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Turns Out Debt is Primary to Money?

‘Debt: The First 5,000 Years’: Mankind’s millenialong obligation

Four years after the mortgage meltdown capsized the market economy, leaving millions of Americans stuck in unthinkable debt, the U.S. government gridlocked over how to bring the nation’s mounting debt under control, and Europe wrestling with how to deal with its various sovereign-debt crisis, it takes not an economist or a politician but an anthropologist to ask, “Just what do we mean by ‘debt,’ anyway?”

Money and Debt: The First 5,000 Years'“That’s the question David Graeber, a self-described anarchist and activist as well as academic (Yale notoriously declined to consider him for tenure in 2005, and he now teaches at the University of London), has set himself to answer in “Debt: The First 5,000 Years.” And the answers he comes up with will, it’s safe to say, set orthodox economic minds spinning.”  Debt, he argues convicingly, predates not only money but also the more primitive barter, saying that there’s “virtually no evidence” that ancient societies relied on barter in anything like the way our economics textbook assumes they did.”

Is debt is primary to money?

In “Debt: The First 5,000 Years,” anarchist, academic and author David Graeber writes about debt, and how humans have both benefitted from and been burdened by owing others for several millennia.

Review by Drew DeSilver |  The Seattle Times

Debt: The First 5,000 Years

Author:  David Graeber

Publisher: Melville House, 534 pp., $32

When you’re faced with a seemingly intractable problem, sometimes there’s nothing as useful as an outsider’s perspective. Someone who, not carrying all of your preconceived ideas about what’s right or possible, sees things you simply cannot.

And so, four years after the mortgage meltdown nearly sank the global economy, with millions of Americans mired in debt, the U.S. government gridlocked over how to bring the nation’s mounting debt under control and Europe wrestling with how to deal with sovereign-debt crises, it takes not an economist or a politician but an anthropologist to ask, “Just what do we mean by ‘debt,’ anyway?”

That’s the question David Graeber, a self-described anarchist and activist as well as academic (Yale notoriously declined to consider him for tenure in 2005, and he now teaches at the University of London), has set himself to answer in “Debt: The First 5,000 Years.” And the answers he comes up with will, it’s safe to say, set orthodox economic minds spinning.

Graeber starts by noting that the way we think of debt — as an obligation between people dischargeable with money — makes little sense outside of a market economy. And such markets, he demonstrates, are hardly universal among human societies: People for millennia have found other ways to distribute goods and perform services, from complex patron-client relationships to webs of reciprocity among extended kinship groups to competitive gift-giving.

And yet, he writes, debt existed long before money. Indeed, he cites many societies in which money, while a unit of account, was seldom used by ordinary people to buy ordinary things. Instead, debts were repaid by crops, military service, sexual favors or even human lives. Across societies, debt long has carried with it connotations of sin, guilt and shame.

Graeber is strongest when he notes the ways in which economic theory — such as, say, how money-based economies arose out of “primitive barter” — fly in the face of observed reality. In fact, he says, there’s virtually no evidence that ancient societies relied on barter in anything like the way our economics textbook assumes they did; the only times when barter was widespread were when existing money-based economies broke down.

So how did money come about? Graeber argues the great civilizations have alternated between systems of “virtual credit money,” which he says “tend to dominate in periods of relative social peace, or across networks of trust,” and systems based on precious metals, which are found “in periods characterized by widespread war and plunder.”

For much of human history, he writes, gold and silver “has served the same role as the contemporary drug dealer’s suitcase full of unmarked bills: an object without a history, valuable because one knows it will be accepted in exchange for other goods just about anywhere, no questions asked.”

One problem with this thesis, common to much anthropological writing, is that it’s too easy to cherry-pick examples from across cultures (especially long-dead ones) to make one’s point; a lay reader can never be sure just how much the author is stacking the deck.

Throughout the book, Graeber’s emphasis is on the notion of debt and how it’s changed across time and space; this is not the place to turn for specific prescriptions on federal budget policy.

But because he sees debt as, among other things, an instrument of control, I suspect he’d say the current angst about the national debt misses the larger point. Despite the dysfunctional bickering of the U.S. governing class, the dollar is still the world’s reserve currency.

That means other countries are more or less forced to buy and hold low-yielding Treasury debt to back up their own currencies. And that, Graeber, says, amounts to a modern form of imperial tribute, with the United States getting a “financial free ride” from the rest of the world.

The rise of China as a major U.S. creditor, though, changes the dynamic. China has a centuries-long history of “tribute trade” with other states — allowing unequal economic relationships in exchange for acknowledgment of Chinese paramountcy.

“There is every reason to believe,” Graeber writes, “that, from China’s point of view, this is the first stage of a very long process of reducing the United States to something like a traditional Chinese client state.”

Drew DeSilver is a business reporter

for The Seattle Times.

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