Debt: The First 5,000 Years

by David Graeber

It’s not entirely true that capitalism is incapable of conceiving of its own eternity. On the one hand, its exponents do often feel obliged to present it as eternal, because they insist that it is the only possible viable economic system: one that, as they still sometimes like to say, “has existed for five thousand years and will exist for five thousand more.” On the other hand, it does seem that the moment a significant portion of the population begins to actually believe this and, particularly, starts treating credit institutions as if they really will be around forever, everything goes haywire. Note here how it was the most sober, cautious, responsible capitalist regimes—the seventeenth-century Dutch Republic, the eighteenth-century British Commonwealth—the ones most careful about managing their public debt—that saw the most bizarre explosions of speculative frenzy, the tulip manias and South Sea bubbles. Much of this seems to turn on the nature of national deficits and credit money. The national debt is, as politicians have complained practically since these things first appeared, money borrowed from future generations. Still, the effects have always been strangely double-edged. On the one hand, deficit financing is a way of putting even more military power in the hands of princes, generals, and politicians; on the other, it suggests that government owes something to those it governs. Insofar as our money is ultimately an extension of the public debt, then whenever we ...