To come to a better understanding of debt and the role it plays on our lives individually, socially, and on a global level we are going to need some help. While at one time the function of a particular logic of indebtedness might have been fully apparent to those who suffered as a result of it, we can’t seem to get a collective grip on debt at present time. A purely economic formulation of how debt functions risks freezing time and giving us only a small slice of the effects that debt takes on people. Economic theories tend to ignore the history of money as it was used in diverse societies and opt for a static, state-of-nature (or similarly ahistorical) account of money, credit, and debt.
To speak or write of a single thing called debt means that there is a common thread extended through most human societies that can be isolated apart from other aspects of a society, though its impact will be transfigured and interpreted in a spectacularly wide range ways depending on geography, cultural heritage, and everything that makes cultures unique. Extracting this thing (which is more properly a logic doing work on its own) called debt from its context is necessary for theorizing it, but this does not mean that one can theorize in the obscurity of a few models, graphs, and esoteric phrases meant to be understood by a select few and mediated by them to the greater public. Economic theory has moved towards specialization and has enormous influence on the actions of representatives taken (supposedly) on behalf of whole societies, but could the discipline of money, markets, trade, labor, and production have really forgotten the most basic element of living in a social arrangement?
There are more prescient economists who are sensitive to a greater array of history than the European story since the Enlightenment era thinkers began musing on human nature and political economy in books printed by a press for wide distribution. More historical information is required though when an entire discipline is rife with political clout, and an anthropologist with an eye towards what is wrong with economics can supply this research. David Graeber brings together an extremely diverse selection of ethnographic research into one book meant to critically assess our knowledge of money – what it is and does to people. He posits many working hypotheses of his own beyond the critical function of dispelling mainstream arguments and even writes a chapter titled: ’A Brief Treatise on the Moral Grounds of Economic Relations’, which I will eventually go over. The book is a kind of grand narrative of the humanistic kind that takes a huge supply of historical records and seeks a link that will bind humans in common. The notion of a “baseline communism” is one that has stuck in my memory as the crux of his ethical position. Morality and money, the effects that the later has on shaping discourse on the former throughout the course of history, are detailed very well, but the authors own morality must be remembered in the stack of historical evidence that Graeber has compiled for us. Lest we allow the mistake of obscurity that befalls economists wearing blinders in regards to the great variety in history, we must not let Graeber’s moral sentiments or, perhaps, ideology* obscure our understanding of debt.
Graeber is quite the crafty storyteller, and ’Debt’ is real page turner. His stated goal is neither to give a purely objective account of debt in human societies nor tell an entertaining story, but he does weave high theorizing in with anecdotes, folk tales, verified documents and artifacts. The first chapter is called ’On the Experience of Moral Confusion’ and muses on how one could justify horrendous macro-economic policies that do severe damage to people under the rubric of debt repayment. It is a sincere and far reaching question to ask: Why do people insist that debtors must repay their debts to creditors as a moral imperative, no matter the physical suffering?
“If one looks at the history of debt, then, what one discovers first of all is profound moral confusion. It is most obvious manifestation is that most everywhere, one finds that the majority of human beings hold simultaneously that (1) paying back money one has borrowed is a simple matter of morality, and (2) anyone in the habit of lending money is evil.” (p.8)
Before getting into the chapters read and discussed by the Politics of Debt group, it is important to note that two separate works are in operation in this book and perhaps deliberately: 1) the historical work of discovering old social customs, recording dates as precisely as possible, supplying evidence to make a case about an actual occurrence, etc. and 2) a moral appeal to humanity that values one action/reaction to another across every human. The diversity in human culture and the range of diverging values they take on in response to ethical dilemmas is on full display (perhaps even better than it has ever been presented to me) but that universal humanist morality can creep into even tightly evidence-based arguments unawares – especially in the hands of a masterful storyteller.
So I will proceed with caution, keeping a close eye on the moral confusion that might arise from reading such a sweeping history itself; on the other hand, an oversimplified clarity could be misleading. The trick is in absorbing the insights that a politically active anthropologist can provide, while keeping the humanist morality separate.
The first few chapters of the book are dedicated to setting the scene with the received schools of economic theory and then demonstrating how easily their axioms and starting assumptions become flatly wrong. The myth of barter assumes that all societies function like the one in which classical economic theory developed: dominated by exchange. Treated like a collection of individuals all alone in their rational decision making power making deals with other similarly isolated individuals, classical economics extends its own social context into those other societies not yet “fully developed”. Economics needed a myth to show why the discipline itself is necessary for making business more efficient and resources better allocated throughout society. The myth that money emerged to simplify transactions already taking place but without the efficiency of money posits a negative of the ideal that economics strives for, equilibrium and efficiency, but does not remove the individualism. The goal of the classical economist here is to understand the origins of “the economy” and in so doing the reason why money exists (supposedly to help facilitate trade). But these moneyless societies did not trade in the way assumed by the economics textbooks – the theory is “exporting” its own social norms into the “old ancient” societies under its study. It is a “classic” example of begging the question: many other cultures didn’t need money and didn’t trade like modern European cultures, from which economics as a field of study, did. Mainstream economists ignore the role of debt and loose agreements among neighbors in a common social setting, to say nothing of the variety in ways different cultures handled indebtedness.
The goal of economists’ adventures in creating fictional scenarios of other, primal peoples before their own time is to explain what money is and how it came to exist. Graeber demonstrates how a theory of money must account for debt:
“The difference between a debt and an obligation is that a debt can be precisely quantified. This requires money… money and debt appear on the scene at exactly the same time.” (p.21)
So debt is bound up with money in that both can be measured and subjected to cold calculation in Graeber’s theory. But debt can exist as a social relation without hard cash or coinage.
“We did not begin with barter, discover money, and then eventually develop credit systems. It happened precisely the other way around. What we now call virtual money came first. Coinage came much later, and their use spread unevenly, never completely replacing credit systems.” (p.40)
So is all money simply debt? Does the IOU credit system, whereby people loan to each other without necessarily establishing precise numerical rules for repayment, always underpin money? The idea of debt-free money will come up later on, but Graeber explicitly states that debts incurred within a society predate money. People have gotten along just fine without a substantial unit of measure to give each other for favors; but when that standard currency comes into play, it is as a form of debt. This is undoubtedly true in a fiat system, where money is created “out of thin air” and so a debt is charged from the bank or entity that put the cash into existence. Currencies pegged to a supply of some material like gold or silver are different: their value is tied to something tangible and not based on a promise. A debt on the other hand involves a transaction whose completion has not yet occurred. There is a time lapse in-between the moment a debt is declared and understood by both parties and when the debt is eliminated by repayment, assuming that all debts could in fact be payed off (they all can’t).
Graeber does think that money comes into being as a kind of debt: the preexisting debt is “monetized” or unitized into a universally recognized store of value. Money obviously involves exchanges and transactions between individuals as a condition for the possibility of the establishment of its value. Money is something exchanged on the spot, bringing the relationship to an equilibrium state and allowing both individuals to walk away. “A debt”, he says, “is just an exchange that has not been brought to a completion” (p.121). Money then becomes a way to resolve the situation of debt. So far so good.
But in beginning the “treatise” chapter he says: “To tell the history of debt, then, is also necessarily to reconstruct how the language of the marketplace has come to to pervade every aspect of human life – even to provide the terminology for the moral and religious voices ostensibly raised against it.” (p.89). We do not need to follow him along with the story of the history of debt in order to understand the logic of debt – this can be done much more quickly and without all of the anecdotes, jokes, and spiritual manifestations. Nor do we need to create new categories that explain the effects of the moral confusion that debt instills. But Graeber does: recurring themes in human societies are given to help us chart the complicated intertwining paths that debt sets us out on. A historical focus prevents the abuses of abstraction found in classical and neoclassical economics, but Graeber is going even farther. Three different forces are contrived and put to work in communities that switch between each other in terms of their role in guiding our behavior: Communism, Hierarchy, and Exchange. He writes that “Much as in the case of the great religions, the logic of the marketplace has insinuated itself even into the thinking of those who are most explicitly opposed to it. As a result, I am going to have to start over here, *to create a new theory pretty much from scratch.*” (p.90). (my emphasis) To find a conception of debt untainted by the market, a new theory is going to be devised. But Graeber is going for something very grand here in a pure conception of debt (i.e. one that cuts through the moral fiber that holds up all cultures and escapes the Capitalist terminology of our current era). We could very well say that indebtedness is simply an uncompleted exchange during which all sorts of strange and pernicious things can happen (usually involving money) but also a necessary component of society, but then we would only get the rule, the logic of debt and not all of those negative effects. Since he wants to correct and detect those misuses of the logic of debt and he has a wealth of data on so many different societies at his disposal, we get terms that will hold for the entirety of human history. This, however, opens him up to criticism for mixing copious amounts of research with a normative standard he perceives to be at the ground of each and every society under consideration.
Not that this vast store of information does not belong in an understanding of debt; it can indeed correct many false assumptions about how debt functions in society – as it does with the majority of modern economic thought. But the big risk is in mixing novel terminology with these details of societies and producing something new and creative with what sounds scientific, or totally evidence based. This is a much bigger issue that goes farther than Graeber: just how scientific is economics? anthropology? To the extent that they gather evidence, hold experiments, make predictions, and much more, science is at work. But we will not understand debt in this scientific way if economic relations require a moral ground, as the title of chapter five implies. The issue is whether debt as a logic can be amoral, and whether Graeber is infusing his history with a morality of his own. Strange things are indeed happening when debt is attempted to be comprehended in a logical fashion. Whether debt logic is extractible from its moral underpinnings, or whether morality follows debt in all cases.
So we are not given a statement of what debt is* until we are treated with a trinity of notions that imminently constitute society: Communism, Hierarchy, and Exchange. The categorization is helpful for conceptualizing debt and it gives us a way to frame separate cultures in a way that links them together in a web of debt. The utility of this trinity, its use-value if you will, for understanding debt is why I will follow Graeber’s story, but it must be remarked that it is precisely here that – in setting forth his own “moral grounds” for economics – that there is room for critique.
Communism is here not a revolutionary utopian or scientific program at the end of a progressivist vision of history, but the bedrock of human social relations. The minimal sense of “from each according to there abilities, to each according to their needs” is often repeated as the principal slogan of communism and the glue of society. I’m wary of this move: the phrase came about in the context of a Marxist revolutionary theory that posits history as a science and leading to a great evental, social whole. The reversal of Communism back into not the high theory (which incessantly demands revolutionary practice as an entrance fee to its discourse) from which it came but each and every society at its base just doesn’t smell right. Why the -ism? Graeber is attacking classical economics and its pursuing individualism (which binds people into contractual, one-to-one relationships with other individuals) very well, but I wonder if this appeal to baseline communism is merely the other side of the “coin”. It is hard for me to believe that a theory that came out of the same debates as the classical school, and is similarly triumphal in their progressive analysis of history could come to embody *all societies.
“In fact, “communism” is not some magical utopia, and neither does it have anything to do with ownership of the means of production. It is something that exists right now – that exists, to some degree, in any human society, although there has never been one in which *everything has been organized that way and it would be difficult to imagine how there would be…
But all social systems, even economic systems like capitalism, have always been built on top of a bedrock of actually-existing communism” (p.95)
It is this baseline communism that will be thwarted by the debt malfeasance of the violent and parasitic members of the commune hoarding cash. The creeping threats of exchange and hierarchy are what invade the commune, subsuming it their own separate logic. The three phenomena coexist in every society but not harmoniously, seeing as it is the functional and integrated form of communism that is the least responsible for intra-societal violence and slavery.
Exchange is responsible for the drift that pushes people away from each other and puts them in a dual state of equality and separation. When one is engaged in exchange, possession of things and commodities, competition, and gift giving can take place.
“In exchange, the objects being traded are seen as equivalent. Therefore, by implication, so are the people: at least, at the moment when gift is met with counter-gift, or money changes hands; when there is no further debt or obligation and each of the two parties is equally free to walk away.” (p.108)
When two people are isolated and yet on the same level (without one being higher or lower than the other) sharing takes on a different dimension (or dimensionality if you will) that allows a measuring of one by the other. So if that same level is to be occupied by both, an equalization must occur so that they do not fall into contestation. But this happens all of the time, and the art of gift giving is a way to politely exchange without breaking out into offensive battle. Exchange keeps people on the same playing field, resulting in entertaining games but also impersonal, commercial transactions where the parties can cancel out the relationship and forget the affair. The debts we have with each other are then a way to bring each other together while equal exchange implies separation.
Hierarchy is the outright rejection of equivalence. The vertical levels are well understood, the contests and games become lording over each other. Hierarchies are stabilized relationships where one is considered better than the other, higher and rightfully so. A justification of one’s status as greater and more revered are assumed: “The moment we recognize someone as a different *sort of person, above or below us, then the ordinary rules of reciprocity are set aside.” (p.111). Kings and royalty, aristocrats, the caste system – you get the picture. Interestingly enough though, Graeber asserts “that the logic of identity is, always and everywhere, entangled with the logic of hierarchy.” The custom and essence of a person, their social role and their inner most being, are a result of sedimentation into hierarchies: “…a certain action, repeated, becomes customary; as a result, it comes to define the actor’s essential nature.” So a persons nature is inextricably linked to their customary role as it has become crystallized into a universally acknowledged quality of that person by everyone else. Essentialism: gone. But what remains is a social core: baseline communism is a “quality” of all social arrangements and is indestructible.
Graeber has done a fine job of critiquing the self-promoting fantasies of (neo)classical economists and their reliance on exchange-based understandings of morality as equality, of Justice as reciprocity. Debt similarly falls into this camp of exchanging things between two parties who are on the same plane and must. By the time he finally gets around to asking “What, then, is debt?” On page 120, it is already firmly placed into the sphere of exchange and not a part of the logic of baseline communism or hierarchy.
“A debt, then, is just an exchange that has not been brought to a completion.
It follows that debt is strictly a creature of reciprocity and has little to do with other sorts of morality (communism, with its needs and abilities; hierarchy, with its customs and qualities). True, if we were really determined, we could argue (as some people do) that communism is a condition of permanent mutual indebtedness, or that hierarchy is constructed out of unplayable debts. But isn’t this just the same old story, starting from the assumption that all human interactions must be, by definition, forms of exchange, and then performing whatever mental somersaults are required to prove it?…
Debt is what happens in between: when two parties cannot yet walk away from each other, because they are not yet equal. But it is carried out in the shadow of eventual equality.” (p.121-122)
So debt is a relation between separate individuals who are equal in theory but not-yet. During this present, this not-yet, hierarchy solidifies.
Critiquing the reciprocal notion of Justice and the tendency to view society, the economy, and the marketplace as a place of equilibrium where things balance out is Graeber’s starting point, and he quickly shows (well, relative to the rest of the book) that it is unreliable as a ethical and economic tool. Given the enormous historical data and factual evidence he presents, it is hard to argue with him that human relations involve far more – including common decency and clear customary boundaries. But doesn’t communism take the privileged position in his triangle, on the bottom, maybe, but resting firmly on a secure ground of the baseline? Triangles need to be in perfect balance themselves if they are to rest one point on a surface, the slightest tilt will make one side fall to the ground and rest much more easily… This issue of origins in value and morality will come up when Nietzsche, Lazzarato, and Wortham come into play, and chapter four, Cruelty and Redemption, looks at On the Genealogy of Morals. The topic of origins is tricky.
Having dispelled equality and reciprocity as standards of economies and ethics, we still are in a study of debt; and in debt, we are in an exchange model that presuppose this one-to-one symmetrical relationship – at least in sometime, the not-yet. To further understand the logic and politics of debt, and without an possibly anthropocentric communism at its base, even more help will be required. Scanning through the internet, the best full critique of Graeber’s book I’ve seen so far is this one from Jacobin Magazine by Mike Beggs: Debt: The First 500 pages. Here is a taste of things to come from that article:
The mint can print any numbers on its bills and coins, but cannot decide what those numbers refer to. That is determined by countless price-setting decisions by mainly private firms, reacting strategically to the structure of costs and demand they face, in competition with other firms. Graeber interprets Aristotle as saying that all money is merely “a social convention,” like “worthless bronze coins that we agree to treat as if they were worth a certain amount.” Money is, of course, a social phenomenon. What else would it be? But to call its value a social convention seems to misrepresent the processes by which this value is established in an economy like ours – not by general agreement or political will, but as the outcome of countless interlocking strategies in a vast, decentralized, competitive system.
I will remain on the topic of values, ethics, and origins for a few more posts before the issue of money, monetary policy, and contemporary heterodox economics enters the stage. But just to conclude, and since this is the topic of the Politics of Debt class at the time, here is another pertinent quote from the Jacobin Magazine article:
“…unlike Graeber’s critique, not much of monetary theory itself rests on the historical origins of money. Economics deals with the operation of a system. It attempts to explain the system’s stability, how the parts function together, and why dysfunctions develop. The origins of the parts may say little about their present shape or roles within the system. Modern monetary economics has been concerned above all else with explaining the value of money, and the conditions of its stability or instability. This is a problem that concerns the role of money in organizing exchange via prices. The imaginary barter economy without money but somehow still with a highly developed division of labor is a counterfactual, a tool of abstraction, which in fact the textbooks are often careful not to describe as actual history.
As for arguments that money is essentially about debt, or essentially a creature of the state: this is to make the mistake of reducing something involved in a complicated set of relationships to one or two of its moments. Economics has generally met the challenges of credit and state theories of money not with fear or incomprehension, but with indifference: if credit or the state is the answer to the riddle of money, the wrong question may have been posed.”