Debt: The First 5000 Years

"Recall that bankruptcy is one piece in a larger mosaic. Bankruptcy is about debt, debt collection and debt forgiveness. Graeber touches on all these topics—he tries to paint them into a big and unified picture. His takeaway finding is that debt abides, that debt issues transcend mere bankruptcy and even transcend capitalism. Seen in this broader context, we come to understand how not merely is bankruptcy an aspect of debt, but debt is an aspect of sovereignty itself. Consider how many societies, throughout human history, consist of, one, a tightly knit core of oligarchs, and, two, a much larger mass of the faceless and voiceless. The oligarchs ‘own’ and the voiceless ‘owe.’ In an all too common version, those who owe just get further and further behind until they have two choices: suicide or slavery. You get a version of this world in the account of Sólōn, the pre-Classical Greek lawgiver said to have ended debt slavery in Athens. You get echoes of it in the Biblical discussion of debt relief through the institution of the jubilee. Graeber’s book seems to generate fierce partisanship among its critics and its defenders. They’re both right: it does have its shortcomings but he gets some big things right. I suspect a virtue but also a defect is that he was trained as an anthropologist in a field dominated by economists. He probably sets out to prove too much, and gets out of his depth. But I don’t know of any other author, ancient or modern, who tried to tackle debt as a whole."

"According to the story of economic progress told in text books, barter came first, then money was invented to make exchange more efficient, and that once you have money you can invent a system of credit. But Graeber argues it is the other way round. And in some ways Debt picks up where The Gift leaves off. Just as Mauss had seen, the first thing to happen is that people have moral debts to each other, remembering who has done what for whom. Further, Graeber argues that all of us actually behave like ‘communists’ the entire time. It’s completely ordinary to act altruistically and cooperatively, to the point where we barely notice it as economic activity. ‘Economic’ life begins with debts, in a social sense, leading us to depend on each other in an ethical sense, although of course moral duties can also be burdensome and even enslaving, as Nietzsche argued. The next step is to start writing down credits and debts, which is how lots of small-scale commerce works – a shopkeeper keeps a tab that gets settled up in some way, rather than everything being an exchange. Money, which is fundamentally a note of credit that can be passed on to strangers, allows for norms of exchange to break free of everyday reciprocity and the ‘communism’ of reciprocity. Finally, Graeber points out that barter (which economists like to assume is the starting point of market relations) is actually a rather freakish and unusual phenomenon which typically emerges after a monetary market economy has broken down for some reason, for instance due to war or some other crisis. “It’s completely ordinary to act altruistically and cooperatively, to the point where we barely notice it as economic activity” What’s stunning about the book is how it brings this anthropological perspective to bear on such an expansive history and geography, bringing the story right up to the present day, at the precise moment when debt has become a hugely political, mobilizing and destabilizing issue. Its central argument is simple and easy to grasp, and has been seized by activists and critics of the financial sector. Once you see money in this way, you can no longer view it as an ordinary commodity. The question is then: how did something originally grounded in the best aspects of human psychology (the propensity to care, give, cooperate) morph into the highly destructive industry, that is modern banking. Graeber shows that, at every stage in the formalization of money and industrialization of credit, there was some kind of alliance going on between the financial sector and the military state. The same question that concerned Karl Marx, of how (what are ultimately) social relations have taken on a ghostly, seemingly autonomous power over human beings, is answered in a fresh way, by showing how modern finance and modern state have developed in tandem to dictate the terms on which debts are accounted for. Nervous States: How Feeling Took Over the World is an attempt to understand why emotion has become such a decisive and influential force in politics right now, and why the credibility of dispassionate, objective and representational institutions — whether they be the BBC, ‘official statistics’, independent experts, or parliamentary representatives — have lost credibility. I take a sociological and historical approach to this question, using the history of ideas especially, in the hope that I can avoid the kind of ‘oh dear, bad things are destroying good things!’ response to populism, that a lot of books on the ‘death of liberalism’ seem to fall into. I want to understand what’s going on, and not simply denounce it. My central argument is that it’s not actually emotion that is the underlying problem we have to deal with right now — I’m not very sympathetic to the defence of ‘rationality’ that figures like Stephen Pinker et al. promote — but the speed with which information moves and changes. What’s happened — and it’s something that’s developed over decades and even centuries — is that an ideal of knowledge and power forged in the mid-17th century, aimed at promoting peace, has become gradually usurped by an alternative one that was forged in war. What figures like Hobbes meant by ‘reason’ was something that was slow, careful and deliberate, that could ultimately be the basis of a broad public consensus. By contrast, in the age of neoliberalism and the internet, everybody is focused on knowing (or, really, sensing) things as quickly as possible, so as to out-do one another. Think of high frequency traders or hedge funds which make money by beating the market by mili-seconds. The fact that our comfortable notions of truth and of government are in trouble is an effect of this valorisation of fast, real-time knowledge, which puts us all on high alert the entire time, as many smartphone users can also attest. “My central argument is that it’s not actually emotion that is the underlying problem we have to deal with right now…but the speed with which information moves and changes” There are a couple of ways in which this links back to the question of moral economy. Firstly, I think the sociological, moral-economic perspective I’ve always taken is quite good at explaining why orthodox economic perspectives ultimately fail politically. For example, liberal elites assumed that ‘Remain’ would would win the Brexit referendum because they believed the voters would generally act in a simple utilitarian fashion, to avoid economic harm. But if we understand the economy as a status game, governed by matters of recognition and reciprocity, as the authors I’ve mentioned above help us to do, it’s clear that people can suffer or feel resentment that doesn’t directly correlate to their objective economic welfare. I explore this point a bit in the book, as a way of understanding partly why the emotional aspect of the market has become so politically influential, and why the dispassionate, objective worldview fails. Secondly, the book does offer a cautious defence of certain forms of expertise of the sort that developed in the seventeenth century, but on a moral, pragmatic basis, that they can help establish certain conventions. Economic and social statistics, for example, aren’t simple objective truths of the sort the natural sciences offer. They provide a moral framework for designating what should be valued and how. I think that, ultimately, while the populist surge cannot be reversed, if it is to end in something more stable and peaceful, it will have to involve the reconstruction of some version of those seventeenth century institutions, such as statistics and technocratic government, which create generally accepted frameworks and rules and facts about society. But that does have to be viewed as a political and moral project, of re-establishing the criteria by which things are valued, measured and judged. The alternative, to which we’re currently headed, is to live in a society where every claim is met with suspicion or derision, and each political faction has its own separate form of truth, that it conceals from the others. As I argue in the book, I think neoliberalism has pointed in this direction for some time. But it is an explosive situation, that needs to be carefully understood and, where possible, defused. What can’t happen is for the ‘liberal elites’ to just dismiss it as ‘irrational’ or ‘stupid’, when there is clearly an internal logic to it, that – as I argue in the book – originates in forms of propaganda, espionage, encryption and code-breaking that are some of the core tools of modern war."