November 25th, 2005

Brad @ Burning Man

Bad Seed

There is intense political debate going on now over a specific economic idea. That debate has been going on, at its current rate of intensity, for at least 10,000 years, perhaps as far back as the beginning of Bronze Age civilization 25,000 years ago. It would be the height of hubris for me to think that I am so persuasive that I can end 25,000 years of political debate on a topic in a handful of paragraphs. But I do have an opinion, and I do think I have the ability to at least catch you up on what the debate itself is really about, what the two positions in it are.

The great technological innovation of the Stone Age was not the stone tool, but the discovery that if you stuck certain kinds of food into the ground, you got more food next year. That's farming for you. So one by one, various tribes independently discovered, imposed on each other, or adopted from each other through imitation and trade, a basic model of how to run a farm. Starting with your first harvest, you set aside in your own on-property storehouse enough seed to plant next year's crop, plus enough to feed your family for the year. You only sell, sacrifice, or otherwise share the remainder. By extension, you use the same principle in managing your herds, your vineyards, your orchards: always keep back enough to feed your family and to produce the next crop.

The great technological innovation of the Bronze Age was not the bronze tool, but the discovery of centralized administration and the division of labor, especially as applied to farming. Instead of each individual farmer keeping back their own supply of seed, a central authority or temple or private granary operator collects all of the seed at harvest time. They pay the farmers enough money for their harvest to buy back seed from the community every day or every week to feed their family. When the next planting season starts, each farm takes out a seed loan against the central granaries, to be repaid from the profits of the sale of the resulting crops.

Which idea is better? Wars have been fought over this question. At least one of those wars may have been the one in which nearly all of Bronze Age civilization was burned to the ground, in 1225 to 1198 BCE, by people who chose to starve to death in illiteracy rather than continue knuckling under to the authority of the central granaries. When the Hebrews seceded from the Egyptian empire around the same time, they wrote it into their laws that no loan can have a term of longer than seven years, that any loan that hasn't been repaid in 7 years is canceled, and this is probably why. (Look up the Biblical laws regarding the Year of Jubilee, if you don't believe me.) When the Athenians tasked the divinely inspired Solon to write the first set of democratic laws for a free people, his first economic principle, his first law, was cancellation of all unpaid seed loans and the outlawing of future seed loans. The lenders tried to raise an army to kill him, and drove him out of Athens for years. But bound by their oaths, they came to discover that he had been right, and learned that both former borrowers and former lenders were better off without this form of commerce. When the Ranters and the Diggers and the Anabaptists tried to secede from medieval and then Renaissance feudal society, a big part of what they were revolting against was the power of the lenders who controlled the seed loans, and for the right and obligation of every farmer to store his own seeds for next year's crops. When the Amish and the Mennonites set out to secede from 19th century American culture, the economic program of their secession was this very idea. And right now, there's an intense diplomatic war being fought in the World Trade Organization over the right of Brazilian farmers to keep back the seeds that they grew on their own farms, balanced against the intellectual property rights of the American corporations whose genetic engineering technology produced those seeds with the clear intent of making it both impossible for farmers to save back seed and illegal for them to try.

If people keep rising up and escaping, seceding, or overthrowing the seed lenders by force of arms, why do we keep coming back to this system? Because it works. Having a hundred thousand or a million or ten million small granaries is both less safe for the individual farmers, and less efficient for society, than having a few big professional granaries. Centrally banked cash makes better insurance against crop failure or any other disaster, more fungible and reliable insurance, than a stockpile of seed that might rot, might catch fire, might get eaten by fungus or bugs, might get wiped out by a storm or an earthquake. Anybody who's taken college economics can walk you through the simple math to show you, in no uncertain terms and with no room for ambiguity, why a society that adopts centralized granaries and seed loans will out-produce a society which doesn't. That's why the Bronze Age societies effortlessly swept the Stone Age societies out of their path as they expanded. Producing more food per acre and per farmer, they could afford to have a denser population, and a larger percentage of their population devoted to non-farm jobs (including professional soldiers), than any society without central granaries and seed loans could.

If the idea is so obviously, provably, demonstrably economically better, why do people keep revolting against it? Because it's a recipe for slavery. When you reduce the number of granaries, and centralize the supply of money that can be used to buy seed from those granaries, then it only takes the people who control the banks and the granaries to agree, and nobody else gets a say. You will either do what the people selling seed and lending cash to buy seed tell you to do, or you and your family will starve. Period. You will obey, or you will not farm. Strict libertarians will argue that this is a problem of centralizing the money supply, but Archaic Greece didn't have a centralized money lending economy, and it still ended up the same way. The Hippeis ("horsemen"), the wealthy upper class, still ended up holding the entire rest of the population in debt slavery. All it took to get there was for some farmers to start out with luck or skill, to produce more grain and build better granaries, for them to be the "obvious" individuals to buy grain and then lend grain to the others. One by one, competing farmers just by the luck of the draw had their various individual failures and ended up having to borrow seed the next year from their luckier neighbors. Eventually the pool of people who hadn't yet lost their crops even once to bad weather or other disaster got small enough that they could all meet and agree upon what was best for society, could combine their economic power to agree among themselves that anyone who challenged their rule didn't get seed. No matter how you structure it, an economy that depends on centralized seed storage and seed loans leads to slavery for individual farmers.

Yesterday I explained why, as a cure for the agricultural ignorance that had produced the Dust Bowl, the US government hired the best minds of their time to produce a manual of standard farming practices. Once that manual existed, it made perfect sense for banks who were in the business of issuing seed loans to ask each farmer, as part of their application, if they were following the manual of standard farming practices. Since modern bankers by definition aren't farmers, it only makes sense that if they want to be confident that you're going to be able to produce enough crops to feed your family and still pay off the seed loan, they need to know that you're following farming practices that the actual experts on farming say maximize your chances of doing so. You don't even need evil intent for the banks' reliance on the manual of standard farming practices to be the end of individual liberty, of individual authority to choose their own farming practices, for every farm family that ever needs to take out a loan.

Where this started turning from theoretical tyranny to actual, demonstrable tyranny in America was during the Green Revolution of the 1960s. That's where I'll pick up tomorrow.