“If we have become a debt society, it is because the legacy of war, conquest, and slavery has never completely gone away. It’s still there, lodged in our most intimate conceptions of honor, property, even freedom. It’s just that we can no longer see that it’s there.”

David Graeber’s Debt: The First 5,000 Years is an in-depth look at the concept of debt, and the role it has played throughout human civilization over the past several millennia. Graeber presents a number of arguments that challenge the common understanding of the history of economics, as well as some of the predominant philosophies surrounding the social responsibilities we ‘owe’ to each other.

Graeber’s examination of debt reveals that it is a term we commonly associate with money, and in a broader sense, also apply to our sense of morality; through the virtues of equality, reciprocity, and justice. For example, if someone assists you, you are considered to have acquired a ‘debt’ to that person. Repayment of that debt makes the parties even, which is considered a just and ideal outcome. Due to our interdependent lifestyle, the exchange of social debts, then, becomes a fundamental part of life and a responsibility we are born with.

Graeber, however, wonders how helpful it is to think of all our interactions as forms of exchange and debt, explaining:

If we insist on defining all human interactions as matters of people giving one thing for another then any ongoing human relations can only take the form of debts. […]

All human interactions are not forms of exchange. Only some are. Exchange encourages a particular way of conceiving human relations. This is because exchange implies equality, but it also implies separation. It’s precisely when the money changes hands, when the debt is cancelled, that equality is restored and both parties can walk away and have nothing further to do with each other. […]

[W]hile most of us can imagine what we owe to our parents as a kind of debt, few of us can imagine being able to actually pay it — or even that such a debt ever should be paid. Yet if it can’t be paid, in what sense is it a “debt” at all? And if it not a debt, what is it?

For Graeber, then, a barter economy does not represent an idealistic model for organizing a close-knit community. This is somewhat contrary to how modern economics treats bartering, which Graeber refers to as the “mystic land of barter.” Popular thinking follows that in the beginning, tribes used barter systems to conduct trade internally and externally. Over time, as groups became sedentary and society became more complex, money was created to provide a more efficient manner to handle the variety of exchanges taking place. This later evolved into the modern day credit system we currently live with. Graeber writes this understanding is actually backwards:

In fact, our standard account of monetary history is precisely backwards. We did not begin with barter, discover money, and then eventually develop credit systems. It happened precisely the other way around. What we now call virtual money came first. Coins came much later, and their use spread only unevenly, never completely replacing credit systems. Barter, in turn, appears to be largely a kind of accidental byproduct of the use of coinage or paper money: historically, it has mainly been what people who are used to cash transactions do when for one reason or another they have no access to currency. […]

For centuries now, explorers have been trying to find this fabled land of barter — none with success. set his story in aboriginal North America (others preferred Africa or the Pacific) … But by mid-century, ‘s descriptions of the Six Nations of the Iroquois, among others, were widely published — and they made clear that the main economic institution among the Iroquois nations were longhouses where most goods were stockpiled and then allocated by women’s councils, and no one ever traded arrowheads for slabs of meat. Economists simply ignored this information … Around that same time, missionaries, adventurers, and colonial administrators were fanning out across the world, many bringing copies of Smith’s book with them, expecting to find the land of barter. None ever did. They discovered an almost endless variety of economic systems. But to this day, no one has been able to locate a part of the world where the ordinary mode of economic transaction between neighbors takes the form of ‘I’ll give you twenty chickens for that cow.’ […]

But the most shocking blow to the conventional version of economic history came with the translation, first of Egyptian hieroglyphics, and then of Mesopotamian cuneiform, which pushed back scholars’ knowledge of written history almost three millennia, from the time of Homer (circa 800 BC), where it had hovered in Smith’s time, to roughly 3500 BC. What these texts revealed was that credit systems of exactly this sort actually preceded the invention of coinage by thousands of years.

Graeber explains that based on the prevailing Western view of human nature, which suggests we are “rational calculating machines,” modern economics tells us to view social interactions as commercial transactions, and to place our commercial self-interests before that of society as a whole. Graeber has a different idea, though, and takes issue with traditional assumptions regarding the lifestyle of earlier tribes:

… for [Friedrich] , starting from Adam Smith’s assumptions about human nature means we must necessarily end up with something very much along the lines of primordial-debt theory [which states that there is a debt owed by the living to the continuity and durability of the society that secures their existence]. […]

What Nietzsche is doing here is starting out from the standard, common-sense assumptions about the nature of human beings prevalent in his day (and to a large extent, still prevalent) […] that “society” itself is just a way of putting a kind of temporary lid on the resulting conflict [of competing self-interests]. That is, he is starting out from ordinary bourgeois assumptions and driving them to a place where they can only shock a bourgeois audience. […]

The best response to anyone who wants to take seriously Nietzsche’s fantasies about savage hunters chopping off each other’s bodies for failure to remit are the words of an actual hunter-gatherer — an Inuit from Greenland made famous in the Danish writer Peter Freuchen’s Book of the Eskimo. Freuchen tells how one day, after coming home hungry from an unsuccessful walrus-hunting expedition, he found one of the successful hunters dropping off several hundred pounds of meat. He thanked him profusely. The man objected indignantly:

“Up in our country we are human!” said the hunter. “And since we are human we help each other. We don’t like to hear anybody say thanks for that. What I get today you may get tomorrow. Up here we say that by gifts one makes slaves and by whips he makes dogs.”

The last line is something of an anthropological classic, and similar statements about the refusal to calculate credits and debits can be found through the anthropological literature on egalitarian hunting societies. Rather than seeing himself as human because he could make economic calculations, the hunter insisted that being truly human meant refusing to make such calculations, refusing to measure or remember who had given what to whom, for the precise reason that doing so would inevitably create a world where we began “comparing power with power, measuring, calculating” and reducing each other to slaves or dogs through debt. […]

This is why I developed the concept of human economies: ones 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.

Going further into history, Graeber looks at when and how the use of currencies started being used and the effects it had on society:

The cycle begins with the Age of the First Agrarian Empires (3500 – 800 BC), dominated by virtual credit money. This is followed by the Axial Age (800 BC – 600 AD) … which saw the rise of coinage and a general shift to metal bullion. The Middle Ages (600 – 1450 AD), 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. […]

The moment we begin to map the history of money across the last five thousand years of Eurasian history, startling patterns begin to emerge. In the case of money, one event stands out above all others: the invention of coinage. Coinage appears to have arisen independently in three different places, almost simultaneously: on the Great Plain of northern China, in the Ganges river valley of northeast India, and in the lands surrounding the Aegean Sea, in each case, between roughly 600 and 500 BC. […]

It was a social transformation. Why this happened in exactly this way is an historical mystery. But this much we know: for some reason, in Lydia, India, and China, local rulers decided that whatever longstanding credit systems had existed in their kingdoms were no longer adequate, and they began to issue tiny pieces of precious metals — metals that had previously been used largely in international commerce, in ingot form — and to encourage their subjects to use them in day-to-day transactions. […]

What really caused the inflation is that those who ended up in control of the bullion — governments, bankers, large-scale merchants — were able to use that control to begin changing the rules, first by insisting that gold and silver were money, and second by introducing new forms of credit-money for their own use while slowly undermining and destroying the local systems of trust that had allowed small-scale communities across Europe to operate largely without the use of metal currency.

According to Graeber, the prevalence of violence and war played an integral role in shaping monetary policy:

 Gold and silver coins are distinguished from credit arrangements by one spectacular feature: they can be stolen. A debt is, by definition, a record, as well as a relation of trust. Someone accepting gold or silver in exchange for merchandise, on the other hand, need trust nothing more than the accuracy of the scales, the quality of the metal, and the likelihood that someone else will be willing to accept it. In a world where war and the threat of violence are everywhere … there are obvious advantages to making one’s transactions simple. This is all the more true when dealing with soldiers. On the one hand, soldiers tend to have access to a great deal of loot, much of which consists of gold and silver, and will always seek a way to trade it for the better things in life. On the other, a heavily armed itinerant soldier is the very definition of a poor credit risk. The economists’ barter scenario might be absurd when applied to transactions between neighbors in the same small rural community, but when dealing with a transaction between the resident of such a community and a passing mercenary, it suddenly begins to make a great deal of sense. […]

As I have emphasized, 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. […]

Originally, human beings lived in a state of nature where all things were held in common; it was war that first divided up the world, and the resultant “law of nations,” the common usages of mankind that regulate such matters as conquest, slavery, treaties, and borders, that was first responsible for inequalities of property as well.

Expanding further on the law and its effects, Graeber highlights the particular influence of Roman law:

German legal theorist Rudolf von Jhering famously remarked that ancient Rome had conquered the world three times: the first time through its armies, the second through its religion, the third through its laws. He might have added: each time more thoroughly. The Empire, after all, only spanned a tiny portion of the globe; the Roman Catholic Church has spread farther; Roman law has come to provide the language and conceptual underpinnings of legal and constitutional orders everywhere. Law students from South Africa to Peru are expected to spend a good deal of their time memorizing technical terms in Latin, and it is Roman law that provides almost all our basic conceptions about contract, obligation, torts, property, and jurisdiction — and, in a broader sense, of citizenship, rights, and liberties on which political life, too, is based. […]

The most notorious of these is the unique way it defines property. In Roman law, property, or dominium, is a relation between a person and a thing, characterized by absolute power of that person over that thing. This definition has caused endless conceptual problems. First of all, it’s not clear what it would mean for a human to have a “relation” with an inanimate object. Human beings can have relations with one another. But what would it mean to have a “relation” with a thing? And if one did, what would it mean to give that relation legal standing? […]

… the notion of absolute private property is really derived from slavery. […]

This is a tradition that assumes that liberty is essentially the right to do what one likes with one’s own property. In fact, not only does it make property a right; it treats rights themselves as a form of property. […]

It’s not only our freedoms that we own; the same logic has come to be applied even to own bodies, which are treated, in such formulations, as really no different than houses, cars, or furniture. We own ourselves, therefore outsiders have no right to trespass on us. […]

To say that we own ourselves is, oddly enough, to cast ourselves as both master and slave simultaneously. “We” are both owners (exerting absolute power over our property), and yet somehow, at the same time, the things being owned (being the object of absolute power). The ancient Roman household, far from having been forgotten in the mists of history, is preserved in our most basic conception of ourselves — and, once again, just as in property law, the result is so strangely incoherent that it spins off into endless paradoxes the moment one tries to figure out what it would actually mean in practice. […]

[T]o say that each of us has something called a “mind” and that this is completely separate from something else, which we can call “the body,” and that the first thing holds natural dominion over the second — flies in the face of just about everything we now know about cognitive science. It’s obviously untrue, but we continue to hold onto it anyway, for the simple reason that none of our everyday assumptions about property, law, and freedom would make any sense without it.

States were able to consolidate their power over territories by implementing laws and requiring their subjects to use their state-sponsored currencies:

The criminalization of debt, then, was the criminalization of the very basis of human society. It cannot be overemphasized that in a small community, everyone normally was both lender and borrower. One can only imagine the tensions and temptations that must have existed in a community — and communities, much though they are based on love, in fact, because they are based on love, will always also be full of hatred, rivalry and passion — when it became clear that with sufficiently clever scheming, manipulation, and perhaps a bit of strategic bribery, they could arrange to have almost anyone they hated imprisoned or even hanged. […]

The story of the origins of capitalism, then, is not the story of the gradual destruction of traditional communities by the impersonal power of the market. It is, rather, the story of how an economy of credit was converted into an economy of interest; of the gradual transformation of moral networks by the intrusion of the impersonal — and often vindictive — power of the state. English villagers in Elizabethan or Stuart times did not like to appeal to the justice system, even when the law was in their favor — partly on the principle that neighbors should work things out with one another, but mainly, because the law was so extraordinarily harsh. […]

Therefore decent people tended to avoid the courts entirely. One of the most interesting discoveries of ‘s research is that the more time passed, the less true this became.

Bringing his analysis to the 20th and 21st century, Graeber writes that the same underlying forces of the state, law, and state-sponsored currencies have continued to reinforce themselves with less than ideal consequences. The emergence of the United States as the lone superpower of the world gave it the power to wield its influence over the international monetary system. The fact the U.S. also uses more money on its military than all other countries combined probably isn’t a coincidence.

The U.S. military, unlike any other, maintains a doctrine of global power projection: that it should have the ability, through roughly 800 overseas military bases, to intervene with deadly force absolutely anywhere on the planet … The essence of U.S. military predominance in the world is, ultimately, the fact that it can, at will, drop bombs, with only a few hours’ notice, at absolutely any point on the surface of the planet. No other government has ever had anything remotely like this sort of capability. In fact, a case could well be made that it is this very power that holds the entire world monetary system, organized around the dollar, together. […]

Because of United States trade deficits, huge numbers of dollars circulate outside the country; and one effect of Nixon’s floating of the dollar was that foreign central banks have little they can do with these dollars except to use them to buy U.S. treasury bonds. This is what is meant by the dollar becoming the world’s “reserve currency.” […]

At the same time, U.S. policy was to insist that those countries relying on U.S. treasury bonds as their reserve currency behaved in exactly the opposite way as they did: observing tight money policies and scrupulously repaying their debts.

The most recent financial collapse of 2008 shows that this economic system isn’t as perfect as its proponents claim it to be. There have been numerous occasions throughout the 5,000 year period of human civilization where similar failures have occurred and when people have rebelled against it; 2008 is just the latest example.

What’s being shunted out of sight here is first of all the fact that everyone is now in debt (U.S. household debt is now estimated at on the average 130% of income), and that very little of this debt was accrued by those determined to find money to be on the horses or toss away on fripperies. Insofar as it was borrowed for what economists like to call discretionary spending, it was mainly to be given to children, to share with friends, or otherwise to be able to build and maintain relations with other human beings that are based on something other than sheer material calculation. One must go into debt to achieve a life that goes in any way beyond sheer survival. […]

It did not help here that in 1980, U.S. federal usury laws, which had previously limited interest to between 7 and 10 percent, were eliminated by act of Congress. Just as the United States had managed to largely get rid of the problem of political corruption by making the bribery of legislators effectively legal (it was redefined as “lobbying”), so the problem of loan-sharking was brushed aside by making real interest rates of 25%, 50%, or even in some cases (for instance for payday loans) 120% annually, once typical only of organized crime, perfectly legal — and therefore, enforceable no longer by just hired goons and the sort of people who place mutilated animals on their victims doorsteps, but by judges, lawyers, bailiffs, and police.

Graeber’s overall point in this seems to suggest that we haven’t been given the full story; that there may be other ways of looking at society and economics that haven’t been talked about or explored. Encompassing our current predicament, then, Graeber writes:

In other words, the vision of the world that forms the basis of the economics textbooks, which Adam Smith played so large a part in promulgating, has by now become so much a part of our common sense that we find it hard to imagine any other possible arrangement.

[W]e seem to be trapped between imagining society in the Adam Smith mode, as a collection of individuals whose only significant relations are with their own possessions, happily bartering one thing for another for the sake of mutual convenience, with debt almost entirely abolished from the picture, and a vision in which debt is everything, the very substance of all human relations.

Perhaps in predictable fashion, what Smith presented wasn’t the complete story:

Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

The bizarre thing here is that, at the time Smith was writing, this simply wasn’t true. Most English shopkeepers were still carrying out the main part of their business on credit, which meant that customers appealed to their benevolence all the time.

Nonetheless, Graeber provides hope, and says we are living in an exciting time where new opportunities may just be around the corner. Throughout the 5,000 years of human civilization Graeber looks at, one of the issues people were consistently uniform about was debt forgiveness:

The designated occasion for clearing Babylonia’s financial slate was the New Year festival, celebrated in the spring. Babylonian rulers oversaw the ritual of “breaking the tablets,” that is, the debt records, restoring economic balance as part of the calendrical renewal of society along with the rest of nature. […]

Over the next several thousand years, this same list — canceling the debts, destroying the records, reallocating the land — was to become the standard list of demands of peasant revolutionaries everywhere. […]

It’s well known that the Rosetta Stone, written both in Greek and Egyptian, proved to be the key that made it possible to translate Egyptian hieroglyphics. Few are aware of what it actually says. The stela was originally raised to announce an amnesty, both for debtors and for prisoners, declared by Ptolemy V in 196 BC. […]

It seems to me that 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 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 democracy is to mean anything, it is the ability to all agree to arrange things in a different way.