Debt and What We Owe

Origins of Debt

At the outset of Debt: The First 5,000 Years, anthropologist David Graeber explains that “this book is a history of debt.” Simple enough and, considering the title, quite obvious, but he continues by writing that it:

“uses that history as a way to ask fundamental questions about what human beings and human society are or could be like — what we actually do owe each other, what it even means to ask that question.”

In a wide-ranging analysis that weaves together anthropology, history and economics, Graeber looks at the origins of money, the origins of debt, deconstructs some of the myths surrounding both, and provides a 5,000+ year historical framework.

Primordial Debt Theory looks at early “existential debts” that people felt they owed to The Gods or The Ancestors and the ways in which they paid these through sacrifices. “[E]ven the English word ‘to pay’” as Graeber writes, “is originally derived from a word for ‘to pacify, appease’”.

“In all Indo-European languages, words for ‘debt’ are synonymous with those for ‘sin’ or ‘guilt’, illustrating the links between religion, payment and the mediation of the sacred and profane realms by ‘money.’ For example, there is a connection between money (German Geld), indemnity or sacrifice (Old English Geild), tax (Gothic Gild) and, of course, guilt.”

The Barter Myth is that money arose as a more efficient way of doing what barter was trying to do. Graeber shows that early societies operated upon the principles of gift economies and barter only become important after the invention of money.

Barter was something that people accustomed to the ethical assumption of a commercial economy did when they entered a difficult period and there was a lack of physical money.

Prior to the rise of commercial economies, people lived in human economies. Graeber defines these as:

“[O]nes in which what is considered really important about human beings is the fact that they are each a unique nexus of relations with others — therefore, that no one could ever be considered exactly equivalent to anything or anyone else. In a human economy, money is not a way of buying or trading human beings, but a way of expressing just how much one cannot do so.”

Over the course of the past 5,000 years or so, these human economies have gradually diminished in influence and with it the moral obligations that knit the community together. In its wake came the history described below.

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5,000 Year History of Debt

The major trend that Graeber discovers when writing a history of debt is that it cycles between periods of virtual money and physical money.

In short:

“The cycle begins with the Age of the First Agrarian Empires (3500-800BC), dominated by virtual credit money. This is followed by the Axial Age (800BC – 600AD) … which saw the rise of coinage and a general shift to metal bullion. The Middle Ages (600 – 1450AD), which saw a return to virtual credit money…. the Age of Capitalist Empires, which began around 1450 with a massive planetary switch back to gold and silver bullion, and which could only really be said to have ended in 1971, when Richard Nixon announced that the U.S. dollar would no longer be redeemable in gold. This marked the beginning of yet another phase of virtual money”

The First Agrarian Empires of the Near East saw the rise of money, markets and loans. Temple Complexes stockpiled resources, held sacrifices, collected taxes, and employed scribes who developed an elaborate system of accounting.

One result of this virtual credit was the creation of debt and a system of behaviors (forced labor, selling daughters) that people did to repay the debts meticulously accounted for in the Temple books.

Every so often, the types of human relationships caused by debt became too detrimental to the integrity of society as a whole, so the state would announce a Jubilee. As Graeber writes:

“[T]hese were called ‘declarations of freedom’ — and it is significant that the Sumerian word amargi, the first recorded word for ‘freedom’ in any known human language, literally means ‘return to mother’ — since this is what freed debt-peons were finally allowed to do.”

The Axial Age Empires of China, India and the Mediterranean, saw the rise of coinage and a shift to bullion. The Temple Complexes of enemy Empires were raided by “successful” armies like Alexander’s and the precious metals were stolen.

Once stolen, they were melted down, fashioned into portable tokens (aka coins) and used as a form of payment. Some of this coin was used to pay off debts but if you didn’t have enough coin then atrocious behaviors (selling daughters, forced labor) were done to pay off the debt.

Graeber calls this process the military-coinage-slavery complex.

The Middle Age Societies of Europe saw a return to virtual money. The Axial Age Empires collapse and along with it, the ability to fund armies that will raid others to steal their metals and make physical coins.

The price of commodities bought through virtual credit (tabs and whatnot) were pegged to the value set down by earlier Roman Coins, even when those physical coins weren’t present during the transaction.

Monasteries stockpiled reserve currency that was lent out as credit and accounting records for loans and debts were still meticulously kept. Since large-scale governments collapsed, commercial markets sprang up outside their direct control and began to grow.

The Capitalist Empires of Europe saw a return to bullion. As the New World was discovered and the Age of Conquest hit full-swing, untold mounds of metals were stolen from the New World and shipped back to the Old World.

This influx of physical coin provided the capital necessary for the Industrial Revolution and the subsequent domination of “The West.”

This money-cycle ends 5 centuries later when President Nixon unpegs the U.S. Dollar from the gold standard and makes it the world’s reserve currency. A currency backed, in large part, by the might of the US Military. Which brings us back to the raiding armies of early empires.

And so the cycle continues.

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Meaning of Debt

In his book, Graeber goes into far greater detail to show how the human economies that predominated for much of human prehistory “can begin to break down and how humans can become objects of exchange: first, perhaps, women given in marriage; ultimately, slaves captured in war.”

In these human economies, moral obligations were the primary way of establishing bonds between people. Debts do this as well, but in a far different way:

“A debt is the obligation to pay a certain sum of money. As a result, a debt, unlike any other form of obligation, can be precisely quantified. This allows debts to become simple, cold, impersonal — which, in turn, allows them to be transferable. If one owes a favor, or one’s life, to another human being — it is owed to that person specifically. But if one owes forty thousand dollars at 12-percent interest, it doesn’t really matter who the creditor is … One does not need to calculate the human effects; one need only calculate principal, balances, penalties, and rates of interest.”

So a debt is a quantifiable obligation, precisely calculated, and repaid to no-one in particular. An obligation is an unquantifiable sense, imprecisely calculated, and repaid to a specific person.

“A debt is just the perversion of a promise.” Graeber writes toward the end, “It is a promise corrupted by both math and violence.”

Re-framing human relationships through the language of debt allows all sorts of dubious acts to arise. Mix this with the assumption that all debts must be repaid and it can provide moral justification to atrocious acts of violence.

As money and debt have become more important in society, their foundational violence has been forgotten or at least severely overlooked. Perhaps the Barter Myth is a way of rationalizing away the violence at the heart of commercial economies?

Perhaps we need it? Or would a more honest analysis work better? Maybe if we focus more on what we actually do owe each other, deeper bonds can be knitted to hold society together.