Note on Money and Taxation (#2)

A brief rejoinder to the previous post on Deleuze and Guattari’s neo-Chartalism—

Alla Semenova and L. Randall Wray (of MMT) fame have a paper on the “Rise of Money and Class Society” that looks at the way that the state creation of money is historically tied to the emergence of class stratifications in society. It revolves around the work of the economic historian John F. Henry—and the discussion of Henry’s work on the emergence of money in ancient Egypt is particularly fascinating in light of Deleuze and Guattari’s model of the Urstaat and taxation. Here’s some heady chunks:

Recognizing the importance of the division of labor, tribal societies would at some point designate a portion of the population to specialize solely in hydraulic activities to improve their ability to control the Nile. At that time, a fixed share of surplus production would be designated for hydraulic activities and projects. As surplus production grew over time, with the share devoted to hydraulic activities remaining unchanged (as it was fixed by convention), the absolute amount of goods flowing to hydraulic engineers from the tribal villages grew. As this development took place gradually (due to the gradual increase in the surplus production), the absolute increases in tribal contributions to hydraulic projects were invisible at first. Contributing to this was also the physical separation of the engineers from the rest of the community.

As hydraulic engineers began to accumulate goods beyond that which was necessary for the carrying out of the hydraulic projects, the substance of social relations between the engineers and the tribal communities started to change. While the appearance of social relations may not have changed (after all, as customary, a fixed share of surplus production was flowing to the engineers), the substance of those relations was undergoing a fundamental transformation. Henry explains that with the growth of the surplus, all members of the community saw a rise in their standards of living. However, the hydraulic engineers saw a relatively greater increase, given that a fixed share of a growing surplus was being channeled to a relatively small group of the population…

By the time inequality came to be strikingly visible, the now-dominant class (the former hydraulic engineers), needed to justify the new socioeconomic relations, as well as keep the flow of surplus production moving in their direction. To achieve that, the dominant class had to “present the veneer that nothing fundamental had changed when, in fact, everything of substance had been altered”. And it was through the apparatus of religion that the new ruling class presented an appearance of old communal relations, thus maintaining its grip on socioeconomic power. Specifically, hydraulic engineers now turned priests, subverted the substance of tribal totemism by elevating the priest-king to a position of authority in communicating with nature. In substance, this amounted to the rise of state religion, while communal obligations to support hydraulic projects were converted into “taxes” aimed at maintaining a privileged segment of the population. Furthermore, a bookkeeping system had to be developed through which tax assessments and payments could be recorded. And it was within this administrative bookkeeping context that a standardized unit of account—the deben unit—was introduced.

The deben unit was initially equated to 92 (or 91) grams of wheat. Later in the Old Kingdom, wheat was replaced by copper, and later yet, gold and silver superseded copper. Regardless of the particular good, the unit of account corresponded to a weight unit of 92 grams. While goods and labor services were valued in deben, no deben units could obviously change hands. Thus money came into being “as simply a non-tangible unit in which obligations are created and discharged”.

Here, this rudimentary form of money emerges in relation to the stock, the growing surplus, which calls along with it an increasing distinct series of class formations. The importance of the stock is at the heart of the economic analysis in A Thousand Plateaus: the ‘trinity formula’ of land-(absolute rent), profit-labor, and money-taxation emerges on the basis of an expanding surplus. This is the boundary between the ‘primitive society’ and the Urstaat that overcodes its.

When Deleuze and Guattari put the Urstaat in relation to Marx’s ‘Asiatic despotism’ (which is itself not really ‘Asiatic’: “One finds these formations, these great archaic Empires, not only in the Near, Middle and Far East – for example, in Egypt, India, China – but also in South America: the great South American Empires. One will find them on the horizon of Greece…), they also bring up into the picture Wittfogel, with this notion of the “hydraulic empire”. For Wittfogel, centralization of political power was intimately bound to advances in agriculture via irrigation. Political abolutism and managerial control advance directly on the basis of the expanding stock, turning about the question of innovation. This dynamic underscores how the centralized political formation—that machine that sets in motion taxation and monetarization—must precede the formalization of economic life (hence the recognized phenomena that in regions without states, formal currency rarely prevails as an emergent property).

The correspondence between Wittfogel’s theory of the “hydraulic empire” and Henry’s neo-Chartalist account of money formation in pre-dynastic Egypt is clear—and becomes clarified (i.e. the importance of the stock over the hydraulic system per se) in Deleuze’s November 13th, 1979 lecture on the ‘apparatus of capture’. He invokes, among many other things, the Egyptian experience as evidence for the claims put forward in A Thousand Plateaus:

The communes possess the soil in the communitarian or communal form of possession; the despot is the superior unity, it is like a kind of pyramid, he is the eminent proprietor of the ground [sol]. What does all this mean? Marx evidently insists on this a great deal: what makes this type possible, not the uniting of agricultural communities but, to speak scientifically, the subjunction of agricultural communes under a formal transcendent unity, the unity of the despot? What makes this possible, according to Marx, is that agriculture has already attained a certain level of development. It is because agriculture has already attained a certain level of development at the level of productivity, with the means of production supplied by a class of craftsmen, all of this implying a certain mode of production, a development, a relatively developed mode of production. The agricultural commune remains the basis, but it finds itself, in virtue of the productive forces of which it makes use, confronted with problems which transcend each commune.

What are these problems? Marx and Engels already insisted on the nature of these problems and Wittfogel’s whole book is centred around this very important point (which is not always confronted, but nevertheless comes up all the time): namely, that this development of agricultural productive forces permits, on the one hand, the formation of a surplus stock – so that one leaves subsistence economy behind in order to enter into a new economy of surplus or of stock. There is the formation of a stock. The state of this mode of production makes possible the formation of a stock, and therefore makes necessary, on the other hand … what? It makes hydraulic works necessary. Hydraulic works can be of very different types: take the case of China – for example the rice fields – or of Egypt with the flooding of the Nile – or the case of Greece, for example the Myceneans with the drying of the marshes; it is rather curious that across figurations that are very, very different, you will rediscover the same theme of hydraulic works. To the extent that Wittfogel calls these ancient archaic formations ‘hydraulic Empires’. Looking more closely, one becomes aware of … [exceptions?], but that changes nothing, that sometimes empires are not hydraulic does not matter. There are cases where, no, it is not hydraulic works that are fundamental. It doesn’t change anything. There is a complementarity between an economy that has become capable of producing stock and the large-scale works that develop the forces of production.