is scientifically evident and the spectator is protected from its brutal force. If not, the lighting remains an object of religious awe or supernatural attributes, like a divine message. For this reason the sublime as an aesthetic judgment is connected, like the flip side of a coin, to the epistemology of modern science.
But, according to Karatani, the philosophy of Kant ignores the material form of the capitalist economy. It was crucial to have the extension of the monetary form of exchange for the concept of art to emerge. This form negated collective rituals and enabled the privatization of value judgment.
At this point, it is imperative to consider a realm that Kant did not scrutinize, a place where all differences are unconditionally bracketed: the monetary economy. This is where manifold use values and the practical labor that produces them are reduced to exchange value, or, in Marxfs terms, gsocial and abstract labor.h c In other words, in the world of the commodity economy we find an attitude totally indifferent to the difference among things -- their use value -- and only concerned with one thing: interest.
c For the romantics, then, Kantian disinterestedness functioned mainly to bracket economic interest, a practice that was manifest as gart for artfs sake.h More crucial in this context is that Kantian bracketing or, namely, purification of all domains is inseparable from the capitalist economy that nullifies differences of all domains. c Hence, ever since art came to be art it has been irrevocably connected to commodification like the flip side of a coin. Disinterestedness as an aesthetic stance is made possible in the supremacy of economic interest, therefore, it is impossible to escape the latter by bracketing it.
In the same manner, the money form that gbracketsh the ethical and aesthetic differences was also influential for the development of modern science. Here from Schumpeter:
c capitalism develops rationality and adds a new edge to it in two interconnected ways.
First it exalts the monetary unit – not itself a creation of capitalism – into a unit of account. That is to say, capitalist practice turns the unit of money into a tool of rational cost-profit calculations, of which the towering monuments is double-entry bookkeeping. Without going into this, we will notice that, primarily a product of the evolution of economic rationality, the cost-profit calculus in turn reacts upon that rationality; by crystallizing and defining numerically, it powerfully propels the logic of enterprise.
Schumpeter analyzes how the extension of monetary units and capitalism generated the rational thought – citing examples from mathematico-experimental science to modern hospitals. Of course, the process was not unidirectional. The development of scientific epistemology decreased the social anxiety for natural disasters. In this sense, neither the state protection nor the rituals to ease rages of gods (religious awe) seemed necessary. At the same time, however, science analyzed the system of natural futility. New knowledge, then, compelled the people to focus on the quality of lands and the health of young people. Scientific answers to increase human futility were, first, education. The entire nation now had the equal chance of education. Second, the morality of people would increase the docility of workers. The need of rest, recreation was also discovered as essential. National holidays were obliged. People now discovered new rituals – national activities.
The states certainly supported these trends. But without the popular cry for the idealized reciprocities, it is hard to understand the strong attachments to such cultures. Benedict Anderson states the difference:
But it is doubtful whether either social change or transformed consciousnesses, in themselves, do much to explain the attachment that peoples feel for the inventions of their imaginations—or, to revive a question raised at the beginning of this text—why people are ready to die for these inventions.
Nationalism was the inversion of the popular calls. Because actual reciprocity or commons no longer existed, people tried to aesthetize and ritualize their imagined worlds. Benedict Anderson argues that the nation as the gimagined communityh emerged from what he terms print capitalism. Multiple publications of the same copy provided the common language of a nation, which previously had various spoken languages.
These fellow-readers, to whom they were connected through print, formed, in their secular, particular, visible invisibility, the embryo of the nationally imagined community.
Second, print-capitalism gave a new fixity to language, which in the long run helped to build that image of antiquity so central to the subjective idea of the nation. As Febvre and Martin remind us, the printed book kept a permanent form, capable of virtually infinite reproduction, temporally and spatially. c
Third, print-capitalism created languages-of-power of a kind different from the older administrative vernaculars. Certain dialects inevitably were ecloserf to each print-language and dominated their final forms. 
The daily publication of newspaper united the readers to the common concerns of the nation.
But in fact, such gnational cultureh was something invented when one tried to criticize capitalism. And these efforts to solve the problem of capitalism – inequality of wealth and the severe cycle of recessions –often ended up within the trinity of the capitalist-nation-state. Nationalism is the gaesthetizedh or gidealizedh form of reciprocity. Its basis was in the gresacralizationh – such as the individual readership of the Bible. This gbracketingh of collective rituals – traditional value judgment – was the source of gimagination.h The act of bracketing, without gde-bracketingh constantly, induces people to idealize continuously the world created by gbracketingh – the nation. This idealization certainly could develop to the level of self-alienation – the sublime to die for onefs inventions. But this idealization is difficult to discard, because its essence resides in the human need for exchanging gfairh equivalents. For example, the disappearance of religion in the modern world seemed inevitable. But, religion, or more accurately speaking, a cult is the essential form of reciprocal exchanges. For this reason, religions have strong reasons to continue or to recover repeatedly. The problem is that both nationalism and modern religions are gidealizedh forms. They will not essentially bring back the lost fairness – associational commons.
Orthodox Marxists since Engels have understood the state as the part of superstructure based on the capitalist economy. They have counted the Base-Superstructure theory as one of the biggest contributions of Marx to the world. Peculiarly, however, Marx states such an idea explicitly only once in the gPreface to the Contribution to the Critique of Political Economy.h In fact, the Base Superstructure theory – or the theory of historical materialism and the labor theory of value (exploitation) – was the idea existed before Marx – in the works of left Riccardians or German historical economists. Marxfs works cannot be categorized into these simplistic approaches; they are, as represented by the 18th Blumaire or Capital, highly complex and detailed studies of the society and economy.
With the Base-Superstructure theory at hand, orthodox Marxists often assigned the state only an auxiliary role – the use of violence to maintain the social order to help the domination of bourgeois. But as I have emphasized, the state and the nation have their own distinct rules of exchange.
Because of its possession of violence, the state can appropriate from others – both inside its territory and outside. Here lies the statefs interest: maximizing the revenue of appropriation. This is different, however much look similar, from capitalistsf motive of maximizing profits – the result of gfairh exchanges within markets. As I have explained before, the state redistributes parts of its revenues to justify the plundering. In fact, this redistribution by way of social welfares, the maintenance of social infrastructures or the protection from outside enemies often result in the increase of social products, thus expanding the amount the state can appropriate. This is the core of the seemingly peculiar exchange of the Statefs appropriation with its redistribution: the exchange between the state and its subjects.
According to a World Bank report, in 1999, 24.7 percent of gross domestic products of the world went to governmentfs revenue. What was the historical origin of this statefs revenue?
Charles Tilly provocatively compares the state with an organized crime:
If protection rackets represent organized crime at its smoothest, then war making and state making – quintessential protection rackets with the advantage of legitimacy – qualify as our largest examples of organized crime. Without branding all generals and statesmen as murderers or thieves, I want to urge the value of that analogy. At least for the European experience of the past few centuries, a portrait of war makers and state makers as coercive and self-seeking entrepreneurs bears a far greater resemblance to the facts than do its chief alternatives: the idea of a social contract, the idea of an open market in which operators of armies and states offer services to willing consumers, the idea of a society whose shared norms and expectations call forth a certain kind of government.
It is almost self-apparent that the possessor of strong military means could plunder from others. Feudal lords were able to extract rents from peasants because of such power. From todayfs viewpoint, such a violent appropriation seems morally unjustifiable. But for aristocratic ideals, violent appropriation was the symbol of a heroic activity. Here is from Simmel:
First, the general acceptance and approval of robbery, as the subjective and normatively unregulated seizure of what is immediately desired. Long after the time of Homer, piracy continued to be regarded, in the backward agricultural areas of Greece, as legitimate business, and some primitive people consider violent robbery more noble than honest payment. This is also understandable; for in exchanging and paying one is subordinated to an objective norm, and the strong and autonomous personality has to efface himself, which is disagreeable. This also accounts for the disdain of trade by self-willed aristocratic individuals. On the other hand, exchange favours peaceful relations between men because they then accept a supra-personal and normative regulation.
The violent appropriation favored by aristocratic individuals was repressed when kings attempted to monopolize its revenues. The development of the money economy and credit system increased the transferability of wealth across lands, which induced the emergence of central tax-appropriation machine – the state. It is also important to notice that the global sea voyages and the absolutist states (and the Protestant) emerged at around the same time – the sixteenth century. Overseas territorial and economic expansion led by European powers also increased the revenue they could appropriate. Kings tried to persuade or coerced their subjects and feudal lords to admit that kingsf concerns were also the gstateh affairs. Here emerged the absolutist regimes. Josef Schumpeter describes the development of such gtax statesh:
Taxes not only helped to create the state. They helped to form it. The tax system was the organ, the development of which entailed the other organs. Tax bill in hand, the state penetrated the private economies and won increasing domination over them. The tax brings money and calculating spirit into corners in which they do not dwell as yet, and thus becomes a formative factor in the very organism which has developed it.
Schumpeter also states an important suggestion that the separation of gprivateh and gpublich was the consequence of such tax statesf efforts to maximize revenues. What was determined taxable was assigned the term public. In contrast, aristocrats, merchants or bourgeois attempted to maximize the sphere of family or domestic domain, which was defined as private. Privacy in this sense was not related to human rights and so on, but was their attempts to escape from taxations. g[T]he individual economy of each family had become the center of its existence; and that thereby a private sphere was created which was now to be confronted by the public sphere as a distinguishable element.h On the other hand, giving up certain amounts of income for taxation guaranteed the freedom of economic activities, detached from feudal subjugation. gThis is, therefore, the right to buy oneself out of a personal obligation by means of money.h The essential element of capitalism – the private property – was, therefore, the outcome of the concession with the State.
Theda Skocpol reinstated the statefs own functions and interests. gState organizations necessarily compete to some extent with the dominant class(es) in appropriating resources from the economy and society.h She also claims that the statefs core interests are to compete with other states and maintain internal order. And such interests could sometimes interfere with capitalists:
The state normally performs two basic sets of tasks: it maintains order, and it competes with other actual or potential states. c Although both the state and the dominant class(es) share a broad interest in keeping the subordinate classes in place in society and at work in the existing economy, the statefs own fundamental interest in maintaining sheer physical order and political peace may lead it – especially in periods of crisis – to enforce concessions to subordinate-class demands. These concessions may be the expense of the interests of the dominant class, but not contrary to the statefs own interests in controlling the population and collecting taxes and military recruits.
Here Skocpol tries hard to argue with Marxist understanding of the state as the tool of a dominant class. The state can be the tool of a dominant class, but also does have its own subjective motive of action. She maintains that the competition for overseas domination was not original to the interests of capitalists. Merchants rather prefer a peaceful stabilization of international geopolitics, in which they can engage in commerce.
The international states system as a transnational structure of military competition was not originally created by capitalism. Throughout modern world history, it represents an analytically autonomous level of transnational reality – interdependent in its structure and dynamics with world capitalism, but not reducible to it.
I agree with Skocpol in this account; another question is, however, why such a monopoly of violence by the state can gain the support of the capitalists or the nation. The statefs gprivateh interests have to be recognized as the gcommon exigency.h In fact, there is a gcommon exigency.h The appropriation-redistribution exchange exist all around the world. It is not only because gviolenth appropriation is by nature prevalent, but also the opposite pole – redistribution – is a universal necessity. Many social infrastructures are impossible to build or run solely by private-interest companies. Without short-term gains in mind, social institutions must engage in gpublich enterprises. States legitimize tax collection by exploiting this universal need of the social trust – commons (even though the typical bureaucratic inefficiency would soon prove to show itself).
Some would argue that the free use of the statefs violence is no longer possible. In many ways, todayfs states have legal restrictions on their conducts; such as the legislative board restricts executive agencies by issuing laws. Since such parliament members are elected by peoplefs votes, the laws are understood to represent the will of the people. In his Transcritique, however, Karatani remarks that the wills of individuals are so various and unstable that in fact they can be hardly grepresented.h Besides, state bureaucrats usually draft laws rather than legislators. This is an old Hegelfs contention that the representative system or election is rather the mechanism to let the citizens to believe that they choose the laws that actually bureaucrats have inscribed. I quote from his Philosophy of Right:
The purpose of the Estates as an institution is not to be an inherent sine qua non of maximum efficiency in the consideration and dispatch of state business, since in fact it is only an added efficiency that they can supply. Their distinctive purpose is that in their pooled political knowledge, deliberations, and decisions, the moment of formal freedom shall come into its right in respect of those members of civil society who are without any share in the executive. Consequently, it is knowledge of public business above all which is extended by the publicity of Estates debates.
The opening of this opportunity to know has a more universal aspect because by this means public opinion first reaches thoughts that are true and attains insight into the situation and concept of the state and its affairs, and so first acquires ability to estimate these more rationally. By this means also, it becomes acquainted with and learns to respect the work, abilities, virtues, and dexterity of ministers and officials.
The core of the state mechanism is the executive agency – bureaucracy – and the monopoly of violence – army and police. Of course, inspections by jurisprudential or legislative democracy exist. But there is a limit with these institutions; because it is gonly an added efficiency that they can supply.h Only the democratization of the bureaucratic system itself can change the issue of the appropriation-redistribution exchange.
Again, the appropriation-redistribution exchange is prevalent; because, as of violent appropriation, social redistribution of wealth is also a general necessity. Even if the violent appropriation were abolished from the world, the redistribution would remain indispensable. In the next, I will examine this social trust wealth in detail.
The Collaboration of the State with Capitalism and the Nation
Capitalism cannot totalize its power to whole societies. Capitalism requires labor power and raw products, but it cannot directly produce them. For maintaining such fields, capitalism needs other institutions. Similarly, even a fervent nationalism cannot maintain its own land fairly without capitalistic economic developments and the strong state military. The state is the same: gIn any case, the state has its definite limits. These are, of course, not conceptually definable limits of its field of social action, but limits to its fiscal potential.h These three institutions – the state, capitalism and the nation -- have to rely on each other.
As Skocpol has indicated, statesf interests of world domination can interfere with capitalistfs interests. Nevertheless, to expand markets, merchants cannot help but welcoming military supports from the state. Historically, this appeared as mercantilism – the collaboration of the absolute state and merchant capitalists.
Before the appearance of the absolute states, there was no mercantilism, but merchant activities, limited to cities or towns. When absolutist monarchy emerged,previous antagonistic relation between feudal lords and merchants – as is shown by the city fortifications – had shifted. Internally, mercantilist states created gnational marketsh and eliminated guilds or other traditional trading customs. It set the national boarder to accumulate the wealth created in the world economy within.
The development of industrial capital – the development of machinery – drove further colonization. Machinery required huge amounts of cheap raw materials and also inexpensive labor powers. Also generally, once the product and process innovations of a certain product had developed to a certain level, capitals could no longer gain enough surplus value from its technological development. Then, the capitalist-state reinforced military attempts for colonization in order to grasp cheap labor. In order to maintain the supply of cheap labor, the state closely regulated the international currency rate. Globalization has been always inherent in capitalism.
Not only colonizing outside the country, but also protecting inside from foreign economic powers is the task the state performs. Relatively weaker industries have sought governmental protections. Wallerstein points out:
the fact that capital has never allowed its aspirations to be determined by national boundaries in a capitalist world-economy, and that the creation of gnationalh barriers – generically, mercantilism – has historically been a defensive mechanism of capitalists located in states which are one level below the high point of strength in the system. c In the process a large number of countries create national economic barriers whose consequences often last beyond their initial objectives. At this later point in the process the very same capitalists who pressed their national governments to impose the restrictions now find these restrictions constraining. This is not an ginternationalizationh of gnationalh capital.
Hence, on the one hand, import-restrictions of competitive electricity products, and on the other, forcing free entrance to the Third World markets through WTO, can both become the policy of one state.
2. Internal Order
The collaboration between the state and capitalism is not limited to external coercions. Especially in the peacetime, both prefer to maintain inner political and social order in a softly manner. There arise many methods of preserving the order. One of the most obvious schemes is the police force. As the famous Max Weberfs definition indicates, the state is the sole proprietor of violence.
The establishment of the legal system is another important role of the state. As Benjamin made famous in his gCritique of Violence,h legality is in essence never substantiated without violence. Capacity to gpunishh is the basis of jurisprudential institutions. In the state legal system, three original sources of rules are intermingled – the order from the state, contract rules for the capitalist economy, and traditional customs. Each of these three sources is based on the necessity to run the three types of exchange. In modernity, these three sources of legality (or morality) are accumulated into the state.
States are also involved with the maintenance of market functions and order. Shanahan and Tuma indicate the relation of banks with the state:
Long before the emergence of modern central banking and the regulation of financial institutions, banks and governments were interdependent. Governments turned to bankers for loans while also providing the bankers with crucial forms of protection -- including, most importantly, help in collecting defaulted loans.
Today, bank notes are generally used as paper money. Governments could not issue such gtrusth money, because their needs to collect state bonds – debt – for flexibly adjusting their finances would undermined the very gtrusth of the state notes. But, at the same time, the guarantees given by the state to collect tax by the central bank notes and to return its bonds by them are essential for the gtrusth of the bank notes. The collaboration of the state and capitalism is such a complex and co-dependent one.
The market system, when left by itself, constantly creates problems: most notably, unfair distribution of wealth and anarchic cycles of recessions. There occurs the need of state regulations. In order to increase effective demands, governments should incite investments by lowering interest rates, and simultaneously in some cases, must provide public investments actively.
One of the crucial works of the state was the establishment of private property rights. Here Fred Block notes, gIn any complex society, one of the statefs inescapable tasks is to establish a regime of property rights. In constructing such a regime, a Lockean conception of private property in which the individualfs ownership rights are absolute is neither possible nor desirable.h As Karatani emphasizes in his Transcritique, the modern style of private ownership was actually given by absolutist states on the condition that owners pay tax to the latter. In this sense, the private ownership is actually the state-guaranteed ownership. On this account, the abolition of private ownership is not to establish state ownership, as Marxists originally thought, because they are in essence originating from the same source: the state power to order. In contrast to gprivate,h toward the end of Capital vol.1, Marx indicates the possibility of gindividualhproperty:
The capitalist mode of appropriation, which springs from the capitalist mode of production, produces capitalist private property. This is the first negation of individual private property, as founded on the labour of its proprietor. But capitalist production begets, with the inexorability of a natural process, its own negation. This is the negation of the negation. It does not re-establish private property, but it does indeed establish individual property on the basis of the achievements of the capitalist era: namely co-operation and the possession in common of the land and the means of production produced by labour itself.
Here, Marx is indicating that gindividual propertyh is the developed form of capitalism. In the third volume of Capital, he hints at the potential created bythe gsocialh possession through stock markets or banks. This social possession cannot retrograde into the monopoly of property – the state ownership. The gsocialh possession is something both gindividualh and gin commonh at the same time. It is clear that he juxtaposes the bothin this paragraph. There is a customary interpretation of this passage, such as consumer goods to individuals on the one hand and the means of production to the state on the other. But this is simply similar to the justification of the statefs taxation – gpublich taxable gprivateh not – as I have explained through Schumpeterfs findings. This will not create any new type of social or individual property system. Marx, in his Capital, repeatedly claims that the credit system will help bring out such a new property system, but it cannot create it solely by itself. I will come back this topic at the section of the alternative economy.
3. Public Goods
The other crucial purpose of the statefs redistribution is the formation of the social infrastructure,whose nature is different from private commodities or goods. Private economies can hardly provide it, due to its relatively small potentials for gaining surplus value (because of its relative immobility, long construction time, and the public necessity to lower the fee to use it). Earlier, Adam Smith mentioned it: gerecting and maintaining those public institutions and public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual or small number of individuals.h From a social viewpoint, social infrastructure plays a highly important role to create local environments.
Kenfichi Miyamoto (1967) applies Marxfs analysis to his study of social goods. This is the premise and basis of the department I (the means of production) and the department II (consumer goods) – he, therefore, calls it the department 0. Furthermore, the department 0 is also, like departments I and II, divided into a department 0i (social goods used mainly for social or private production, which is the source of the accumulation of capital) and 0ii (social goods for social or private consumption).
For example, the former 0i includes industrial complexes, roads, ports, airports, railways, telecommunication, irrigation, power plants, military facilities, etc. The department 0ii includes public utilities, commuting trains, parks, nurseries, hospitals, educational institutions, cultural or entertaining facilities, etc. To be sure, both departments share many infrastructures such as roads; however, their formation can be leaned toward either one of the two (often to the production side, for example, a better transportation system in industrial or office areas than in residential areas).
In order to explain the statefs involvement with the construction of public goods, some scholars point out popular pressures, such as political protest (social demonstrations, protests, boycotts, strikes), educational needs, or social democratic force (labor unions, leftist parties, voting power of workers). However, these explanations cannot explain the development of what Miyamoto calls social goods for production (the department 0i).
The need of capitalism influences the development of social goods for productions (department 0i) more than the other (0ii). The state hurries the construction of the department 0i in order to modernize industries quickly, while keeping the development of living environments lower.
4. Financial and human revenues.
As clear from the above observations, capitalism usually benefits from its collaboration with the state. National citizens can also gain as the consequence of the development of social goods or services for public consumptions. Then, what is the advantage for the state? It is obviously the maximization of their tax revenues as the result of effective redistribution. The state cannot sustain without proper amounts of tax revenues. g[T]he state, as a condition of its power, must organize its economic bases and encourage economic growth as an ongoing source of revenue.h
It is not only money that the state receives from the capitalism and the nation. Human and other material resources (including arms, trans-communication systems and so on) are indispensable for the state organization. Capitalism supplies and develops various goods with new technology. The continuing supply from the nation to police, army and other task forces guarantees the monopoly of violence, while various technical jobs require a complex bureaucracy system. In order to receive loyal citizens (subjects), the state distributes or intervenes into education.
Yet, in order to discourage wills of citizens to participate in politics from going further, the state quickly establishes representative parliaments. Because citizens gvoteh representatives, people feel that they are actually participating in politics. However, this is an illusion, because represented politicians actually do not directly represent the people who vote, but represent some powerful voice-makers and groups of bureaucrats. As Kojin Karatani points out, since secret votes – indispensable for liberal democracy – hide who has actually voted who, politicians are detached from citizens, yet preserve the claim that they were elected and therefore represent the people. As the previous quotation from Hegel suggests, parliament is a complex system to legitimate the actions and decisions of the gomnipresenth bureaucracy. The core of the state is not the parliament, but the bureaucracy, army and the absolute leader in the case of crisis.
This systematic limitation of citizensf participations into politics through representation led the people like Proudhon to anarchism. But his idea differs from other gillusoryh anarchists. He has recommended the federalism based on autonomous local governments. In this sense, we can see the similarity with the idea of liberalists, such as Alex de Tocqueville. I will not delve into this point, but such an gassociationalh decision-making system would be the only alternative to the state.