Yesterday I read an interesting and rather unusual article titled Debt: The first
. The author, David Graeber, has apparently expanded his thesis into a full-length book, as well.
I will attempt here to summarize the basic argument and add my own reflections, because I find it fascinating. The idea turns the conventional
assumption about the relationship between debt and money on its head.
First of all, the common-sense, conventional view is that "money comes first" and debt is a kind of secondary development, which occurs when one
party owes money to another. Graeber's theory, however, reverses this understanding. To grasp this, we have to look very far back in history.
Before there was actual money, people related to goods and services in a loose sense of doing favors for one another and helping each other survive in
the earliest tribal proto-societies. If somebody saved your life from a sabre-tooth tiger, for example, you would probably feel a natural sense of
debt to the person, and would help them out in some way later. All early hunter-gatherer societies depended on such reciprocity. So-called "big men"
or tribal chieftains would show their wealth and power by holding massive feasts where they would give away food and other forms of wealth. This in
turn would motivate other strongmen to similarly reciprocate or compete in generosity. Thus, we can see that a certain type of moneyless reciprocity
of favors is at the root of human material relationships. This reciprocity does, indeed, resemble "debt" (in the sense of natural compassion and
obligations) more than it does "money" or "trade." Thus, it can be said that debt (in its most primal form) came before money or the concept of
According to Graeber, money entered the picture when different societies established more complex relationships both with each other and within
themselves. In such cases, treasures, precious metals, jewels, and other rare commodities served to cement relationships between different tribes and
settlements, as well as between strangers in growing settled societies (which became too large for everybody to know each other personally and do each
other natural favors).
Another seminal turning point in the creation of money was the development of warfare, slavery, and advanced governments. In war, if a man is taken
prisoner, the victor exercises an absolute power over the prisoner's life or death. He can kill the prisoner, torture him, or make him a slave. When
this happens, whatever forms of debt or favor the prisoner may happen to owe to other individuals are erased, and the prisoner enters a state of
ABSOLUTE DEBT to his conqueror. However, when such prisoners were sold or traded as slaves, a kind of economic paradox entered the picture. In such
situations, ABSOLUTE DEBT was quantified in the form of a commodity (such as gold or silver ingots or coinage). This paradox strengthened the role of
precious metals and money, giving these materials a power that was both absolute and relative...elusive yet indispensable.
The author goes on to note that dependence on coinage and money tended to flourish in times of chaos, warfare, or strife, when conventional
relationships of trust and natural credit break down. In the article linked to above, he analyzied the past 5,000 years in terms of an oscilating
cycle of reliance on debt versus reliance on currency or precious metals. When there is relative peace, there is more trust, and hence willingness to
extend favors and credit of various types. When societies break down or enter periods of crisis, such trust evaporates and people typically demand
more concrete forms of wealth: Gold, silver, jewels, treasure, booty, paper money, land and titles, etc.
To me, the most interesting thing about this theory is the way it reverses common assumptions about the roles of debt and money. Debt comes first,
wealth comers second -- a very counterintuitive idea, yet one that makes sense if you think about it carefully. Debt under the theory is associated
with peace and prosperity, while demand for hard assets is seen as a replacement for debt that must be resorted to in harder times. We can see this in
our own era, as a long period of relative peace and abundance is giving way to more global turbulence and instability. In this climate, it would make
sense to expect a shift away from a debt-based system (which is a large part of the unerpinnings of modern hypercapitalism) and towards a system
demanding more immediate claims on commodities and tangible money/precious items.
Whether or not you agree with Graeber's thesis completely, I think it makes for compelling food for thought. In times of change, it is very important
to examine basic assumptions. However, in times of change, people are often too panicked or busy to do this. I think this is an excellent opportunity
to mull over the philosophical relationship between debt and tangible goods, and to examine what got us into this mess and, perhaps, to find ways out