Debt: The First 5,000 Years

Debt: The First 5,000 Years (Melville House Publishing, 2014) is a non-fiction book by anthropologist David Graeber. Graeber uses comparative examples from anthropology, archaeology, economics, history, and ethnography to upend the traditional history of debt told by economists. Graeber began to write the book in mid-2008, when the US and global economy faced a downturn. He hoped that this financial crisis would spur people to think about how to change our capitalist system so that it was more inclusive and accessible. This did not happen.

Graeber focuses on the last 5,000 years in part because he believes there has been a collapse in our collective imaginations. To him, it feels like technological advances and sociopolitical complexity have caused people to believe that there are no other alternatives to our current financial order. He hopes the diverse political, economic, and social arrangements described in Debt will spark new ideas for how we view debt, work, money, and freedom.

Summary

The first four chapters of Debt describe a dilemma: We do not really know how to think about debt. In fact, Graeber suggests in Chapter 1 that we have profound moral confusion when it comes to the concept of debt. At face value, repaying debt seems to be an economic concern, but we often categorize it in the realm of morality. Humans also tend to view all moneylenders as evil, even though we take on both roles as lender and borrower in our relations with others.

To understand how we got to this point, Graeber discusses the origins of money according to traditional economic theory. He demonstrates that we are trapped between two different ideas. The first is imagining society following the father of modern economics Adam Smith’s barter theory (Chapter 2). Smith argued that people bartered one thing for another for the sake of mutual convenience. For this reason, we are never fully indebted to anyone. The other idea follows that of Primordial Debt Theorists (Chapter 3). Here, people are fully indebted to the universe. This means that it is impossible to pay back any debt. Graeber rejects both barter theory and primordial debt theory (Chapter 4).

The archaeological evidence suggests that traditional economists have the origin of money backwards. Traditional economists believe that barter was the primary mode of exchange before the invention of money and markets, and credit comes much later. In fact, credit appears first. In Chapters 5-7, Graeber presents his model on what debt is and how it came to be. One of the main reasons that Graeber takes issue with traditional economic theory is because it reduces all human activity to exchange. Graeber then develops the concept of human economies in Chapter 6. The key element to human economies is the fact that human beings “are each a unique nexus of relations with others—therefore, that no one could ever be considered equivalent to anything or anyone else” (208). Money, in human economies, rearranges these relationships. Graeber wrestles with how violence has shaped our modern economy. Using ethnographic accounts and textual evidence, he demonstrates how life was much different prior to the introduction of markets.

Graeber next turns to the cyclical nature of virtual credit money and coinage in Eurasia over the last 5,000 years. Agrarian Empires (3500-800 BCEE) in Mesopotamia, Egypt, and China used virtual credit as their primary medium of exchange (Chapter 8). We also see the earliest evidence of interest-bearing loans, which coincides with the first declarations by kings to forgive public debt. During the Axial Age (800 BCE-600 CE), coins dominated (Chapter 9). A similar pattern emerges throughout Eurasia: the rise of trained professional armies, the creation of coined money to pay for these armies, government policies that encouraged the development of markets (again to fund the armies), the explosion of slavery, and the appearance of philosophers and religious thinkers trying to grapple with the increase in violence and its impacts on society. The Middle Ages (600 CE-1450 CE) turned back to virtual credit (Chapter 10). Religious leaders had a much larger role in the regulation of credit systems (violence also declined).

Within this section of Debt, Graeber highlights several interesting discoveries, including that the modern conceptions of freedom stems from ancient Roman slave law and that medieval Islam provides the earliest evidence for free markets. He provides both a macro- and micro-level view of the period from 3500 BCEE to 1450 CE to show the different ways that humans have organized themselves.

In the final two chapters, Graeber examines the last 500 years of history. The Age of Capitalist Empires (1450-1971 CE) sees the return to coinage, which was partly kicked off by China’s transition to metal currency (a story that Graeber suggests has been forgotten), and the institutionalization of the global slave trade. The moving of the US dollar off the gold standard in 1971 marks the end of the capitalist empires and the start of something yet to be revealed (Chapter 12). While the transition back to virtual credit money should result in greater peace and stability, this is not what we have seen so far. Graeber sharply critiques capitalism in this concluding section.