David Graeber was eight years old when Apollo 11’s crew took their first lunar steps. The sight deeply affected him. “I have clear memories of calculating that I would be 39 years of age in the magic year 2000, and wondering what the world around me would be like,” said Graeber. It wasn’t quite the moon landing he hoped for. “Did I honestly expect I would be living in a world of such wonders? Of course. Do I feel cheated now? Absolutely.” Some baseline improvements he was hoping for? A fifteen-hour work week and all debts cancelled. No wonder he was so disappointed. But the world still had much in store for him. Graeber grew up inside a New York City union-sponsored co-op, a suitable petri dish for radical politics. We can think of no better homestead for the man who later helped coin the phrase, “We are the 99%.” At age eleven, he attempted his first translation of Mayan hieroglyphics and sent his findings to a renowned scholar in the field. This early sign of genius secured him a scholarship to Phillips Academy Andover, a renowned boarding school which also failed at refining George Bush I and George Bush II. At sixteen, he declared himself an anarchist. At forty-five, he was canned by Yale for being one. And at fifty, Graeber threw his fate in with the Occupy Wall Street movement, and his book sales never looked the same. This week, in honor of Graeber’s sudden passing on September 2nd, we review Debt: The First 5,000 Years, an alternate history of the rise of money and markets that includes an attempt to demolish the long-told story that money arose from barter. On one extreme, Graeber’s debut inspires gushing reveries from his “army of fanbois,” (including, perhaps to Graeber’s surprise, many on Wall Street).
On the other extreme, his work often spawns McCarthy-like examinations that leave little doubt you are in the hands of a secret communist. We leave you to decide your camp.
Should We Pay Our Debts?
“I would think that th[is] book can warm the hearts of the people fully supporting occupy Wall Street movement, but it does nothing to recruit more followers,”–Savage Amazon Reviewer who requested an “anarchist trigger warning” before reading Debt: The First 5,000 Years
Even if you are an ardent capitalist and card-carrying adherent to the barter theory of money, Debt is still worth reading simply for the invaluable supply of dinner-table small talk you will gain. You’ll never say “please” or “thank you” again without thinking about everyone as little feudal lords. (Apparently, the practice was lifted from peasants showing verbal deference: if it pleases you, my lord. Now, the middle class comforts itself by pretending we’re all insufferable.) Even Santa Claus loses his innocence when we realize that the only reason we don’t owe him something is because he is a benevolent burglar, leaving gifts by stealth, who couldn’t possibly be tracked down to return the favor. (Christians have strict conditions for true charity.) It’s also worth experiencing the uncomfortable moral questions the book will subject you to. Let’s try one. Should everyone repay their debts? David Graeber doesn’t think so, and, as he painstakingly details, history often agrees. Another curiosity? Why most people throughout history simultaneously believe 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.” (Obviously, because we are all wretched vultures.)
St. Peter, The Evil Accountant
Graeber introduces his Big History study of debt with the following observation: “for the last five thousand years, with remarkable regularity, popular insurrections have begun the same way: with the ritual destruction of the debt records — tablets, papyri, ledgers … in the ancient world, all revolutionary movements had a single program: ‘Cancel the debts and redistribute the land.’”
In other words: purge the accountants. Indeed, by the end of the book, accountants have never seemed like such nefarious figures. Every major religion frames our sins in terms of debt. Both the devil and St. Peter were routinely depicted as terrifying accountants wielding a thick ledger where they meticulously logged our sins.
The original version of the Lord’s prayer even begged God to “forgive us our debts, as we also forgive our debtors.” Of course, hardly anyone ever does this, so forgiveness doesn’t seem like it’s coming for many of us. But Graeber doesn’t seek to disprove this: he simply wants us to reexamine why we think of paying our debts as virtuous.
At one point in time, during the High Middle Ages, usury became such a hated practice that it was forced upon European Jews, who were used as convenient scapegoats for royal figures. The kings of England were notorious for deploying this strategy, excluding Jews from merchant and craft guilds, but granting them “the right to charge extravagant rates of interest, backing up the loans by the full force of the law.”
Of course, their protection was very fickle. In 1210 AD, King John decided to impose an emergency levy for funding his wars in France and Ireland. How did he do this? He rounded up every Jew in England and presented them with a bill, payable now or at a later date, under the persuasion of torture. When this proved too violent, arbitrary taxations were simply extracted via institutions (i.e. the Exchequer of the Jews, a government branch created solely for this purpose) rather than by tooth.
Social Currency & The Myth of Barter
One refreshing characteristic of the book is that Graeber approaches the subject as an anthropologist rather than an economist. Graeber criticizes conventional economic histories for their tendency to erase any players whose daily lives did not revolve around profit-seeking transactions. In other words, most people. Nowhere is this bizarre editorializing more evident than in discussions of “primitive money,” a term which causes mass confusion by framing it as a natural predecessor to the kinds of currencies we use today. Graeber insists that early forms of money were actually used in a very different sense: many of them were never used to buy or sell any material goods, much less swap potatoes amongst neighbors.
The Barter Theory of Money, first popularized by Adam Smith in The Wealth of Nations, would have us believe that small town villagers wandered around with a bag of potatoes or a slab of meat until they found someone who was 1) willing to trade for it, and 2) also happened to have whatever it is their heart desired that morning. Of course, waiting for such a series of coincidences to occur had no predictable time limit, and so money was created to solve this inefficiency.
Graeber finds this explanation laughable. He argues that barter was never in popular usage among communities and that credit came well before coins. Instead, villages operated through localized credit systems that kept tabs on people’s debts through some form of an IOU. These “social currencies,” as he labels them, were used as a unit of account for any range of interpersonal obligations, whether it was establishing paternity or confessing to a blood feud. What distinguishes “human” economies from commercial economies is that they have little interest in the accumulation of wealth: human economies are primarily focused on the creation, destruction, and rearrangement of human beings. (Note: this does not mean that they are less cruel.)
Money, then, as we think of it in the modern sense, never spontaneously arose to fix the mythical problems of barter. Even after coinage was invented, most people continued to use credit systems because coins were in such short supply. For example, in medieval England, most people used “tally sticks” to record debts. The system worked as described below:
“Both parties to a transaction would take a hazelwood twig, notch it to indicate the amount owed, and then split it in half. The creditor would keep one half, called “the stock” (hence the origin of the term “stock holder”) and the debtor kept the other, called “the stub” (hence the origin of the term “ticket stub”).
When tax season came around, the tax man would use these twigs to hand each local sheriff their total bill for the year. If however, the king needed funds before tax season, the royal treasurer would sell the tallies at a discount, and they would circulate as tokens of debt owed to the government.
Credit Versus Bullion
Another significant point Graeber focuses on is the historical alternation between periods dominated by credit money and periods dominated by bullion. For instance, the Axial Age (800 BC — 600 AD) saw a general shift to coinage and bullion, whereas during the Middle Ages (600–1450 AD), precious metals mostly sat in the coffers of churches and were replaced by virtual credit money. What’s the difference between the two? For Graeber, bullion is inextricably linked to violence, war, and theft. In periods of widespread war and plunder, credit systems are quickly eroded by coinage.
Why? Because massive, mobile armies have no access to networks of trust. The traveling soldier is an instant credit risk, unlikely to ever return, much less remember to pay off his tally stick. Gold and silver instantly solve this problem by serving much like a contemporary drug dealer’s suitcase full of unmarked bills. A coin is “an object without a history, valuable because one know it will be accepted in exchange for other goods just about anywhere, no questions asked.” And better yet, it’s traceless.
The other logical connection between professional armies and coinage is looting. Historically, most geographic areas have limited access to precious metals: most Sumerian farmers would have had no occasion to hold a piece of silver, except perhaps at their wedding. Israeli Classicist David Schaps puts it succinctly:
“Soldiers who plunder may indeed go first for the women, the alcoholic drinks, or the food, but they will also be looking around for things of value that are easily portable. A long-term standing army will tend to accumulate many things that are valuable and portable — and the most valuable and portable items are precious metals and precious stones.”
Only once protracted warfare is established — as it was during the archaic age of Greece and the Warring States of China, etc. — does coinage start to circulate between a large percentage of the population and come into every day use.
Wipe Out the Balance Sheets
The book charts another 3,000 years of history, covering everything from Arthurian legend to the corporatization of medieval churches. Graeber ends this vast saga by proposing a Biblical-style debt Jubilee which would erase all international and consumer debt. In ancient times, after too many children of the poor were carried off by creditors, Babylonian rulers forgave all non-commercial debts amidst much fanfare and pageantry. While erasing student loans would no doubt appease legions of Millennials, it seems like a Band-Aid solution.
Traditional Jubilees were not a one-time affair. They were a scheduled, recurring event that everyone could plan for, much like any other holiday. It seems optimistic to believe that we could get one debt Jubilee passed, let alone an extra holiday tacked on to each calendar year. Plus, Graeber never ventures into what fate that would spell for our creditors, evil accountants or not. On the bright side, we’re at the start of another credit cycle, which Graeber links to periods of greater tolerance, so that’s one thing going for us. And, as Graeber reminds us, perhaps the point is not to stage a grand revolution or to dismantle the American empire overnight (his dying dream), but to simply acknowledge that “just as no one has the right to tell us our true value, no one has the right to tell us what we truly owe.”
About Colbeck: Colbeck is a strategic lender that partners with companies during periods of transition, providing creative capital solutions to meet their evolving needs. You can reach the team at email@example.com.