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Re-Thinking Money: Is Real Wealth Currency? Debt? Or Community?

Our capital-based economy isn't working. David Graeber's <i>Debt: The First 5,000 Years</i> explains why, and points to what real wealth might look like.

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Graeber is loath to apply his thinking explicitly to current monetary debates, but here the connection is obvious. Advocates of “real money” are operating without a complete understanding of the nature and history of money. Money has always been a social agreement governed and legitimized to varying degrees by political authorities. It was true 4,000 years ago in Mesopotamia, and it is true today. As Graeber painstakingly establishes, the claims by some monetary critics that “unbacked” currency always leads quickly to economic chaos are simply not true. It is, if anything, more true of coinage.

This book presents a huge challenge to anyone who thinks that coins or metal-backed currency exemplify real money, and present money as a kind of departure from or degeneration of it. According to Graeber, it is coins, rather, that are a degeneration: a substitution for credit money when political turmoil and war destroyed the credit networks that flourished in more peaceful times. Credit and coins, he observes, bear one “spectacular distinction”: only the latter can be stolen. That is because coins (or paper money) are divorced from their origins, and therefore suitable to commerce among strangers. Aside from assurances of the coins' purity, no trust is necessary to conduct a transaction. Credit, on the other hand, has no value once removed from its social matrix.

Though Graeber doesn't discuss it, one might conclude from this that one way to rebuild the community trust that has been shattered through centuries of commerce among strangers might be to establish new, local networks of credit. Mutual credit currencies such as those designed by Michael Linton and Tom Greco serve this function; one might say that they reclaim the “credit commons” that was commodified through the banking system. Time banking might also be considered in this light.

Ultimately what is at stake is the Newtonian/Cartesian conception of money as a thing, rather than as a social construct, agreement, or set of relationships. Graeber ably and thoroughly debunks the commodity theory of money that holds sway in neo-classical economics, which says that money originated from early barter economies. This, as Graeber points out, is an imaginary history with no historical or anthropological evidence. Instead, it projects our own market-conditioned behavior onto primitive people, assuming that they, like we, were calculating maximizers of their own self-interest. A universe of competing, separate selves, interacting according to impersonal economic “forces”, is the economic analog of the Newtonian physics that was so spectacularly successfully up until the 20th century. It is obsolete today, as quantum mechanics reveals the dubiousness of the subject-object distinction. If even reality might be a construct, a relationship between observer and observed, certainly money might be the same. From this perspective, rantings about “fiat money” lose their ground. The question becomes instead, “By what social and political process do we arrive at the agreements that create money?” We also might very well ask, “What invisible agreements does our present money system embody?” and, “What power relationships do they encode?” Simply knowing that money is not an immutable thing but can be changed, indeed, by our collective “fiat” is tremendously empowering. Contrary to Margaret Thatcher, there is an alternative.

Noticeably absent from Debt is much discussion of solutions. Rather, he says, he hopes to “throw open perspectives, enlarge our sense of possibilities; to begin to ask what it would mean to start thinking on a breadth and with a grandeur appropriate to the times.” Nonetheless, I would have loved to see Graeber apply the historical lens of his book toward various topics in alternative economics: peer-to-peer finance, mutual credit currencies, time banking, Georgist economics, negative-interest currency, and so forth. He doubts that capitalism as we know it will last another generation, but rather than just await its demise, what vision of a more beautiful world shall we work to create?

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