"Before there was money, there was debt. Every economics textbook says the same thing: Money was invented to replace onerous and complicated barter systems--to relieve ancient people from having to haul their goods to market. The problem with this version of history? There's not a shred of evidence to support it. Here anthropologist David Graeber presents a stunning reversal of conventional wisdom. He shows that for more than 5,000 years, since the beginnings of the first agrarian empires, humans have used elaborate credit systems to buy and sell goods - that is, long before the invention of coins or cash. It is in this era, Graeber argues, that we also first encounter a society divided into debtors and creditors. Graeber shows that arguments about debt and debt forgiveness have been at the center of political debates from Italy to China, as well as sparking innumerable insurrections. He also brilliantly demonstrates that the language of the ancient works of law and religion (words like guilt, sin, and redemption) derive in large part from ancient debates about debt, and shape even our most basic ideas of right and wrong. We are still fighting these battles today without knowing it"--Publisher's description.
Here are a few small points that have changed my way of thinking:
-Graeber begins by debunking the sacred Adam Smith, which he admits threatens the very foundation of economics, and that economics itself rests on the completely false foundations of Smith’s unfounded and unprovable assumptions. The first clop up the side of the head is the destruction of the notion that money preceded markets and credit. He shows definitively and with total certainty that it was completely the other way around. Credit came first because there was no coinage. Markets and money, on the other hand, are side effects of governments. They cannot exist without institutional structures in place. And countries didn’t appear until late in the human game. Ultimately, he says Smith was describing an ideal state, not anything that has ever existed anywhere.
-Next, Graeber swings a punch for honor. All debt seems to stem from honor. Medieval Ireland for example, was structured on a monetary system that valued the honor of various classes of people, and assigned hard goods to value them – right in law. So honor was “monetized” in hard goods. Coins had no place beside eggs and cows and slave girls. Too abstract. Too remote. Similar official valuations of honor to commodities occurred elsewhere in history too. Tellingly, the Greek word for honor is the same word for price. In other words, the very human condition of honor is possibly the single most important driver of economics. This is a delightfully radically different viewpoint.
-About the earliest evidence of the knowledge of structured debt that we have comes from 2402 BC. Money itself only appears around 600 BC, and most interestingly, it disappears again around 600 AD. Medieval societies existed without cash. Cash came back, obviously. But the question remains: is it cyclical? This gets short shrift, and only at the very end of the book.
-Money itself seems to have come into play all over the world at about the same time, and for about the same reason: to pay armies. Alexander the Great alone required half a ton of silver a day to keep his men his men. This of course became a vicious circle. More need of silver meant wider conquests, more mines, more slaves to work them, and larger armies to oversee the expanding empire. In very many ways, little has changed.
-For centuries, peasant uprisings have focused not on equality, not on an end to slavery, but the destruction of debt records. From medieval India to modern Chiapas, it is debt that causes violent dissatisfaction with life.
-Market economies and capitalist economies are not (necessarily) the same thing, or even compatible. Market economies seek to trade goods for money in order to obtain more goods. Capitalist economies use money to buy goods to make more money. Put that way, it’s two different universes.
-and finally, “Capitalism cannot really operate in a world where people believe it will be around forever.” I don’t think I’ve seen a more highly charged statement in a rational context – ever.
What a fine book!
The modern kind of debt assumes to separate parties of similar status where both parties can walk away before entering into a contract. From the beginning, the debtor has been in a weaker position. While the debtor is under the obligation to repay his debts, the creditor has no obligation towards the debtor. Given that the debtor is faced with full uncertainty, while the creditor expects a defined cash flow, it is only a matter of time for chance to work in the creditor's favor (who has to fear only massive inflation). Religion and law were used to contain the time bomb of debt, periodically re-setting the tally to relieve indebtedness. Otherwise, a system of wage slavery quickly develops.
Graeber shows how the scourge of indebtedness made the conquistadors even more rapacious. The huge capital outlay for their expeditions all but required them to exploit the new world to the fullest. Debt, money and greed drives the world. Graeber does very well in questioning the dark underpinning of Adam Smith's self-interest and invisible hand. There are a lot of animal spirits lurking and the harsh hand of government is all too necessary to keep the machine working. Economics could profit from more interaction with anthropology and sociology.
The inverse is true too. Often, the text would have benefited from an economics co-writer who might have enhanced or corrected some statements. The text and its message could have been so much stronger. Especially, the terribly weak final chapter does not do the book justice. Graeber probably knows that the dire picture he paints is only true in the United States of America. Europe has evaded most of those bad effects. Thus, these social changes that are slowly destroying the middle class are reversible. The fight against the corporate interests might be hard but more achievable and realistic than Graeber's utopian wish for a debt Jubilee.
Read the book for its excellent first half. It unfortunately fails to become a contemporary Guns, Germs and Steel.
Graeber simply does not truck with the presumed universality of the wisdom of economics. The problem with it is it isn't really science and therefore, rather than being based on observation of history and growing to incorporate the economies of various times and cultures it presumes the universality of the sort of economy that it was born within : Capitalism. This becomes even more of an achilles heel as Graeber points out that the creation myth of capitalism is just that, myth. That old chestnut that captialism, indeed money itself, sprung inevitably from the prohibitively unweildy system of barter is simply fancy. Speculation straight from Adam Smith. Of course the man had a right to such intellectual noodlings, but Graeber reminds us that ultimately the common knowledge of captialism and economics come from an idea about what could be, not what has been or what is. Adam Smith's idea, the dream of a self-regulating market, prices set by the will of God.
The point is capitalism is just the most recent economic system used on this planet. And comparatively, it hasn't even been in use all that long. Graeber wades through thousands of years of human exchange from all over the globe, and if one thing is glaringly apparent it's that that people have had nuanced and effective systems of exchange of all sorts as long as we have history for them. One of the things Graeber is careful to point out is that you can't presume all of human exchange boils down to the expectations of capitalism and dyed in the wool economics. Because ultimately exchange isn't about the relationship between people and money or people and goods or whatever. A person can't really have a relationship with a product or currency. A person can only have a relationship with other people regarding goods and currency. And that, what currency and goods mean in terms of people's relationship to eachother, is a product of culture.
Honestly, it's fascinating. More fascinating than I expect anyone ever expected of an economics books (if you even want to call it that). The sheer variety of exchange culture in history is eyeopening and a good way to get perspective on our own exchange culture. This book does go to some pretty dark places as the relationship between war and finance has always had a way leading exchange to dark places. The volume of content on the commodification of people and the economic role of slavery in various times and culures is profoundly disturbing, but too important to ignore. And heads up, that includes contemporary slavery and capitalism.
You will not find solutions in this book. Graeber's recommendation of a "jubilee" year (in which international and consumer debts are forgiven) is not really presented as a plan. Would small mutual banks in the rural countryside also be expected to forgive car loans and mortgages? Presumably not, but -- well, that would be part of the plan.
Nevertheless, I am convinced that I should minimize the extent to which I place myself in a role which permits others to exact usurious profit from others.
The publisher should have exercised greater caution in the editorial phase -- many typographical errors remained. The sections on the "Axial Age" and "Middle Ages" were outside of Graeber's primary areas of expertise, and an editor could possibly have encouraged self-restraint in some areas in those chapters.
My favorite takeaway is a quote that isn't even attributed to Graeber. It appears early on in order to foreshadow that the history of debt has more causes and effects than any one answer can provide. I'm adopting it as my new mantra, and I suspect it will be even more relevant as I get older and try to make sense of our multifaceted world.
"For every subtle and complicated question, there is a perfectly simple and straightforward answer, which is wrong." --H.L. Mencken
I think some of the connections Graeber draws are a bit tenuous, and I honestly don't know quite what to think about most of the broader points he's making. But it's provocative in a good way, it's full of a lot of interesting and frequently surprising bits of history and anthropology, and it certainly provides some new perspectives on subjects that most of us take entirely too much for granted. If nothing else, Graeber makes it clearly, blindingly obvious that the simplistic models economists use about the origins of the marketplace have very little to do with real human culture and human behavior, even if they have perhaps shaped both of those things since.
The last hundred pages were a bit of a disappointment, it felt like he was kinda skimming over the modern era, which is perhaps the place where the most solid case is required (there's only so much information available about ancient Sumer, which means that there's really just one story, and not a lot of “noise” surrounding that; the opposite is true today, which I think places a much higher burden on anyone using modern evidence to support a point about the nature of our economic system: is that the real story, or is he cherry-picking his evidence?). Still, I should read more by Graeber, his scholarship is astonishing.
In his answers he debunks the myth
This work is conversational - as are many e-books actually - and reads more like a lecture of discussion but its premise - that debt is inherently immoral in the way in which we give it supremacy over our lives - is far more persuasive than governments want it to be.
One of the most basic of those assumptions is that, prior to the invention of money, people relied on barter to trade the things they
How do people trade among themselves when their society doesn't have money? Oddly, the same way we do now: through elaborate credit arrangements. Henry needs a pair of shoes; John makes shoes. Henry has potatoes, which John doesn't need right now, but Henry, John, and all their neighbors are perfectly capable of remembering that Henry owes John the value of a pair of shoes. Traditional societies have many faults and are by no means idyllic Edens of perfection, but there is an assumption that of course everyone needs to have the essentials of survival, and that this is a community concern, not solely an individual concern. Everyone helps others, because everyone is going to need help from others. What goes around, comes around. Competition, anger, greed, resentment all exist, but sociability is the key to survival.
The really interesting bit, and the meat of this book, is how we get from that, to money-based economies, and how this affected not just economics but every part of human life. One crucial factor is the connection between armies and militarism, and the need to supply those armies, and the invention of coin. The three basic ways of supplying your army are to maintain really long supply lines, to loot the countryside they're marching through, or to buy supplies along your army's route.
But the people in the country you're marching through mostly have no reason to share resources with your army, who aren't part of their community. And carrying trade goods in quantity is just a different version of the "long supply lines" problem.
Small and portable bits of gold and silver, though, are usually acceptable and tradeable everywhere.
Once coinage is invented and accepted, everything gradually acquires a price, including people--and even intrinsically non-tradeable things, like parent-child relations, begin to be talked about in terms of credit, debt, and price.
This is a thoughtful, interesting, informative, and highly readable book, well worth reading regardless of whether you ultimately agree with Graeber's thesis.
I borrowed this book from the library.
The books so dense and fresh I have no idea where to begin, so I’ll just get going rather than try to pull things into coherence.
Economics isn’t a science. It’s a combination of anthropology and fiction. Economics was a recently invented term. We treat money like it operates under laws, like physics, when it’s actually a plastic social agreement.
Barter comes after money, not before. Gift economies come before money economies. Coinage appears only during wars. Governments form to create and manage currencies. Currencies are created to fund wars.
Social economies and material economies don’t mix well. The triangle slave trade of the 1800s is a tribute to that.
Small amounts of debt are debt; large amounts of debt are power and control - think “too big to fail.”
In their inception, church and state, and money and politics, were unified. This modern idea that each two pairs should be separate has thousands of years of cultural development in the way.
Interest, or usury, has been banned by many major religions [Islam, Christianity] for good reason. In the Middle Ages, one could not be both a merchant and a Christian, as the values were at odds.
Historically, debt and slavery has been imposed on people that would have otherwise been killed in war.
There’s a lot to be learned in the history of words. For example, to be free means to be grounded in community - contrary to modern usage. This origin comes from it’s usage in Greek times, when a slave would be emancipated and granted citizenship.
Looking back over history, it’s rare to find genocide unlinked from debt. For example, why did the Spanish decimate the Mayans? Because they were in debt to the Chinese.
Poverty is a creation of money. In it’s early days, money was used for special things and managing social relationships [such as marriages]. Things such as food an housing were supplied by the community, except during extreme cases when somebody would be kicked out of a community [and most likely die shortly after].
Debt used to be temporary. For example - the Jewish “Jubilee,” or regular annulment of all debts.
Money has no essence. But if we tried to give it one, it would be religion.
The idea of debt isn’t indigenous, as it implies separation.
Money replaces, or more precisely, liquidates social capital and trust.
Although 5,000 years seems like a long way back, I’m sure that the story of debt is very interesting before then. We just don’t have access to the records.
Debt as a social phenomenon
Draws from Polanyi's ideas on the Market Society. 'Government non-intervention' as a contradiction in terms. Military-industrial-financial complex - link between need for capital backing to finance wars of conquest and economic power.
Historical cycles of the meaning of debt and currency. Two eras of the rigid monetarization and submission to debt (800 BC to 600 AD, and 1450-1791), and one era of 'primordial' social debt, the Middle Ages. In 1971, when Nixon removed the US from the gold standard, this began a new era, but one that we're not quite sure what it means yet.
Capital as stimulus of economic and technological change. Industrial Revolution, but what about massive fluctuations that led to our own crisis? Removal or entrenchment of economic with social factors. Computerized treatment of derivatives and debt. Financial conglomerates.
Is debt as an idea inherently tied to the newer idea of wage-slavery? Author does describe the worst effects of harmful loaning practices, he does describe some of the better aspects too. Anthropological treatment of the whole. Nothing inevitable about our current relationship with debt. There is much still to be done.
This is a profoundly interesting book. Although one may disagree with the assertions, read it anyways and have an argument with it. This is one of those books that shapes conversations and thoughts for decades.
Graeber's theme is a simple one. What makes us human is our relationship with others, starting with our mothers, then family and then tribe. Left to ourselves human beings would organize co-operatively and naturally share with each other the fruits of our labor. The goal in our life is to enjoy human interactions.
Over the course of 5000 years, this form of natural relationship has become completely distorted. We now see our life goal as to be producers/ consumers whose function is to exploit the world. We base human relationships on cold calculations of gain and loss, credit and debit.
Since such a world view (often referred to as 'capitalism') thwarts our basic nature, Graeber provides an anthropological/ historical survey of how the world ended up where it is today. His central thesis is that our current view of how society ought to be organized, can only have been created and maintained by violence. War, which rips apart all human relations, and removes individuals from their web of connections, is what allows us to place financial value on another human, as opposed to the inherent idea that every human is invaluable.
When summarized in this way, Graeber's thesis may sound simplistic and reductionist. But while his basic thesis IS a simple one, what makes the book brilliant is the depth of research and intelligent analysis that supports his argument and gives it depth and richness. By providing an overview of the concept of debt across 5000 years of history and ranging over many cultures across geography and time, Graeber convincingly makes his radical arguments seem almost self evident.
There are times, of course, where Graeber's ideas do come close to being reductionist, despite the vast wealth of well documented data he provides (and yes, read the footnotes too! Lot's of interesting details are contained therein). For example, in trying to contrast the "non-imperial" Medieval era to its predecessor the "imperial Axial" age, he leaves out a discussion of counter examples like the Mongols & the Turks. Similarly since one of his main goals in the book is to provoke people out of their conventional thinking, on more than one occasion he exaggerates to make a point. For example, while Medieval Islam has much to be admired, I am not convinced it was as much the anarchistic market system that Graeber tries to argue it was, nor, for related reasons, should one expect brilliant economic insights to come out of modern day Islamism. But Graeber is both too intelligent and too much the academician (in a positive sense) to fall into the trap of becoming a propagandist. He duly notes what he leaves out and acknowledges when his arguments are unconventional. And he always indicates that he may be over emphasizing some point precisely because it is too often ignored or trivialized.
A while back in a review of Rushkoff's awful book which covered similar themes, I lamented that there was not yet a contemporary book that provided a coherent criticism of modern day capitalism. Sure Marx still has much to teach us, but so much has changed since Das Kapital was written, and Marx' alternative system has proven itself a dismal failure. Graeber's has now provided us with just such a book - a compelling, provocative critique of financial capitalism and neoliberalism. And his call to action is neither another utopian vision nor a feel-good New Age trope. Rather, by surveying the rich and varied approaches to organizing societies over the past 5000 years, Graeber gives us tools to help us begin to re-imagine a better future for humanity.