Re-Thinking Money: Is Real Wealth Currency? Debt? Or Community?
For as long as there has been such a thing as money, morality and debt have been intimately intertwined. We see this today in discussions about the debt crisis. Do mortgage debtors, credit card debtors, and student loan borrowers have a moral obligation to pay back their debts? Is it unethical for debtor nations to default on their loans?
Most folks, thinking themselves as honorable people, feel a strong moral obligation to “make good” on their debts, to honor their debts, to follow through on what looks very much like a promise to repay. We even speak of “redeeming” a promise, hinting again at the moral dimensions of debt repayment. Yet, paradoxically, we also tend to look askance at lenders, at those who enrich themselves by lending money at interest to others. Few moneylenders enjoy positive portrayals in literature. Islam, Christianity, and Judaism have all gone so far as to prohibit lending money at interest. Neither the malingering debtor nor the creditor who hounds her have much claim to our moral approval.
This and many other paradoxes become transparent in David Graeber's recent book, Debt: The First 5000 Years. It is a magisterial and deeply scholarly history of how debt – and money – came to be what it is today, and how human relations evolved around it.
Debt: The First 5000 Years covers a vast sweep of history, anthropology, and political economy, arguing not so much for a single thesis as for a braid of complementary ideas. Among them are:
- That money originated as “social currencies” used to rearrange relationships among human beings (marriage, funerals, blood money, and other social functions), and was not used to buy and sell things. Indeed, this kind of money is to be found even in societies without a significant division of labor.
- That the first money used for commerce took the form of credit: tallies of transactions and loans denominated in a common unit of account and periodically settled by delivery of various commodities.
- That the conflation of these two different kinds of money led to debt peonage, slavery, the demotion of women's status, and other iniquities that one might expect to happen when human relationships are mediated by the same currency as commercial transactions.
- That much of the psychology and morality around money traces its origins to the violence and slavery that have been part of creditor-debtor relationships for thousands of years. War and slavery were crucial in creating the economy we know today, which should not be surprising, as our economic habits still encode the anxiety one might expect from such origins. As well, they perpetuate violence and, if not outright slavery, debt servitude to this day.
- That history has alternated between periods of credit money and coinage, with the latter corresponding to times of greater violence, social chaos, slavery, and the repression of women. So for example, the Middle Ages saw the virtual abolition of slavery and the flowering of complex credit relationships facilitating trade across the Indian Ocean and beyond. Coins were seldom used. Compared to the Axial Age that preceded it, it was a time of relative peace and prosperity, ending with the rise of Europe and the influx of vast amounts of silver from the New World. A new age of coinage began.
- That markets have never been “free” in the sense of being separate from government, but, to the contrary, were created by governments to facilitate their acquisition of various goods (especially for their armies). They have been intertwined ever since.
- That all major world religions grew in response to money, whether informed by the beliefs of people living in a money economy, or in reaction to its evils.
- That the origin of capitalism as we know it today is “the story of how an economy of credit was converted into an economy of interest.” Debt, he says, is the primary instrument of colonization whether internal or abroad – keeping in mind that behind the man with the ledger is a man with a gun. Moreover, the enforcement of debts is key to maintaining the political power relationships the prevail today.
- That the invasion of market relations into every sphere of life has always been accompanied by violence. War, debt, and the market are inextricably linked. Even today, our money system is based mainly on the monetization of government war debts. If there is one persistent theme to this book, it is that our association of debt repayment with morality is false; that, indeed, the debt relations that hold today are rooted in a history of violence; that debt and money itself are social creations and not unalterable facts of nature; that our understanding of human nature is deeply colored by the market-based, debt-based world we live in. The world could be different. We are right to want it to be different.
This view inevitably clashes with much of modern economics, particularly its air of inevitability and mathematical certainty. His critique, which is usually implicit (he writes more as an historian than a critic of economics) goes all the way to the bottom: what is “money,” anyway? Consider his treatment of what some critics call “fiat money.” Graeber always puts it in sarcastic quotations, understanding how that term carries so many assumptions about what money is that aren't true. For example, writing in the context of China's medieval paper currencies (used during a period “usually considered the most economically dynamic in Chinese history”), he points out that China's paper currency, like all so-called “fiat money,” was “not originally created by governments at all; they were simply ways of recognizing and expanding the use of credit instruments that emerged from everyday economic transactions.”