On “Debt” by David Graeber ***

 

The book is a history of debt that questions a lot of assumptions about fiscal systems generally. It starts off really interestingly and is full of interesting anecdotes throughout, but the deeper I got into the book, the more technical it felt and the less interesting it became. In the end, this really seemed more like a scholarly work than one for general audiences. Because I ended up having a harder and harder time following it as I made my way through it, my notes are likely to seem somewhat slipshod, but they attempt both to summarize some of the main points and some of he most interesting ones.

On a national level debt is both a way of keeping the third world poor and of rich nations gaining tribute from the rest of the world. (In that sense American debt is actually just a sign of its power.) Whether debtors are bad because they have failed to meet obligations or creditors are bad for taking advantage of others varies by the cultural moment and needs of those in power. Impersonalizing debt allows us to justify dreadful actions to others that would be impossible without. We would never demand someone let us prostitute their family, but if we make it such that not paying a debt, the person will face consequences such that they then turn to prostitution to avoid those consequences, we aren’t directly implicated in that turn to prostitution.

The first chapter explains how debt really is the foundation for money. Tendency is to see barter as preceding money, but Graeber denotes that money actually is just an IOU and as such predates any kind of barter. After all, among people who know each other, why would a person take a chicken he didn’t need in exchange for a stereo? We would just give the person the stereo as a gift and then one day when we needed a chicken, the other person would hand us a chicken. We would have credit in other words. Barter only enters in when you have communities who don’t know each other or when monetary systems collapse. If my dollar used to buy stereos but now I need a million dollars that tomorrow I will need 2 million such that dollars are essentially useless, I’m going to be inclined to take the chicken but again only if I need it or if I feel I can do something with that chicken and quick. It’s really not practical for me to wheel chickens around.

Debts can be bought and sold, transferred. But the issue would be that down the line, some folks won’t know the loaner or debt holder. This is where government enters. If the debt holder is the king, everyone knows the king. Now the king becomes the person issuing debt—i.e., money. As such government must have debt to enable money. Thus taxes—we owe government money/debt it then loans out.

Religion is often structured around ideas of debt: we owe our creator or the gods.

But debt is not always a medium of equal exchange. Society is actually centered around different formats and debt can be a way of maintaining social relations such that it is never expected to be paid back. Parents for example will never recoup what they put in to their children; if they demanded such, the relationship would essentially be at an end. Why should such a child continue to respect the parent? In a sense then all communities are communist in a way: we tend to share when we have and take when we need. If we are digging a hole together and one of us needs a tool and the other person has it, we ask and the person gives. The person doesn’t say, what’s in it for me? At a different level, though, communities also organize around exchange. Such communities do so only when people are at near status. If a rich man takes a poor to dinner, the poor man likely isn’t expected to return the favor. Two friends, however, would expect that. A poor man taking a rich man out would generally be seen as receiving a favor from the rich man for his time. So what to do when parties are at different levels? Exchange becomes formalized in some other way where debt is never fully paid, such that relationships continue. The mob boss offers “protection” and takes from me a share of my earnings.

In fact perhaps money is not rooted in debt as a system of exchange at all. Perhaps money is rooted in the concept of debt that can never be repaid: the bride price or, in the religious context, one’s own existence.

Here’s a fact I didn’t know: most Africans went into slavery not as war captives but as debtors. Graeber is interested in how we can come to accept such violence for debt. One can’t truly, for example, pay back someone for a murder. One life does not equal another. Each person is unique. But if we can depersonalize things, rip people from their contexts, then yes, actually we can make a person equal another—or a bag of gold. A slave is like a dead person; and as such, the dead have no rights (indeed, if one is enslaved via war, one would have been dead—and therefore can be owned by the savior).

Graber then turns to questions of honor as they relate to concepts of debt. And then next to women— and how they became possessions (such was not so in the earliest societies). Honor plays a curious role here. The bride price makes sense in a poor or rural society, where a woman is another worker for the family. In rich and urban societies you get the opposite: dowries. Now the family pays the groom to take the woman, the extra mouth to feed, off their hands. Veiling plays a role here as well. Men protect this assett they have acquired with the veil, as a matter of honor. Some early laws required veils for respectable women but also required that prostitutes not wear veils.

Slavery is a basis for society throughout much of history, but it has ceased to be the rule at some periods, like now. But in its place is wage slavery. Why? Perhaps religion but also perhaps having to do somehow with money. Graber doesn’t make clear the connection.

What he does note is that periods of credit are exchanged for periods of coinage: real metal used for money. The latter tends to be periods of warfare, where credit won’t do: you can’t pay transient soldiers with credit and you won’t sell to such soldiers who may never return if only on a promise that they’ll pay you back someday. We’ve entered a credit period with Nixon who took us off the gold standard.

So coinage arrives during a period of great war, when soldiering becomes professionalized rather than something done by regular folk when necessary. It replaces plunder. This period when armies roved and coinage first came to wide use, around 500 bc, is also when great philosophy came on the scene: Buddha, Confucius, and Pythagoras all came in this century and all from civilizations that started using coinage. What’s the connection? Debt enslavement in turn also falls away with soldiering as the spoils of war allow riches to be gained that way rather than from plebians. Now the plebians are soldiers. What emerges with the coin is markets. Markets mean a more materialist way of thinking, which in turn sparks new philosophies and thoughts on ethical practices.

Interesting fact: much of Adam Smith’s theory is drawn from medieval Muslim economics writing, which saw the open market as good and even created by god—however, to help people share rather than to be selfish. Because Muslims banned usury, the market was the only way to make money: take part ownership in someone’s business and reap profits. Christianity condemned usury also, but it saw markets as bad, the tool of nefarious profiteers.

In the Middle Ages coinage was taken in mostly by the church. There was a return to a credit system.

In the early days of capitalism, debt was viewed negatively, but almost everything ran on informal credit. Debt was personal. Rarely did people seek formal law about it; the law in turn was super severe—like the death penalty for not paying a bill was possible and certainly prison. Best not to do that to your neighbor. But as interest was added to debt and credit became depersonalized, buying on credit fell into disrepute, even as penalties became less severe. What’s more government itself took on debt by borrowing from its people to pay for things like wars, instead of people in debt to government because of taxes. That created something of a double standard, where debtors are bad but the government can take on debt at will and at great levels and no one cares.

Graeber then gets into questions about what capitalism even is and how long it’s been around. He gives special attention to slavery and how debt has been used to enslave people such that we aren’t really out of a slave economy: we have wage slaves.

The modern debt age begins with the floating of the dollar, the death of the gold standard. That made poor countries poorer (since they held dollars in lieu of gold) and created inflation. The floating of the dollar was used to pay for the Vietnam War, much as government debt is usually about funding armies. American debt has gone up at roughly the same rate as military spending. Meanwhile the dollar has become the world’s default currency. The dollar is essentially an IOU that goes down in value, or in other words tribute, since that dollar is used to pay for the military that props up its use.

In the end Graeber says that debt plays into the hands of the haves against the have nots, even when the haves owe money. (Think of how banks are bailed out, but people who default are made to pay or reap the consequences of bad credit scores.) His one proposal is to start over; forgive all debt, lest the world’s economy fail, as it surely at some point will.