Debt: The First 5,000 Years

by David Graeber

The effect, though, is that American imperial power is based on a debt that will never—can never—be repaid. Its national debt has become a promise, not just to its own people, but to the nations of the entire world, that everyone knows will not be kept.

and the current, largely cashless economy only came into being in the 1990s. All of these new credit arrangements were mediated not by interpersonal relations of trust but by profit-seeking corporations, and one of the earliest and greatest political victories of the U.S. credit-card industry was the elimination of all legal restrictions on what they could charge as interest.

“one has to pay one’s debts”—since the specter of default by any country is assumed to imperil the entire world monetary system, threatening, in Addison’s colorful image, to turn all the world’s sacks of (virtual) gold into worthless sticks and paper.

money has no essence. It’s not “really” anything; therefore, its nature has always been and presumably always will be a matter of political contention.

To put it crudely: the white working class of the North Atlantic countries, from the United States to West Germany, were offered a deal. If they agreed to set aside any fantasies of fundamentally changing the nature of the system, then they would be allowed to keep their unions, enjoy a wide variety of social benefits (pensions, vacations, health care …), and, perhaps most important, through generously funded and ever-expanding public educational institutions, know that their children had a reasonable chance of leaving the working class entirely. One key element in all this was a tacit guarantee that increases in workers’ productivity would be met by increases in wages: a guarantee that held good until the late 1970s.

The reader will recall that Keynes fully accepted that banks do, indeed, create money “out of thin air,” and that for this reason, there was no intrinsic reason that government policy should not encourage this during economic downturns as a way of stimulating demand—a position that had long been dear to the heart of debtors and anathema to creditors.

Everyone could now have political rights—even, by the 1990s, most everyone in Latin America and Africa—but political rights were to become economically meaningless. The link between productivity and wages was chopped to bits: productivity rates have continued to rise, but wages have stagnated or even atrophied

This was accompanied, at first, by a return to “monetarism”: the doctrine that even though money was no longer in any way based in gold, or in any other commodity, government and central-bank policy should be primarily concerned with carefully controlling the money supply to ensure that it acted as if it were a scarce commodity. Even as, at the same time, the financialization of capital meant that most money being invested in the marketplace was completely detached from any relation to production or commerce at all, but had become pure speculation.

Rather than euthanize the rentiers, everyone could now become rentiers—effectively, could grab a chunk of the profits created by their own increasingly dramatic rates of exploitation. The means were many and familiar. In the United States, there were 401(k) retirement accounts and an endless variety of other ways of encouraging ordinary citizens to play the market but at the same time, encouraging them to borrow.

economic reforms would never gain widespread support unless ordinary working people could at least aspire to owning their own homes;

“neoliberalism.” As an ideology, it meant that not just the market, but capitalism (I must continually remind the reader that these are not the same thing) became the organizing principle of almost everything. We were all to think of ourselves as tiny corporations, organized around that same relationship of investor and executive: between the cold, calculating math of the banker, and the warrior who, indebted, has abandoned any sense of personal honor and turned himself into a kind of disgraced machine.

the principle of honor has thus been almost completely removed from the marketplace.31 As a result, perhaps, the whole subject of debt becomes surrounded by a halo of religion.

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), and that very little of this debt was accrued by those determined to find money to bet on the horses or toss away on fripperies. Insofar as it was borrowed for what economists like to call discretionary spending, it was mainly to be given to children, to share with friends, or otherwise to be able to build and maintain relations with other human beings that are based on something other than sheer material calculation.35 One must go into debt to achieve a life that goes in any way beyond sheer survival.

The chief cause of bankruptcy in America is catastrophic illness; most borrowing is simply a matter of survival (if one does not have a car, one cannot work); and for most, simply being able to go to college now means debt peonage for at least half of one’s subsequent working life.36 Still, it is useful to point out that for real human beings survival is rarely enough. Nor should it be.

The only unifying theme seems to be: people ought to be in debt. It’s good in itself. It’s empowering. Anyway, if they end up too empowered, we can also have them arrested. Debt and power, sin and redemption, become almost indistinguishable. Freedom is slavery. Slavery is freedom.

capitalism cannot really operate in a world where people believe it will be around forever.

There is very good reason to believe that, in a generation or so, capitalism itself will no longer exist—most obviously, as ecologists keep reminding us, because it’s impossible to maintain an engine of perpetual growth forever on a finite planet, and the current form of capitalism doesn’t seem to be capable of generating the kind of vast technological breakthroughs and mobilizations that would be required for us to start finding and colonizing any other planets.

Yet, faced with the prospect of capitalism actually ending, the most common reaction—even from those who call themselves “progressives”—is simple fear. We cling to what exists because we can no longer imagine an alternative that wouldn’t be even worse.

How did we get here? My own suspicion is that we are looking at the final effects of the militarization of American capitalism itself. In fact, it could well be said that the last thirty years have seen the construction of a vast bureaucratic apparatus for the creation and maintenance of hopelessness, a giant machine...

social movements cannot be seen to grow, flourish, or propose alternatives; that those who challenge existing power arrangements can never, under any circumstances, be perceived to win.39 To do so requires creating a vast apparatus of armies, prisons, police, various forms of private security firms and military intelligence apparatus, and propaganda engines of every conceivable variety, most of which do not attack alternatives directly so much as create a pervasive climate of fear, jingoistic conformity, and simple despair that renders any thought of changing the world seem an idle fantasy.

there seems to have been a profound contradiction between the political imperative of establishing capitalism as the only possible way to manage anything, and capitalism’s own unacknowledged need to limit its future horizons, lest speculation, predictably, go haywire.

Once it did, and the whole machine imploded, we were left in the strange situation of not being able to even imagine any other way that things might be arranged. About the only thing we can imagine is catastrophe.

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.

Even if we are at the beginning of the turn of a very long historical cycle, it’s still largely up to us to determine how it’s going to turn out.

Will a return to virtual money lead to a move away from empires and vast standing armies, and to the creation of larger structures limiting the depredations of creditors? There is good reason to believe that all these things will happen—and if humanity is to survive, they will probably have to—but we have no idea how long it will take, or what, if it does, it would really look like.

The one thing that’s clear is that such new ideas cannot emerge without our jettisoning of much of our accustomed categories of thought—which have become mostly sheer dead weight, if not intrinsic parts of the very apparatus of hopelessness—and formulating new ones.

If this book has shown anything, it’s exactly how much violence it has taken, over the course of human history, to bring us to a situation where it’s even possible to imagine that that’s what life is really about. Especially when one considers how much of our own daily experience flies directly in the face of it.

Any system that reduces the world to numbers can only be held in place by weapons, whether these are swords and clubs, or, nowadays, “smart bombs” from unmanned drones.

Just as markets, when allowed to drift entirely free from their violent origins, invariably begin to grow into something different, into networks of honor, trust, and mutual connectedness, so does the maintenance of systems of coercion constantly do the opposite: turn the products of human cooperation, creativity, devotion, love, and trust back into numbers once again. In doing so, they make it possible to imagine a world that is nothing more than a series of cold-blooded calculations.

Trying to flip things around by asking, “What do we owe society?” or even trying to talk about our “debt to nature” or some other manifestation of the cosmos is a false solution—really just a desperate scramble to salvage something from the very moral logic that has severed us from the cosmos to begin with. In

This is the “democratization of finance” argument and it too is nothing new: whenever there are some people calling for the elimination of the class that lives by collecting interest, there will be others to object that this will destroy the livelihood of widows and pensioners.

For me, this is exactly what’s so pernicious about the morality of debt: the way that financial imperatives constantly try to reduce us all, despite ourselves, to the equivalent of pillagers, eyeing the world simply for what can be turned into money—and then tell us that it’s only those who are willing to see the world as pillagers who deserve access to the resources required to pursue anything in life other than money.

(“Cancel all student loan debt? But that would be unfair to all those people who struggled for years to pay back their student loans!” Let me assure the reader that, as someone who struggled for years to pay back his student loans and finally did so, this argument makes about as much sense as saying it would be “unfair” to a mugging victim not to mug their neighbors too.)

The argument might perhaps make sense if one agreed with the underlying assumption—that work is by definition virtuous, since the ultimate measure of humanity’s success as a species is its ability to increase the overall global output of goods and services by at least 5 percent per year. The problem is that it is becoming increasingly obvious that if we continue along these lines much longer, we’re likely to destroy everything. That giant debt machine that has, for the last five centuries, reduced increasing proportions o...

The real question now is how to ratchet things down a bit, to move toward a society where people can live more by working less.

I would like, then, to end by putting in a good word for the non-industrious poor.45 At least they aren’t hurting anyone. Insofar as the time they are taking off from work is being spent with friends and family, enjoying and caring for those they love, they’re probably improving the world more than we acknowledge. Maybe we should think of them as pioneers of a new economic order that would not share our current one’s penchant for self-annihilation.

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.

As it turns out, we don’t “all” have to pay our debts. Only some of us do. Nothing would be more important than to wipe the slate clean for everyone, mark a break with our accustomed morality, and start again.

What is a debt, anyway? A debt is just the perversion of a promise. It is a promise corrupted by both math and violence.

Even three hundred years ago, there was no such thing as “the economy,” at least in the sense of something people could talk about as an entity unto itself, with its own laws and principles. For the vast majority of people who have ever lived, “economic affairs” were just one aspect of what we’d call politics, law, domestic life, or even religion. Economic language has always been—and still is—fundamentally moral, even when it insists that it is not (as in the cutthroat realpolitik of the Axial Age, or the “rational” cost-benefit analysis of economists today), and a genuine economic history must therefore also be a history of morality.

As I say, the very notion that there is something called “the economy” is relatively new. Is it possible that children born today might live to see the day when there is no longer an “economy,” when we can examine these matters in completely different terms? What would such a world even look like?