It would be misleading to say I’d ‘devoured’ a 400 page anthropological study of debt from the dawn of time to the Great Financial Crisis, along with its 100 additional pages of footnotes and bibliography – but only slightly.
David Graeber’s Debt: The first 5000 years is an important and fascinating book. Anybody trying to make sense of the financial catastrophe continuing to unfurl around us – and who isn’t? – should read it. This is not to say I agree with everything its author says; nor that it offers ‘solutions’ to the situation we find ourselves in. However, the description of the links between money, debt and power in many societies and many eras casts illuminating shards of light on the present day. Having read the book, I don’t think there’s any hope of finding a reasonable path forward without much more careful and detailed political thought about what the nature and scope of debt says about society and power structures. (This is a thought I expressed in The Economics of Enough and other economists have also underlined, including Raghuram Rajan in Fault Lines and Simon Johnson and James Kwak in 13 Bankers; but our approach is abstract while Graeber’s fills in the historical substance.)
The book’s first point is that the usual account of the origins of money as a natural evolution from barter economies, and debt as a follow-on to money, is historically utterly inaccurate. Primitive economies start as credit-based economies, with the flows of credit expressing social relations, and cash – bullion-based and then much later fiat money – follow on. Neighbours exchanged goods by running a tab, and from time to time these accounts would be generally settled in the village. This required a unit of account to compare, say, chickens and corn, but not actual money. The earliest written records are ledgers or tallies of debts. But the advent of cash enables the rise of the state and more broadly the accumulation of political power. Once cash had been invented in any place, local rulers seem to have always moved quickly to assert their monopoly over it, and to force people to participate in the cash economy by demanding that taxes were paid in cash.
Graeber then goes on to outline a common imperial pattern of a cycle of mining bullion to get the money to pay armies to conquer new lands to gain access to the gold and silver. “Historically, war, states and markets all tend to feed off one another. Conquest leads to taxes. Taxes tend to be ways to create markets, which are convenient for soldiers and administrators.” (p179) The growth of the money-based economy was, he argues, fundamentally enabled by violence and enabling of violence – the account of the slave trade is particularly compelling. There is a similarity between his account of the innate tension between the growth of the money economy and traditional social relations and other takes on the history of capitalism. Many authors have regretted – with, in my view, undue romanticism – the decline of traditional rural societies over time; for there are also benefits in the anonymity of markets and the opportunities offered by a restless economy. However, Graeber does not fall into the trap of rose-tinting traditional society, despite his evident scepticism about the benefits of the economy and society we have ended up with.
This is not an overtly polemical book. It makes its essential point – about the inextricable link between the power of the state, ultimately based on coercion, and the exaction of debts – through the steady accumulation of detail rather than excitable rhetoric. Graeber points out that in the past, states have all ultimately had to announce a general forgiveness of debts, whether regularly as in the ancient ‘jubilees’ or as one-offs. He concludes the book:
“It seems to me 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 a 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 of all to agree to arrange things in a different way.” (p390)
Powerful states always resist any breach of the principle that debts must be repaid, he notes. However, as we watch the leading powers dither helplessly in the face of the stand-off between powerful banks and less powerful states (such as Greece), and when allegations have emerged that Barclays made a major business out of helping banks avoid paying national taxes (FT: US tax authorities target global bank deals), it would obviously be a travesty of social justice if the banks get bailed out again by taxpayers while individuals without political power are turfed out of repossessed homes or taken to court over consumer debts they incurred to feed the economic boom.