Written by Oscar Soberg
When David Graeber’s book Debt: The First 5,000 Years hit the bookshelves in 2011, it was met with equally poignant praise and criticism. Passionate debates and lively discussions sprouted from its unapologetically sharp critique of modern economics, its impressively expansive review of human history, and its controversial suggestions about our current understanding of money, markets, economies, and society. The book, being known for birthing a plethora of commentaries and reviews, could not be exhaustively analyzed in a brief article. Therefore, I would like to explore some particularly interesting topics and arguments that pose intriguing questions regarding our modern approach to understanding and operating the current economic system.
First, let us return to our very first lessons in economics. Whether in a high school class or a university lecture, our initial exposure to the broad field of economics usually begins with a brief recap of human economic history. The typical narrative goes something like this: in early human civilization there was no money or other medium of exchange; therefore, humans operated in a barter economy where people participated in immediate transactions of differing goods. Textbooks dating back to Adam Smith frequently give examples such as one farmer trading two pounds of wheat for another farmer’s pig. Here, both farmers receive the goods immediately and the trade is presumed to be beneficial to both parties. Sooner or later, we are told, humans realized how inefficient such a barter economy is and switched to using coins as a medium of exchange, and eventually to the fiat currency we use today (Wikipedia). However, Graeber argues quite convincingly that such a story is wholly untrue and supported by no anthropological evidence–it is a hypothetical created by economists on a whim, and has never since been challenged. Graeber’s anthropological background helps him to prove that the first recorded debt systems (found in the Sumer civilization in approximately 3500 BC) long predate the advent of coinage systems as units of account (the earliest coins can be dated back to at most around 1100 BC). Furthermore, he argues that there is no strong anthropological evidence to support the claim that barter economies predominantly existed in any society. The few examples of barter ever being the primary form of exchange comes in situations of low trust, such as exchanges between different societies that had infrequent contact, or in the context of ritualized warfare. Graeber lays to rest this inaccurate depiction of human development when he cites Cambridge professor Caroline Humphrey’s quite definitive anthropological conclusion: “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing’” As revolutionary as this is, one might still ask: what relevance does this have? Who cares? So what?
Graeber answers these questions by leading us into a different, though related, overview of debt and its role throughout human history. He explores how debt transactions impact human economic development, revealing that debt initially functioned in situations of high trust–early humans living in tight-knit communities knew each other well and needed to trust each other. Say one member of the community was hungry and needed food, his neighbor would lend him some extra food (as the survival of such an early human community relies on the survival of every community member), and thus a debt was created. We see actions similar to these happen today, again in situations of high trust, between family members and friends. If your friend is fixing the sink and asks you to pass the wrench, your immediate thought is not “well what are you going to give me in return?” The reason being, quite simply, efficiency (Kay). Graeber argues that we as humans recognize the efficiency of debt, and since the creation of early civilizations we have used social relations along with debt to complete transactions that a market would otherwise be ill-equipped to handle.
So how, then, did the coinage system arise? Graeber postulates, using anthropological evidence, that money arose out of state violence. His theory follows as such: early states, in their quest to secure more land, more slaves, more resources, needed to fund large armies, but the aforementioned debt system was not sufficient for such purposes. What good is an I.O.U. to a soldier hundreds of miles away? Plus, every soldier would demand something different in return. Money, therefore, was invented to symbolize and standardize the debt owed by the state to its soldiers. Coinage soon became the dominant system in large states throughout human history. But an army only wins if it is better than its adversary, so states began taking on debt to finance larger and better armies. States’ debts grew and grew, and citizens’ debts grew and grew accordingly. Countless documents show ancient civilizations would become so mired in debt that families would send their children to be slaves as a way to repay debts they owed. As a response to this ever-increasing accumulation of essentially unpayable debt, many states enacted “Jubilee” laws. Coming from the Biblical “Law of Jubilee,” which referred to the cancelation of all debts in ancient Israel, these laws would do just that–cancel all debt. As preposterous as it may sound to a modern person, it was both practical and beneficial for societies to have all debts periodically wiped clean. States could then resume accumulating debt to fund their violence, and citizens could again assume debt in their everyday interactions without fear of excessive indebtedness, enslavement, or violence.
To Graeber, as well as many other economists and anthropologists, such a history of debt and of ancient economic organization reveals a unique property of human motives. Contrary to the current economic assumption that people act in self-interested, rational ways, history shows that humans are not inherently selfish, nor are we frequently rational actors. This idea is not revolutionary, but important to note. Eric Bain-Selbo, a department head at Western Kentucky University, writes about this divergence when he says, “the cross-cultural history of debt and debt relationships shows us a complexity that escapes the discipline of economics. Human beings have an incredible variety of motives as they navigate through their lives, and debts have been incurred and forgiven in ways that do not fit a neat business model.” Graeber does not make the same mistake as the economists he critiques, instead he reminds us that a truly rigorous economic system or theory must recognize the unreliability of human behavior. In summary, understanding the role of debt in economics may require completely scrapping our current base assumptions and forming new fundamental theories based not on hypotheticals, but on observed facts.
So what does this all tell us? How can we apply our refined perception of human behavior and of humanity’s historical utilization of debt to modern problems? Here Graeber leaves us. He offers virtually no concrete policies, or even a specific path forward. However, following Graeber’s theory of debt being sustained through violence, we can look at the world around us with a new lense. It doesn’t take much critical thought to observe such violence in our everyday lives. Credit scores dictating whether we can afford a roof over our heads, the threat of police arresting us for being unable to pay our debt, and the enormous financial burden of student loans robbing us of “financial freedom,” are all examples of violence being used to maintain, enforce, and promote debt. Furthermore, we can analyze the military in much the same way as ancient armies. The United States, for example, racks up trillions of dollars in debt to continually fund its military violence–just as ancient rulers would accumulate debt to fund their armies. And again, as has continually happened throughout history, the debt owed by the United States has reached an unpayable amount, an amount that quite frankly seems imaginary.
Now, Graeber actually does give us one recommendation for a solution to this absurd and misunderstood problem of debt. He recommends a Biblical-style Jubilee that “would affect both international debt and consumer debt,” reasoning that it “would relieve so much genuine human suffering.” Such periodic forgiveness, Graeber claims, “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 all agree to arrange things in a different way.” A profound statement with a profound impact, we are called to accept that our economic organization now is not the only economic organization possible. We are implored to view debt as it really is, as a social relation that is subject to destruction, manipulation, and creation in ways a US dollar or a Euro are entirely incapable of.
I would like to end by reminding ourselves that debt is not inherently bad–we use it every day in our social interactions–but without trust there is a need for violence, and too much violence will lead the system to crash down upon itself.
References
“Debt: The First 5000 Years.” Wikipedia, Wikimedia Foundation, 30 Jan. 2022, https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years.
Graeber, David. Debt: The First 5000 Years. Melville House, 2011.
Kay, Joseph. “Thoughts on David Graeber’s ‘Debt: the First 5,000 Years’.” The Anarchist Library, 3 Jan. 2012, https://theanarchistlibrary.org/library/joseph-kay-thoughts-on-david-graeber-s-debt-the-first-5-000-years.
