Ancient Fiscal Fissures

I was reading-up on history of imperialism recently — you know, because the Leftist hair-on-fire types annoy me about as much as the blithering idiot Neocons. Or perhaps it is just consuming too much of my news clippings from social media commentators is catching too much anti-establishment fluff in the old daily news fishing net.

Anyway, what you hear often from a steady stream of Anti-establishment types (who range widely on the political spectrum from extreme left-wing to libertarian right-wing) is that

"US Empire is about to collapse!"

It is cringe stuff.

Big Whimpers

Empires do not just go away like this popular conception (or, let’s say, the conception that I thought-was-popular-but-only-in-my-own-head-since- I-do-not-pay-much-attention-to-what-most-people-understand-of-history-of-empire — you know, that sort of garden variety uncomplicated conception).

But take the Soviet Union for example. The system of governance collapsed, but the Russian State did not, it was split up, but hardly a collapse of Russia. And what matters is the People. Not the system of government. The same oligarchs held on to power in Russia who existed in the former Soviet Union. Hardly a collapse of anything. But, ok, it was a massive shock administratively.

I doubt anything similar will occur for the USA, but if there is a massive re-organization of government in the USA, it will not vanquish the might of the USA that has not already been diminished. It might even strengthen the USA, who knows. The key will be to excise the unholy madness of the Trumpistas. If they burn-out, the establishment might be back but perhaps with humbler ambitions for the billionaires, and greater ambitions for the working class? Well… one can dream.

(I did hear a whisper somewhere recently that some former Obamarites have grown a conscience.)

But yes, I am already looking ahead of the Trump–MarsKing reign. I think it will be clownish and the shortest monarchy in world history. Holding real power will still be the oligarchs when the Mar-a-Lago bulldozer dust settles.

Also, I really could not care if the USA gets split up into several sovereign states. That could be a very good thing… for some, horrid for others. But the balance of the break-up effect is impossible to guess. Or even if there will be a break. My feeling from working in the USA is that the ordinary people of the USA have a strong enough cultural identity and can remain a united power. They are not united under a vision of themselves as a complete imperialist economic colonial 𖧥𖨚𖨚𖦙𖥕ꛚ𖠢s, but they do share a national multicultural identity that is richer than they might give themselves credit for collectively (because the cult of the individual is also strong).

Most people in the USA do not want this status as international pariahs and neo-imperialists. If the government of the USA listens to their people, all should be fine.

That’s enough Crystal Ball gazing. I suck at it.

Using the Timestone called a “history book” I was wandering back centuries and reading that my dopey naïve thought that the big grand stories of collapses of empires was a bit mythical, was largely true. While a “great leader” is often a man mounted on a house of cards, the people of the empire are more resilient than the names at the top, and tend to always persist. How could they not? You cannot exterminate or assassinate a culture.

Some dude said, was it T.S. Eliot? “The world ends not in a bang, but with a whimper.”

Such seems to be the way great empires get rolled up. The time span in the historical accounts seems compressed when you read it, but taking a sober look at the dates involved the process tends to (for most empires which fade) to be very slow. Not Soviet Union style at all.

It is remarkable the Russians did it twice in a century. If you consider the Soviets to have been pretty Empirical. (Physics nerd puns are the worst.) Although, I do not know much about the Tsarist regime, I think from accounts I’ve read about the Bolshevik revolution that the Tsar was pretty darn weak in the end well before the revolution, so this had been a slow decline too.

A good history work detailing rise and fall of empires, recommended by The Burning Archive host Jeff Rich, is John Darwin’s After Tamerlane. It confirms what I had always thought was fishy. Although, to be honest I have little time or pleasure to read history, so it is possible it was my false impression of History as taught that was at fault? Perhaps all the scholars would say, “Yeah, empires never really collapse like that!”

History Buffs, Buffing up the metals

There are two things I want to comment upon now.

1. The accounts of the historians get the money story wrong I believe. They talk about “fiscal crises” but are not giving us the more accurate historical account.
2. For the USA today a “collapse” or reform of US government will not necessarily be a collapse through “collapse of the US dollar”.

I am going to take the Safavid Persians and Indian Moguls as my study for the first.

The orthodox history buff idea is that the rulers needed to collect “revenue” — in order to get their own currency!

Complete bollocks. Why do the history buffs, who are supposed to be excellent with words, not understand the meaning of the word revenue?

The far more realistic account of empire collapse or retreat is that they get over-extended and run out of real resources to support the army (or mercenaries or whoever). Sometimes the peasants revolt too, if they are sending a high revenue burden back to the rulers.

But we know that revenue side of the sorry! The peasants cannot create the currency, so when they are forced to return it they lose spending power and social fabric and community cohesion is destroyed. This is the cohesion and unity that truly maintains empire. The history books often tell this story skewed. Afterall, we are not talking about just continual barbarian hoards one after another. Most empires are peaceful-like. (Hey, relative terms ok! “Nasty brutish and short” is peaceful compared to “Violent sadistic and over-in-a-flash”.)

The extensions of empire are always after more real resources, the minerals, the silk, the food, and sometimes… yes, sometimes also the gold and silver (fine thing for decoratively equipping a non-fighting army with).

In demanding gold and silver the elites are undermining their empire. They are making the peasant work in ꕗꖹꝆꝆꕷꖾꕯꖡ jobs. But, you know, it can work for a while.

Safavid Monetary System

Let’s examine the Safavids then, who supposedly had a fiscal crisis or two (reduction in those revenues). I will sprinkle in a few links for the history buffs.

During the Safavid era in Persia, the primary state currency was the ʿabbāsī, named after Shah ʿAbbās I (1581–1629. The ʿabbāsī was issued in both silver and gold tokens , with silver being the more common form. Other denominations included the šāhī, moḥammadī, and tūmān (as a unit of account ). Double entry book-keeping was around, and the Safavid and Qaja administration was not far off what we do today.

It is fair to say that the Safavid currency was partially tax-driven, but not exclusively so. Several factors contributed to the demand for the ruler’s currency. Let’s run through them:

1. Tax collection: The Safavid state collected taxes in its official currency, which created a consistent demand for it. Taxes were levied on land, trade, and various economic activities, requiring subjects to acquire the state’s currency to meet their obligations. Lo! Basic MMT.
2. Administrative payments: High Safavid officials were paid salaries and entitlements, often through land grants (toyūl) and special tax assessments, which were likely denominated in the state currency.
3. Trade and commerce: The ʿabbāsī and other Safavid coins were used in domestic and international trade, creating additional demand beyond tax purposes . Lo! The non-government sector also desires to save in the tax credits.
4. Minting control: The Safavid rulers maintained control over minting, farming out the mint to private persons who were obliged to bring foreign money to the public mint, thus ensuring the circulation of state currency.

This is an MMT system if ever I saw one.

Periodic reforms, such as those implemented by Shah ʿAbbās I, aimed to standardize the currency system and increase its use throughout the empire.

On point 3 it was clear protection of trade routes was the main problem, not the revenues.

It’s important to note that foreign currencies also circulated: Rixdollars, Spanish ryals, and other foreign coins were accepted and often converted to ʿabbāsīs. Lo and behold! A forex desk was in operation! It might have been a floating exchange rate, in fact what else could it have been? The Safavids did not sem to have proper fixed exchange rate control from what I can tell. The MMT just keeps piling on.

Different regions within the Safavid empire used various currencies, such as the akçe in Shirvan and the tanka in Mazandaran, before monetary unification efforts in the 1570s.

Towards the end of the Safavid period , the state faced economic difficulties, including currency devaluation and shortages of silver, which affected the stability and demand for the official currency. Which is an indication even back then the “economists” did not grasp the function of the state/empire currency authority.

Thus while tax collection was a significant driver of demand for the Safavid currency, it was part of a broader economic system that included trade, administrative payments, and sometimes backwards monetary policies, all of which contributed to the currency’s use and circulation but also unnecessary “fiscal crises”.

The point is though, it was still MMT. The taxes drove the demand for the currency. Devaluation was not a silver supply problem, it was a problem of lack of understanding (probably all around, but certainly among the elites) of the tax system. When a whole system effect get’s mentally locked-in, and everyone thinks the silver literally is the money then bad things will result.

The Moghuls

A similar story can be told under the reign of the Great Ahkbar across India and what is now Pakistan.

However, it appears their goldbug mentality was more severe than the Safavids. They really did believe in metallic purity of coinages. So it is no wonder they suffered (needless) fiscal crises.

It was clearly an MMT system. Akbar replaced the previous tribute system with a monetary tax system based on a uniform currency. I doubt pure Tribute systems (real goods given) ever function for any large disparate empire, the scaling is all wrong. (But I do not know, it just seems impossible.)

The Moghals did attempt to manage the relationship between face value and intrinsic value. For example, the ratio of dam (copper coin) to rupee fluctuated over time, from 48:1 at the start of Akbar’s reign to 38:1 in the 17th century, and eventually 16:1 by the 1660s. This suggests an awareness of changing metal values and attempts to adjust accordingly.

But this is more like managing a commodity peg. They needed the metal resources to manage the peg. It was madness. But obviously people of the day did not realize. The peasant communities they conquered were probably functioning more like pure communists(!) The records of account were all in their heads. So when the coins came along from Ahkbar they were not wise to the “scam” so-to-speak. Someone somewhere was digging up metals to put into a numeraire to support false consciousness. Where these the first ever truly ꕗꖹꝆꝆꕷꖾꕯꖡ jobs in history (apart from the courtesan stuff).

Once the metallic value exceeds the coin face value, there is inevitable defacing et cetera. So the Moghul system cannot truly have been a metal standard. The metal intrinsic value had to have been an impediment to trade efficiency I would think, not a bonus. It means people think they desire the metal in the coin, but if the face value is higher the metal is irrelevant, and in fact a big waste and inefficiency. Indeed, it is an inherent instability. Did the Moghuls perhaps not realize this? Seems so.

It is interesting to note the Wikipedia article stating the misunderstanding openly and naked:

“The base of the empire’s collective wealth was agricultural taxes, instituted by the third Mughal emperor, Akbar. These taxes, which amounted to well over half the output of a peasant cultivator , were paid in the well-regulated silver currency, and caused peasants and artisans to enter larger markets .”

History goldbuffer dude! Where dd the merchants get the tokens from in the first place? Out their Mint 𖧥𖨚𖨚𖠢𖨚?

Now, it is possible Ahkbar had some merchants mint the coins themselves, but this is not clear, and I highly doubt it. The administration was known in high repute for excellent standardization, which means the officials likely closely controlled the minting. No one could get a reap of rupee until the empire spent it.

It is tragic: you have an MMT system but do not know it. How much historic tragedy are we talking about now? It is not just 20th century Neoliberalism causing collapse and crisis and unemployment.

History records a “fiscal crisis”. But it was not the lack of tax revenue that was the problem, that was a symptom. The problem was over-extending empire, and the need to protect trade routes, because of overwhelming demand for the real resources available. Requiring extra metal resources for the coins was a terrible mistake. Shoulda’ used tally sticks Mr Ahkbar.

When real supply is pressured, the revenues collapse. The tax revenue is the ex poste accounting evidence of a strong productive economy, it is not the funds for the Empire. I suspect there are very few history books that state this explicitly, which is a great shame. Although, like I wrote, I am not a history buff so have not read widely enough to say for certain the buffs are still buffering the fake knowledge of metals and money.

Also, to end this bit, because the rulers probably falsely believed the metal was the money, they probably caused the fiscal crises, needlessly. Or was it? I still would say the over-extended need for real resources, and likely loss of control over corruption, is what devalues the currency and if the Ruler/Authority does not issue more tokens to satisfy the rise in nominal demand (i.e., fails to accommodate the inflation) then bad things are bound to happen. All the more so if pegging to the metal standard.

Lesson for history: you’d better know what you are standardizing for!

If you are the Ruler you always accommodate the inflation. Meanwhile, get the army to work shoring up supply which is the cause. Not plundering, but building. You do not want real supply efforts to be digging around for metals for a stamped coin.

We cannot ever underestimate the stupidity of Ruler Elites and their material greed. Throughout history they are often their own undoing, and the empires they inherit go out with mostly whimpers.

USA Today

It is almost absurd to think the USA will collapse due to fiscal ineptitude. But stranger things have happened. I’ll not go back to the Crystal Ball. Instead I am gong to wildly speculate by looking at the crumbs on my keyboard — there are none to be seen, such not much to divine.

I will just bookmark that already the collapse on the fiscal side due to the MarsKing Reign of PayPal Phreaks is unlike in anceint times. The US dollar system is robust but also far more significant than ancient tax driven systems. So in the USA today the collapse of sales is likely to be so fast and so severe the lunatics will be thrown out probably by Trump himself once Mar-a-Lago &c., sales plummet, or the CIA get involved.

The CIA is not exactly a Mont Pelerin institution, but I rather feel most of their experts are neck deep in stupid goldbug monetarist groupthink mud, but even they might dimly understand the gold at Fort Knox is not the thing worth protecting but the payments system is the thing for national security preservation. Preservation of the rentiers, Wall Street, Venture Capitalists first and foremost, and then all the rest.