Ever wondered how the concept of debt has evolved over centuries and shaped our societal structures? How has it played a role in human economies, from the ancient Irish law codes to the practices of the Lele and Tiv people of Africa? What has been the impact of the horrific slave trade on our understanding of debt? This book will take you on a journey through the history of debt, debunking myths, and revealing the complexities of our economic systems. Dive in to discover how debt has shaped our world and continues to influence our lives.

Debt: The First 5,000 Years

In the early 2000s, David Graeber, the author, through a series of coincidences, found himself at a garden party at Westminster Abbey conversing with a young attorney who worked for a foundation that provided legal support for anti-poverty groups in London. 

During their conversation, they discussed the global justice movement and the International Monetary Fund (IMF). Graeber explained how the IMF acted as the world's debt enforcer, imposing harsh financial regulations on poor countries, leading to a collapse of their most basic support systems. 

However, the attorney argued that these countries had borrowed the money and therefore were obligated to pay back their debts, a sentiment that made Graeber realize the complexity of the conversation about debt. While Graeber could argue that these loans were often taken out by unelected dictators who spent the money on themselves rather than the country, the idea that debts have to be repaid was a deeply ingrained belief. 

The 2008 financial crisis sparked a brief public conversation about the nature of debt and credit institutions. However, the conversation was short-lived as the U.S. government chose to bail out the banks while leaving ordinary citizens to struggle.

Graeber explains the difference between an obligation and a debt. A debt is the obligation to pay a certain sum of money. However, when one looks a little closer, one discovers that these two elements are intimately linked. 

Graeber argues that our sense of morality and justice is reduced to the language of a business deal when we reduce moral obligations to debts. This has led to a moral confusion that seems to float around everything surrounding the topic of debt. This moral confusion is not new; it has existed since the earliest records from ancient Mesopotamia and finds its first philosophical expression in the Vedas. 

Graeber ends by stating that we are moving toward a restoration of something much like debtors' prisons. Meanwhile, the global conversation about debt halted abruptly, popular outrage against bailouts devolved into incoherence, and we seem to be tumbling inexorably toward the next great financial catastrophe. He believes that this moment is particularly important for reexamining the history of debt, as we stand on the brink of epochal changes.

Are We Obligated to Pay Debts Incurred by Dictators? A New Perspective on Global Debt and Justice

Money and debt are inseparable. The quantification of debt is possible because of money, and both appeared simultaneously in human history. The first written documents were Mesopotamian tablets recording credits and debts, with the value specified in grain and silver. This means the history of debt is essentially the history of money. However, mainstream economists tend to ignore the role of credit, focusing instead on the progression from barter to money.

The standard economic narrative suggests that barter, where goods and services are directly exchanged without money, was the precursor to our modern monetary system. 

However, anthropologists have challenged this narrative, arguing that barter is usually practiced between strangers or enemies, and that most transactions within a community take place without the use of currency.

Economists often imagine a society without money to illustrate the benefits of a medium of exchange. Yet, the reality is more complex. In small, intimate communities, the need for direct exchange disappears as people keep track of who owes what to whom. This system of credit, where debts can be paid in various forms, actually predates the invention of coinage.

The conventional story of money's origins has been thoroughly debunked. We did not begin with barter, then discover money, and finally develop credit systems. The truth is the exact opposite. Virtual money came first, followed by coins, and barter is mostly what people do when they have no access to currency. Yet, this revised history of money has largely been ignored by economists. Instead, they continue to peddle the myth of barter, despite the lack of historical evidence to support their claims.

Debunking Myths: The True Origin and Evolution of Money and Debt

Graeber explores the concept of "Primordial Debts" and how they impact our view of economics. The idea is that from the moment we are born, we owe a debt to the gods, the saints, our ancestors, and to other humans. This perspective challenges the commonly accepted myth of barter, which suggests that money and economics evolved from a system of direct trade. 

Instead, Graeber argues that this myth is perpetuated because it supports the foundation of economics as a science, neatly fitting into the narrative of self-interest guiding the invisible hand of the market. Economists have long disregarded elements of Adam Smith's "The Wealth of Nations," so why not challenge the notion of barter as well?

In contrast to the myth of barter, Graeber presents the "Credit Theory of money" which insists that money is not a commodity but an accounting tool. The theory suggests that money is a promise to repay something of the same value as an ounce of gold. But that's all that money ever is. It's not a thing at all. It's an abstract unit of measurement.

Graeber also criticizes the theory that money is unimportant and economies are just vast barter systems. He points out that history shows that without money, such vast barter systems do not occur. Even when economies "revert to barter," as Europe was said to do in the Middle Ages, they don't actually abandon the use of money. They just abandon the use of cash.

This leads to the discussion of "Primordial Debt Theory" which suggests that we have an infinite debt to society, nature, and the cosmos. The concept of society is deceptive because we assume the world is organized into a series of compact, modular units called "societies," and that all people know which one they're in. Historically, this is very rarely the case.

In the end, Graeber criticizes the idea that the state must be the guardian of the debt we owe to society. This leads to a dichotomy between the logic of the market, where we like to imagine we all start out as individuals who don't owe each other anything, and the logic of the state, where we all begin with a debt we can never truly pay. He argues that this is a false dichotomy, as states created markets and markets require states. Neither could continue without the other.

Is the Barter System a Myth and Do We All Owe a Primordial Debt?

Money is a complex concept that has been a subject of debate among those who perceive it as a commodity and others who view it as an IOU. Keith Hart, a renowned anthropologist, argues that money is both. It acts as a symbol of political authority and a thing of value that can be exchanged for other things. 

The Roman Empire, for instance, used silver coins stamped with the image of Tiberius, which circulated at a value higher than the silver's worth because the government accepted them at face value. 

In many societies, anything could function as money, as long as everyone knew someone was willing to accept it to cancel out a debt. This was evident in 19th-century Thailand, where small change consisted of porcelain issued by local casinos. If a casino went out of business, its owners would announce that anyone holding such chips had a few days to redeem them. 

The concept of debt is also intertwined with moral, religious, and social narratives. Nietzsche suggested that the feeling of personal obligation originated from the earliest forms of human relationships, like seller and buyer. This notion of debt seeped into religious beliefs, such as Christianity, where the act of redemption is framed in the language of a financial transaction. 

However, the premise that all human interactions are forms of exchange is challenged by the existence of diverse moral principles in any human society. These principles include communism (from each according to their abilities, to each according to their needs), hierarchy (relations between superiors and inferiors), and exchange (implying formal equality). These principles often coexist and interact, creating a complex web of social and economic relations. 

The concept of debt fits into this framework as an exchange that has not been completed. It arises when two people who are potential equals are not in a state of equality, but there is a way to restore this equality. This understanding of debt reveals its complexity and its deep entanglement with social, moral, and economic aspects of human life.

Decoding Money: A Journey through its Complex Entanglement with Debt, Morality, and Society

In traditional economic history, much of the complexity of human life gets simplified into mere exchanges, often sidelining the day-to-day existence of women and most non-adult males. This sanitized view misses the gritty reality of deals, as seen in the case of Neil Bush admitting to extramarital encounters during business trips, highlighting the mix of sex, drugs, music, and potential violence in major transactions.

Economists' view that economic life starts with innocent barter is utopian and overlooks the darker aspects of history, such as the use of female slaves as currency in ancient Ireland. These "bondmaids" were so integral that they functioned as money. 

Traditionally, many societies used "social currencies" like Iroquois wampum or Solomon Island feather money not for trade but to manage human relationships—arranging marriages, resolving feuds, or negotiating treaties. These currencies marked a different understanding of economies, where the focus was on human relations rather than wealth accumulation.

Philippe Rospabe's theory suggests that "primitive money" was a way to acknowledge debts that couldn't be fully repaid, like the gift of a bride. This acknowledgment was a way of recognizing the invaluable nature of human life and relationships.

In societies like the Tiv of Central Nigeria, marriage often involved an exchange of sisters, reflecting the idea that only a woman could repay the debt of another woman's life. This complex system of exchanges extended to other aspects of life, where brass rods, used as currency, couldn't fully settle the debt for a life saved or lost. Instead, these exchanges acknowledged a debt too significant to be fully paid.

The Lele people of the Belgian Congo turned the principle of blood debts into an organizing societal principle. Here, human lives, particularly young women's lives, were traded as pawns to settle various debts, reflecting how deeply these exchanges were embedded in social structures. This system allowed men to accumulate pawns to settle future debts, intertwining human lives with economic obligations.

Similarly, the Tiv managed their economy through spheres of exchange involving ordinary goods, prestigious items, and rights in women. This system was haunted by the belief in "flesh-debts," where the most powerful men were suspected of cannibalism to augment their powers, reflecting a deep fear of the potential for human economies to turn destructive.

The African slave trade exemplifies how commercial economies corrupt human economies. Slavery stripped individuals of their identity, reducing them to mere bodies for sale. This process was facilitated through debt bondage and pawnship, where people became collateral for debts they often couldn't pay, leading to their enslavement.

This highlights the stark contrast between human economies, which value human life and relationships, and commercial economies, which often reduce people to commodities. The transformation of social currencies into tools for enslavement underscores the violence inherent in the process, showing how historical practices continue to influence modern economic structures.

Did Human Economies Once Value Relationships Over Wealth, and How Did They Turn Destructive?

The intertwining of violence, honor, and debt shapes our understanding of civilization. For instance, in exploring the African slave trade, we see how raw brutality can swiftly transform human economies. It's a stark reminder that violence often underpins significant social changes.

Take the story of Olaudah Equiano, a man who epitomizes the paradoxes of honor and slavery. Kidnapped at eleven from the Kingdom of Benin, Equiano's life was a tumultuous journey through the horrors of the Middle Passage, bondage in Virginia, and eventual freedom. Despite his suffering, he initially accepted slavery as a social norm. It was only after converting to Methodism that he became a vocal abolitionist, leveraging his honor and eloquence to champion the end of the British slave trade.

Equiano's struggle to reclaim his honor, which had been stripped away by slavery, unveils a critical insight: honor is inherently tied to societal perception. For a slave to regain honor, they must navigate the very systems that degraded them. This tragic necessity highlights a profound violence intrinsic to slavery — the need to adhere to the oppressor’s rules to restore one’s dignity.

In early medieval Ireland, honor was meticulously quantified. Every free person had an "honor price," a compensation owed for insults to their dignity. The highest honor price, often measured in cumals (slave girls), underscores the paradox of using degraded beings to measure a nobleman’s honor. This system reveals that honor and degradation are inextricably linked.

In ancient Greece, the rise of markets brought a crisis in the concept of honor. Money, both a measure of honor and a tool of degradation, led to a moral conundrum. The Greek aristocrats scorned the market’s vulgarity yet needed money for their pursuits, illustrating a broader societal tension between honor and economic necessity.

The Roman conception of property and freedom further complicates our understanding. Property, defined as absolute power over a thing, originated from the master-slave relationship. Roman law, which treated slaves as both people and things, laid the foundation for our modern notions of ownership and freedom. This legacy persists in our legal and social systems, where freedom often means power over oneself and others.

In essence, our civilization is built on a complex web of relationships defined by honor, debt, and violence. From the meticulous honor prices of medieval Ireland to the brutal realities of Roman slavery, these elements have shaped our moral and legal frameworks. Understanding this history challenges us to rethink the foundations of our societal values and the true meaning of freedom.

Unraveling the Paradoxes of Honor, Debt, and Violence: From African Slave Trade to Ancient Societies

Slavery, a grim relic of human history, has been abolished multiple times, often despite prevailing political and intellectual attitudes. For instance, following the fall of the Roman Empire, Europe saw the disappearance of slavery, a feat not wholly attributed to Christianity, which at times defended the institution. Yet, popular detestation of slavery endured, compelling European merchants to source slaves from Africa for plantations in the New World when reviving the trade centuries later.

Similarly, in the Axial Age (800 BC - 600 AD), a transformative period marked by the simultaneous rise of philosophical thought and coinage in regions such as China, India, and Greece, we perceive the emergence of new economic dynamics. Coinage, invented independently in various regions, facilitated everyday transactions by simplifying the exchange processes amidst war-driven economies where precious metals were looted and circulated widely.

In Mesopotamia, sophisticated credit systems flourished, with clay tablets recording debts, effectively functioning as early promissory notes. Conversely, Egypt, with its centralized state control, eschewed interest-bearing loans for much of its history, only witnessing debt crises and slavery towards its later periods.

China's early states, less bureaucratic than their Western counterparts, relied on various currencies including cowrie shells and bronze imitations, while large-scale credit instruments predated writing. Although the origins of interest-bearing loans in China remain obscure, the legend of ancient emperors coining money to alleviate disaster-induced debts hints at an early recognition of monetary systems' social impacts.

In India, the collapse of the Indus Valley Civilization led to a resurgence of urban life in the Ganges Valley, where professional armies and coinage emerged. States like Magadha harnessed mining and military might, while philosophical movements like Buddhism and Jainism, patronized by rulers like Asoka, advocated non-violence and ethical living, marking a shift from aggressive expansion to spiritual governance.

The Axial Age also saw the rise of materialist philosophies, driven by the widespread use of coinage which simplified human interactions to mere transactions, fostering a view of life as calculative and profit-driven. This period of intense intellectual activity questioned human existence, the nature of the cosmos, and ethics, laying the foundation for modern philosophical and religious thought.

Ultimately, the cycles of history reveal a pattern where periods of credit dominance alternate with bullion-centric eras, often influenced by the prevalence of war and social upheaval. Understanding these cycles helps us recognize the historical opportunities and challenges we face today, providing insights into the potential for meaningful societal change.

Could Understanding Credit and Bullion Cycles in History Shape Our Future?

In the medieval period, religious institutions began to merge with commodity markets, resulting in significant changes in economic life. 

Religious authorities started to regulate economic life and control predatory lending. This was a period of a return to virtual credit money. However, the Middle Ages are often thought of as a time of superstition, intolerance, and oppression. This is a skewed perception as, for most of the Earth's inhabitants, the Middle Ages were a significant improvement over the terrors of the Axial Age.

In Medieval India, kingdoms rose and fell, and local Brahmins began reshaping society along hierarchical principles. They took control of law administration and established an overarching hierarchical system where everyone knew their place. This system, however, was fraught with problems relating to debt and hierarchy.

In China, empires collapsed, coins disappeared, and economic life fell increasingly under the regulation of religious authorities. The early Middle Ages saw a dramatic decline of cities and a shift towards rural society. Still, a widespread movement to control predatory lending resulted in a return to various forms of virtual credit money.

In the Near West, the Islamic world saw a significant shift in class alliances. The urban civilizations of the Middle East were dominated by an alliance between the merchants and the common folk, who opposed the ruling class. This led to a flourishing of markets, but without the elements needed to create the large merchant banks and industrial firms that would later become the hallmark of modern capitalism.

In the Far West, the Middle Ages were marked by a general move towards abstraction. Real gold and silver ended up largely in religious establishments, and economic transactions were carried out primarily through credit. Debates about wealth and markets became debates about debt and morality, which in turn became debates about the nature of our place in the universe.

The Middle Ages were not an age of blind obedience to authority but rather an age of transcendence. The collapse of the ancient empires led to a religious transformation, a decline in slavery, and an increase in technological innovation. The economy became spiritualized, and the period saw the rise of virtual forms of money such as checks, tallies, and paper money. 

Religious Regulation and Economic Revolution: Unveiling the True Middle Ages

From 1450 to 1971, the world witnessed the rise of capitalist empires, driven by exploration, science, and the return to gold and silver. This period, known as the "Age of Exploration," marked a dramatic shift from medieval practices to modern capitalism. The influx of bullion from the Americas triggered a "price revolution" in Europe, leading to widespread inflation and challenging traditional societal structures.

Amid these changes, various forms of predatory warfare, usury, and debt peonage resurfaced, alongside the resurgence of chattel slavery. Despite the chaos, this era also saw remarkable scientific and philosophical advancements. The 1400s, a century of catastrophe for Europe with plagues and wars, paradoxically brought prosperity to many ordinary people due to labor shortages and rising wages.

During this time, China abandoned its paper money system, returning to silver, which became the currency for large transactions. This shift created a massive demand for silver, which Europe met through its colonies. The Spanish conquest of the Americas provided vast quantities of precious metals, fueling European economies and enabling the rise of new credit systems.

The transition from traditional credit systems to modern banking was tumultuous. In England, local credit systems were gradually replaced by more formal banking practices, leading to a dependence on national debts and central banks. This shift was accompanied by speculative bubbles and financial crises, highlighting the inherent instability of capitalist systems.

Despite the rise of wage labor and the ideal of a market-driven economy, capitalism has always been intertwined with coercive labor practices, including slavery, indentured servitude, and forced labor. This contradiction challenges the notion of capitalism as a system based solely on free labor and market freedom.

The story of capitalism is also one of apocalyptic fears and speculative frenzies. From the tulip mania in the Dutch Republic to the South Sea Bubble in England, financial speculation has periodically led to economic collapses. These events underscore the precarious nature of a system built on credit and constant growth.

In essence, the age of great capitalist empires was a time of profound transformation, marked by both incredible advancements and deep-seated inequalities. It set the stage for the modern world, with its complex interplay of economic forces, social changes, and the ever-present specter of financial instability.

Did the Age of Exploration Pave the Way for Modern Capitalism?

In 1971, Richard Nixon divorced the US dollar from the gold standard, steering the world into the current era of free-floating currencies. This move was motivated by the escalating costs of the Vietnam War, financed by deficit spending, which put enormous strain on US gold reserves. 

Despite the initial negative impacts of Nixon's decision, such as persistent inflation and wealth transfer from poorer to richer countries, the world entered a new phase of financial history. 

In modern times, money is no longer gold but is based on government debt. Central banks grew out of the marriage between warriors and financiers in the Renaissance era, a partnership that forms the foundation of financial capitalism. The global system of credit money, unpegged from gold, has introduced a new stage of financial history, one that is still not fully understood. 

The current economic system has become a vast bureaucratic apparatus for creating and maintaining hopelessness. It has taught us to imagine a world that is nothing more than a series of cold-blooded calculations, reducing human relationships to matters of debt and sin. 

However, David Graeber suggests that we are at the threshold of a new era. Just as the world transitioned from a bullion economy to virtual credit money at the end of the Middle Ages, we might be on the verge of another shift. The key to navigating this transition, he suggests, is to see ourselves as historical actors who can influence the course of world events. 

Graeber proposes a Biblical-style Jubilee, a relief of both international and consumer debt. This would not only alleviate much human suffering but would also serve as a reminder that money is not ineffable, that paying one's debts is not the essence of morality, and that our economic arrangements can be changed democratically. 

In the end, Graeber emphasizes that no one has the right to tell us what we truly owe.

From Gold to Government Debt: Navigating Tides of Financial History and the Potential for Era of Debt Relief

The concept of debt is deeply embedded in our society, influencing not only our economic systems but also shaping our moral, social, and legal frameworks. Debt has evolved from being associated with honor and maintaining social relationships in ancient societies to a symbol of degradation in the modern world, often leading to the commodification of human life. 

The advent of money and markets and their intersection with debt has led to ethical confusion and a shift in societal values. This transformation is particularly evident in the changing roles and statuses of women in societies. 

The history of money and debt is intertwined with the evolution of human thought and society. The invention of coinage and the rise of materialistic philosophies during the Axial Age gave birth to major world religions and philosophical movements that championed peace and rejected violence. This era marked a shift in human thinking, with a newfound emphasis on material wealth and profit as the driving force of human life. 

However, this was countered by intellectuals who sought a new foundation for ethics and morality, rejecting the idea that the pursuit of wealth was the ultimate end of human existence. 

The Middle Ages saw a shift back to virtual credit money and a spiritualization of the economy, with religious institutions merging with commodity markets and regulating economic life. 

The Age of Capitalist Empires was characterized by a return to gold and silver, leading to the rise of modern science, capitalism, humanism, and the nation-state. This era was marked by the birth of modern banking and paper money, born from war and debt, and a system that demanded constant growth, leading to worker exploitation and wealth creation for a select few.

In the modern era, money is based on government debt, with the global system of credit money unpegged from gold marking a new stage in financial history. This system enforces a constant cycle of borrowing and repayment, creating a sense of impending catastrophe and economic anxiety. 

We could be on the verge of another shift in our economic systems, and it's important to see ourselves as historical actors who can influence this transition. 

We need to remember that our economic arrangements can be changed democratically, and no one has the right to tell us what we truly owe. The key to navigating the future might lie in a reimagining and restructuring of our understanding of debt, potentially through a Biblical-style Jubilee or a relief of both international and consumer debt.

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