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Ed 's Reviews > Debt: The First 5,000 Years
Debt: The First 5,000 Years
by David Graeber
by David Graeber
While the Goodreads rating system doesn't allow for fractional results this book should be a 4.5.
David Graeber turns an anthropologist’s gimlet eye toward the way that economists analyze the world and after the first few chapters the dismal science is little more than a smoking ruin. “Debt: the First 5,000 Years” is an impressive and important book. It begins with a history of money that, while interesting in itself, is more important in showing how economists have been wrong about the most basic issues they study starting with the idea of exchange through barter. He unpacks the received notions of Adam Smith and other classical thinkers to show that the profession has founding myths that serve the function of valorizing current practices. Essentially they don’t function much differently than creation stories of religion—Genesis (1-3), Lord Brahma the Creator, the Great Serpent and all that—not subject to scientific inquiry but the basis for rules and standards that govern the faithful. (The last sentence is my reading of the Graeber).
One by one the assumptions that guide economists are questioned and found wanting. Barter, for example, was the way that people exchanged goods before the invention of money, mentioned above, according to most economic texts—but try to find examples of it in the literature. You won’t. Another shibboleth of long standing is that human interactions are forms of exchange. This works if one ignores everything moral, philosophical or artistic that defines us as human, in other words disregards anything that undermines initial suppositions and prejudices. This is, of course, exactly the method that economists use when creating the studies that reinforce their beliefs/outlook.
An old joke is a good example of this. A physicist, an engineer, and an economist are stranded on a desert island with lots of canned food but no can opener. The physicist tries to open a can by heating it but it explodes; the engineer climbs a tree and drops a rock on a can but it ruptures and splatters the contents into the dirt. The economist says, “Assume a can opener...”
If you make the right assumptions then anything is possible.
Graeber is great on the debt part of his inquiry, asking how a commercial transaction with a certain degree of risk that results in a debt has been elevated to a basic, immutable moral law. Much of the answer lies not in the ethics of the situation but in the ability of one party to enforce the contract even to the great detriment of the other party—or, more likely, its successors. The grinding down of highly indebted poor countries by the IMF in order to repay loans that were simply stolen by unelected leaders, many of whom were voted out of office or, more likely, overthrown in rebellions, by the same people who are being told they are now responsible for the indebtedness is an example of this. If a brutal dictator ruled a tropical hellhole for decades and is finally defeated by rebellious citizens the new government is expected to honor every penny, franc and farthing the dictator managed to cadge from banks in the advanced sector—including the tens of millions of dollars the former ruler borrowed in loans subsidized by France, England or the United States so that his military could buy helicopter gunships from manufacturers in the country that loaned him the money. That half the proceeds of the loans were rerouted to banks in the Cayman Islands by the former ruler and the other half was used to buy helicopters used to slaughter insurgents makes no difference—in the twisted morality of the realm of debt it is all the same and must be repaid.
Graeber is less convincing in his survey of the history of debt across centuries and continents—while he has a lot of data on China, India, Europe and North America going back millennia it is a lot to synthesize and present, particularly for someone who is not a historian. However he does such a wonderful job with the dismantling and reconstruction of our notions of debt and justice that we tend to forgive any lacunae that might occur in the very broad sketch of the 5,000 years he covers.
David Graeber turns an anthropologist’s gimlet eye toward the way that economists analyze the world and after the first few chapters the dismal science is little more than a smoking ruin. “Debt: the First 5,000 Years” is an impressive and important book. It begins with a history of money that, while interesting in itself, is more important in showing how economists have been wrong about the most basic issues they study starting with the idea of exchange through barter. He unpacks the received notions of Adam Smith and other classical thinkers to show that the profession has founding myths that serve the function of valorizing current practices. Essentially they don’t function much differently than creation stories of religion—Genesis (1-3), Lord Brahma the Creator, the Great Serpent and all that—not subject to scientific inquiry but the basis for rules and standards that govern the faithful. (The last sentence is my reading of the Graeber).
One by one the assumptions that guide economists are questioned and found wanting. Barter, for example, was the way that people exchanged goods before the invention of money, mentioned above, according to most economic texts—but try to find examples of it in the literature. You won’t. Another shibboleth of long standing is that human interactions are forms of exchange. This works if one ignores everything moral, philosophical or artistic that defines us as human, in other words disregards anything that undermines initial suppositions and prejudices. This is, of course, exactly the method that economists use when creating the studies that reinforce their beliefs/outlook.
An old joke is a good example of this. A physicist, an engineer, and an economist are stranded on a desert island with lots of canned food but no can opener. The physicist tries to open a can by heating it but it explodes; the engineer climbs a tree and drops a rock on a can but it ruptures and splatters the contents into the dirt. The economist says, “Assume a can opener...”
If you make the right assumptions then anything is possible.
Graeber is great on the debt part of his inquiry, asking how a commercial transaction with a certain degree of risk that results in a debt has been elevated to a basic, immutable moral law. Much of the answer lies not in the ethics of the situation but in the ability of one party to enforce the contract even to the great detriment of the other party—or, more likely, its successors. The grinding down of highly indebted poor countries by the IMF in order to repay loans that were simply stolen by unelected leaders, many of whom were voted out of office or, more likely, overthrown in rebellions, by the same people who are being told they are now responsible for the indebtedness is an example of this. If a brutal dictator ruled a tropical hellhole for decades and is finally defeated by rebellious citizens the new government is expected to honor every penny, franc and farthing the dictator managed to cadge from banks in the advanced sector—including the tens of millions of dollars the former ruler borrowed in loans subsidized by France, England or the United States so that his military could buy helicopter gunships from manufacturers in the country that loaned him the money. That half the proceeds of the loans were rerouted to banks in the Cayman Islands by the former ruler and the other half was used to buy helicopters used to slaughter insurgents makes no difference—in the twisted morality of the realm of debt it is all the same and must be repaid.
Graeber is less convincing in his survey of the history of debt across centuries and continents—while he has a lot of data on China, India, Europe and North America going back millennia it is a lot to synthesize and present, particularly for someone who is not a historian. However he does such a wonderful job with the dismantling and reconstruction of our notions of debt and justice that we tend to forgive any lacunae that might occur in the very broad sketch of the 5,000 years he covers.
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Dec 11, 2011 12:30pm
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Chris wrote: "Are you enjoying this so far?"Very much so--Graeber does an excellent job of taking apart the arguments of economists regarding debt and just about everything else but does it in a very nuanced, well-researched and delightfully written way.
I think it is worth reading.
That's reassuring. I bought this back when it first came out but have since danced around slotting it in. A GR friend of mine didn't care for it at all, and I've discovered a mixed-bag of opinions about it on other forums and blogs from people whose opinions I respect. It sounds like it could provide a perspective-altering reading experience, but I'm just unable at the moment to make the commitment. Perhaps your review will finally push me into doing so.
If it is of any interest to you, the blogsite Crooked Timber is currently hosting a series of posts regarding Debt.
Chris wrote: "If it is of any interest to you, the blogsite Crooked Timber is currently hosting a series of posts regarding Debt."Definitely of interest--some excellent readings of "Debt" and intriguing discussions that spring from the posts.
A lovely resource, thanks for pointing it out.
You're welcome. Graeber actually made an appearance in the lower end of a thread by Daniel Davies, who is one of the best of that site's stable of contributors.
Graebers's book is difficult but rewarding, as were your comments which illuminated some of his more challenging ideas.
Even by the time one is halfway through chapter 3 of DEBT, THE FIRST 5,000 YEARS, Graeber has yet to put his finger on who produces 'value', a term he throws around quite regularly. Yes, he does tell his readers who see 'value'--humans, obviously. People see value, they see the use-value of the commodities they trade. A commodity can have all the labour time in the world in it and if it isn't perceived as having a human use, it will have zero exchange-value. Stick a pin there.Graeber does tell some very important tales in DEBT, pinning the need and therefore usefulness of money on ruling class desires for more wealth than they needed just to live. In other words, in order to be rulers e.g. to pay for armed bodies of men, through the governing/enforcement structure of the political State. As a means of transferring produced wealth of the peasantry to rulers' ownership, tax systems are decreed by ruling classes which require payment in 'sovereigns'/money. Even so, the confusion accumulates when he poo-poos money itself as being a commodity.
Graeber's DEBT is all about definitions. I think he's written a very readable book with many great tales of credit. In addition, he makes definitive statements like, "Money is credit, it can be brought into being by private contractual agreements...." And so, we have a self-professed anarchist like Graeber who would like to see the end of the State and the formation of a classless society. According to Graeber, money is the creature of the State. So, without a State, there would be no money. I think one can surmise this from Graeber's ideology.
As Graeber reveals to his readers, the famous bourgeois economist, Lord Keynes, early on in his career made a study of Mesopotamian cuneiform texts which took years of research and resulted in his celebrated treatise on money. Like Keynes, Graeber basically dismisses labour as being the source of value when it comes to exchange. He goes so far as identifying and trashing Adam Smith's 'labour theory of value' with a sentence early in his book.
Why is this important for understanding the theme of the book, debt?
Because Graeber embraces what amounts to a consumption theory of value, one which isn't tied to socially necessary labour time; but is more in tune with how price is determined i.e. by supply and demand for use-values. Mike Beggs has correctly observed in his review of DEBT, that Graeber's theory of money is related to 'chartalist' sources. In other words, it's kind of half right. Indeed, Graeber uses his anthropological wisdom to eviscerate the standard bourgeois economic notion that the clumsiness of barter brought about the need for money.
As I said, his book is peppered with some great tales, such as the one about Keynes and his years long study of Sumerian texts concerning money, which in turn resulted in one of the good Lord's most celebrated works. But in this reviewer's opinion, it is important to know the source of the production of wealth which is represented by money. And in my opinion that source is to be found in the socially necessary labour time it takes to produce it, for that is the point where economy becomes political. Sure, the State creates money, today's States and yesteryear's States, just as Graeber says. But what does money represent?
Debt?
Sure. But what is debt, if not the promise to pay in wealth and where does wealth come from?
For Marx there are only two sources of wealth, labour and nature. I was curious about Graeber. He's a self-described anarchist. As far as I know, he's still a member of the IWW. He's also touted as a leader of the 'occupy movement'. I wondered how he would solve the fetishism of the commodity in his work, as the commodity, IMO, is the building block of class society and class society is the foundation for the political State and yes, as Graeber says, the political State does mint what passes for the universal equivalent used to exchange commodities and pay off debts.
Graeber's anthropological reflections are quite useful in bringing to the fore the notion that barter was rare as an historical phenomenon and money was absent in classless societies of hunter/gatherers. People basically used what they found/hunted. Trade between groups (my commodity for yours) was extremely limited. Those observations by Graeber made sense to me and so the book as a whole is not a total loss. No, no, no. Read the book. In fact it's a bloody good anecdotal romp through 5,000 years of history.
For instance, in chapters 3 and 4 of Graeber's DEBT, THE FIRST 5,000 YEARS, we read of enlightening ties between debt, sin, guilt, owing society, owing parents, ancestors and ultimately the creation of money to repay debts to the sovereign. Of course deities can never be totally repaid and many times under absolutist rule, the sovereign becomes a demi-god or even god. All good here.
I especially enjoyed the way he uses Nietzsche's GENEALOGY OF MORALS, not as dogma, but as a way to illustrate mass religious conceptual ideologies and their cultural penetration into what passes in daily life for normative thinking.
Chapter 5 is divided into an examination of each of three themes of human interaction. He starts off with 'communism' and proceeds to define solidarity. The communism that communists know as common ownership of the means of production, production according to ability, distribution according to need is poo-pooed and shelved in good anarchist fashion. In an effort to sell us Graeber-communism (also based on the ability/need axis), he brings us out of the 'communism' of the great beyond (after the State withers away) to the daily praxis of solidarity between humans (up to a point) as being bits and pieces of actually existing 'communism' throughout the ages. According to Graeber, the social revolution is already happening, with co-operation between workers within corporations to get the job done (one not charging the other handing a screw driver to the bloke who needs one to complete the company's job); giving to relatives with no expectation of being paid back but, expecting reciprocal deeds when in need and so on. I can see his point and it's good to read someone who has something positive to say about how we live our lives in communistic behaviour patterns. Of course, he does drag out the ghost of the USSR to scare us away from 'Communism' and this works into his arguing against the conception of 'communism' as any real communist/socialist would define it.
No sign of labour being the source of all wealth not found in nature at this point in the book. DEBT remains a stimulating, if often frustrating, read. It made me want to call Davey up on the phone and share ales over conversations about how to change the world.
Onward to the next of the three themes of chapter 5, 'exchange'.
"Originally, human beings lived in a state of nature where all things were held in common; it was war that first divided up the world and the resultant 'law of nations,' the common usages of mankind that regulate such matters as conquest, slavery, treaties , and borders, that was first responsible for inequalities of property as well." David Graeber writes in DEBT, The First Five Thousand Years
No David. Private property precedes war. Nevermind--a bloody good read. Also, the State doesn't come before private property; but after its establishment in the wake of humans' discovery of how to domesticate those plants and animals capable of being domesticated. Geography has much to do with this, as Jared Diamond has pointed out in his GUNS, GERMS AND STEEL. The provision of a stable food supply, one not totally dependent on hunting and gathering what could be found in nature, was driven by our instincts for survival and freedom, IMO. Agriculture and animal husbandry began to emerge thousands of years before records began to be written in Sumer. But back to Graeber....
Debt is certainly very important in the establishment of class and patriarchal domination; but when will Professor Graeber recognise in writing DEBT the fact that wealth, to which debt is intimately related, is either a product of labour or exists before us in nature and then is merely possessed by threat of violence through the State's law enforcement hirelings?
Maybe I'm supposed to give him a 'huss' and assume that what I'm missing is 'implied'. The problem with that is that while I may see it, others may not, as he dismisses 'the labour theory of value' earlier on in DEBT, with regard to Adam Smith, as I've already stated.
Wealth is liberty — liberty to recreation — liberty to enjoy life — liberty to improve the mind. "Wealth is disposable time, and nothing more. " (From a pamphlet published anonymously in 1821, The Source and Remedy of the National Difficulties). Debt certainly leads to slavery or at the very least to dependency structures woven into the social fabric via culture e.g. the 'milk debt' Graeber outlines with regard to the ongoing establishment of Hinduism in the historical time frame he labels, "The Axial Age". But even 'milk debt' involves scads of labour time, in fact, our whole Hindu guided lives, if that's where we're at.
Graeber provides his readers with many original source anecdotes concerning the question of slavery which go basically along these lines: Once upon a time, the producers of wealth believed their monarchs deserved to live high on the hog while they lived lives of poverty. Once upon a time, slaves believed slavery was normal for those defeated in military conflict. All this is true.
I kept being frustrated about the questions he raised in my mind about the source of wealth. At the same time I was fascinated by his anecdotes concerning how various cultures dealt with certain kinds of debt. For example, cattle were used as currency for some transactions in pre-State Wales. Women were used in ancient Irish areas for certain forms of debt. Yet, halfway through chapter 6 and still no theory of where wealth comes from.
Debt is expanded beyond economic transactions to include sin and other moral questions and while these are cogent observations, Graeber's emphasis on them turns our attention away from what is being asked of those who are indebted. And what is that but their labour time and giving up their free time in some way shape or form up to and including becoming chattel slaves to those to whom they owed their debts. Labour time is the source of exchange-value which is wrapped up in the social relations between those in debt and those to whom debts are owed. And this is precisely what Graeber misses and or dismisses when it comes to his analysis of debt and his continual mystifications regarding money. For Graeber, money is not based on embodied labour time but on the trust people have in the authorities. Sure, there is trust; but as the old folk wisdom goes, "Where's the beef?" Graeber's rulers seem to just decree what the value of money is as opposed to money being a universal equivalent used to trade objects with exchangeable labour time embodied in them.
So, what is value? What is price? What is profit? Graeber continually mixes up exchange-value with a sense of debt which is based on being beholden to another person in some honourable way. I see the connection; but I find his anecdotes confusing the issue. Exchange-value is based on socially necessary labour time (snlt). Humans perceive their own labour time thusly, their own life expenditure in the exchange of commodities. This social perception is born of haggling around price until a sense of 'this is right' is established. But why is it, 'right'? It's the perception of life's labour time in the object or service which is based on the material reality of socially necessary labour time embodied therein.
