“Debt – the First 5,000 Years,” by David Graeber, 2011
This magisterial work by a pro-Occupy professor from Goldsmiths University in the U.K. has gotten praise from, of all places, Bloomberg and the New York Review of Books. And that is odd for an anti-capitalist book that takes a hard-line against modern financial debt. Graeber sees communism as the basic human relationship between people, in much the same way that CLR James (see review, "Facing Reality, below) announced that socialism already existed everywhere among the western working classes in the 1950s. The book, however, promises more than it delivers.
Graeber’s contention is that debt – in various forms – has been in existence since the times of ‘primitive’ communism – among tribal societies, slave societies, mercantile societies, serfdom, early capitalism and now, modern monopoly finance capital. He makes the point that ‘debts’ are central to human society. The only issue is what kind of debt it truly is - social or private. This book is a work of economic anthropology that re-visits the cultural and economic history of society up to the present day, ‘re-imagined’ through the lens of debt – be it mystical, moral, social or monetary. Graeber approaches the debt issue on a world-scale, comparing cultures in China, India, Africa, Mesopotamia, the Americas and Europe. He focuses most on China, India and the Near East, and only later, on Europe.
Why should we care? Unlike ‘salt’ or steel, in the modern period, impersonal financial debt has become a central feature of the present structure of finance capitalism and its economic crisis. Graeber thinks the present U.S. treasury bill debt will never be repaid - it is instead functioning as a kind of imperial tribute to the U.S. government. He carefully delineates the issue of interest over time – including the successful use of bans on usury by Islamic markets and even early Christian ones. The complete collapse of laws against usury in the U.S. in 1980, allowing rates up to 120% on payday loans, marked a significant change in how this issue was handled. In essence, it made every U.S. bank a loan shark. Debt peonage continues to exist across the globe – even among U.S. college students who have forfeited many years of earnings to pay their loans – or homeowners that will never own their houses free and clear.
Graeber contends that debt is intimately connected to war and slavery. Slaves were one of the first forms of payment in tribal societies, along with cattle. In fact, the end of slavery marked a certain diminuation in the idea that everything is a commodity - although insurance companies still like to put a price on human life. Like Marx’s point about primitive accumulation, he locates the origin of impersonal markets in theft itself, usually during military conquest. He dismisses theological arguments by various religions that the debt we owe is to a ‘god,’ ‘nature,’ morality or some mystical entity. Real debts can only be between equals, or those within some approximation of legal equality.
Graeber takes aim at several modern free-market shibboleths. He divides the nature of markets between modern impersonal markets and intimate local markets, showing how early markets were really a function of social exchange, not profiteering against strangers. This point is a familiar one from pro-capitalist anarchists. He punctures Adam Smith’s myth of barter as existing prior to the development of money. Indeed, no anthropologist has yet located the barter system that Smith made up in his creation myth about money. He repeatedly hits the free-market libertarian fantasists who think gold and silver are not also ‘fiat’ money. Graeber says that money has never had any intrinsic value, even prior to the U.S. going off the gold standard in 1971. It has always been a social construct. Even a cow - one of the original measures of value - is worth more than gold. He spends a lot of time on the creation of money, showing how money originated out of debt, not barter. And how national governments adopted money for their own uses. The ‘market’ did not create money.
Graeber takes aim at the present legal definitions of property - which originated in Roman era law, then were transmitted through English law to U.S. codes. Rome was a society that supported slavery, and that 'logic' actually crept into its idea of property law.
Among many historical stories he tells is a significant one about the mining of gold and silver in Peru and Mexico by the conquistadors lead by Cortes. After slaughtering the Aztecs, millions of native peoples were used in the mining process. After dying in the mines, their dead bodies were left heaped around the mines like slag rock. While Cortes and his men never got free of debt – even though sitting on an ocean of gold and silver – most of these precious metals went to European bankers, and ultimately were sold to the Chinese so their governments could prop up their monetary system. Ordinary Europeans saw very few coins even at that time.
Graeber dates 1971 as the year that a new – and unknown - modern capitalist period started. When Nixon went off the gold standard that year it was an attempt to pay for the national debt of the Vietnam war. Graeber shows how war has been the chief driver of generalized debt since the beginnings in Sumerian Mesopotamia. The modern capitalist national debt was not created until the formation of the Bank of England in the 1600s, which itself reflected the King's war spending. Paper money, used in China and several other places, came into generalized use in England only after the intentional destruction of informal, local credit systems, part of what I consider the 'enclosure of the commons.' That grocer that used to let you run a tab? Now a distant memory. Trust and personal knowledge of people you knew was replaced by cold hard cash.
For a Marxist, Graeber’s most interesting point is about ‘free’ wage labor not being the universal standard after the development of modern capitalism. While wage labor certainly is the primary form labor took in most advanced countries - rural and urban debt peonage and other forms of pre-capitalist functioning continue to exist in mass forms under imperial capital to this day. Indian farmers are so in debt to usurers and banks for Monsanto seed and chemical fertilizers (which have destroyed the soil) that they commit suicide in consistent numbers. Many people are still tricked into working for free. Thievery and crime form the earnings of countless others. marginal peddlers working on credit are endemic to massive third-world cities. Virtual slavery still exists in sections of the world economy. As he puts it:
“We could no more have a universal world market than we could have a system in which everyone who wasn’t a capitalist was somehow able to become a respectable, regularly-paid wage laborer with access to adequate dental care. A world like that has never existed and never could exist.”
He follows that up by pointing out that the post WW2 Keynesian compromise between capital and labor has broken down – and will not return.
Solutions? After putting in a good word for the Sadrists in Iraq as perhaps having answers like their early Mesopotamian cousins, Graeber pulls up short. What popular movement will provide the answer? Graeber’s answer: “Who’s to say?” (!) He does call for a debt Jubilee, much like those under Hammurabi and others. And, interestingly enough, the ancient Mesopotamians seem to be to the left of the IMF, the World Bank and the U.S. political pygmies of both parties. The latter only take a haircut when the blood no longer runs from the stone. Who says history only goes forward?
Jubilees of this kind have been used in human society many times in order that the population not overthrow the rulers. Graeber consistently points to the pressure of the masses against debt during nearly all periods of history. However, a debt Jubilee still leaves the impersonal debt machine in place. While fulfilling its function of relieving the pressure of an angry population, and counting as a significant reform, it allows the machine to live, and the original communism of the human population to remain submerged.
And I bought it at Mayday Books!
January 1, 2012