GoodReads: 5 stars

Former Yale Law School professor David Graeber stuffs the controversial "Debt" with 5,000 years of fascinating anecdotes about money, morality, and violence. He’s a fantastic storyteller who manages to turn a potentially dreary subject (debt) into a sprawling jeremiad encompassing everything from ancient Sumerian law and African slavery to the conquest of the Aztecs and the US going off the gold standard. An anthropologist and a notorious anarchist, Graeber strikes a wonderfully conversational tone and he delights in attempting to refute conventional wisdom. Main topics covered are the moral ambiguity of debt, the idea that debt came before money, and that quantification of debt almost always leads to violence. It’s certainly worth a read, but I’d also recommend reading the Jacobin’s harsh critique of Graeber’s cherry-picking and misreading of his sources.

My highlights below


On the Experience of Moral Confusion

The very fact that we don’t know what debt is, the very flexibility of the concept, is the basis of its power. If history shows anything, it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt - above all, because it immediately makes it seem that it’s the victim who’s doing something wrong.

The U.S. foreign debt, though, takes the form of treasury bonds held by institutional investors in countries that are in most cases, effectively, U.S. military protectores, most covered in U.S. bases full of arms and equipment paid for with that very deficit spending... So what is the status of all this money continually being funneled into the U.S. treasury? Are these loans? Or is it tribute?

As the great classicist Moses Finley often liked to say, in the ancient world, all revolutionary movements had a single program: “Cancel the debts and redistribute the land.”

Here we come to the central question of this book: What, precisely, does it mean to say that our sense of morality and justice is reduced to the language of a business deal? What does it mean when we reduce moral obligations to debts?

the crucial factor... is money’s capacity to turn morality into a matter of impersonal arithmetic - and by doing so, to justify things that would otherwise seem outrageous or obscene... these two elements - the violence and the quantification - are intimately linked.

The Myth of Barter

The definitive anthropological work on barter, by Caroline Humphrey, of Cambridge, could not be more definitive in its conclusions: “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing.

But the most shocking blow to the conventional version of economic history came with the translation, first of Egyptian hieroglyphics, and then of Mesopotamian cuneiform... what these texts revealed was that credit systems of exactly this sort actually preceded the invention of coinage by thousands of years.

At this point, just about every aspect of the conventional story of the origins of money lay in rubble. Rarely has an historical theory been so absolutely and systematically refuted... The groundwork was laid by Mitchell-Innes... in two essays that appeared in New York’s Banking Law Journal in 1913 and 1914.

Our standard account of monetary history is precisely backwards. We did not begin with barter, discover money, and then eventually develop credit systems. It happened precisely the other way around... What we now call virtual money came first. Coins came much later, and their use spread only unevenly, never completely replacing credit systems. Barter, in turn, appears to be largely a kind of accidental byproduct of the use of coinage or paper money: historically it has mainly been what people who are used to cash transactions do when for one reason or another they have no access to currency.

Primordial Debts

In this sense, the value of a unit of currency is not the measure of the value of an object, but the measure of one’s trust in other human beings.

The IOU can operate as money only as long as Henry never pays his debt. In fact this is precisely the logic on which the Bank of England - the first successful modern central bank - was originally founded. In 1694, a consortium of English bankers made a loan of 1,200,000 pounds to the king. In return they received a royal monopoly on the issuance of banknotes. What this meant in practice was they had the right to advance IOUs for a portion of the money the king now owed them... this was a great deal for the bankers... but it only worked as long as the original loan remained outstanding. To this day, this loan has never been paid back. It cannot be. If it ever were, the entire monetary system of Great Britain would cease to exist.

At certain points he [John Maynard Keynes] immersed himself in it: he spent several years in the 1920s studying Mesopotamian cuneiform banking records to try to ascertain the origins of money - his “Babylonian madness,” as he would later call it.

The core argument is that any attempt to separate monetary policy from social policy is ultimately wrong. Primordial-debt theorists insist that these have always been the same thing. Governments use taxes to create money, and they are able to do so because they have become the guardians of the debt that all citizens have to one another. This debt is the essence of society itself. It exists long before money and markets, and money and markets themselves are simply ways of chopping pieces of it up.

In all Indo-European languages, words for “debt” are synonymous with those for “sin” or “guilt”, illustrating the links between religion, payment and the mediation of the sacred and profane realms by “money.” For example, there is a connection between money (German Geld), indemnity or sacrifice (Old English Geild), tax (Gothic Gild) and, of course, guilt.

The answer provided by primordial-debt theorists is, again, ingenious. If taxes represent our absolute debt to the society that created us, then the first step toward creating real money comes when we start calculating much more specific debts to society, systems of fines, fees and penalties, or even debts we owe to specific individuals who we have wronged in some way, and thus to whom we stand in a relation of “sin” or “guilt.”

States created markets. Markets require states.

Cruelty and Redemption

Why, for instance, do we refer to Christ as the “redeemer”? The primary meaning of redemption is to buy something back... to acquire something by paying off a debt. It is rather striking to think that the very core of the Christian message... should be framed in the language of a financial transaction.

What makes debt different is that it is premised on an assumption of equality.

The Moral Grounds of Economic Relations

All of us act like communists a good deal of the time... all social systems, even economic systems like capitalism, have always been built on top of a bedrock of actually-existing communism.

One might even say that it’s one of the scandals of capitalism that most capitalist firms, internally, operate communistically.

Solitary pleasures will always exist, but for most human beings, the most pleasurable activities almost always involve sharing something: music, food, liquor, drugs, gossip, drama, beds. There is a certain communism of the senses at the root of most things we consider fun.

Indeed, one could judge how egalitarian a society really was by exactly this: whether those ostensibly in positions of authority are merely conduits for redistribution, or able to use their positions to accumulate riches.

The habit of always saying “please” and “thank you” first began to take hold during the commercial revolution of the sixteenth and seventeenth centuries - among those very middle classes who were largely responsible for it... It is also merely one token of a much larger philosophy, a set of assumptions of what humans are and what they owe one another, that have by now become so deeply ingrained that we cannot see them.

Games with Sex and Death

In most human economies, money is used first and foremost to arrange marriages.

Money, then, begins, as Rospabe himself puts it, “as a substitute for life.” One might call it the recognition of a life-debt. This, in turn, explains why it’s invariably the exact same kind of money that’s used to arrange marriages that is also used to pay wergeld (or “bloodwealth”).

All of this merely serves to underline Rospabe’s basic point, which is that money can be seen, in human economies, as first and foremost the acknowledgement of the existence of a debt that cannot be paid.

Money almost always arises first from objects that are used primarily as adornment of the person.

We have perhaps a general principle: to make something saleable, in a human economy, one needs to first rip it from its context. That’s what slaves are: people stolen from the community that made them what they are.

Honor and Degradation

There is every reason to believe that slavery, with its unique ability to rip human beings from their contexts... played a key role in the rise of markets everywhere.

Al-Wahid’s answer is striking in its simplicity. one becomes a slave in situations where one would otherwise have died.

What’s more, at certain periods there was a very lively slave trade. As one historian put it, “Ireland has no mineral wealth, and foreign luxury goods could be bought by Irish kings mainly for two export goods, cattle and people.”

As I have emphasized, historically, war, states, and markets all tend to feed off one another. Conquest leads to taxes. Taxes tend to be ways to create markets, which are convenient for soldiers and administrators.

The Assyrian habit of veiling was not widely adopted in the Middle East, but it was adopted in Greece. As much as it flies in the face of our stereotypes about the origins of “Western” freedoms, women in democratic Athens, unlike those of Persia or Syria, were expected to wear veils when they ventured out in public.

Formal slavery has been eliminated, but the idea that you can alienate your liberty, at least temporarily, endures. In fact, it determines what most of us have to do for most of our waking hours, except usually, on weekends. The violence has been largely pushed out of sight.

Credit Versus Bullion

How did we ever eliminate slavery? Of course, a cynic might argue that we haven’t; we’ve just relabled it. The cynic would have a point: an ancient Greek would certainly have seen the distinction between a slave and an indebted wage laborer as, at best, a legalistic nicety.

Bullion predominates, above all, in periods of generalized violence. There’s a very simple reason for that. Gold and silver coins are distinguished from credit arrangements by one spectacular feature: they can be stolen.

The Axial Age

By insisting that only their own coins were acceptable as fees, fines, or taxes, governments were able to overwhelm the innumerable social currencies that already existed in their hinterlands, and to establish something like uniform national markets.

Alexander was also the man responsible for destroying what remained of the ancient credit systems, since not only the Phoenicians but also the old Mesopotamian heartland had resisted the new coin economy. His armies not only destroyed Tyre; the also dethesaurized the gold and silver reserves of the Babylonian and Persian temples, the security on which their credit systems were based, and insisted that all taxes to his new government be paid in his own money. The result was to “release the accumulated species of century onto the market in a matter of months,” something like 180,000 talents, or in contemporary terms, an estimated $285 billion.

The Middle Ages

Politically, it is never a particularly good idea to first tell people they are your equals, and then humiliate and degrade them. This is presumably why peasant insurrections, from Chiapas to Japan, have so regularly aimed to wipe out debts, rather than focus on more structural issues like caste systems, or even slavery.

The two great threats to the authorities were always the same: the nomadic peoples to the north (who they systematically bribed...) and popular unrest and rebellion. The later was almost constant, and on a scale unknown anywhere else in human history. There were decades in Chinese history when the rate of recorded peasant uprisings was roughly 1.8 per hour.

Again, this seems bizarre, since we’re used to assuming that capitalism and markets are the same thing, but, as the great French historian Fernand Braudel pointed out, in many ways they could equally well be conceived as opposites. While markets are ways of exchanging goods through the medium of money... (in economic shorthand ‘C-M-C’ for commodity-money-other commodity) - capitalism and first and foremost the art of using money to get more money (M-C-M).

Whence, then, this image of the solitary knight-errant, wandering the forests of a mythic Albion, challenging rivals, confronting ogres, fairies, wizards, and mysterious beasts? The answer should be clear by now. Really, this is just a sublimated, romanticized image of the traveling merchants themselves.

Let’s start with the Greek term “symbolon.” Two friends at dinner might create a symbolon if they took some object - a ring, a knucklebone, a piece of crockery - and broke it in half. Any time in the future when either of them had need of the other’s help, they could bring their halves as reminders of the friendship.

Age of the Great Capitalist Empires

The problem with the conventional story is that very little of that gold and silver lingered very long in Europe. Most of the gold ended up in temples in India and the overwhelming majority of the silver bullion was ultimately shipped off to China.

The story of the origins of capitalism, then, is not the story of the gradual destruction of traditional communities by the impersonal power of the market. It is, rather, the story of how an economy of credit was converted into an economy of interest; of the gradual transformation of moral networks by the intrusion of the impersonal - and often vindictive - power of the state.

The criminalization of debt, then, was the criminalization of the very basis of human society. It cannot be overemphasized that in a small community, everyone normally was both lender and borrower.

The man who won the argument, however, was John Locke, the Liberal philosopher, at that time acting as advisor to Sir Isaac Newton, then Warden of the Mint.

But consider the following lines, often attributed to Lord Josiah Charles Stamp, director of the Bank of England: The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in iniquity and born in sin. Bankers own the earth; take it away from them, but leave them with the power to create credit, and with the stroke of a pen they will create enough money to buy it back again... If you wish to remain slaves of Bankers, and pay the cost of your own slavery, let them continue to create deposits.

It is the secret scandal of capitalism that at no point has it been organized primarily around free labor.

Almost none of the great theorists of capitalism, from anywhere on the political spectrum, from Marx to Weber, to Schumpeter, to von Mises, felt that capitalism was likely to be around for more than another generation or two at most.

1971 - The Beginning of Something Yet to Be Determined

One element, however, tends to go flagrantly missing in even the most vivid conspiracy theories about the banking system, let alone in official accounts: that is, the role of war and military power. There’s a reason why the wizard has such a strange capacity to create money out of nothing. Behind him, there’s a man with a gun.

The essence of U.S. military predominance in the world is, ultimately, the fact that it can, at will, drop bombs, with only a few hours’ notice, at absolutely any point on the surface of the planet. No other government has ever had anything remotely like this sort of capability. In fact, a case could well be made that it is this very power that holds the entire world monetary system, organized around the dollar, together.

At the same time, U.S. policy was to insist that those countries relying on U.S. treasury bonds as their reserve currency behaved in exactly the opposite was as the did: observing tight money policies and scrupulously repaying their debts.

From a longer-term perspective, China’s behavior isn’t puzzling at all. In fact it’s quite true to form. The unique thing about the Chinese empire is that it has, since the Han dynasty at least, adopted a peculiar sort of tribute system whereby, in exchange for recognition of the Chinese emperor as world-sovereign, they have been willing to shower their client states with gifts far greater than they receive in return. The technique seems to have been developed almost as a kind of trick when dealing with the “northern barbarians” of the steppes who always threatened Chinese frontieres: a way to overwhelm them with such luxuries that they would become complacent, effeminate, and unwarlike.

All that I have said so far merely serves to underline a reality that has come up constantly over the course of this book: that money has no essence. It’s not “really” anything; therefore its nature has always been and presumably always will be a matter of political contention.

This in turn leads to that great embarrassing fact that haunts all attempts to represent the market as the highest form of human freedom: that historically, impersonal commercial markets originate in theft. More than anything else, the endless recitation of the myth of barter, employed much like an incantation, is the economists’ way of fending off any possibility of having to confront it.

In this book I have largely avoided making concrete proposals, but let me end with one. It seems to me that we are long overdue for some kind of Biblical-style Jubilee: one that would affect both international debt and consumer debt. It would be salutary not just because it would relieve so much genuine human suffering, but also because it would be our way of reminding ourselves that money is not ineffable, that paying one’s debts is not the essence of morality, that all these things are human arrangements and that if democracy is to mean anything, it is the ability to all agree to arrange things in a different way.