Debt: The First 5,000 Years

by David Graeber

Actually, the remarkable thing about the statement “one has to pay one’s debts” is that even according to standard economic theory, it isn’t true. A lender is supposed to accept a certain degree of risk. If all loans, no matter how idiotic, were still retrievable—if there were no bankruptcy laws, for instance—the results would be disastrous.

“Surely one has to pay one’s debts.” The reason it’s so powerful is that it’s not actually an economic statement: it’s a moral statement. After all, isn’t paying one’s debts what morality is supposed to be all about?

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.

one finds that the majority of human beings hold simultaneously that (1) paying back money one has borrowed is a simple matter of morality, and (2) anyone in the habit of lending money is evil.

Credit system, tabs, even expense accounts, all existed long before cash.

The one thing that all these misconceptions have in common, we will find, is that they tend to reduce all human relations to exchange, as if our ties to society, even to the cosmos itself, can be imagined in the same terms as a business deal.

WHAT IS THE DIFFERENCE between a mere obligation, a sense that one ought to behave in a certain way, or even that one owes something to someone, and a debt, properly speaking? The answer is simple: money. The difference between a debt and an obligation is that a debt can be precisely quantified. This requires money.

the main economic institution among the Iroquois nations were longhouses where most goods were stockpiled and then allocated by women’s councils, and no one ever traded arrowheads for slabs of meat.

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.”

This in turn allows us to assume that life is neatly divided between the marketplace, where we do our shopping, and the “sphere of consumption,” where we concern ourselves with music, feasts, and seduction.

Swapping one thing directly for another while trying to get the best deal one can out of the transaction is, ordinarily, how one deals with people one doesn’t care about and doesn’t expect to see again.

Smith’s famous invisible hand was, as he says in his Theory of Moral Sentiments, the agent of Divine Providence. It was literally the hand of God.

What matters is that there is a uniform system for measuring credits and debts, and that this system remains stable over time.

It makes no real difference whether it’s pure silver, debased silver, leather tokens, or dried cod—provided the state is willing to accept it in payment of taxes. Because whatever the state was willing to accept, for that reason, became currency.

what exactly was the point of extracting the gold, stamping one’s picture on it, causing it to circulate among one’s subjects—and then demanding that those same subjects give it back again?

every family, in order to get their hands on the coins, must find some way to contribute to the general effort to provide soldiers with things they want.

What we call “money” isn’t a “thing” at all, it’s a way of comparing things mathematically, as proportions: of saying one of X is equivalent to six of Y. As such it is probably as old as human thought.

Money is credit, it can be brought into being by private contractual agreements (loans, for instance). The state merely enforces the agreement and dictates the legal terms.

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.

“primitive currencies” of this sort is only rarely used to buy and sell things, and even when they are, never primarily to buy and sell everyday items such as chickens or eggs or shoes or potatoes. Rather than being employed to acquire things, they are mainly used to rearrange relations between people. Above all, to arrange marriages and to settle disputes, particularly those arising from murders or personal injury.

Exchange implies equality.

Very large numbers of Roman gold and silver coins did end up in India and even China; this is presumably the main reason that they were made of gold and silver to begin with.

medieval Pomeranian peasants appear to have at certain points convinced their rulers to make taxes, fees, and customs duties, which were registered in Roman currency, actually payable in wine, cheese, peppers, chickens, eggs, and even herring—much to the annoyance of traveling merchants, who therefore had to either carry such things around in order to pay the tolls or buy them locally at prices that would have been more advantageous to their suppliers for that very reason.

coins—pieces of silver or gold that are already valuable commodities in themselves, but that, being stamped with the emblem of a local political authority,

“Freedom,” in the Bible, as in Mesopotamia, came to refer above all to release from the effects of debt.

World religions, as we shall see, are full of this kind of ambivalence. On the one hand they are outcries against the market; on the other, they tend to frame their objections in commercial terms—as if to argue that turning human life into a series of transactions is not a very good deal.

“Clearly you need a course in Economics 101”—the theory is seen as so obviously true that no one who understands it could possibly disagree.)

capitalist realism

Conquest, untrammeled force, becomes systematized, and thus framed not as a predatory relation but as a moral one, with the lords providing protection, and the villagers, their sustenance.

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 more of one’s wealth is obtained by plunder or extortion, the more spectacular and self-aggrandizing will be the forms in which it’s given away.44 And what is true of warrior aristocracies is all the more true of ancient states, where rulers almost invariably represented themselves as the protectors of the helpless, supporters of widows and orphans, and champions of the poor. The genealogy of the modern redistributive state—with its notorious tendency to foster identity politics—can be traced back not to any sort of “primitive communism” but ultimately to violence and war.

Markets aren’t real. They are mathematical models, created by imagining a self-contained world where everyone has exactly the same motivation and the same knowledge and is engaging in the same self-interested calculating exchange. Economists are aware that reality is always more complicated; but they are also aware that to come up with a mathematical model, one always has to make the world into a bit of a cartoon.

the voice of patriarchal hatred of the city, and of the angry millennial voices of the fathers of the ancient poor.

As the sexual regulation of women of the propertied class became more firmly entrenched, the virginity of respectable daughters became a financial asset for the family. Thus, commercial prostitution came to be seen as a social necessity for meeting the sexual needs of men. What remained problematic was how to distinguish clearly and permanently between respectable and non-respectable women.

a systematic demotion of sexuality itself from a divine gift and embodiment of civilized refinement to one of its more familiar associations: with degradation, corruption, and guilt.

between the push of commoditization, which fell disproportionally on daughters, and the pull of those trying to reassert patriarchal rights to “protect” women from any suggestion that they might be commoditized, women’s formal and practical freedoms appear to have been gradually but increasingly restricted and effaced.

women in democratic Athens, unlike those of Persia or Syria, were expected to wear veils when they ventured out in public.64

Almost anything I might think of doing with a chainsaw outside my own home or land is likely to be illegal,

The violence has been largely pushed out of sight.130 But this is largely because we’re no longer able to imagine what a world based on social arrangements that did not require the continual threat of tasers and surveillance cameras would even look like.

terms like “fiat money,” however common, are deceptive. Almost all of the new forms of paper money that emerged were not originally created by governments at all; they were simply ways of recognizing and expanding the use of credit instruments that emerged from everyday economic transactions.

In the 1600s there were at times almost as many white debtors as African slaves working in southern plantations, and legally they were at first in almost the same situation, since in the beginning, plantation societies were working within a European legal tradition that assumed slavery did not exist, so even Africans in the Carolinas were classified, as contract laborers.97 Of course this later changed when the idea of “race” was introduced.

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.

the notion that exchange is the basis of our mental functions, and manifests itself both in language (as the exchange of words) and economics (as the exchange of material goods) goes back to Smith.

the Irish text that specifies that one can demand compensation for a bee-sting, but only if one first deducts the cost of the dead bee