Debt: The First 5,000 Years

by David Graeber

having a famous poet compose verses making fun of you for bouncing a check was probably the ultimate disaster.

the “partnership of the penniless” (sharika al-mafalis). It comes about when two people form a partnership without any capital in order to buy on credit and then sell. It is designated by this name partnership of good reputations because their capital consists of their status and good reputations;

it’s quite possible to turn honor into money, almost impossible to convert money into honor.

If the Axial Age was the age of materialism, the Middle Ages were above all else the age of transcendence.

debt—that peculiar agreement between two equals that they shall no longer be equals, until such time as they become equals once again.

the Society of Merchant Adventurers, charted by King Henry IV in London in 1407,

During the first years after the conquest, the slave traffic flourished, and slaves often changed master. They produced so many marks on their faces, in addition to the royal brand, that they had their faces covered with letters, for they bore the marks of all who had bought and sold them.

money always remained a political instrument.

something essential about the psychology of debt. Or, more precisely, perhaps, about the debtor who feels he has done nothing to deserve being placed in his position: the frantic urgency of having to convert everything around oneself into money, and rage and indignation at having been reduced to the sort of person who would do so.

One should not idealize the situation. This was a highly patriarchal world: a man’s wife or daughter’s reputation for chastity was as much a part of his “credit” as his own reputation for kindness or piety. What’s more, almost all people below the age of thirty, male or female, were employed as servants in someone else’s household—as farmhands, milkmaids, apprentices—and as such, were of “no account” at all.

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.

It cannot be overemphasized that in a small community, everyone normally was both lender and borrower.

Paper money was debt money, and debt money was war money, and this has always remained the case. Those who financed Europe’s endless military conflicts also employed the government’s police and prisons to extract ever-increasing productivity from the rest of the population.

“The gold stored at the Federal Reserve Bank of New York,” according to the promotional literature, “is secured in a most unusual vault. It rests on the bedrock of Manhattan Island—one of the few foundations considered adequate to support the weight of the vault, its door, and the gold inside—eighty feet below street level and fifty feet below sea level … To reach the vault, bullion-laden pallets must be loaded into one of the Bank’s elevators and sent down five floors below street level to the vault floor … If everything is in order, the gold is either moved to one or more of the vault’s 122 compartments assigned to depositing countries and official international organizations or placed on shelves. ‘Gold stackers,’ using hydraulic lifts, do indeed shift them back and forth between compartments to balance credits and debts, though the vaults have only numbers, so even the workers don’t know who is paying whom.”

In part, these systems work because no one knows how they really work.

All this is a bit of a simplification: monetary policy is endlessly arcane and, it does sometimes seem, intentionally so. (Henry Ford once remarked that if ordinary Americans ever found out how the banking system really worked, there would be a revolution tomorrow.) There is no end to the smoke and mirrors here.

the problem of loan-sharking was brushed aside by making real interest rates of 25 percent, 50 percent, or even in some cases (for instance, for payday loans) up to 6,000 percent annually, the sort of numbers that would once have made the mafia blush, perfectly legal—and therefore, enforceable no longer by just hired goons and the sort of people who place mutilated animals on their victims’ doorsteps, but by judges, lawyers, bailiffs, and police.29 Any number of names have been coined to describe the new dispensation, from the “democratization of finance” to the “financialization of everyday life.”30 Outside the United States, it came to be known as “neoliberalism.”

There are even debt TV shows, which have a familiar religious-revival ring to them.

What’s being shunted out of sight here is first of all the fact that everyone is now in debt (U.S. household debt is now estimated at on average 130 percent of income),

To begin to free ourselves, the first thing we need to do is to see ourselves again as historical actors, as people who can make a difference in the course of world events. This is exactly what the militarization of history is trying to take away.

As I’ve emphasized, communism may be the foundation of all human relations—that communism that, in our own daily life, manifests itself above all in what we call “love”—but there’s always some sort of system of exchange, and usually, a system of hierarchy built on top of it.

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.

I also decided I wanted to write a big, sprawling, scholarly book—the kind that people don’t write anymore.

the inevitable unfolding of some sixty-year Kondratieff curve of technological innovation and decline?

In all this, probably my greatest inspiration was the early twentieth-century French anthropologist Marcel Mauss—both because he was perhaps the first to recognize that all societies are such a jumble of contradictory principles, and also, much more specifically, because he was one of the first to try to combine the insights of ancient history with those of contemporary ethnography, in order to unmask the bizarre assumptions about human life and human nature on which modern economics is constructed.

What I would like best of all, of course, would be to see this book contribute, in some small way, to a broader moral reassessment of the very idea of debt, work, money, growth, and “the economy” itself.

This is why he thought a free market could work to the betterment of all: because he was convinced ordinary human beings would not be so industrious, and so self-aggrandizing, as to continue pursuing their advantage once a certain comfortable prominence was achieved: that is, that they would not continue amassing more and more wealth simply for the sake of doing so. For Smith, the pursuit of wealth beyond a point where one had achieved such a comfortable position was pointless, even pathological.

“And what does your Majesty propose to do then?” said the Favourite. “I propose then,” said the King, “to enjoy myself with my friends, and endeavour to be good company over a bottle.” “And what hinders your Majesty from doing so now?” replied the Favourite.