Earth Eaters: Once and Future Agrarians

[Dear Reader, this is the opening chapter of a book about subsistence farming.
I welcome your comments. --S.]

The women rise before daybreak to prepare the earth. They combine clay, water, cooking oil, and salt, shape it into small discs, and set them out to harden in the morning sun before carrying them to the marketplace near Fort-Dimanche, Port au Prince, Haiti. Buyers and sellers call it, pica--Latin for magpie, a bird known for its ability to survive on almost anything. The magpie earned its name during famine times in Europe, when people took some comfort in the reflection they saw of themselves in the scrappy scavenger, a trickster and survivor, somehow cursed and proud at the same time.

Medical textbooks have recorded earth eating since the time of Aristotle. Physicians today know pica as a biochemical response to nutritional deficiency, in which the afflicted crave the minerals they lack, usually iron. The image of humans choking down coal, paper, feces, chalk, soap, and clay revolts against our instinct not to eat these things, which is why doctors also consider pica a mental illness. But earth eating among Haitians is not a psychiatric condition, unless poverty and starvation result in dementia. Any trace iron in the dust underfoot is irrelevant next to the mud’s most obvious purpose: to exert gross weight against the gut. As one woman told a journalist, “Once you eat them, you don’t feel hungry anymore. That and a glass of water and you feel satisfied.” To supplement clay cakes children compete with pigs for the gleanings along open sewers. “No one talks about the sugar,” said a furious woman in a public market. “No one talks about the corn, the beans and the oil. No one talks about the education for the kids. No one cares about what we go through.”

Explanations for Haiti’s famine include a torrent of proximate causes. Hurricanes destroyed half or more of the island’s crops in 2008. International food aid fell short. Rising petroleum prices and rising demand from China and India forced upward the worldwide cost of food by 75 percent in a single year. Haiti has a density of 902 people per square mile and an unemployment rate of 70 percent (the fifth highest of any country). Nothing seems to bring stability--not food, not money. The World Food Program fed 1.7 million Haitians in 2008 but without confronting the causes of Haiti’s misery. The money recently spent by governments and foundations defies belief. The World Bank pledged $1.2 billion; The African Development bank, 1 billion; The Islamic Development Bank, $1.5 billion--in sum about $400 per person. Frederick Kaufman asks the crucial question, “Why, despite our spending more money than had ever been spent to solve the problem of world hunger, and why despite everybody’s best efforts to reconceptualize the problem--why were more and more people going hungry?”

Haitians produce little of their own food. The reasons go back to slavery and the Spanish and French takeover of the island of Hispaniola from the Taíno in the sixteenth and seventeenth centuries. Planters ruled the western island, what became Haiti, growing coffee, sugar, and cotton. Then came a shattering, breakthrough event. The Haitian Revolution of 1791 was the most radical popular movement of the nineteenth century. Not only did slaves emancipate themselves, toss out a colonial power, and upset a class hierarchy, they seized control of a nation. Writes the philosopher Michel-Rolph Trouillot, “The Haitian Revolution thus entered history with the peculiar characteristic of being unthinkable even as it happened.” Emancipated Haitians terrified slaveholders everywhere in the Western Hemisphere by nullifying the material basis of planter power. Land reform has rarely delivered on its promise to level social classes, but it might have come closest in Haiti. Led by Jean-Jacque Dessalines, Henri Christophe, and Alexandre Pétion, the Revolution splintered into two political units--a northern kingdom under Christophe and a southern republic under Pétion.

The republic’s constitution prevented any white person from owning land, and Pétion moved immediately to break the borders of the old plantations and distribute the land for small farms. In the decades that followed, land tenure remained stable, with smallholders producing subsistence as well as a slight but increasing quantity for export. Poor people grew their own food--enough for them to sustain their bodies as well as the symbolic relationship between food and freedom. These smallholdings, known as provision grounds, allowed Haitians and other freed people across the Caribbean to cut ties with the plantations. Early in the 1840s, an English Quaker and abolitionist named Jon Chandler visited the island. He saw families cultivating from 9 to 30 acres, raising yams, plantains, bananas, and four kinds of livestock. “Good land may be had of the government in every part of the island at a low price,” he discovered, “and any man not satisfied with his condition ... may easily buy it, and become a freeholder in his own right.” Chandler took in a busy peasantry, free of tribute to any prince, a people with “few wants,” who “grow up contented with common fare, course clothing,” who “work to live, as without some labour they cannot subsist; but they do not, and they will not work hard to please anybody.” He called many farms shabby, agricultural languishing, and commerce stagnant, all meaning that Haitians realized no surplus value, and did not turn out the kinds of broad-acre commodities that add to a nation’s wealth. Instead, he found one out of every three households in possession of their own patchy garden, “a proportion of independent proprietors, such as perhaps scarcely any other country in the world can exhibit.”

The provision grounds emerged from the Caribbean plantation, replete with the irony intrinsic to slavery. Planters invented the idea of slave self-sufficiency as a way to lower their costs and rend the greatest possible profit from spent capital. Setting aside soil for slaves to grow their own food on their own time, costing masters nothing. Slaves themselves recognized the kernel of true freedom. Their diets now belonged to them and, at least in this sense, so did their bodies. Runaways relied on the same volcanic soils and abundant rainfall, planted the same buried and easily hidden crops allowed them by masters but used these to liberate themselves from life as chattel property and from dependence on the plantation. They called their fugitive villages and renegade cassava, “making freedom.” Provision grounds schooled blacks in peasant farming well in advance of emancipation, eased that transition, and gave them skills for survival. After emancipation--whether in Haiti, Jamaica, or Grenada--provision grounds became central to the negotiation of the terms of post-slavery society. The peasant class looked upon their cassava, dasheen, breadfruit trees, and yams as a right of freedom.

Planters saw the provision grounds though different eyes. They believed that free farmers needed to live in the free market. No more customary property rights. Rents would replace the old ties between servant and master. Planters charged impossible rents and favored taxes. In the words of Eric Foner, “Throughout the Caribbean, taxation was also employed to limit the freedmen’s access to land, to restrict the economic progress of the peasantry, and to induce blacks to labor for wages.” Freed people continued to steal from plantation fields with the argument that since they had cleared the land

Then the bourgeoning Haitian republic began its slow-motion disintegration into violence, madness, and death. The United States invaded to take control of indebted Haitian banks. Under American occupation, a dictated constitution opened the country to foreign investment by eliminating the prohibition against white ownership of land. After the National Assembly refused to ratify the occupiers’ law, the occupiers held a phony plebiscite in 1919 in which less than five percent of the mostly illiterate population voted. It ended Haitian autonomy. Highly capitalized whites worked with successive governments to gain control of the lowlands, sending the households to the mountains. The new plantations paid wages to Haitians who could no longer make a living from out of their own resources, and while this condition might appear to introduce circulating currency into the economy, people on low wages cannot afford what capitalist farmers produce. Most of the food ended up on breakfast tables in the United States and Europe. It turned a profit for its foreign owners while it drained Haitian soils of their fertility--the island’s only natural capital.

Since that time, international development organizations have favored intensified market relations as the solution to the problem of poverty in Haiti, under the assumption that money exchanges for food and labor would allow producers and consumers to flourish together. The result has been a human disaster. The agencies have either wanted to bring smallholders into the market, to sell food to the cities and into the world economy and/or they have encouraged commodity-producing corporations to hire poor people for wages in order to increase the export trade and the gross domestic product of the nation-state. Capitalism, in other words, is the solution that has repeatedly failed, yet the unquestioned confidence that capitalism sustains people, enhances food security, and eliminates hunger still rules in the conference rooms of the International Monetary Fund and the World Bank.

It does not. The Great Famine in India, in which millions died during the 1870s, took place amid a thriving British wheat market. High food prices exist in an upside-down world of capitalist calculation, where the product of agriculture is money--not food. By alienating themselves from the lives of ordinary people, governments and their private-sector clients aggravate the very political instability both assumed capitalism would magically relieve. Commercial farmers displace subsistence farmers and pastoralists (as they did in Mexico and Ethiopia throughout the 1970s), resulting in mass starvation whenever flood or drought toppled the zero-sum livelihood of the world’s dependent poor, leaving the afflicted only one option: migration to cities. Whenever smallholders attempt to use the tools of industrial agriculture to improve their yields, toward a profitable surplus, they run into limits and conditions that force them into market relations that they do not freely choose. Seed companies breed germination out of high-yield hybrids, requiring farmers to purchase them continually rather than select them from the yearly harvest, as farmers have always done. One Haitian, gleaning rice from a large farm, picked up a handful and let it slip between his fingers in disgust, telling a journalist, “This grain doesn’t grow. It’s not good. We can’t replant it.”

This book will look, unflinchingly, into the alternative that generations of modernizers have condemned as equivalent to the destruction of civil society--the practices and people known as agricultural savages, economic outliers, slackers and draggers against human progress, backwards and degenerate, technologically stagnant and languishing, and wasting of land and labor--at best curiosities, at worst forest and mountain-dwelling insurgents without political allegiance or ties to centralized authority. This is subsistence farming as it has come down from the metropolis. It is time to look at it differently, through the prism of intractable starvation, high-energy prices, and the century-long extraction of resources from the Caribbean, Africa, Mexico, and the Southern Hemisphere. Where provision grounds have remained, they have undergone no significant changes for centuries, evidence of the reliability of low-input cropping practices. Provision grounds maintain their soils, function without petroleum or capital, and give returns that feed households and local markets. The geographical and social isolation of subsistence farmers sounds self-evident, but the studies of anthropologists obliterate this misconception. Many of the same “agricultural savages” sell into the global economy without threatening or altering their subsistence strategies The paradox and successes of the subsistence culture in North America and the world is my subject, a history of rebellion and violence, of tradeoffs and privation, but also of a kind of freedom few people of the developed countries have ever known.

Now Haitian merchants lean against sacks of rice grown in California, waiting for customers. The world’s poor rioted against governments in Haiti, Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan, and Yemen in 2008, not because they found too little food for sale but because food cost more than they could afford. Development agencies that for half a century have build roads, introduced technology, moved people into wage work, and generally modernized and monetized the rural poor (in cooperation with governments often riddled with corruption) should have taken a moment to appreciate the irony. All these hungry people struggled against the heightened global demand for rice, maize, and wheat and from the rise in factor prices, especially petroleum, inherent in industrial food. They starved, in other words, from being monetized, from the very dependency that represents their modernity. These millions of Haitians--the great-great-grandchildren of the slaves who went farther than the leading lights of the European Enlightenment in defining the meaning of universal rights and freedom, the great-grandchildren of proud smallholders whose cassava and dasheen gave material meaning to freedom--eat slum dirt.

•

Until very recently, the poor and dependent people of the world mostly fed themselves. They traded with other farmers, other villages, and distant merchants whose reach extended to the known world. Subsistence farmers depend on family labor and reciprocity, rarely paying wages; they use no expensive or high-technology tools, seeds, chemicals, or other inputs; they almost always produce a cash crop, without depending on money; and what is the same thing, they have a market connection, without depending on the market.

The word itself evokes an armed standoff. In its Latin form, the verb to subsist meant to stand firm, to stand still, and to be self-sufficient. Subsistence refers to tenacious existence and to the food essential for supporting life. One who subsists does not move toward any distant goal of accumulation or wealth. For people who believed in progress as the defining modern quality, subsistence deserved its name--a livelihood outside of historical time, resisting change, stagnate amid epoch-making change. Those who subsisted increasingly found themselves in a standoff with those who valued progress and accumulation, and this is the central conflict in this book.

Such farmers exist in a cultural niche. Children know The Little Wooden Farmer and his little wooden wife from the book by Alice Dalgliesh (1968), in which barnyard animals happily provide their characteristic products for the contented couple (a problem for the pigs). For many, they are first settlers who live in privation before the canal or the steamboat or the railroad finds them, giving them a market connection. The image often finds an example in the metropolitan caricature of the Appalachian hollows, where family members intermarry and scratch around in filthy, stupefying isolation. Yet there is a nagging sense that they somehow know the world better than the metropolitans, like the Beverly Hillbillies--fashion-stupid but mountain-smart. We all know the cultural types from television and grade school: the American backwoods settler, the medieval European peasant, the Caribbean cassava planter, and the African cattle herder. And though poor farmers exist all over the world today, most Americans see them as belonging to a savage past. They are backward, a word used without irony or definition, as though everyone knows what it means.

At some point during the last 200 years, a heartbeat in time compared to ten millennia of settled life on Earth, subsistence farmers no longer represented a viable or even legitimate form of household economy. A household consists of related people who work together, share the same living space, and eat from the same pot. Pervasive as the household may be, economists since Adam Smith have ignored it in favor of individuals as the basic unit of social theory. Smith’s American followers ceased to see the rural household as a symbol of the republic’s future but of its past, a useful myth of origin after they no longer served as un-deputized colonizers and Indian fighters in the wars of expansion. The template that replaced the subsistence household by the 1850s was the modest commercial farm, a hybrid based on a contradiction. It would be occupied by a family and their wage-earning employees and would operate as a highly capitalized, technologically competitive, commodity-producing enterprise. The hybrid failed, a conclusion born out by the plummeting number of farms between the end of the Civil War and 1990s, the century when capitalism and public policy conspired to depopulate the American countryside. In this sense, subsistence gets folded into the long and agonizing death of the commercial homestead--outmoded modes of production unsuited to the needs of a modern economy.

In fact, subsistence survives, not as a vestige but because it offers strategies impossible among wage-takers. Seeing subsistence without the enduring prejudices of industrialists and colonial offices broadens our sense of possibility for our own material lives and for those gasping against the vortex of forces that want to give economic value to their land and labor.

The tendency here might be to pounce on commodities chains, supermarket-determined monocultures, and energy-intensive corn. I continue to see industrial farming as a temporary, even ephemeral method of growing food. Its false assumptions are well known, thanks to the work of many writers. The system that will replace it will almost certainly include a reinvigorated sense of agrarian independence. Yet I do not read noble savagery into the lives of the smallholders who so fascinate me. I admire their successes and their fierce autonomy, but I do not long for an Arcadian contentedness that never existed. It is a well-known trait of urban sophisticates that they sometimes celebrate conditions that come across as authentic or virtuous for being devoid of the consumer products and electric gadgets that clutter their own lives. Given the chance, poor farmers would have indoor plumbing and electricity, as well as microwavable bags of brown rice from Trader Joe’s and ESPN.

We need to take control of the words used to define agrarian cultures as poor. For the World Bank and the United Nations Food Development Program, poverty consists of the things people lack. It is the inability to consume. In the words of anthropologist Enrique Mayer, “poverty is reduced to a set of attributes of the household ... This kind of poverty research comes close to blaming the victim for his condition. And it pays scant attention to the external factors that cause income to fail.” Mayer prefers “standard of living,” because it allows for greater flexibility and takes the expectations and wants of Andean potato growers into account. To call the people of northern Appalachia poor because they did not have refrigerators when refrigerator purchases became common in the suburbs is to use a standard outside of their experience. More than that, it disregards the sentiment for work and family life that emerges from practices and legacies irreproducible in a middle-class standard of living. Hundreds of years of peasant rebellion and dispossession seem to indicate that subsistence farmers do not greet the emissaries of capitalism as liberators, clinging to their legs and begging them to make room in the helicopter. They don’t call the World Bank the first chance they get.

Mayer prefers to view Andean households as engaged in an economy that--like any economy--sometimes gives them plenty and sometimes depravation. They have a number of strategies for getting through lean times, as they have been doing for centuries. Likewise, the people of Appalachia, who make up the central historical subject in the following pages, wanted sufficiency no matter what anyone else called it and fought against those who would take it from them. Being poor is not the same as being destitute; just because a family has little money, limiting their consumption of store-bought goods, does not mean that they starve, as long as they have access to land, possession of their own labor, and freedom from debt. And if subsistence cultures appear to have no safety net when the rains arrive at the wrong time of year or when locusts fall from the sky in clouds, people who depend on wages fare no better. Slum poverty only seems like an improvement on rural poverty when we fail to ask what caused self-sufficient households to flee the countryside in the first place.

For billions of people over the last 400 years, modernization and industrialization has brought early death, not a living wage; it has meant a shack on stilts over a shit-polluted lake, not economic stability. No doubt, these billions from the global countryside have considered meager wages earned by sewing labels on running shoes or washing windshields better than the handful of rice they had before, but it is important to understand that the rural poverty they fled came from larger forces at work. In Haiti, when commercial farmers evicted smallholders from the more fertile lowlands, sending them into the barren hills, once independent families could no longer make a living. In India, partition with Pakistan in 1947 forced millions to migrate from contested territory to the fringes of Bombay. In Vietnam, the United States uprooted millions of peasants, bringing them to the cities, in order to foil the Maoist strategy of mobilizing the rural poor into a revolutionary movement.

Two billion of the world’s dispossessed and their living legacies now survive in slums, including Dharavi, Mumbai; Cité Soleil, Port au Prince; and the shanties along the Nhieu Loc Canal of Ho Chi Minh City, Vietnam. Are the 4 million people who live in the archipelago of slums outside of Mexico City really better off now than they were when they cultivated there own maize? Neza (or Ciudad Nezahualcóyotl) had a population of 10,000 in 1957. It now has 3 million. Highly capitalized farmers, moving into rural districts between the 1970s and the 1990s, ruined householders who could not compete with the quantities and the low cost of industrial food. The forced-upon tradeoff: a full belly in exchange for dependence. Developing nations found the attractions of dispossession irresistible. Their treasuries would be gorged with export dollars. They would expend nothing for additional infrastructure to house the migrants. And they could finally make profitable use of natural resources long in the hands of peasants. The goal was not food or livelihood but economic growth.

According to the International Fund for Agricultural Development, an agency of the United Nations, the poorest people in the world are not those who live in subsistence households but rural workers who depend exclusively on wage employment, sharecroppers, and families without fathers. The solutions keep coming back to subsistence. Borrowing the design of a container invented for city dwellers to grow vegetables in their apartments, a group calling itself ANADEGES promotes the same method for growing food in the world’s slums. It is fertilized by urine and the castings of worms, recycle kitchen waste, and retain moisture.

Even nation-states have embraced subsistence. One observer on the ground in Uganda writes, “I remember the days (not so distant) when all schools of economic thought scoffed at the self-sufficient ‘subsistence economy,’ describing it as a relic of the past ... Now societies like Uganda’s exist and survive precisely thanks to this subsistence economy. Though much of the population has migrated to the cities, the people have retained their ties with the countryside, where their little patches of bananas, millet and cassava still bloom and bear fruit.” Seventy percent of Uganda’s land area produces locally consumed food. Women provide over half of the labor for a national household crop whose value exceeds that of all market crops. In 1999, food production included 9.4 million tons of plantain; 3.4 million tons of cassava; 2.5 million tons of sweet potato; 600,000 tons of banana; 638,000 tons of millet; 780,000 tons of corn; and hundreds of thousands of tons of sorghum, beans, and potato. Writes Tewolde B. G. Egziabher, Director General of the Environmental Protection Authority of Ethiopia, “Africa’s subsistence agriculture could be the basis for the much needed intensification of sustainable food production, not only in Africa, but throughout the world.”

The end of subsistence farming is not a stage in the progress of humanity. To think so requires a willful misreading of history and the motives of all those lords and tax collectors who maligned rural people before taking their land. The agrarian household serves a purpose for those who practice it and expresses a basic human right, one easily violated by free-trade governments because many people in the developed world see subsistence as historically transitional and dispossession as a regretful but necessary.

FICTITIOUS CAPITAL: Wall Street's Great Delusion

[Dear Reader, The following essay first appeared in the Chronicle of Higher Education,
October 3, 2008.]

Imposing buildings with imposing names mark the geography of capital in New York City: Bear Stearns, Merill Lynch, Lehman Brothers, American International Group. Somehow both fearsome and elegant, the buildings release their workers at day's end. The granite-and-steel firmness of Wall Street is difficult to reconcile with the overnight collapse of the 158-year-old Lehman Brothers and the panicked sale of Merrill Lynch for 22 percent of its stated value. Rumors of more failures to come, whispered over tables at the Wall Street Burger Shoppe (where a sandwich topped with black truffles and flakes of gold leaf sells for $150) and at the counter at Tiffany's (where a pair of earrings sells for $230,000), shatter confidence in the financial markets.

Look at a graph of stock prices for the 1990s. It spikes like Mount Olympus compared with what came before. Even after the dot-com bubble burst, Wall Street had amassed the greatest concentration of wealth in human history. In 1990, 51 million people owned stock, and trading volume topped 200 million shares. Over the next 17 years, volume multiplied 20 times to its current one-day record of four billion shares traded. The enormous capital from those trades and from every imaginable venture introduced into the capital markets during the go-go years of investment banking, flowed into the key financial institutions. If such venerated institutions, together accounting for hundreds of billions of dollars in assets, could implode within hours, it must mean that their assets had little actual value.

What kind of economy -- what kind of growth -- have the financial titans created? I speak to the question as a historian with a new book on the utopian quality of economic growth. The Great Delusion is not about growth as a government policy, nor does it chart household incomes. Instead it explores the very idea that any society can increase in wealth perpetually. In essence it is about how progress became material by the middle of the 19th century, how it changed from a humdrum word for moving from here to there to signify increase, betterment, control over nature, security from want, and the defining condition of modernity.

The people who both described and promoted material progress in the 19th century called themselves political economists. They tried to explain the enormous changes taking place in Britain and the United States by writing about heat, coal, engines, capital, geography, production and consumption generally, and the origin of value. In time they tracked employment, population, and government policies -- everything to do with the flow of matter through human hands. They dreamed and fantasized about how God and Nature blessed American industrialism. One of them, Amasa Walker, called wealth "a perpetual progress, an unceasing self-multiplication." Consumption depletes nothing, intoned the political economists (who, if they had had a drinking club, would have refused the cheerless Thomas Malthus and his friend David Ricardo); instead, as Walker continued, it provides "the springs of wealth." These writers called nature inexhaustible, gushing with species and metals and materials in quantities that would always equal human wants. The most salient characteristic of their thought was a model of reality that held nature constant at infinity.

Time-warped to Wall Street before the events of the past few months, the political economists would have been agog. I imagine them standing for hours in front of the Lehman Brothers building, near Times Square, with images glinting over screens that cover almost the entire structure. I imagine Henry C. Carey, the most influential of his profession during the decades preceding the Civil War, looking down at the floor of the Stock Exchange, seeing in its frantic motion proof of his belief that "capital grows in the ratio of the circulation." In other words, it grows by rapid exchanges -- not by saving, which Carey thought signified stagnancy. Thousands of industry analysts and corporate economists have had little reason to think him wrong.

But the political economists of a century and a half ago would have also worried. Natural abundance might have had no limit for them, but they steadfastly tied value to hard and useful things. They measured progress as fields plowed, sheep sheared, textiles milled, ships unloaded. Many thought it economically impossible, or just insane, to issue currency not backed by the identical value in gold. Carey himself anchored his entire system to the cultivation of land. Back when an elevator receipt represented a hundredweight of wheat, the tradable value of things did not stray very far from the things themselves.

Wall Street, on the other hand, thrives on intangibility. What exactly are "mezzanine tranches" of collateralized debt that can be traded on "credit correlation markets"? What does it mean to securitize portfolio "credit default swaps"? They are various ways of speculating on debt, in which portfolios of credit exposure (mortgages) are broken into parts (tranches) that are then sold separately to investors. Here is where the deal enters the World of Make Believe. Investors don't actually have to pay for the debt they buy. A perfect document for channeling the spirit of the boom comes from an industry article, "The Collateralized Debt Obligation Market: Riding the Wave," published in Institutional Investor News in 2006. According to the lawyers Stuart N. Goldstein and Angus Duncan, "You can now source collateral either cash or synthetically. Now managers are not limited in what they can find in cash -- they can find assets synthetically." The most trusted financiers call it a good idea (or did until recent events) to take a credit risk and to pay for it with other peoples' credit risks. Like children using M&M's as currency, they and their public have been trading in fictitious commodities. As Karl Marx put it, "All that is solid melts into air."

Hard and useful things do lie at the bottom of the crisis. Just follow the money. The most-favored securities for most of the faltering firms were mortgages; mortgages represent the value of houses; and houses require land and materials. The roughly $500-billion once said to be the value of American collateralized debt corresponds to a proliferation of sprawling subdivisions across the country. It would be too much to go through the causes of recent foreclosure, and they are well known. But I have not yet heard someone consider the hive of interests that benefited from a rising growth curve in residential housing -- counties that wanted more property-tax dollars, builders and their subcontractors, real-estate agents, and the makers of everything that goes into houses: wood, plastic, glass, steel, plaster, insulation, cement, appliances. Through their individual decisions, they worked hand-in-hand with the bankers to eat up open space and recklessly expand the mortgage market, which, in turn, generated a surplus value increasingly detached -- with every successive bundling and exchange -- from the fluctuating prices of actual houses on actual hillsides.

Did boom years on Wall Street deliver the kind of growth that improves health, prolongs life, and makes people happier? The gross domestic product certainly increased, with sharp gains in those places burgeoning with construction jobs and property taxes. GDP, however, does not measure things like the loss of natural capital; neither does it measure human misery. The use of credit as a source of economic growth generates phantom prosperity with incomprehensible social costs.

I find myself agreeing with the free-market economist George Reisman, once a student of Ludwig von Mises and a friend of Ayn Rand. Writing earlier this year, Reisman, an emeritus professor of economics at Pepperdine University, noted: "The truth is that credit expansion is responsible not only for the boom-bust cycle but also … sharply increased economic inequality, in which the wealthier strata of the population appear to increase their wealth dramatically relative to the rest of the population and for no good reason."

Companies crave credit expansion because it elevates their stock prices, giving them money for nothing. From the point of view of the aggregated goods and services that we call the economy, money for nothing does nothing. Profit-taking is not the outcome of selling things, making things, or employing people. Profits from mortgages traded on credit-correlation markets do not end up in blue-collar paychecks and then at the supermarket. Even worse, credit expansion has enticed Americans to mine their homes instead of demanding higher wages. In a self-serving scheme that would be unbelievable if it were not real, many companies pay their employees in company stock. Rather than compensate secretaries and sales representatives out of profits, executives substitute a utopian promise of future riches -- fictitious money. In some companies, those securities have genuine value, but in example after example workers have been coaxed and manipulated into forfeiting their earnings.

When credit inevitably shrinks, consumers plunge into insolvency, find themselves without income for their retirement, and tumble out of their highly leveraged houses. According to Harper's Magazine, 79 percent of Citigroup's profit in 2007 came from credit cards. It came, in otherwords, from interest paid by people without the funds to cover their purchases at the end of the month. Matt Fellowes, a project director at the Pew Charitable Trusts, told a Federal Reserve Board forum that year how credit scores have made consumer debt a safer risk for lenders than before: "That led to more businesses and consumers having access to more money, which meant more spending, more investing, more jobs … more economic growth."

In the 19th century, the idea of growth was based on faith, not science -- an idealism that appealed to Providence or a mystical conception of the natural order. When the president of Lehman Brothers staked the $600-billion company on fictitious value (while he took home less-fictitious Federal Reserve notes -- the ones with pictures of Benjamin Franklin on them), he participated in another kind of delusion: that speculative value can create an economy detached from hard and useful things and from social costs. At this writing, with news still breaking, the British bank Barclays has agreed to buy Lehman's New York headquarters for $1.29-billion. They're also buying Lehman's entire investment-banking-and-trading unit, for $250-million. It somehow makes sense that the building is now worth more than five times the bank.