Debt: The First 5,000 Years

by David Graeber

In such a world, heroic considerations of honor and glory, vows to gods or desire for vengeance, were at best weaknesses to be manipulated. In the numerous manuals on statecraft produced at the time, everything was cast as a matter of recognizing interest and advantage, calculating how to balance that which will profit the ruler against that which will profit the people, determining when the ruler’s interests are the same as the people’s and when they contradict.58 Technical terms drawn from politics, economics, and military strategy (“return on investment,” “strategic advantage”) blended and overlapped.

Interesting note! However there seems to be a contradiction here with a previous chapter. Weren't "considerations of honor and glory" deeply connected to periods of war, slavery, and coinage (the "military-coinage-slavery complex")? Then why is it that the opposite of these considerations were also connected to the same of such periods? Why is it then that when the military-coinage-slavery complex took hold in some societies mentioned in previous passages (i.e., Ancient Greece, medieval Ireland, etc.) that these societies never adopted the "profit motive" as a guiding ideology and stood by "considerations of honor and glory"?

Like the Legalists, Kautilya emphasized the need to create a pretext that governance was a matter of morality and justice, but in addressing the rulers themselves, he insisted that “war and peace are considered solely from the point of view of profit”—of amassing wealth to create a more effective army, of using the army to dominate markets and control resources to amass more wealth, and so on.61

Important note!

Anyone who has ever read Thucydides’ Melian dialogue—in which Athenian generals present the population of a previously friendly city with elegantly reasoned arguments for why the Athenians have determined that it is to the advantage of their empire to threaten them with collective massacre if they are not willing to become tribute-paying subjects, and why it is equally in the interests of the Melians to submit—will be aware of the results.62

Another striking feature of this literature is its resolute materialism. Goddesses and gods, magic and oracles, sacrificial ritual, ancestral cults, even caste and ritual status systems all either disappear or are sidelined, no longer treated as ends in themselves but as yet mere tools to be used for the pursuit of material gain.

That intellectuals willing to produce such theories should win the ears of princes is hardly surprising. Neither is it particularly surprising that other intellectuals should have been so offended by this sort of cynicism that they began to make common cause with the popular movements that inevitably began to form against those princes. But as is so often the case, oppositional intellectuals were faced with two choices: either adopt the reigning terms of debate, or try to come up with a diametrical inversion. Mo Di, the founder of Mohism, took the first approach. He turned the concept of...

But as is so often the case, oppositional intellectuals were faced with two choices: either adopt the reigning terms of debate, or try to come up with a diametrical inversion. Mo Di, the founder of Mohism, took the first approach. He turned the concept of li, profit, into something more like “social utility,” and then he ...

Important note!

His conclusion: if one could add up the total costs of aggression in human lives, animal lives, and material damage, one would be forced to the conclusion that they never outweighed the benefits—even for the victor. In fact, Mo Di took this sort of logic so far that he ended up arguing that the only way to optimize the overall profit of humanity was to abandon the pursuit of private profit entirely and adopt a principle of what he called “universal love”—essentially arguing that if one takes the principle of market exchange to its logical conclusion, it can only lead to a kind of communism.

Important note!

The Confucian ideal of ren, of humane benevolence, was basically just a more complete inversion of profit-seeking calculation than Mo Di’s universal love; the main difference was that the Confucians added a certain aversion to calculation itself, preferring what might almost be called an art of decency.

Still, a mirror image is, ultimately, just that: the same thing, only backwards. Before long in each case we end up with an endless maze of paired opposites—egoism versus altruism, profit versus charity, materialism versus idealism, calculation versus spontaneity—none of which could ever have been imagined except by someone starting out from pure, calculating, self-interested market transactions.65

Important note! This is fascinating - essentially it is saying that spiritual movements like Confucianism and Taoism that rejected entirely the "profit motive" as the guiding force for human decision-making, even if it led to less violent ends, were developed in direct rebuttal to the profit motive - i.e., its mirror image.

China was unusual because philosophy there began with debates about ethics and only later turned to speculations about the nature of the cosmos. In both Greece and India, cosmological speculation came first. In each, too, questions about the nature of the physical universe quickly give way to speculation about mind, truth, consciousness, meaning, language, illusion, world-spirits, cosmic intelligence, and the fate of the human soul.

The notion that humans had souls appeared to Boesoou to be self-evident. The notion that there was such a thing as the body, apart from the soul, a mere material collection of nerves and tissues—let alone that the body is the prison of the soul; that the mortification of the body could be a means to the glorification or liberation of the soul—all this, it turns out, struck him as utterly new and exotic. Axial Age spirituality, then, is built on a bedrock of materialism.

Greek philosophy, in turn, begins with three men: Thales, of Miletus (c. 624 BC–c. 546 BC), Anaximander, of Miletus (c. 610 BC–c. 546 BC), and Anaximenes, of Miletus (c. 585 BC–c. 525 BC)—in other words, men who were living in that city at exactly the time that coinage was first introduced.72 All three are remembered chiefly for their speculations on the nature of the physical substance from which the world ultimately sprang. Thales proposed water, Anaximenes, air. Anaximander made up a new term, apeiron, “the unlimited,” a kind of pure abstract substance that could not itself be perceived but was the material basis of everything that could be. In each case, the assumption was that this primal substance, by being heated, cooled, combined, divided, compressed, extended, or set in motion, gave rise to the endless particular stuffs and substances that humans actually encounter in the world, from which physical objects are composed—and was also that into which all those forms would eventually dissolve.

Gold, shaped into coins, is a material substance that is also an abstraction. It is both a lump of metal and something more than a lump of metal—it’s a drachma or an obol, a unit of currency which (at least if collected in sufficient quantity, taken to the right place at the right time, turned over to the right person) could be exchanged for absolutely any other object whatsoever.73

At least within the communities that created them, ancient coins were always worth more than the gold, silver, or copper of which they were composed. Seaford refers to this extra value by the inelegant term “fiduciarity,” which comes from the term for public trust, the confidence a community places in its currency.74

This is, incidentally, why ancient governments were so often able to introduce base metal into their coins without leading to immediate inflation; a debased coin might have lost value when traded overseas, but at home, it was still worth just as much when purchasing a license, or entering the public theater.75 This is also why, during public emergencies, Greek city-states would occasionally strike coins made entirely of bronze or tin, which everyone would agree, while the emergency lasted, to treat as if they were really made of silver.76

A coin was a piece of metal, but by giving it a particular shape, stamped with words and images, the civic community agreed to make it something more. But this power was not unlimited. Bronze coins could not be used forever; if one debased the coinage, inflation would eventually set in. It was as if there was a tension there between the will of the community and the physical nature of the object itself.

But this power was not unlimited. Bronze coins could not be used forever; if one debased the coinage, inflation would eventually set in. It was as if there was a tension there between the will of the community and the physical nature of the object itself.

Important note!

The images stamped on Greek coins (Miletus’ lion, Athens’ owl) were typically the emblems of the city’s god, but they were also a kind of collective promise, by which citizens assured one another that not only would the coin be acceptable in payment of public debts, but in a larger sense, that everyone would accept them, for any debts, and thus, that they could be used to acquire anything anyone wanted. The problem is that this collective power is not unlimited. It only really applies within the city. The farther you go outside, into places dominated by violence, slavery, and war—the sort of place where even philosophers taking a cruise might end up on the auction block—the more it turns into a mere lump of precious metal.78

The war between Spirit and Flesh, then, between the noble Idea and ugly Reality, the rational intellect versus stubborn corporeal drives and desires that resist it, even the idea that peace and community are not things that emerge spontaneously but that need to be stamped onto our baser material natures like a divine insignia stamped into base metal—all those ideas that came to haunt the religious and philosophical traditions of the Axial Age, and that have continued to surprise people like Boesoou ever since—can already be seen as inscribed in the nature of this new form of money.

Important note!

Even the Axial Age religions are often startlingly lacking in the plethora of supernatural forces seen before and after: as witnessed by continued debates over whether Buddhism even is a religion, since it rejects any notion of a supreme being, or whether Confucius’ admonitions that one should continue to venerate one’s ancestors was merely a way of encouraging filial piety, or based on a belief that dead ancestors did, in some sense, continue to exist.

Over time, however, the logic of the market became entangled in military affairs, where it became almost indistinguishable from the mercenary logic of Axial Age warfare, and then, finally, that logic came to conquer government itself, to define its very purpose.

As a result, everywhere we see the military-coinage-slavery complex emerge, we also see the birth of materialist philosophies.

We have already seen that reimagining moral responsibility in terms of debt—an impulse that cropped up in both Greece and India—while almost inevitable given the new economic circumstances, seems to prove uniformly unsatisfying.80 The stronger impulse is to imagine another world where debt—and with it, all other worldly connections—can be entirely annihilated, where social attachments are seen as forms of bondage, just as the body is a prison.

Rulers’ attitudes changed over time. At first, most appear to have affected an attitude of bemused tolerance toward the new philosophical and religious movements while privately embracing some version of cynical realpolitik. But as warring cities and principalities were replaced by great empires and especially, as those empires began to reach the limits of their expansion, sending the military-coinage-slavery complex into crisis, all this changed. In India, Aśoka tried to re-found his kingdom on Buddhism; in Rome, Constantine turned to the Christians; in China, the Han emperor Wu-Ti (157–87 BC), faced with a similar military and financial crisis, adopted Confucianism as the philosophy of state.

Important note!

The ultimate effect was a kind of ideal division of spheres of human activity that endures to this day: on the one hand the market, on the other, religion. To put the matter crudely: if one relegates a certain social space simply to the selfish acquisition of material things, it is almost inevitable that soon someone else will come to set aside another domain in which to preach that, from the perspective of ultimate values, material things are unimportant, that selfishness—or even the self—are illusory, and that to give is better than to receive. If nothing else, it is surely significant that all the Axial Age religions emphasized the importance of charity, a concept that had barely existed before. Pure greed and pure generosity are complementary concepts; neither could really be imagined without the other; both could only arise in institutional contexts that insisted on such pure and single-minded behavior; and both seem to have appeared together wherever impersonal, physical, cash money also appeared on the scene.

Important note!

It is surely significant that the only people who succeeded in abolishing slavery in the ancient world were religious sects, such as the Essenes—who did so, effectively, by defecting from the larger social order and forming their own utopian communities.81 Or, in a smaller but more enduring example: the democratic city-states of northern India were all eventually stamped out by the great empires (Kautilya provides extensive advice on how to subvert and destroy democratic constitutions), but the Buddha admired the democratic organization of their public assemblies and adopted it as the model for his followers.82

Important note!

Finally, the larger historical achievements of these movements are not, in fact, insignificant. As they took hold, things began to change. Wars became less brutal and less frequent. Slavery faded as an institution, to the point at which, by the Middle Ages, it had become insignificant or even nonexistent across most of Eurasia. Everywhere too, the new religious authorities began to seriously address the social dislocations introduced by debt.

Important note!

IF THE AXIAL AGE saw the emergence of complementary ideals of commodity markets and universal world religions, the Middle Ages were the period in which those two institutions began to merge. Everywhere, the age began with the collapse of empires. Eventually, new states formed, but in these new states, the nexus between war, bullion, and slavery was broken; conquest and acquisition for their own sake were no longer celebrated as the end of all political life. At the same time, economic life, from the conduct of international trade to the organization of local markets, came to fall increasingly under the regulation of religious authorities. One result was a widespread movement to control, or even forbid, predatory lending. Another was a return, across Eurasia, to various forms of virtual credit money.

cities shriveled, and many were abandoned, but even this was something of a mixed blessing. Certainly, it had a terrible effect on literacy; but one must also bear in mind that ancient cities could only be maintained by extracting resources from the countryside.

one need only do the math: since medieval agriculture was no less efficient than ancient agriculture (in fact, it rapidly became a great deal more so), the amount of work required to feed a handful of mounted warriors and clergymen could not possibly have been anything like that required to feed entire cities. However oppressed medieval serfs might have been, their plight was nothing compared with that of their Axial Age equivalents.

The Mauryans represented a high watermark of empire. The next five hundred years saw a succession of kingdoms, most of them strongly supportive of Buddhism. Stupas and monasteries sprang up everywhere, but the states that sponsored them grew weaker and weaker; centralized armies dissolved; soldiers, like officials, increasingly came to be paid by land grants rather than salaries. As a result, the number of coins in circulation steadily declined.

The key innovation was the creation of what were called the “perpetual endowments” or “inexhaustible treasuries.” Say a lay supporter wished to make a contribution to her local monastery. Rather than offering to provide candles for a specific ritual, or servants to attend to the upkeep of the monastic grounds, she would provide a certain sum of money—or something worth a great deal of money—that would then be loaned out in the name of the monastery, at the accepted 15-percent annual rate. The interest on the loan would then be earmarked for that specific purpose.

When coins go out of circulation, after all, the metal doesn’t simply disappear. In the Middle Ages—and this seems to have been true across Eurasia—the vast majority of it ended up in religious establishments, churches, monasteries, and temples, either stockpiled in hoards and treasuries or gilded onto or cast into altars, sanctums, and sacred instruments. Above all, it was shaped into images of gods. As a result, those rulers who did try to put an Axial Age–style coinage system back into circulation—invariably, to fund some project of military expansion—often had to pursue self-consciously anti-religious policies in order to do so.

As kingdoms continued to rise and fall, the world inhabited by kings and princes became increasingly distant from that of most people’s everyday affairs. During much of the period immediately following the collapse of the Mauryan empire, for instance, much of India was governed by foreigners.10 Apparently, this increasing distance allowed local Brahmins to begin reshaping the new—increasingly rural—society along strictly hierarchical principles.

Artisans and craftsmen fleeing the decline or destruction of cities often ended up as suppliant refugees and, gradually, low-caste clients. The result was increasingly complex local patronage systems in the countryside—jajmani systems, as they came to be known—where the refugees provided services for the landowning castes, who took on many of the roles once held by the state, providing protection and justice, extracting labor dues, and so on—but also protected local communities from actual royal representatives.

the village community became an effective means of holding the state and its representatives at least partially at bay.

Indeed, India has become notorious as a country in which a very large part of the working population is laboring in effective debt peonage to a landlord or other creditor. Such arrangements became even easier over time. By about 1000 AD, restrictions on usury by members of the upper castes in Hindu law-codes largely disappeared. On the other hand, 1000 AD was about the same time that Islam appeared in India—a religion dedicated to eradicating usury altogether. So at the very least we can say that these things never stopped being contested. And even Hindu law of that time was far more humane than almost anything found in the ancient world. Debtors were not, generally speaking, reduced to slavery, and there is no widespread evidence of the selling of women or children. In fact, overt slavery had largely vanished from the countryside by this time. And debt peons were not even pawns, exactly; by law, they were simply paying interest on a freely contracted agreement. Paying the principle might take generations, but the law stipulated that even if it was never paid, in the third generation, they would be freed.

The French anthropologist Louis Dumont made the famous argument that one cannot even really talk about “inequality” here, because to use that phrase implies that one believes people should or could be equal, and this idea was completely alien to Hindu conceptions.18 For them to have imagined their responsibilities as debts would have been profoundly subversive, since debts are by definition arrangements between equals—at least in the sense that they are equal parties to a contract—that could and should be repaid.

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.

By medieval standards, India was unusual for resisting the appeal of the great Axial Age religions, but we observe the basic pattern: the decline of empire, armies, and cash economy, the rise of religious authorities, independent of the state, who win much of their popular legitimacy through their ability to regulate emerging credit systems. China might be said to represent the opposite extreme. This was the one place where a late Axial Age attempt to yoke empire and religion together was a complete success.

Important note!

As Max Weber long ago pointed out, once one sets up a genuinely effective bureaucracy, it’s almost impossible to get rid of it. And the Chinese bureaucracy was uniquely effective. Before long, the old Han system reemerged: a centralized state, run by Confucian scholar-gentry trained in the literary classics, selected through a national exam system, working in meticulously organized national and regional bureaus where the money supply, like other economic matters, was continually monitored and regulated.

Important note!

The two great threats to the authorities were always the same: the nomadic peoples to the north (who they systematically bribed, but who nonetheless periodically swept over and conquered sections of China) and popular unrest and rebellion. The latter 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.21 What’s more, such uprisings were frequently successful. Most of the most famous Chinese dynasties that were not the product of barbarian invasion (the Yuan or Qing) were originally peasant insurrections (the Han, Tang, Song, and Ming). In no other part of the world do we see anything like this.

The Confucian state may have been the world’s greatest and most enduring bureaucracy, but it actively promoted markets, and as a result, commercial life in China soon became far more sophisticated, and markets more developed, than anywhere else in the world. This despite the fact that Confucian orthodoxy was overtly hostile to merchants and even the profit motive itself. Commercial profit was seen as legitimate only as compensation for the labor that merchants expended in transporting goods from one place to another, but never as fruits of speculation. What this meant in practice was that they were pro-market but anti-capitalist.

Important note!

While markets are ways of exchanging goods through the medium of money—historically, ways for those with a surplus of grain to acquire candles and vice versa (in economic shorthand, C-M-C’, for commodity-money-other commodity)—capitalism for Braudel is first and foremost the art of using money to get more money (M-C-M’). Normally, the easiest way to do this is by establishing some kind of formal or de facto monopoly.

In Confucian terms, merchants were like soldiers. Those drawn to a career in the military were assumed to be driven largely by a love of violence. As individuals, they were not good people, but they were also necessary to defend the frontiers. Similarly, merchants were driven by greed and basically immoral; yet if kept under careful administrative supervision, they could be made to serve the public good.29 Whatever one might think of the principles, the results are hard to deny. For most of its history, China maintained the highest standard of living in the world—even England only really overtook it in perhaps the 1820s, well past the time of the Industrial Revolution.

As Gernet remarks, the idea of life as an endless burden of debt would surely have struck a chord with Chinese villagers, for whom this was all too often literally true; but, as he also points out, like their counterparts in ancient Israel, they were also familiar with that sense of sudden liberation that came with official amnesties. There was a way to achieve that too. All that was required was to make regular donations to some monastery’s Inexhaustible Treasury. The moment one does so, the debts from every one of one’s past lives are instantly blotted out.

A man begins with an unpayable milk-debt. The only thing of comparable value is the Dharma, the Buddhist truth itself. One can thus repay one’s parents by bringing them to Buddhism; indeed, this can be done even after death, when one’s mother will otherwise wind up as a hungry ghost in hell. If one makes a donation to the Inexhaustible Treasuries in her name, sutras will be recited for her; she will be delivered; the money, in the meantime, will be put partly to work as charity, as pure gift, but partly, too, as in India, as interest-bearing loans, earmarked for specific purposes for the furtherance of Buddhist education, ritual, or monastic life.

Most monasteries came to be surrounded not only by commercial farms but veritable industrial complexes of oil presses, flour mills, shops, and hostels, often with thousands of bonded workers.41 At the same time, the Treasuries themselves became—as Gernet was perhaps the first to point out—the world’s first genuine forms of concentrated finance capital. They were, after all, enormous concentrations of wealth managed by what were in effect monastic corporations, which were constantly seeking new opportunities for profitable investment. They even shared the quintessential capitalist imperative of continual growth; the Treasuries had to expand, since according to Mahayana doctrine, genuine liberation would not be possible until the whole world embraced the Dharma.42 This was precisely the situation—huge concentrations of capital interested in nothing more than profit—that Confucian economic policy was supposed to prevent. Still, it took some time for Chinese governments to recognize the threat.

Important note!

Before long there were major campaigns of government repression, at first often limited to certain regions, but over time, more often empire-wide. During the most severe, carried out in 845 AD, a total of 4,600 monasteries were razed along with their shops and mills, 260,000 monks and nuns forcibly defrocked and returned to their families—but at the same time, according to government reports, 150,000 temple serfs released from bondage. Whatever the real reasons behind the waves of repression (and these were no doubt many), the official reason was always the same: a need to restore the money supply. The monasteries were becoming so large, and so rich, administrators insisted, that China was simply running out of metal: