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Debt! How Human Beings Become Enslaved to Powerful Interests

David Graeber's "Debt: The First 5,000 Years" traces the history of debt in human relationships, exploring the complex power dynamics at play.

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The essence of debt is obligation — but not all obligation is debt. Rather, debt is a quantified obligation, discharged by the payment of money. As such, debt takes on a peculiarly impersonal character. One's debt obligation is isolated from the human consequences it causes. A foreclosing bank need not consider resulting homelessness.

Moreover, debts are intrinsically enforceable. Graeber describes debt as depending on violence — and there is no doubt that the history of debt is intertwined with the history of violence. This violence includes the exertions of the modern state — the state's ability to seize the debtor's goods, home, earnings, and person to force discharge of the debt obligation. Many of Graeber's stories depict the forms of control that creditors exercise on debtors, and it is worth noting that significant control obtains regardless of whether the debtor is in “default.”

The quantification and impersonality of debt contribute to its mobility. One’s debt may come to rest in a stranger’s hands, thus compounding its impersonality. Here Graeber sees the origin of true money — debt quantified and freely assigned. Graeber makes a stunning argument that state-issued money arises when the state purposely creates debt to facilitate social control. Money — that is, debt of the state — has imputed value as it may be used to discharge tax burdens — the people “owe” the state money. And in order to meet these obligations, they obtain state money by selling to markets. Soldiers furnished with money can use the money to buy provisions. And so the circle closes, according to Graeber. By exercising its money issuance and taxation functions, and by furnishing violence to enforce debts, the state creates the market.

Graeber draws on anthropological and historical records to describe the various routes to the formation of debt. Gifts can create debts, particularly in societies with strong norms of reciprocal giving. The gift recipient, in a society where giving is competitive and potentially hostile, may find himself in an arms race: to fail to match the gift is to accept subordination. Yet a gift can, in some societies, impose debt-like obligations on the giver. One who saves a life may find herself charged with the care of the survivor.

The important common feature here is that debt forms an ongoing social relationship. Only by extinguishing the debt may the relationship be severed. And so — in certain social contexts — great care is taken to avoid full satisfaction. One repays the borrowing of a dozen eggs with 11 or perhaps 13 eggs, but not the equivalent 12, as this would rupture the relationship involved. And therefore, some obligation — the direction is often less important — is deliberately maintained.

There are certain features of modern debt that Graeber misses. Our perverse tax system drives many to borrow against the value of their homes in order to generate tax deductions. And businesses have similar tax incentives to prefer borrowed capital to use of their own funds. Similarly, bankruptcy and family law considerations create unexpected motives for taking on debt.

And Graeber may miss the essence of the modern American debtor’s predicament. For the most part the faceless creditor has little or no desire to exert domain over the debtor’s person (Chase doesn’t really want us to scrub the floors) so long as the debtor continues to earn. The American is not so much chained to his creditor as he is chained to his job, for it is from his periodic wages he metes out his various tributes.

Yet Graeber's historical chapters explore this relationship between debt and servitude. At times, debt peonage is the ordinary result of the failure to discharge debt — indeed, pledging oneself (or one's spouse and children) is frequently the only security a borrower may offer. During hard times entire communities may be swept off their land and into the bonded service of their creditor. In the extreme, debt can lead to enslavement. In other situations, mass servitude can create sufficient social unrest to trigger a political reaction. The Jubilee was just such a response to such uprisings — restoring to debtors their freedom and their land.

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