At the end of Of Mice and Men, George tells Lennie, for the last time, about the property they dream of owning; “An’ live on the fatta the lan’!”, Lennie giggles. It’s significant that in the midst of a depression, a time of mass unemployment, people dream not of having abundant paid work but of not needing paid work at all. Having no paid work and “living on the fatta the lan'” is leisure, not unemployment. Absence of paid work becomes unemployment only in combination with a need for paid work.
Staunchly neoclassical economists allow for no notion of need; they only recognise preference. Thus for them there is no unemployment, only leisure. They are forced to the conclusion that the Great Depression was a long holiday for the masses. A healthy mind baulks at this conclusion. Mathematics and dogma tether it steady and hold the course. But everything comes untethered when we ask why, if Lennie and George already have the leisure they dream of, they spend so much time drudging for petty cash.
Bring in the concept of need and unemployment makes sense again. Human beings weren’t created with the need for paid work; relative to the lifespan of our species, it is a recent invention. So where does the need come from? If you can live on the fatta the lan’, you need no paid work. The land and its fat are still there, but something stands in the way; this is, of course, the state. We can wax philosophical about ‘property rights’ and ascribe them like Locke to a divine origin. But the cold, concrete fact is that if you live on the fat of the nearest available piece of land, you’ll soon be seeing jackboots and rubber truncheons. It’s the same deal if you get caught taking one of those tins of beans stacked floor to ceiling in the supermarket and in many cases – remarkably – if you try to take some of the unsold food that ends up in the garbage hopper at the end of the day.
That is coercion; really it’s a sort of imprisonment. It isn’t, after all, by the size of the prison that we measure the loss of freedom. What matters is that you’re on one side of the wall and what you need is on the other, provided only at the behest of the authorities and on whatever terms they assign. The beans are inside the supermarket security gates. Your hungry self lives outside of them. The supermarket, backed by the authority of the state and its police, permits the beans to travel across the barrier only on the condition that certain pieces of paper, metal, or plastic are presented. The prison is the outside. Money is the parole ticket. The philosopher G.A. Cohen pointed out that even in a libertarian, ‘negative’ sense of freedom: “lack of money, poverty, carries with it lack of freedom”.
This isn’t necessarily a bad thing in itself. The condition of life in a modern state is that the state has the power to coerce. Democracy is meant to ensure that that power is employed in the interests of ‘the people’ – whoever that is. But if we fail to appreciate the connection between money and coercion, we fail to understand unemployment. We are liable to ascribe it to some mysterious organic forces in the market, when it is, on the contrary, the direct outcome of deliberate decisions by those in charge of the coercive apparatus.
The neochartalist line is that the state creates unemployment by imposing tax. The state demands tax from its citizens, on pain of punishment. The tax can only be paid using a currency that only the state can issue. And so people surrender goods and services to the state in order to earn the currency. Their need to do so – their need to earn the state-issued currency – is unemployment on the neochartalist definition (Warren Mosler kindly commented on my last blog, explaining this position very clearly).
Cohen’s article, however, helps us to see the neochartalist story as representing a special case of something more general. The state creates unemployment by depriving people of freedom – not simply depriving them of freedom, but standing between them and what they need for a basic subsistence. Imposing a tax is one way of constraining people – it forces you to do what is necessary to earn the currency that pays the tax. But so is maintaining a judicial and police system that prevents you from taking food from any of the obvious sources. Access to the fatta the lan’ is granted on the state’s terms. These revolve around possession of certain pieces of paper issued and ratified by the state – a signed note stating “This land is the property of X” or another sort of signed note stating “I promise to pay the bearer”, “This bill is legal tender”, or something else like that.
It is worth generalising the neochartalist story, I believe, since the idea that taxation creates unemployment can be misleading. Lenny and George spend a good deal of time being unemployed, but they’re well beneath the official tax threshold. They dream of being free from having their labour power exploited by landowners, and yet they go around seeking exploitation. Why?
As Joan Robinson wrote: “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all”. This is not a fact of nature; it is the legacy of the modern state, in which lack of money is lack of freedom, even the small modicum of freedom required to sustain a basic life. The state, by imposing tax in a currency it issues, extracts goods and services from the taxpayers. But the haves can impose their own tax upon the have-nots, by enclosing the fatta the lan’ (with the help of the state) and requiring money payments in exchange for access to it. Cohen gives good reasons to believe that this is no less coercive than the imposition of a tax. The spectre of state coercion, as I wrote elsewhere, haunts every transaction in the monetary system.
Seen from this angle, unemployment appears as the cruel joke it always was. Having deprived us of our freedom, the state declines to allow some of us even the opportunity to earn it back. The unemployed are willing to work for the pieces of paper that, thanks to the coercive apparatus of the state, provide the only means of access to the basic ingredients of life. The state won’t even let them have that opportunity. The politicians excuse themselves with a cock and bull story about the ‘funding constraints’ faced by the very entity that issues the paper and imposes the constraints. They try to convince us that somebody else should be solving the problem of unemployment, as though anybody else can issue the magic paper or relax the constraints. Or they blame the unemployed for not trying hard enough, as though a really thorough search could turn up what doesn’t exist.
Don’t fall for it. See things as they are. Money being freedom doesn’t preclude knowledge being power.