Debt: The First 5000 Years

Following up on my previous post on Debt and Civilization, I read David Graeber’s Debt: The First 5,000 years. It is a very important book. It lays out a case that we have not yet fully heard: that debt, as a human construction, is something which has been overlaid on our social relationships in such a way as to produce confused mixtures of morality and economics. He starts out his book in his introductory chapter “On the Experience of Moral Confusion” with a little story about how this was brought home to him.

I found myself attending a garden party at Westminster Abbey. I was a bit uncomfortable… I felt more than a little out of place. At one point Father Graeme intervened saying that there was someone at a nearby fountain whom I would certainly want to meet…. “She works for a foundation that provides legal support for anti-poverty groups in London…”
I told her I had been involved for many years with the global justice movement – “anti-globalization movement,” as it was usually called in the media. She was curious: she’d of course read a lot about Seattle, Genoa, the tear gas and the street battles, but . . . well, had we really accomplished anything by all of that?

“Well for example we managed to almost completely destroy the IMF.”

As it happened she didn’t actually know what the IMF was, so I offered that the International Monetary Fund basically acted as the world’s debt enforcers.… I spoke of poverty, the looting of public resources, the collapse of societies, endemic violence, malnutrition, hopelessness, and broken lives.

But what was your position? The lawyer asked.

About the IMF? We wanted to abolish it.”

“No, I mean, about the Third World Debt.”

Oh, we wanted to abolish that too… thirty years of money flowing from the poorest countries to the richest was quite enough”

“But” she objected, as if this was self-evident, “they’d borrowed the money! Surely one has to pay one’s debts.”
It was at this point that I realized that this was going to be a very different conversation than I had originally anticipated. P.2-3

Indeed the position of his interlocutor is something that I have heard in conversation as well. That debt is natural and, of course as a matter of moral principle, one must pay one’s debts. This is what Graeber calls the moral confusion that we normally bring to bear on debts.

Graeber brings the perspectives of both an anthropologist and an activist to the study of what it means in human societies throughout history to be in debt. And along the way he demolishes much of what passes for obvious linkages for us day-to-day: that debt is somehow natural, right and moral.
What is debt? On one hand it is the glue binding human communities together. To have borrowed something, a lawnmower, a cup of sugar, is be indebted to the neighbor who loaned it. This is to have a continuing relationship, tinged with a moral sense, an accountability to one another. These types of debts are never repaid exactly. In fact Graeber makes the point that in Eskimo society to repay a gift is to say in effect to the neighbor, “I don’t want to have anything to do with you anymore.” A breaking of the relationship.

On the other hand debt is also the basis of the current world economy. This debt has a strict accounting. It is denominated in money. And though it is an ongoing relationship it is not a relationship between equals, except at the initial situation, where either party can refuse the loan.

This stems Graeber posits, from two competing theories of the origins of debt which he covers in the chapters on “The Myth of Barter” and “Primordial debt.” In the Myth of Barter he takes on the classical Adam Smith argument of the origins of the money economy. Adam Smith and many textbooks have a mythical story about how money came about. In this story barter economies existed where one traded one’s eggs for meat, or pottery for pans. But, the story goes, if your neighbor didn’t have anything that you wanted then you were in a quandary. So money is invented, shells, coins, whatever, and individuals transact for the coinage, and the use the coinage in further transactions with their neighbors. But, as Graeber points out throughout the book, this is NOT what we actually see happening in barter economies. By and large in barter economies neighbors exchange freely with neighbors whatever is needed, in a sort of primitive communism, to each according to his need. And in the neighborly community people are always in each other’s debt, this one for okra, that one for a chicken, and these debts are an active part of the social network. In these economies shells, jewelry, coins, or cows if that is the ‘money’ of the economy are reserved for special transactions such as exchange for ritual objects or wives.

The primoridial debt story Graeber traces back to the Vedantas. In this narrative one owes one’s life to the gods and through this primordial debt one owes also a debt to ones ancestors, and by extension rulers and society.

Hudson, in my previous post, Graeber goes back into the question of what is debt by delving into ancient Sumerian sources. In the end he shows in depth what Hudson posited: that states, war, slavery and debt are all inter-related. They arise at the same time, and not just in Sumer, but in various other times and places as well. Money as coinage, and gold, arises from plunder and the need to pay soldiers, mercenaries in some mobile fungible form. And money is used by the soldiers to buy from the populace, since none of the conquered populace would transact as neighbors with these bellicose strangers (since who could be sure that they would repay the debt of neighborliness). They accept some store of value, such as gold and bronze coins. Money is what you accept when you don’t want to have a debt to someone.

I’ve found a new way to link to the book on Amazon so if you want to get it. Paperback coming out soon!

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