David Graeber on Debt
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Debt: the first 5000 years

David Graeber's 2011 book, Debt: the first 5000 years, has everybody talking, but it's actually very long and hard to read. This is a short and probably not entirely accurate summary of what David has to say.

1) It's not at all obvious that everyone has to pay their debts. Many debts are not paid: people and businesses go bankrupt, countries default on loans, your sister tells you to just forget it. Often there are good reasons for not paying debts, for example if a poor country's decision to pay its debt to a richer country would mean that thousands of children starved to death.

2) Money does not start out as a way to replace barter. Nobody begins to barter until long after the invention of money. Money starts out, not in trade, but as a way to compensate a clan or a family when you have killed or injured someone in that clan or family, to prevent blood feuds and wars. This early money is in the form of credit, not metal coins. Really, you're not paying the value of the person - how could a person's life have a specific value? You're giving gifts to show how sorry you are that the debt is impossible to fully repay.

3) The second use of money is still not in trade. It's to compensate a family for the loss of a woman, by paying a bride price to her family when you marry her. From there, people start to turn this idea around and use people to pay off their debts, by giving their dependents - women and children and anyone in their debt - to their creditors as slaves.

4) The sale of women leads to the division of women into two groups: those men can sell, and those men protect from being sold. "Respectable" women can't be sold; to protect their sexual chastity, they begin to be kept inside the house and veiled when they go out, and severely punished for any sort of display of their own sexuality. Poor women can be sold, raped, prostitute themselves, whatever.

The development of a market economy and capitalism in particular depends on government violence that enables people to collect large amounts of capital.

5) Early money centers on credit - Sumerians ran up accounts, charged each other interest, compounded interest, sent letters of credit. Two thousand years later they invented coins (about the same time all across Eurasia). They use it mainly to pay soldiers. People began to use mainly coins during the Roman Empire and Early Middle Ages. Then in the Middle Ages they went back to the use of credit again. People like cash when the world is unsettled, because you can take it with you and it doesn't depend on trust.

Big world religions - Buddhism, Christianity, Islam - arise about the same time as coinage. They're opposed to this new use of coinage, and try to prevent usury, debt-slavery, and also warfare.

With the influx of gold and silver from the conquest of the New World, you get again big empires, the return of chattel slavery.

Now we are slowly moving back into a period of credit money. Usually this is associated with empires breaking down, so you live in smaller states where you can rely on trust. Usually people then protect debtors against creditors, but instead we're doing it backwards and protecting creditors against debtors defaulting. If Aristotle saw the way Americans live, he would consider us all slaves. Instead of selling ourselves to work off our debt, we rent ourselves to work off our debt, but it's pretty much a fine distinction, a distinction with little meaning.

But it's silly to act as though paying off your debts is so important, when big banks and governments are just making up this money, creating money. Banks lend 17 times as much as they actually have in reserve. If you don't pay off your debts, it's not coming out of anybody else's pocket, or only a small percentage is coming out of somebody else's pocket. How can the economy grow without creating new money - speculating in money you imagine will exist in the future? This works okay as long as there really is growth, but when they're not it will really squeeze debtors, which is what's happening now. There can't be growth forever, because we live on a finite planet. So something will have to change.

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Professor Carr

Karen Eva Carr, PhD.
Assoc. Professor Emerita, History
Portland State University

Professor Carr holds a B.A. with high honors from Cornell University in classics and archaeology, and her M.A. and PhD. from the University of Michigan in Classical Art and Archaeology. She has excavated in Scotland, Cyprus, Greece, Israel, and Tunisia, and she has been teaching history to university students for a very long time.

Professor Carr's PSU page

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