Book Review: Debt: The First 5,000 Years
Debt: The First 5,000 Years by David Graeber
My rating: 4 of 5 stars
When institutions don’t repay their debts, they say it’s because they’re fighting for their very existence. But doesn’t the same logic hold true for people fighting to keep a roof over their heads or to feed their families?
It seems that whenever companies get into any kind of financial bind, or just want to appease Wall Street, they can simply go to their workers each year, or to their unions, and renege on whatever financial promises they may have made. But, since individuals aren’t always able to avoid repaying their debts, they often struggle year after year under the weight of these obligations. And there are very few options they can pursue as a result.
Debt, however, is a subject that’s not really understood by many. Today’s neoclassical economists like to tell us that debt is good. And yet, classical economists will argue, that debt is exactly what is wrong with society, and that the past 400 years of Western history represent a grievous departure from how human societies have traditionally thought about our obligations to one another. Which makes this book, really more of a philosophical inquiry into the very nature of debt itself, where it came from and how it has evolved.
Graeber begins his impressive book, first by demolishing some of the more conventional myths concerning economic history, starting with the notion that before money and markets were invented, barter was the normal mode of exchange. In fact, as anthropologists have tried to explain to economists for over a century, barter is almost unheard of in traditional societies. Within communities, food, clothing, tools, and other everyday items might simply be distributed freely from one person to another in accordance with a strong sharing ethos, or distributed from a communally managed stock, or exchanged in a tit-for-tat fashion (so-called “gift economies”), or exchanged as debits and credits in a “virtual” currency that never actually changes hands. Many so-called “primitive currencies,” high-status items like cattle or hand-woven cloth, change hands primarily for purposes of rearranging human relationships (e.g., sealing a marriage contract or compensating the family of a murdered individual). Barter, when it does occur in traditional societies, tends to crop up on the margins of economic life, when people trade with strangers and potential or actual enemies. The modern triumph of money and markets can be seen to represent, in a way, the remaking of society as a collection of strangers or potential enemies a la Hobbes.
But, if you look at the history of debt, what you’ll discover first and foremost is a very profound moral confusion surrounding the concept. It’s most obvious manifestation is that almost everywhere, one finds that the majority of people hold simultaneously that (1) paying back money one has borrowed is a simple matter of morality, and (2) anyone in the habit of lending money is evil. Graeber’s entire thesis can actually be said to focus on this moral dimension, illustrating all throughout the book, that it is in fact this very dimension which enables people to do very bad things to each other.
Debt has been used to degrade everything, including human lives, to a monetary calculation that eliminates all social obligations. This is especially observable in the later development of capitalism that has reduced society to a system of practical debt slavery. Which was actually, as Graeber chillingly demonstrates, the normal endgame of debt in the ancient world. That a debtor’s family members, and in extremis, the debtor himself, were meant to be reduced to bondage.
Enslavement (and other forms of compulsion–peonage, indentured servitude, wage slavery) have all been intimately bound up with debt. Time and again, debt has been the siphon that sucks victims into a system of exploitation, and also the motor that drives the exploiters–both the grand masters (monarchs, conquistadors) and the petty functionaries–to take the rapacious step of destroying other people’s lives. Thus, we can no longer legitimately insist on an absolute obligation to pay ones debts, without first considering the quality and effects that all debt-related activity has on society at large.
“But, surely one has to pay one’s debts.” The reason this statement feels so powerful is that it’s not actually an economic statement: it is in fact, as we’ve seen, a moral one. And, more importantly, if the duty to pay a debt is ethical, then the ‘ought implies can’ rule applies: we cannot be morally obliged to do what it is not in our power to do. Thus any obligation to pay is limited by capacity to pay. This alone might instantly change the way we think about debt, especially concerning interest rates on consumer loans, which is usually not only far higher than the original loan but beyond any reasonable capacity to pay. And as Graeber, himself, very carefully reveals, any simple equation of debt and duty is mistaken, though often politically advantageous to those with financial power. Whether debt gives that power to creditors or debtors, debt is unquestionably the mechanism by which that power is expressed. There is no better way really, to justify unequal power relations in a society than “by reframing them in the language of debt … because it immediately makes it seem that it’s the victim which is doing something wrong.”
This is a big book full of big ideas, and it’s one of only a handful of really interesting works on political economics that I’ve read in the past few years, standing nicely alongside, Picketty’s Capital. Within all of it’s 500 plus pages you'll find a potent theory of capitalism, religion, and even the state. In the end however, we are left with only one concrete idea about what to do next, but it’s really the only one we need, and it also happens to be one that has precedence in many societies: a jubilee, a wiping-clean of the slate, in which we are reminded that the balance at the bank is not all we are, and that we might refashion our relations with one another differently, and better. As Graeber writes a jubilee “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 arrange things in a different way.” I can only hope, that the next 5,000 years will prove to be more enlightening.