Nature's Evil

SEVEN

Resources and Commodities

In his History (430 bce ), the Greek author Herodotus related that, while his native Hellas had a climate which was favourable for human beings, ‘the extremities of the inhabited world had allotted to them by nature the fairest things.’ 1 His list was very long. In India, ‘the most easterly country’, there was an incalculable quantity of gold, and her plants grew ‘tree wool’ – cotton, which was better than sheep’s wool. In Arabia, ‘the most southerly country’, there were trees bearing frankincense, but they were guarded by winged serpents. There was also cinnamon – scary birds built their nests of its sticks. Ebony trees grew in Ethiopia, with wood as dark as the people. Tin was brought to Hellas from the most westerly isles that were later called British. In the north of Europe, there was gold, as in India, but it didn’t reach Hellas, remaining as mythical as cinnamon.

The classical idea of the universe was like a map of fabulous resources which surrounded the sphere of civil life, with the storyteller at its centre. Two hostile empires, Hellas and Persia, constituted the inhabited world; the extremities furnished them with their exotic fruits, and the further away these products came from, the more precious they became. The work of the carpenter, the tailor and the blacksmith was limited and easy to understand; but the remote worlds of fishermen and lumberjacks, miners and gold prospectors, were filled with adventure, risk and profit. An anonymous multitude of spinners and weavers created the economies of world empires; but the civilised world admired those who sought the golden fleece and tamed overseas colonies. Raw materials were over there, goods were here. Production was humdrum, extraction was extraordinary. The banality of labour coexisted with the exoticisation of raw materials. The processing of commodities into goods, and of energy into services, are the chief tasks of civilisation, and they are subject to rational understanding and regulation. But real wealth comes only with trade. Distance raises the price, risks bring profits, and an image of adventure is the best decoration for a gold chest – or for a bank note. The double meaning of the English ‘fortune’ conveys this connection better than philosophical treatises.

Reworking this tradition, Karl Marx saw mystery at the very heart of trade. In his Capital , he borrowed the key concept from peoples as distant as those described by Herodotus – fetishists (for Marx, they were a religious rather than a sexual sect). Explicating ‘commodity fetishism’, he used a German word, vertrackt , which is usually applied to sick eccentrics; in English translation it sounds even stronger – queer. ‘A commodity appears, at first sight, a very trivial thing, and easily understood. Its analysis shows that it is, in reality, a very queer thing.’ 2

‘The old colonial system’, as it was known in the British tradition, did not move too far from Herodotus. The empire consisted of a metropolitan centre, or ‘mother country’, and colonies. Different races lived in them, and different laws applied. The daughter colonies extracted raw materials and delivered them to the mother country; the mother country processed them into manufactured goods which she sold back to her colonies or traded with other empires. The Republic of Venice and the Spanish Empire also used this dual model, but it fully developed later in England as mercantilism – the political-economic doctrine that was the ideological foundation of the British Empire.

Some countries are rich in resources, others in labour. Raw materials and goods are constantly being exchanged. Robert Malthus said that the greatest sector of world trade was the exchange between town and country. Extending this formulation, we could say that the greatest sector of world trade has been the exchange between labour-dependent and resource-dependent partners. In earlier times these partners were the metropoles and the colonies. Today they are ‘developed’ and ‘developing’ countries: the first world and the third world, the post-imperial centre and the post-colonial periphery – and the second, post-socialist world, still shaky and uncertain. All these definitions share the prefix ‘post’. 3 Post-colonial, post-socialist and, on the top of that, post-modern – but have we actually parted with the old mercantile system? Do we live in a post-mercantilist world?

Natura vastata

The silkworm has a complicated life cycle, but humankind uses only one stage of it – the cocoon. Unravelling the thread from the cocoon, man throws away everything else that makes the silkworm grow, move and reproduce. The cotton bush has roots, stems and flowers, but man uses only the single-celled fibre that grows from the husk of the seed. Nature created this fibre to allow the seed to float on the wind, dispersing the plant across the land. Using these little filaments, humans refused to follow the path that evolution had mapped out for them; they learnt to cover their bodies with the fibres of the silkworm cocoon or the cotton plant, which protect them from heat and cold. The poppy is also intricate; but only a small and incidental part of it, the sap of the unripe seed head, is of interest to man. For humans, all these resources are both the condition of their freedom and the road to new dependencies. By multiplying the ways they extract some elements and ignore others, humans increase consumption and proliferate waste. In mastering the nature of other beings, they change their own.

As long as nature seemed infinite and good, it was possible to think of her as God made manifest in another form; that is what Spinoza thought, distinguishing between Natura naturans and Natura naturata (Nature the Creator and Nature Created). Today it would be more accurate to contrast Nature Created with Nature Used and also with Nature Wasted, Natura vastata . The first has always been greater than the second; but it is the third that defines our survival. As Kant wrote: when man realised that he was ‘the true end of nature’, he said to the sheep, ‘The fleece which you wear was given to you by nature not for your own use but for mine.’ 4 The power of man over nature consists not so much in modifying Nature Created – the possibilities for that are limited – as in selecting his Nature Used and ceaselessly reproducing the chosen thing: out of many insects man chose the silkworm, from plants he selected cotton, from animals he chose sheep, and so silkworms, cotton and sheep are bred in quantities that far exceed their natural limits. This is also a natural selection, but Spinoza’s terms make it more basic than Darwin’s. The power of humans is also realised in the deep processing of selected materials: a great deal of knowledge and labour is required to make cotton into cloth and cloth into clothes. Natural selection leads to the development of new kinds of technology and standards of taste – or, conversely, these technologies and fashions make the use of new materials possible and desirable. If Nature the Creator has a plan, it nowhere coincides with human plans, which is precisely why it is so difficult for us to understand her plan.

The light, the rare and the dry

Aristotle distinguished between things for use and things for exchange – between domestic economy and property that is used for trade and profit. * Hume’s theory of value bracketed all the corn, wool and silver that people consume or just keep at home: ‘As the money and commodities, in these cases, never meet, they cannot affect each other … It is only the overplus, compared to the demand, that determines the value.’ 5 In 1910 a multi-volume textbook on the economic history of Russia began with these words: ‘The experience of history shows that trade and industry can flourish only in times of peace, in densely populated countries with good communication routes; if these conditions are not met, the peasants are obliged to produce everything they need themselves.’ 6 Peaceful times were rare, convenient routes a luxury; but, without them, how could a dense population flourish? In fact, the vast majority lived by subsistence farming. They consumed what they produced and produced only as much as they could consume, because their products were perishable and difficult to transport, and there was no demand for them elsewhere. Only a few products of nature and labour were suitable for making into goods which could be traded. Three difficult conditions had to obtain – these products had to be light, rare and dry. Bulky and heavy commodities were difficult to transport. Those that were universally available met no demand. And only dry products would not spoil when they were stored or transported. The initial meaning of the word ‘drug’ was ‘dry’; in the fourteenth century it referred to all dry and valuable goods, from herbs and spices to dyes and soaps. 7

In the structural anthropology of the last century, ‘the raw’ was considered the opposite of ‘the cooked’: the former was a part of nature, the latter was a product of culture. In my historical anthropology, the opposite of the raw is the finished, completed, directly usable. In English, this opposition can be rendered as ‘raw materials vs. finished goods ’, or even ‘raw bads vs. dry goods ’. 8 In a state of nature, tea leaves, fur pelts, fish bodies, salt solution, sugar sap, cotton linters and many other sorts of raw material are wet; in this initial, perishable condition they cannot be transported and traded. Only with dehydration do they acquire an exchange value. Drying is the universal operation of primary processing which preserves commodities for transportation over long distances and prepares them for secondary processing. Grain, hay and firewood were the first commodities that needed covered storage and markets. But many kinds of goods produced by arable and cattle farmers – meat, potatoes, fruits – were difficult or impossible to transport; they became tradable only when new technologies for preservation and transport appeared, which themselves required energy and raw materials.

Empires did not send expeditions overseas to admire the noble savages. They needed tangible value that they could appropriate, transport, and sell to their own peoples, or other populations, with profit. As a rule, these were raw materials, dried into goods. Colonial stores selling dried goods (épicerie in France, Kolonialhandlung in Germany) were the first groceries. They sold tea, sugar, dried fruits, coffee, tobacco, chocolate and dried fish, and gunpowder as well. These dry goods had to be protected from the weather, so warehouses and shops were needed to store them. Conversely, local trade in fresh, wet products – meat, fish, milk, fruits and vegetables – had no need of roofs; numerous open-air markets sprang up in towns to meet the needs of local trade and sold perishable goods at competitive prices; supplying the towns and providing employment in rural areas, this capillary system of distribution did not lead to the accumulation of capital. Ports and industrial cities developed because of long-distance trade in dry goods. Market cities sprang up in the places where commodities were delivered from afar, trans-shipped or processed, and where the arterial routes of long-distance trade intersected. The best trade went by water, but the best goods were dry. Protecting commodities from humidity was the foundation of the art of commerce, but emerging capitalism depended on water as much as it dodged it.

Commodification resulted from the progress in two major commercial disciplines – transformation and transportation. Primary processing turned raw, wet, perishable materials into dry, light, packed commodities. Various kinds of transport moved them overland or overseas, from the source where this material was abundant to the place where it was absent and in demand. It was only by combining these two processes, transformation and transportation, that commodification created value. A moving frontier, commodification crept forward from the domestic use of raw products to wet markets of local commerce and then to long-distance trade in dry goods. Until people learnt how to cure pelts, dry cod, salt herring, freeze meat, they consumed these products on the spot or shared them with neighbours. Until people learnt how to transport these products without their perishing on the way, they did not generate revenue, customs and taxes. In those times of subsistence, materials remained raw, capital refused to multiply, and people were ‘indolent’. New technologies of commodification led to prosperity in the metropoles and violence in the colonies. Through the use of slavery and serfdom, the external and internal colonies of great empires produced raw materials and energy. The creation of goods and the provision of services were reserved for the imperial centres. From flint to gold, from wool to silk, from peat to oil, the rarer, dryer, lighter and more distant the commodity, the bigger the profits it brought and the greater the evil it caused.

Sweet refinement

The century of the Enlightenment was also the century of commerce. Economists and historians understand this crucial connection mostly in the context of production, as primitive accumulation (Marx), the great transformation (Polanyi), or the industrious revolution (de Vries). An alternative tradition comes from the classics of philosophy and political economy, whose authors saw this connection in the context of consumption. Hume argued that ‘the refinement of taste’ was the key to progress; Malthus talked about ‘effectual demand’.

The Enlightenment cultivated the desires, tastes and habits of mass consumption. Exotic products from the East, such as sugar, silk and porcelain, were in demand among the European elite. Prices fell when locally produced versions replaced expensive imports. First, Indian cotton replaced the more costly Chinese silk; then American cotton, woven in England, displaced Indian fabrics. First, sugar came from Asia and was a luxurious treat for the aristocracy; then sweet commerce from the West Indies led to mass consumption; in its turn it was ousted by a cheap European substitute, beet sugar. For early capitalism, the strategic line of commodification was to imitate Eastern luxury by using cheaper materials produced in the West. 9 While cultural scholars talk about Orientalism – the Western idea of domination over the passive, submissive East – economic history saw the opposite trend: European masters imitated Eastern models, using local materials and practising reverse engineering. * Furniture, clothes, gardens and even the architecture of the age of Enlightenment were full of ‘chinoiseries’ – simulacrums of an imagined China which was known only through very rare and expensive imports. Fashionable in England from the 1620s, chinoiserie blended easily with the culture of the baroque, adding playful notes to it. China was associated with silk in the same way that India was associated with cotton. Lacquered handicrafts were in demand, but the original lacquer came from the sap of rare trees which grew only in East Asia. During the course of the eighteenth century, these luxury items – silk panels, lacquered furniture, porcelain tea services – all underwent reverse engineering using European raw materials. In imperial centres, these high-status goods became available to the masses. The bourgeoisie was extravagant and thrifty, reticent and ostentatious, and ever more numerous. It could have had better taste, but its ever-growing demand for affordable luxury drove technological progress and economic growth.

In less fortunate parts of the world, where the risks of hunger and shortages were perennial, a new problem arose – a lack of demand. Comparing the Dutch and English markets to the massive periphery of Europe, economic experts saw the main difference not in a shortage of goods or services but, on the contrary, in a lack of demand for them. Demand depended on the raising of the general level of education and culture: savages did not have a taste for luxury items, nor did peasants. It was fine that poor peasants did not have the goods that were routine for the bourgeoisie. The fact that they did not want them was a problem. Lack of taste and ambition made them lazy and poor, which did not help their ambition. Demand, taste and aspiration – they all had to be created among these unfortunates. Fashion and addiction became the magical means of taking the peasant economy out of sloth and idleness.

Bernard Mandeville, the author of the remarkable Fable of the Bees (1705), was the first to voice the idea that individual virtues have little effect on the common good, but that the free play of private vices creates it from scratch. Mandeville described a hive of bees that live just like people. Worker bees fed ‘half the world’ with their labour but remained poor. Their judges took bribes. Their priests were lustful, and even manure was fake. And yet life flourished as never before. ‘Thus every part was full of vice / yet the whole mass a paradise.’ But then, all those fancy things ‘which the Indies had been ransacked for’ vanished. It was the way back to misery. ‘The slight and fickle age is past; / and clothes, as well as fashions, last.’ Speaking in rhyme, Mandeville launched a war against the old ascetic morality.

In 1718, Nathaniel Torriano set off for China on the Augusta , an East India Company ship. In Canton, he sold the copper and iron ingots, watches and jewellery he had brought from England, and also calicos from India. In exchange he took on a cargo of tea, which became all the rage when he brought it back home. In London the value of his cargo was estimated at £50,000; this would have been enough to buy several English estates. The exchequer received less revenue from land taxes than from customs, which produced from half to three-quarters of its income. 10 Fashion led to a particularly rapid turnover of capital. Mandeville wrote: ‘fickleness / in diet, furniture and dress, / that strange ridiculous vice, was made / the very wheel that turned the trade.’

In his Essays (1777), David Hume organised these early ideas into a philosophical system. In the ancient world, almost everyone was a peasant, but now every peasant fed another person: it could be a soldier who made the state safer or an artisan who made life more pleasant. But what forced the peasants to produce more than they needed for themselves? There would be no surplus, wrote Hume, if peasants lived in their idle way, working only enough to take care of their own families’ needs. Indeed, a peasant works either under compulsion or of his own free will. Armed men could force peasants to work; but this slave-driving method is impractical, it enfeebles the state and diverts soldiers from their duties. The peasant would only work willingly to meet his own desires. There are certain things, products of nature or manufacturing, that create ‘temptations’ – goods that stimulate desires rather than satisfy them. These ‘temptations’ would motivate a peasant to work more effectively than force of arms. Temptations had first been delivered by foreign trade, which, Hume says, ‘in most nations has preceded any refinement in home manufactures.’ But then local artisans learnt to reproduce these tempting goods in ever larger volumes, using domestic resources. ‘And this perhaps is the chief advantage which arises from a commerce with strangers. It rouses men from their indolence; and presenting [them] with objects of luxury, which they never before dreamed of, raises in them a desire of a more splendid way of life than what their ancestors enjoyed.’ Nobody is left behind, because those very merchants who had specialised in importing foreign goods eagerly reinvest in producing home-grown imitations. ‘Their own steel and iron, in such laborious hands, become equal to the gold and rubies of the Indies.’ 11

Tempting commodities excite admiration, stimulate desire and, ultimately, create a habit. A peasant who grows accustomed to drinking tea with sugar or using fashionable calicos will work harder than a peasant who consumes only the things he can produce himself. The former will overcome his indolence, the latter won’t. According to Hume, it was only because of the imports and imitations of luxury goods that landowners could rely on the free will of their tenants and avoid the unpleasant duty of forcing them to work. Importantly, Hume does not speculate about the utility value of ‘the gold and rubies of the Indies’; he does not say that sugar is particularly healthy or silk beautiful. The only common feature of tempting goods is the inability of the peasant to produce them himself. Thus the trade in oriental commodities, and then in their domestic imitations, overcame the indolence, idleness and laziness of the lower classes.

While some scholars write about the Victorian invention of idleness, I see this set of regulatory ideas – idleness, indolence, laziness – coming into fashion much earlier. In the English language, the usage of these words grew rapidly around 1750, reached an all-time peak by 1800, and then declined. * Hume saw idleness as an economic problem that could be resolved by economic means. His solution was a stimulation of demand. Luxury leads to imitation, imitation to commerce, and commerce to liberty. Going against the ascetic legacy of Christianity, which resonated with Hume’s Presbyterian background, it was a radical idea. Be it food, drinks or clothes, most versions of asceticism proclaim both the superiority of the local over the foreign or global and the virtues of production rather than consumption. But the spirit of capitalism invoked something entirely different, and Hume responded to this call. The philosopher was discussing a problem that social sciences understood in the twentieth century: subsistence farming was an obstacle to economic growth, but of course growth could not be based on the destruction of subsistence. Peasant ‘indolence’ was an equilibrium between labour and nature. If progress failed to incentivise the peasant, it would lead to slavery. Using the word ‘progress’ at least as much as ‘imitation’, Hume combined these opposite concepts in his sceptical view of history, which he saw as a cyclical process. If imitation leads to progress, and progress consists of imitations, there is no room for creative energy to break the cycle, no novelty, no revolution. Hume came to this conclusion in a recently colonised Scotland, which had its ambitions curbed by the dominating power. It was in Scotland that scholars formulated the laws of economics and, several generations later, the laws of thermodynamics as well. 12 Energy, the potential of work, was the opposite of idleness. But energy was finite and its perturbations cyclical. Deprived of autonomy, progress turned out to be a pendulum.

In Hume’s view, by imitating oriental luxuries – supplanting fur by wool and silk by cotton, enjoying ever cheaper sugar and tobacco – European societies enter the ‘progress of improvement’. Descending the social ladder, these ‘innocent gratifications’ overcome sloth and invigorate labour. ‘Where luxury nourishes commerce and industry, the peasants, by a proper cultivation of the land, become rich and independent; while the tradesmen and merchants acquire a share of the property.’ With constant new goods available to them, peasants become hard-working and free-minded. Increasing revenue and acquiring property, shopkeepers turn into a middle class – ‘that middling rank of men, who are the best and firmest basis of public liberty.’ Indolence leads to dearth, which leads to barbarity: ‘when sloth reigns, a mean uncultivated way of life prevails amongst individuals, without society, without enjoyment.’ Poor land and bad work are connected to unsociability and ignorance. Like Adam Smith, Hume extended his sympathies only to those commodities that belonged to the mainstay of the English trade and detested Spanish ones: ‘since the discovery of the mines in America, industry has encreased in all the nations of Europe, except in the possessors of those mines.’ 13

Without having any data, Hume produced a pioneering theory of demand-side modernisation, as it would be called nowadays. ‘The ages of refinement are both the happiest and most virtuous,’ he wrote. Refinement comes from industry, knowledge and civility. It leads to progress and happiness. It depends on certain commodities that bring ‘innocent gratifications’, and not so much on supply but on demand for these commodities. ‘In a nation, where there is no demand for such superfluities, men sink into indolence.’ In contrast, ‘encrease and consumption of all the commodities which serve to the ornament and pleasure of life, are advantageous to society.’ 14 Hume uses these ambiguous terms, ‘commodities’ and ‘luxury’, interchangeably; he also gives the same meaning to ‘delicacies and luxuries’. It is wrong to understand these commodities in line with a traditional idea of luxury, such as particularly expensive items of art or furniture. Clearly, Hume is interested in the conversion of luxury goods into items of mass consumption which form ‘a kind of storehouse of labour’ – drugs on the one hand, textiles on the other. When demand for these commodities meets supply, which happens only in a refined and industrious country, people reveal their public virtues. ‘Particular clubs and societies are everywhere formed. Both sexes meet in an easy and sociable manner; and the tempers of men, as well as their behaviour, refine apace.’ 15

In the revolutionary year of 1793, the English philosopher Jeremy Bentham subjected these ideas to a radical re-evaluation. Bentham’s utilitarianism developed in a direct polemic with mercantilism: the purpose of the state was not to accumulate gold in its coffers but to promote the utility or well-being of its citizens, which Bentham defined as the difference between the sum of their pleasures and the sum of their sufferings. Pleasure is not a natural constant but is formed by habit, and its total sum can grow infinitely. Like Montesquieu’s ‘sweet commerce’, Bentham’s ‘principle of utility’ belonged to the age of sugar, when trade unexpectedly turned into a promise of peace, and pleasure into the central concept of political philosophy. Bentham noted with surprise that even the richest men of the ancient world didn’t know sugar, but for his contemporaries it was quotidian. Calling upon the French revolutionary Convention Nationale to emancipate the sugar colonies in the West Indies, Bentham developed a sound theory of monopoly. ‘Monopoly produces mischief without remedy.’ 16 It increases prices and amplifies their fluctuations; it reduces the number of traders and impoverishes or enslaves the workers. Affirming a role for pleasure and presenting its maximisation as the duty of the state, the utilitarian philosophy of Bentham articulated the very essence of an empire whose crowning glory was the sugar islands.

Bentham is one of the most quoted philosophers from the classical age. He was first rediscovered by Michel Foucault, who presented Bentham’s Panopticon as a universal image of power. 17 Foucault did not address the anti-imperial overtones of this imagery. In fact, Bentham invented the Panopticon while he was living and working in a colony of the Russian Empire, as a secretary of Prince Potemkin in Krichev, in modern-day Belarus. Later, he spent decades trying to build his utopian Panopticon in England. In his article ‘Panopticon versus New South Wales’, Bentham explained the benefits of organising an internal panoptical colony rather than transporting convicts to Australia. Closer to our time, the distinguished Australian philosopher Peter Singer proposed utilitarianism as the foundation of moral philosophy. In contrast to sceptical Hume, Bentham believed that the ‘felicific calculus’ was capable of infinite growth. A good government had a duty to maximise the sum of pleasures, and this is what is called progress. But this utilitarian progress means the total sum of man’s addictions, which expands at nature’s expense. Perhaps this calculus needs broadening. It should also take into account the experiences of nature – her pleasures and sufferings, elements of growth and destruction. This comprehensive calculus would enable the mutual recognition of man and nature, though their relations are not symmetrical: in this couple, man is uniquely susceptible to addiction.

Mono-resource as an economic platform

In 1802, the Prussian explorer and mining official Alexander von Humboldt found guano on islands off the coast of Peru. Attracted by abundant shoals of fish, huge colonies of seabirds deposited layers of excrement on the rocks. Used by the Incas for centuries, guano was a very productive soil fertiliser. It did not need processing, so the production price consisted of the transportation costs plus mandatory payment to the Peruvian government. Inadvertently, Humboldt’s discovery gave rise to the first case of what would later be called the ‘Dutch disease’. Peruvian currency strengthened. Cheap imports flowed into the country, depriving local peasants and artisans of work. When the supplies of guano ran out, just as silver had previously done, the Peruvian state was left with debts which it could not pay off; in 1876 it filed for bankruptcy. European farmers switched to nitrate fertilisers that were extracted from mines. In another surprising contingency, these mines were also located in Peru. Thanks to these gifts of nature, Peru went to war with its neighbours. Having lost this battle, it ceded its nitrate sites to Chile. Just a little later, the German chemist Fritz Haber found a way of synthesising nitrate fertilisers. They are now made literally from the air, albeit with a huge investment of energy (see chapter 13 ).

Guano is just one example of the tragic fate that a unique, topical mono-resource brings to the nation that happens to own it. It promises wealth and simplicity, and these temptations are irresistible for any political body. Getting a magic tool for distinguishing between good and evil, the state uses a mono-resource, invests in it, protects it, identifies with it, and distributes its profits for the benefit of the subjects. All other sources of prosperity are left to private interests or historical chance. The closer this state is to the exclusive ownership of a mono-resource, the more evident it becomes that this particular kind of raw material is money – the proper currency of this state. Gold, silver, silk, fur, tobacco, opium – all of them were used as money, as the means of payment for labour and goods. Only in labour-dependent countries is capital a converted form of labour; more frequently, capital turns out to be the transfiguration of a chosen resource.

Working on the history of Canada, the sociologist Harold Innis formulated a ‘staples thesis’. He presented this resource-bound development as a succession of changing ‘staples’ – different sorts of raw material: in the beginning there was fur, then timber, then grain, then oil. Following Innis, the historian Robert Allen based his version of global economic history on a similar idea. 18 Similar concepts of a dominant staple , mono-resource platform or commodity fetishism assert that the economy of political communities – nation-states or, in earlier epochs, empires with their colonies – tends to concentrate on a particular form of raw material to the exclusion of others . In my view, this concentration has been historically typical for most resource-bound states; labour-bound states escape it. The higher the concentration, the more disconcerting the shift. This ‘fetishist’ moment ends either because the raw material runs out or, more frequently, because its consumption falls. When this happens, the economic mechanisms of supply and demand go into a tailspin. With the change of economic platform, the whole pyramid of production and trade, state and society, shakes or even collapses. 19 Such moments are times of trouble – no wonder that the struggling elites try to prevent them by any means.

Why is the raw materials economy concentrated and the labour economy pluralistic and complex? One mechanism is comparative advantage, as described in the economic theory of international trade. States trade because they specialise in different commodities. With time, each economy increases the share of that particular commodity in which it is most efficient. For example, if coal in England was cheaper than in India but in India cotton was cheaper than in England, then the share of coal would grow in the English economy and the share of cotton would grow in the Indian economy. Another mechanism is monopoly. In the commercial exploitation of raw materials, the price of a commodity can differ from the cost of its extraction, changing the calculus of efficiency. 20 The formation of a monopoly is more likely in the case of topical, geographically concentrated resources – sugar rather than salt, diamonds rather than coal. The theory and history of monopoly have been strangely underexplored; we have heard much more about free trade, competition, equilibrium theory and the informational role of prices – all those mechanisms of ‘complete markets’ that historical monopolies have been able to abolish for the sake of their profits. From Jeremy Bentham to John Marshall, social thinkers saw in monopoly a great challenge – a major source of wealth, inequality and evil. But monopolies and cartels continue to define our civilisation. Granted, all these economic mechanisms have always been subjugated to political decisions: when the Indian calicos were banned in England, the whole system of trade was transfigured, as also happened when the OPEC cartel was formed. But, in each case, the terms of trade also grew out of the natural characteristics of a raw material. It wasn’t the Spanish king who ordained Potosí to be the site of silver mines, just as it wasn’t the members of the Politburo who located the site of oil extraction in Western Siberia. This is how nature arranges things; her actions are either random or, what comes to the same thing, inscrutable. But the fates of the Spanish emperor and the Soviet general secretary depended on these acts of nature.

The broader relations between natural resources and labour also belong to the context of comparative advantage. In 1949 two economists who worked for the United Nations, Raúl Prebisch and Hans Singer, wrote that the price of a raw material changed more slowly than the price of labour. If one country produces mainly raw material while another invests the productive labour of its citizens, then the first country will gradually become impoverished while the second will become increasingly prosperous. 21 For example, German merchants bought Argentinian hides, took them to Central Europe, made bags or jackets, and sent them back to Argentina. Over the course of decades, you will be able to buy fewer and fewer leather bags and jackets for the same quantity of Argentinian hides (and, while the hides are always the same, the fashion in bags will change dramatically, giving another advantage to their makers). If you exchanged cars for oil, you would get more oil for a Tesla in 2020 than for a Packard in 1920. Prebisch and Singer ascribed this asymmetry to the democratic institutions, which are more successful in labour-dependent countries. Or was it the other way round – was it democratic choice that shunned the reliance on natural resources?

The gold standard

By virtue of their geological rarity and chemical stability, gold and silver have been used for hoarding capital from the dawn of human history. Always in short supply, gold was both the stimulus and the limit for the development of the banking system in Renaissance Europe. Silver was the first global commodity in the sense that its price throughout the world, from Mexico to China, fluctuated in one wave. The further east one went, the more gold was paid per unit of silver – silver was more expensive in China than anywhere else. At the opposite end of the world, the English thought up the gold standard – the idea that any financial transaction was potentially guaranteed by a stipulated amount of gold, and every deal had its place in the linear hierarchy of value. But there was never enough gold and silver to secure all possible transactions, so the idea of the gold standard remained a legal fiction. In the real world, if silver was in short supply, coins were debased with copper. In times of peace, this worked.

But, in a time of crisis, gold and silver are no more reliable assets than paper – shares, debentures or title deeds to property. The very materiality of metals, which seems so reliable, turns out to be a factor of vulnerability. Granted, gold doesn’t rot or burn like grain or oil; but gold and silver are vulnerable to theft, plunder, corruption – to the evil with which gold has been intertwined for millennia. Gold has to be hoarded and counted, kept in safe boxes or carried about in armoured trains, weighed by the ton to the accuracy of a milligram – and guarded, constantly guarded.

Karl Polanyi wrote that the gold standard was a rare phenomenon in which heaven concurred with hell and Marx with Ricardo. In fact, the gold standard was maintained thanks to the extraction of gold from South African mines: again, worldwide development depended on one tiny, remote spot. Finding the roots of the totalitarian regimes of the twentieth century in the racist empires of the nineteenth, Hannah Arendt examined the interwoven history of apartheid and gold. Gold had no function in production or consumption; it was precisely because of this that gold, that most superfluous of resources, acquired its special role as a means of exchange. Limiting consumption, the mercantile empires found in gold the key to their problems of surplus. Gold became a ‘reserve’, a converted form of labour and resources through which mercantilist empires could calculate their redundant capital. These empires disagreed about everything, but the consensus about the gold standard was astonishing. For Arendt, the gold fever of South Africa started off the process that ‘turned peoples into races’. 22 Destined to be a bulwark of stability, gold added to the financial sphere a shade of unreality and meaninglessness.

The secrets of the Russian economy in the twenty-first century are known to its critics: its dependence on the export of raw materials, its excessive military expenditure, the degradation of human capital. Its passion for turning the state’s revenues into gold is less well understood. The gold reserve of the Russian Federation is disproportionate to its economy. According to the economist Yakov Mirkin, Russian gold reserves have increased threefold in the period 2009–19, although during this time the economy grew only by a quarter. In 2009 the share of gold in the Russian reserves was 5.2 per cent, in 2018, 16.9 per cent. 23 This is very unusual from a global perspective. The budget for education is falling, the pensions deficit is rising, but the weight of gold in the Russian reserves is increasing at unbelievable speed. During this decade, Russia was the major purchaser of gold on the world markets. Great Britain has seven times less gold, although its economy is larger than Russia’s. The population of India today possesses huge stores of personal gold, possibly more than in any other country; but the Indian state has three times less gold than Russia. And even China, whose economy is many times larger than Russia’s, has less gold.

The Russian Empire also accumulated large gold reserves, but they didn’t help it. In 1913, the gold reserve of the Russian state bank was 1,300 tons – the largest reserve in the world. On paper, it remained so until October 1917; but the national debt was also among the largest in the world. The historian Oleg Budnitsky has traced the adventures of Russian gold after the Bolshevik Revolution. 24 In 1915, during the First World War, the state gold reserves were evacuated far behind the lines, to Kazan. By the summer of 1918, bank vaults in Kazan housed more than half of Russian gold. For this and other reasons, the Volga region turned into the epicentre of the civil war. The Bolsheviks attempted to remove the gold reserve but they managed to dispatch from Kazan only a hundred boxes; all the rest were seized by fleeing Czechoslovakian units and their allies in the White Army. In October 1918 the gold was deposited in the middle of Siberia, in the Omsk branch of the state bank. Admiral Alexander Kolchak, self-proclaimed supreme governor of Russia, had at his disposal 490 tons of gold. Most of it disappeared: according to accounts from 1923, the Soviet state’s gold reserve was ten times less than the pre-war reserves of the Russian Empire. The Soviet state had to obtain gold by new means – through the labour of prisoners in the Gulag camps and the system of Torgsin – hard currency pawn shops which exchanged food provisions for the gold of the starving population. 25 After the Second World War, the first Soviet capitalists joined in these experiments. Survivors of the Gulag, they procured gold in the Arctic with unparalleled efficiency. Later, massive exports of Russian oil and gas brought many more tons of gold into the vaults of the central bank.

The conversion of natural riches, extracted by the efforts of many generations, into gold reserves is not an economic but a political phenomenon. Norway invests its profits from oil in shares in American and European companies. Some petro-states, for example Iran, spend their oil revenues on physical survival and armaments. But, in Russia, the exchange of oil for gold played a uniquely important role. Following the Russian model, in 2018 the president of Venezuela promised to create the second greatest gold reserve in the world; he didn’t succeed, and his country is suffering from hyperinflation. In the world of petro-states and sovereign funds, the strategy of the Russian authorities to convert oil revenues into gold is their special invention.

The Russian political economy is reproducing, either consciously or more likely not, the mercantilist policies of classical empires. Exploiting their colonial resources, the mercantilists believed that the main goal of state policy was a positive balance of trade – more exports than imports – which would lead to the accumulation of gold and silver in the treasury. The mercantile state was there not for the glory of the sovereign and not for the happiness of its subjects, but for the sake of gold in the treasury. Modern economic thought began with the criticism of these regimes, so that mercantilism today is considered as something known and obsolete but not quite intelligible. The mercantile system divided the world into ‘us and them’, and the relations between these two were considered along the lines of a zero-sum game or a tug-of-war: someone’s gain is always another’s loss. The mercantilists weren’t socialists; land, factories and commodities remained in private hands. But the state was always imposing new taxes, tariffs and excise duties on the merchants and entrepreneurs. The restraint of public consumption was a key element in this system. Subsistence farmers could consume whatever was locally available, but the import of foodstuffs or luxuries involved the spending of gold, and this had to be checked. Adam Smith’s ideas of free trade and Jeremy Bentham’s utilitarian principles turned mercantilism into an archaic apparition from the era of sugar islands, plantation slavery and the gold standard. In theory, mercantilism could not survive democracy: if people are empowered to pursue happiness, they want their state to spend funds, not to hoard them. In practice, some of the most powerful states in the world still practise – though they do not preach – mercantilism. But it is still true that excessive attention to gold reserves is a sign of imminent disaster.

Note

Notes

1 Herodotus, The History , p. 106. 2 Marx, Capital , Vol. 1, p. 47. 3 Appiah, ‘Is the post- in postmodernism the post- in postcolonial?’; Moore, ‘Is the post- in postcolonial the post- in post-Soviet?’. 4 Kant, ‘Conjectures on the beginning of human history’, p. 225. 5 Hume, Political Essays , p. 122. 6 Istoriya torgovli , Vol. 1, p. 29. 7 Breen, The Age of Intoxication , p. 7. 8 For the concept of ‘public bads’, see Beck, The Metamorphosis of the World . 9 Berg, ‘From imitation to invention’. 10 Berg, ‘In pursuit of luxury’, p. 118; Daunton, State and Market in Victorian Britain . 11 Hume, ‘Of commerce’, in Political Essays , p. 102. 12 Daggett, The Birth of Energy . 13 Hume, ‘Of money’, in Political Essays , p. 118. 14 Hume, ‘Of commerce’, pp. 93–104. 15 Hume, ‘Of refinement in the arts’, in Political Essays , p. 107. 16 Bentham, Emancipate Your Colonies , p. 21. 17 Etkind, Internal Colonization . 18 Innis, The Fur Trade in Canada ; Allen, Global Economic History . 19 Podobnik, Global Energy Shifts ; Fischer-Kowalski et al., ‘Energy transitions and social revolutions’. 20 Krugman, Rethinking International Trade . 21 Toye and Toye, ‘The origins and interpretation of the Prebisch–Singer thesis’; Harvey et al., ‘The Prebisch–Singer hypothesis’. 22 Polanyi, Origins of Our Time: The Great Transformation , p. 26; Arendt, The Origins of Totalitarianism , pp. 188, 199. 23 Mirkin, ‘Rost zolotogo zapasa v Rossii’. 24 Budnitskiy, Den’gi russkoy emigratsii . 25 Osokina, Zoloto dlya industrializatsii .