Debt: The First 5,000 Years

by David Graeber

Whatever its earliest origins, for the last four thousand years money has been effectively a creature of the state. Individuals, he observed, make contracts with one another. They take out debts, and they promise payment.

This does not mean that the state necessarily creates money. 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. Hence Keynes’ next dramatic assertion: that banks create money, and that there is no intrinsic limit to their ability to do so: since however much they lend, the borrower will have no choice but to put the money back into some bank again, and thus, from the perspective of the banking system as a whole, the total number of debits and credits will always cancel out.

All of this is said to go back to some sort of original “social contract” that everyone somehow agreed on, though no one really knows exactly when or by whom, or why we should be bound by the decisions of distant ancestors on this one matter when we don’t feel particularly bound by the decisions of our distant ancestors on anything else.

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.

The first kings were sacred kings who were either gods in their own right or stood as privileged mediators between human beings and the ultimate forces that governed the cosmos. This sets us on a road to the gradual realization that our debt to the gods was always, really, a debt to the society that made us what we are.

The “primordial debt,” writes British sociologist Geoffrey Ingham, “is that owed by the living to the continuity and durability of the society that secures their individual existence.”

From Sumer to Classical Greece, silver and gold were dedicated as offerings in temples. Everywhere, money seems to have emerged from the thing most appropriate for giving to the gods.

If you start from the barter theory of money, you have to resolve the problem of how and why you would come to select one commodity to measure just how much you want each of the other ones. If you start from a credit theory, you are left with the problem I described in the first chapter: how to turn a moral obligation into a specific sum of money, how the mere sense of owing someone else a favor can eventually turn into a system of accounting in which one is able to calculate exactly how many sheep or fish or chunks of silver it would take to repay the debt.

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.”

Almost all of the Germanic law codes use Roman money to make assessments; penalties for theft, for instance, are almost always followed by demands that the thief not only return the stolen property but pay any outstanding rent (or in the event of stolen money, interest) owing for the amount of time it has been in his possession. On the other hand, these were soon followed by law codes by people living in territories that had never been under Roman rule—in Ireland, Wales, Nordic countries, Russia—and these are if anything even more revealing.

What’s more, the levying of penalties must have constantly required the calculation of equivalences. Say the fine is in marten pelts but the culprit’s clan doesn’t have any martens. How many squirrel skins will do?

The question is: Does it really make sense to think of this as a debt? After all, a debt is by definition something that we could at least imagine paying back. It is strange enough to wish to be square with one’s parents—it rather implies that one does not wish to think of them as parents anymore. Would we really want to be square with all humanity? What would that even mean? And is this desire really a fundamental feature of all human thought?

From quite early times, then, Temple administrators developed the habit of advancing goods to local merchants—some of them private, others themselves Temple functionaries—who would then go off and sell it overseas. Interest was just a way for the Temples to take their share of the resulting profits.

In Sumer, these were called “declarations of freedom”—and it is significant that the Sumerian word amargi, the first recorded word for “freedom” in any known human language, literally means “return to mother”—since this is what freed debt-peons were finally allowed to do.

However, if we are born with an infinite debt to all those people who made our existence possible, but there is no natural unit called “society”—then who or what exactly do we really owe it to? Everyone? Everything? Some people or things more than others? And how do we pay a debt to something so diffuse? Or, perhaps more to the point, who exactly can claim the authority to tell us how we can repay it, and on what grounds?

The problem is that for several hundred years now, it has simply been assumed that the guardian of that debt we owe for all of this, the legitimate representatives of that amorphous social totality that has allowed us to become individuals, must necessarily be the state.

One might even say that what we really have here, in the idea of primordial debt, is the ultimate nationalist myth. Once we owed our lives to the gods that created us, paid interest in the form of animal sacrifice, and ultimately paid back the principal with our lives. Now we owe it to the Nation that formed us, pay interest in the form of taxes, and when it comes time to defend the nation against its enemies, offer to pay it with our lives.

This is a great trap of the twentieth century: on one side is the logic of the market, where we like to imagine we all start out as individuals who don’t owe each other anything. On the other is the logic of the state, where we all begin with a debt we can never truly pay. We are constantly told that they are opposites and that between them they contain the only real human possibilities. But it’s a false dichotomy. States created markets. Markets require states. Neither could continue without the other, at least, in anything like the forms we would recognize today.

As I’ve pointed out, often what was inside and what was outside were not especially clear. Within a community—a town, a city, a guild or religious society—pretty much anything could function as money, provided everyone knew there was someone willing to accept it to cancel out a debt.

Thus money is almost always something hovering between a commodity and a debt-token.

In other words, the battle between state and market, between governments and merchants, is not inherent to the human condition.

If Nietzsche’s analysis of debt is helpful to us, then, it is because it reveals that when we start from the assumption that human thought is essentially a matter of commercial calculation, that buying and selling are the basis of human society—then, yes, once we begin to think about our relationship with the cosmos, we will necessarily conceive of it in terms of debt.

Redemption was a release from one’s burden of sin and guilt, and the end of history would be that moment when all slates are wiped clean and all debts finally lifted, when a great blast from angelic trumpets will announce the final Jubilee. If so, “redemption” is no longer about buying something back. It’s really more a matter of destroying the entire system of accounting.

Still, what is even more striking to me is the tacit suggestion that forgiveness, in this world, is ultimately impossible.

This is a vision of human life as inherently corrupt, but it also frames even spiritual affairs in commercial terms: with calculations of sin, penance, and absolution, the Devil and St. Peter with their rival ledger books, usually accompanied by the creeping feeling that it’s all a charade because the very fact that we are reduced to playing such a game of tabulating sins reveals us to be fundamentally unworthy of forgiveness.

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.

One does not see a similar outcry against caste systems, for example, or for that matter, the institution of slavery.28 Surely slaves and untouchables often experienced at least equal horrors. No doubt many protested their condition. Why was it that the debtors’ protests seemed to carry such greater moral weight? Why were debtors so much more effective in winning the ear of priests, prophets, officials, and social reformers?

What makes debt different is that it is premised on an assumption of equality. To be a slave, or lower caste, is to be intrinsically inferior. These are relations of unadulterated hierarchy. In the case of debt, we are talking about two individuals who begin as equal parties to a contract. Legally, at least as far as the contract is concerned, they are the same.

Between close kin, many “loans” were probably, then as now, just gifts that no one seriously expected to recover. Loans between rich and poor were something else again. The problem was that, unlike status distinctions like caste or slavery, the line between rich and poor was never precisely drawn.

Throughout most of history, when overt political conflict between classes did appear, it took the form of pleas for debt cancellation—the freeing of those in bondage and, usually, a more just reallocation of the land. What we see in the Bible and other religious traditions are traces of the moral arguments by which such claims were justified, usually subject to all sorts of imaginative twists and turns, but inevitably, to some degree, incorporating the language of the marketplace itself.

From early on, there were those who wished to create a theory of social interaction grounded in a more generous view of human nature—who insisted that moral life comes down to something more than mutual advantage, that it is motivated above all by a sense of justice. The key term here became “reciprocity,” the sense of equity, balance, fairness, and symmetry, embodied in our image of justice as a set of scales.

human life could be imagined as consisting of three spheres: language (which consisted of the exchange of words), kinship (which consisted of the exchange of women), and economics (which consisted of the exchange of things). All three, he insisted, were governed by the same fundamental law of reciprocity.

The reason is simple efficiency (ironically enough, considering the conventional wisdom that “communism just doesn’t work”): if you really care about getting something done, the most efficient way to go about it is obviously to allocate tasks by ability and give people whatever they need to do them.

I will call this “baseline communism”: the understanding that, unless people consider themselves enemies, if the need is considered great enough, or the cost considered reasonable enough, the principle of “from each according to their abilities, to each according to their needs” will be assumed to apply.

However, this baseline of openhanded sharing and generosity never extends to everything.

The obligation to share food, and whatever else is considered a basic necessity, tends to become the basis of everyday morality in a society whose members see themselves as equals.

The surest way to know that one is in the presence of communistic relations is that not only are no accounts taken, but it would be considered offensive, or simply bizarre, to even consider doing so.

What is equal on both sides is the knowledge that the other person would do the same for you, not that they necessarily will.

It’s understandable that dealings with potentially hostile strangers should encourage an all-or-nothing logic, a tension preserved even in English in the etymology of the words “host,” “hostile,” “hostage,” and indeed “hospitality,” all of which are derived from the same Latin root.22 What I want to emphasize here is that all such gestures are simply exaggerated displays of that very “baseline communism” that I have already argued is the ground of all human social life.

Once again, we are back to the principle that if the needs (for instance, dire poverty) or the abilities (for instance, wealth beyond imagination) are sufficiently dramatic, then unless there is a complete absence of sociality, some degree of communistic morality will almost inevitably enter into the way people take accounts.

But at the same time, there’s a sense that both sides are keeping accounts and that, unlike what happens in communism, which always partakes of a certain notion of eternity, the entire relationship can be canceled out, and either party can call an end to it at any time.

Exchange allows us to cancel out our debts. It gives us a way to call it even: hence, to end the relationship.

To bring back an exact equivalent would be to suggest that one no longer wishes to have anything to do with the neighbor.

“in an endless circle of gifts to which no one ever handed over the precise value of the object last received”—and in doing so, they were continually creating their society. There was certainly a trace of communism here—neighbors on good terms could also be trusted to help each other out in emergencies—but unlike communistic relations, which are assumed to be permanent, this sort of neighborliness had to be constantly created and maintained, because any link can be broken off at any time.

In some societies, these games are formalized, but it’s important to stress that such games only really develop between people or groups who perceive themselves to be more or less equivalent in status.

In exchange, the objects being traded are seen as equivalent. Therefore, by implication, so are the people: at least, at the moment when gift is met with counter-gift, or money changes hands; when there is no further debt or obligation and each of the two parties is equally free to walk away.

In contrast, relations of explicit hierarchy—that is, relations between at least two parties in which one is considered superior to the other—do not tend to operate by reciprocity at all.

Such an act of one-sided generosity is treated as a precedent for what will be expected afterward.

This last point can’t be overemphasized because it brings home another truth regularly overlooked: that the logic of identity is, always and everywhere, entangled in the logic of hierarchy. It is only when certain people are placed above

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.