[Updated 2024-01-20 14:05]
[Updated 2024-02-03 18:00]
"Debt - The First 5,000 Years"
is a 2011 book by
David Graeber, 832 pages, 226k words. I read the "Updated and Expanded Edition" of 2014.
Note, the Notes and Bibliography sections make up ~29% of the book - there was
enough interesting info there that I read all the notes.
This is a little odd. The picture of the cover currently shown on Kobo says
"With an Introduction by Thomas Piketty" and "Tenth Anniversary Edition". The
cover to my eBook says "Updated and Expanded Edition" and "International
Bestseller", and there is no Introduction by Thomas Piketty in my eBook??? I just bought this eBook, it looks like somehow I got the 2014 edition instead of the 2021 edition.
Graeber was an anthropologist. He was a professor at the London School of
Economics at the time of his sudden death in 2020 at age 59. He was also an
activist, a leader in the original Occupy Wall Street occupation.
The book has 12 chapters and an afterword.
This is a great book. I was reminded that in my entire academic career, I have
only taken 1 history course: US History, junior year of high school. There are
so many interesting and unexpected facts presented - if I had taken more
history courses, maybe some of these facts wouldn't have been so unexpected,
but maybe they would have. Some of it I found upsetting - I had to quit
reading for a few days in the middle, as its in-depth exploration of the many
forms of slavery that have existed just got to be too depressing.
I also found the book to be not too well organized. The 1st chapter is a
teaser, with anecdotes to draw the reader in. Then there are 2 chapters
picking bones with inaccuracies in economics textbooks that anthropologists
have been pointing out to economists for decades, to no avail. Then 4 chapters
developing his overall theory of debt. Then 5 chapters tracing his theory
through history - those are always fun.
The bone-picking could maybe have been integrated into the following chapters,
rather than presented front and center? The economists' misrepresentation has
apparently been a burr under the saddle of anthropologists for quite a while -
"it’s been a kind of pet peeve of anthropologists for more than a
century.". But, in the Afterword 2014, he says that he just saw a Bank of England
presentation which did not use "the myth of barter", and took some credit for
helping to finally bring economists up to speed.
At the start of each chapter section below, I give the number of pages, as per
the Kobo reader on my MacBook Air, for size comparison purposes.
[Back to the top]
Chapter 1, 88 pages, is titled "On the Experience of Moral Confusion".
It contains several riffs on the overall meaning of debt. It opens with an
anecdote, when Graeber was at a cocktail party and was educating a
anti-poverty group lawyer about the rapacious conduct of the IMF -
the world’s debt enforcers—“You might say, the high-finance equivalent of
the guys who come to break your legs.”
- over the decades. Greaber mentions wanting to get rid of the IMF and to
declare a third-world debt Jubilee [1 of my favorite words!]. The
lawyer then objects:
"But ...
they’d borrowed the money! Surely one has to pay one’s debts."
This leads Graeber to 1 of the main themes of this book.
The reason it [one has to pay one's debts]
is so powerful is that it’s not actually an economic statement: it’s a moral
statement.
...
If history shows anything, it is that there’s no better way to justify
relations founded on violence [my bold], to make such relations seem moral, than by reframing them in the language
of debt—above all, because it immediately makes it seem that it’s the victim
who’s doing something wrong. Mafiosi understand this. So do the commanders
of conquering armies. For thousands of years, violent men have been able to
tell their victims that those victims owe them something. If nothing else,
they “owe them their lives” (a telling phrase) because they haven’t been
killed.
Graeber presents examples of the kind of strong-arm behavior inflicted on debtor
nations:
-
Madagascar was invaded by the French in 1895. The French then started
building stuff, whether the population wanted it or not, and billed the
population for the stuff, plus the cost of their invasion! Independent since
1960, the current government is still paying off its debt to France.
-
Haiti - poor Haiti. Capitalism really does not like it when literal
human capital - slaves - insist they are human rather than capital.
After the successful slave revolt in 1804, the French billed the new
Haitian republic for their lost property - including the slaves
themselves - and for the cost of their (defeated) military expeditions
to suppress the slaves. "and all other nations, including the United States, agreed to impose
an embargo on the country until it was paid." Over 200 years later, poor Haiti is still mostly a continuous
disaster.
A different riff: the US national debt? Is it really something to worry about?
Graeber proposes that the foreign purchase of US Treasury Bills could actually
be considered tribute. If the US were to get rid of its military budget, which
equals that of the rest of the world combined, the national debt could be easily
retired. But, then who will be the world's policeman? No one else has anything
close to the 800 US military bases around the world. And, we all know that
police forces are at
all most some levels a form of protection racket. "Nice
country you got here. Too bad if something happened to it. Here, buy some of
these nice T-bills." Of course, the size of the US economy and the pre-January
6, 2021 stability of the US political system have also helped make US T-bills
the popular investment they are worldwide.
Here is an overview of the overall historical view Graeber will present:
For most of human history—at least, the history of states and empires—most
human beings have been told that they are debtors. ... For thousands of
years, the struggle between rich and poor has largely taken the form of
conflicts between creditors and debtors—of arguments about the rights and
wrongs of interest payments, debt peonage, amnesty, repossession,
restitution, the sequestering of sheep, the seizing of vineyards, and the
selling of debtors’ children into slavery. By the same token, for the last
five thousand years, with remarkable regularity, popular insurrections have
begun the same way: with the ritual destruction of the debt records—tablets,
papyri, ledgers, whatever form they might have taken in any particular time
and place. (After that, rebels usually go after the records of landholding
and tax assessments.) As the great classicist Moses Finley often liked to
say, in the ancient world, all revolutionary movements had a single program:
“Cancel the debts and redistribute the land.”
Our tendency to overlook this is all the more peculiar when you consider
how much of our contemporary moral and religious language originally
emerged directly from these very conflicts. Terms like “reckoning” or
“redemption” are only the most obvious, since they’re taken directly from
the language of ancient finance. In a larger sense, the same can be said
of “guilt,” “freedom,” “forgiveness,” and even “sin.” Arguments about who
really owes what to whom have played a central role in shaping our basic
vocabulary of right and wrong.
Where does the "
moral confusion" of the chapter title come in?
Its 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.
...
Looking over world literature, it is almost impossible to find a single
sympathetic representation of a moneylender—or anyway, a professional
moneylender, which means by definition one who charges interest. I’m not
sure there is another profession (executioners?) with such a consistently
bad image.
Here is an interesting fact of which I had no idea. More American
exceptionalism!
The United States was one of the last countries in the world to adopt a law
of bankruptcy: despite the fact that in 1787, the Constitution specifically
charged the new government with creating one, all attempts were rejected, or
quickly reversed, on “moral grounds” until 1898.
[Back to the top]
Chapter 2, 90 pages, is titled "The Myth of Barter". LOL, Graeber is
definitely no fan of Adam Smith, the father of Economics. Smith will be kicked
around more for other reasons later in the book. After pointing out that "the
myth of barter" seems to engrained in "common sense" around the world (an
anthropologist's argument), Graeber lays the responsibility for its place in
modern economics at the feet of Adam Smith.
Adam Smith set his story in aboriginal North America (others preferred
Africa or the Pacific). In Smith’s defense, at least it could be said that
in his time, reliable information on Native American economic systems was
unavailable in Scottish libraries. His successors have no excuse. By
mid-century, Lewis Henry Morgan’s descriptions of the Six Nations of the
Iroquois, among others, were widely published—and they made clear that the
main economic institution among the Iroquois nations were longhouses where
most goods were stockpiled and then allocated by women’s councils, and no
one ever traded arrowheads for slabs of meat. Economists simply ignored this
information. Stanley Jevons, for example, who in 1871 wrote what has come to
be considered the classic book on the origins of money, took his examples
straight from Smith, with Indians swapping venison for elk and beaver hides,
and made no use of actual descriptions of Indian life that made it clear
that Smith had simply made this up. Around that same time, missionaries,
adventurers, and colonial administrators were fanning out across the world,
many bringing copies of Smith’s book with them, expecting to find the land
of barter. None ever did.
Graeber does his anthropologist thing and describes several different ways that
varied cultures exchange goods, none of which is remotely like barter. So is
barter ever actually used?
What we now call virtual money came first. Coins came much later, and their
use spread only unevenly, never completely replacing credit systems. Barter,
in turn, appears to be largely a kind of accidental byproduct of the use of
coinage or paper money: historically, it has mainly been what people who are
used to cash transactions do when for one reason or another they have no
access to currency.
[Back to the top]
Chapter 3, 134 pages, is titled "Primordial Debts". This chapter seems
to be trying to address a kind of convoluted chicken & egg question: which
came first, debt, money, markets, or states?
Graeber contends that "Wealth of Nations", Adam Smith's foundation of the
fledgling "science" (or "discipline") [note scare quotes ;-P] of Economics is
totally based on "the myth of barter" - discredited in the prior chapter.
Interesting, I had not heard this next:
Smith’s famous invisible hand was, as he says in his
Theory of Moral Sentiments, the agent of Divine Providence. It was
literally the hand of God.
Well, most economists probably don't want a theistic element to their "science".
Smith posits:
- Helped by the invisible hand, markets naturally spring into being.
- Money only works if backed by precious metals.
Graeber counters:
- Money was a prerequisite for markets to exist.
- State policy and requlation is required for markets to work.
This leads us to a section titled "
State and Credit Theories of Money".
We are introduced to
Alfred Mitchell-Innes. He only published a couple of papers, but 1914's
"The Credit Theory of Money"
was very influential. I read it (14k words), it definitely informs much of the thinking of this book, and of
Modern Money Theory (MMT)
- that money is a unit of measurement, like the inch or the cc. How you choose
to record that measurement, whether in precious metals, tally sticks, or a cell
in a spreadsheet on a computer, is completely irrevelant. The paper also interestingly mentions his belief that the US was in error when it passed a law setting the minimum reserves banks are required to maintain - this is a reflection of the belief that money is precious metals, which he believes is completely false.
The obvious next question is: If money is a just a yardstick, what then
does it measure? The answer was simple: debt. A coin is, effectively, an
IOU.
In an extended example, we are intruduced to a guy named Henry, who gives an IOU
to Joshua in exchange for something. Joshua then gives the IOU to Sheila in
exchange, who gives it to Lola in exchange, etc. Henry's IOU has essentially
become currency. This might work in a small village with everybody trustworthy
and everybody writing IOUs, but it doesn't scale. [Note, Graeber doesn't make
arguments based on lack of scalability as often as I thought he should.]
All this would be much less of a problem, however, if Henry were, say,
Henry II, King of England, Duke of Normandy, Lord of Ireland, and Count of
Anjou.
So next up is "
the historian
G.F. Knapp, whose State Theory of Money first appeared in 1905." This book introduced
Chartalism
- interesting, "charta" is from the latin for token or ticket. Here's some
interesting history showing the abstract nature of money:
During the reign of the actual Henry II (1154–1189), just about everyone in
Western Europe was still keeping their accounts using the monetary system
established by Charlemagne some 350 years earlier—that is, using pounds,
shillings, and pence—despite the fact that some of these coins had never
existed (Charlemagne never actually struck a silver pound), none of
Charlemagne’s actual shillings and pence remained in circulation, and those
coins that did circulate tended to vary enormously in size, weight, purity,
and value. According to the Chartalists, this doesn’t really matter. What
matters is that there is a uniform system for measuring credits and debts,
and that this system remains stable over time. The case of Charlemagne’s
currency is particularly dramatic because his actual empire dissolved quite
quickly, but the monetary system he created continued to be used for keeping
accounts within his former territories for more than 800 years.
Graeber brings up "tally sticks", which I 1st learned about in
the MMT book. What a great analog technology! A strip of wood split down the middle. If the
halves fit together, it is a valid token, else not. I doubt that even today there
is a technology (maybe a 3d printer that printed in wood?) that could
counterfeit a tally stick. Tally sticks were still used in the UK into the 19th
century?!?!?
Tally sticks were quite explicitly IOUs: both parties to a transaction
would take a hazelwood twig, notch it to indicate the amount owed, and then
split it in half. The creditor would keep one half, called “the stock”
(hence the origin of the term “stock holder”) and the debtor kept the other,
called “the stub” (hence the origin of the term “ticket stub.”)
This next excerpt completely shows how indeed money === debt.
Recall here the little parable about Henry’s IOU. The reader might have
noticed one puzzling aspect of the equation: the IOU can operate as money
only as long as Henry never pays his debt. In fact this is precisely the
logic on which the Bank of England—the first successful modern central
bank—was originally founded. In 1694, a consortium of English bankers made a
loan of £1,200,000 to the king. In return they received a royal monopoly on
the issuance of banknotes. What this meant in practice was they had the
right to advance IOUs for a portion of the money the king now owed them to
any inhabitant of the kingdom willing to borrow from them, or willing to
deposit their own money in the bank—in effect, to circulate or “monetize”
the newly created royal debt. ... To this day, this loan has never been paid
back. It cannot be. If it ever were, the entire monetary system of Great
Britain would cease to exist.
Similarly, the Fed & the US Treasury were panicky when the Clinton
administration ran surpluses. The National Debt represents all the US currency
in circulation. No debt => no currency.
Notice there has been no mention of gold or silver in the above paragraphs?
There is some preliminary discussion of the origin of gold and silver specie.
Their raison d'etre: to pay armies, and to create markets where (foreign)
soldiers can spend their wages. Much more on this later.
Next there is a section titled "In Search of a Myth".
Anthropologists: The "myth of barter" is completely bogus.
Economists: Well, then what did come before money?
Anthropologists: As many different systems of exchanging goods as there were
societies.
Economists: Well, that doesn't help satisfy our Physics envy.
Anthropologists: Welcome to the real world!
This next is unbelieveable. Is this really true? LOL, reads like conspiracy
theory to me! Something I've known my entire life has a completely arcane
origin???
L. Frank Baum’s book The Wonderful Wizard of Oz, which appeared in
1900, is often held to be a parable for the Populist campaign of William
Jennings Bryan, who twice ran for president on the Free Silver
platform—vowing to replace the gold standard with a bimetallic system that
would allow the free creation of silver money alongside gold. As with the
Greenbackers, one of the main constituencies for the movement was debtors:
particularly, Midwestern farm families such as Dorothy’s, who had been
facing a massive wave of foreclosures during the severe recession of the
1890s. According to the Populist reading, the Wicked Witches of the East and
West represent the East and West Coast bankers (promoters of and benefactors
from the tight money supply), the Scarecrow represented the farmers (who
didn’t have the brains to avoid the debt trap), the Tin Woodsman was the
industrial proletariat (who didn’t have the heart to act in solidarity with
the farmers), the Cowardly Lion represented the political class (who didn’t
have the courage to intervene). The yellow brick road, silver slippers,
emerald city, and hapless Wizard presumably speak for themselves. "Oz" is of
course the standard abbreviation for “ounce.”
Greaber next quotes John Maynard Keynes, "
arguably the single most important economic thinker of the twentieth
century", who "
spent several years in the 1920s studying Mesopotamian cuneiform banking
records to try to ascertain the origins of money—his “Babylonian madness,” as
he would later call it.":
The State, therefore, comes in first of all as the authority of law which
enforces the payment of the thing which corresponds to the name or
description in the contract. But it comes doubly when, in addition, it
claims the right to determine and declare what thing corresponds to the
name, and to vary its declaration from time to time—when, that is to say
it claims the right to re-edit the dictionary. This right is claimed by
all modern States and has been so claimed for some four thousand years at
least. It is when this stage in the evolution of Money has been reached
that Knapp’s Chartalism—the doctrine that money is peculiarly a creation
of the State—is fully realized … Today all civilized money is, beyond the
possibility of dispute, chartalist.
Keynes has spoken. So, I am going to make the following summarization of our
chicken/egg issue: debt (or its converse credit) came 1st, followed by money,
created by states to support markets for (foreign) armies.
Which leads us to the bonus question: where, then, did debt some from? This
brings us, finally, 1/2 way through, to the 1990s and the title of this
chapter: primordial debt. [IMO this chapter up to this point should have been
in the prior chapter.] This discussion also addresses the question, what
justifies the state requiring us to pay taxes?
The core argument is that any attempt to separate monetary policy from
social policy is ultimately wrong. Primordial-debt theorists insist that
these have always been the same thing. Governments use taxes to create
money, and they are able to do so because they have become the guardians of
the debt that all citizens have to one another. This debt is the essence of
society itself. It exists long before money and markets, and money and
markets themselves are simply ways of chopping pieces of it up.
Noted primordial-debt theorists, starting with 3 Frenchmen:
Primordial debt is not a new idea.
Actually, even the very earliest Vedic poems, composed sometime between
1500 and 1200 BC, evince a constant concern with debt—which is treated as
synonymous with guilt and sin.
...
It was only with the Brahmanas that commentators started trying to weave
all this together into a more comprehensive philosophy. The conclusion:
that human existence is itself a form of debt.
A man, being born, is a debt; by his own self he is born to Death, and
only when he sacrifices does he redeem himself from Death.
Christianity (Catholicism?) buys into this same concept, naming it Original Sin.
[I always thought this was a totally bogus concept. To me there can be no debt
without an agreement into which both the debtor and creditor explicitly enter.
Otherwise, it is like when some charity tries to get you to contribute to them
by giving you unasked-for gifts. They are trying to create a contract without
your consent. I think this was pointed out to me by Douglas Rushkoff in his
book
"Coercion, Why We Listen to What "They" Say", which I mention in
my 3rd blog post, May 6, 2003. Exocortex, FTW!]
The Hindu tradition saddles us with even more non-consentual debts:
two famous passages in the Brahmanas insist that we are born as a debt not
just to the gods, to be repaid in sacrifice, but also to the Sages who
created the Vedic learning to begin with, which we must repay through study;
to our ancestors (“the Fathers”), who we must repay by having children; and
finally, “to men”—apparently meaning humanity as a whole, to be repaid by
offering hospitality to strangers.
Notice, none of these debts are things that could be repaid with money. Things
now take a turn:
Why were cattle so often used as money? The German historian Bernard Laum
long ago pointed out that in Homer, when people measure the value of a ship
or suit of armor, they always measure it in oxen—even though when they
actually exchange things, they never pay for anything in oxen. It is hard to
escape the conclusion that this was because an ox was what one offered the
gods in sacrifice. Hence oxen represented absolute value. From Sumer to
Classical Greece, silver and gold were dedicated as offerings in temples.
Everywhere, money seems to emerged from the thing most appropriate for
giving to the gods.
If the king has simply taken over guardianship of that primordial debt we
all owe to society for having created us, this provides a very neat
explanation for why the government feels it has the right to make us pay
taxes. Taxes are just a measure of our debt to the society that made us.
But this doesn’t really explain how this kind of absolute life-debt can be
converted into money, which is by definition a means of measuring and
comparing the value of different things.
This "conversion into money" happens in steps. The 1st step:
Rather than being employed to acquire things, they [primitive currencies]
are mainly used to rearrange relations between people. Above all, to arrange
marriages and to settle disputes, particularly those arising from murders or
personal injury.
There is every reason to believe that our own money started the same
way—even the English word “to pay” is originally derived from a word for
“to pacify, appease”—as in, to give someone something precious, for
instance, to express just how badly you feel about having just killed his
brother in a drunken brawl, and how much you would really like to avoid
this becoming the basis for an ongoing blood-feud.
Avoiding blood-feud was a pretty hot topic during the Middle Ages. After the fall of the Roman Empire, this led to the development across all of Europe of
“Barbarian Law Codes”.
from the groundbreaking work of one of the twentieth century’s greatest numismatists, Philip Grierson, who in the ’70s first suggested that money might first have emerged from early legal practice.
Their [barbarian law codes] detail is remarkable, not only in the personal injuries envisioned—specific compensations for the loss of an arm, a hand, a forefinger, a nail, for a blow on the head so that the brain is visible or bone projects—but in the coverage some of them gave to the possessions of the individual household.
The 2nd step: states establish fees, penalties, tariffs, fines, and sometimes
taxes. But, note, these have nothing to do with any kind of "primordial debt".
Primordial debt got carried to its (il)logical conclusion by
Auguste Comte, another Frenchman, who is credited with coining the term "sociology". He
proposed a "a Religion of Society, which he called
Positivism". Wow, this next 1891 quote from Comte is pretty scary. Not just criminals owe a "debt to
society". Ugh, and again, ugh.
We are born under a load of obligations of every kind, to our predecessors, to our successors, to our contemporaries. After our birth these obligations increase or accumulate before the point where we are capable of rendering anyone any service. On what human foundation, then, could one seat the idea of “rights”?
So the opposite of "primordial debts" is "human rights". I think I'll go with
the latter.
Graeber concurs, and concludes that, like "the myth of barter", "primordial
debt" is also bogus.
theories of existential debt always end up becoming ways of justifying—or
laying claim to—structures of authority.
...
One might even say that what we really have here, in the idea of
primordial debt, is the ultimate nationalist myth. Once we owed our lives
to the gods that created us, paid interest in the form of animal
sacrifice, and ultimately paid back the principal with our lives. Now we
owe it to the Nation that formed us, pay interest in the form of taxes,
and when it comes time to defend the nation against its enemies, offer to
pay it with our lives.
This is a great trap of the twentieth century: on one side is the logic of
the market, where we like to imagine we all start out as individuals who
don’t owe each other anything. On the other is the logic of the state,
where we all begin with a debt we can never truly pay. We are constantly
told that they are opposites and that between them they contain the only
real human possibilities. But it’s a false dichotomy. States created
markets. Markets require states. Neither could continue without the other,
at least, in anything like the forms we would recognize today.
Graeber in this chapter begins a discussion of loans and interest.
By c. 2400 BC it already appears to have been common practice on the part of local officials, or wealthy merchants, to advance loans to peasants who were in financial trouble on collateral and begin to appropriate their possessions if they were unable to pay. It usually started with grain, sheep, goats, and furniture, then moved on to fields and houses, or, alternately or ultimately, family members. Servants, if any, went quickly, followed by children, wives, and in some extreme occasions, even the borrower himself. These would be reduced to debt-peons: not quite slaves, but very close to that, forced into perpetual service in the lender’s household—or, sometimes, in the Temples or Palaces themselves.
...
The effects were such that they often threatened to rip society apart.
...
Faced with the potential for complete social breakdown, Sumerian and later Babylonian kings periodically announced general amnesties: “clean slates” ...
Yay, Jubilees! More on Jubilees in the next chapter.
I thought this piece of entymology was interesting:
In Sumer, these were called “declarations of freedom”—and it is significant
that the Sumerian word amargi, the first recorded word for “freedom”
in any known human language, literally means “return to mother”—since this
is what freed debt-peons were finally allowed to do.
[Back to the top]
Chapter 4, 67 pages, is titled "Cruelty and Redemption". It starts with further exploration of the "primordial debt" concept. We are introduced to Friedrich Nietzsche musings in his 1887 work "On the Genealogy of Morals". [I'm pretty sure I read this as a college sophomore for a Philosophy class - I of course remember nothing about it.]
In it, he begins with an argument that might well have been taken directly from Adam Smith—but he takes it a step further than Smith ever dared to, insisting that not just barter, but buying and selling itself, precede any other form of human relationship.
Nietzsche I think ranks up their with Freud as "influential guys who had ground-breaking ideas that were mostly wrong". But, I'll go further than that. I think Nietzsche was basically a troll - he is possibly the founding father of trolling.
In fact, Nietzsche went so far as to insist that those original barbarian law codes that tabulated so much for a ruined eye, so much for a severed finger, were not originally meant to fix rates of monetary compensation for the loss of eyes and fingers, but to establish how much of the debtor’s body creditors were allowed to take!
That's definitely trolling - writing to create outrage.
The rest of the chapter emphasises how much of overall morality and religion is based on concepts of debt. Original Sin is discussed - we are born owing god for our very existence. Here's Nietzche on this:
Finally, with the impossibility of discharging the debt, people also come up with the notion that it is impossible to remove the penance, the idea that it cannot be paid off (“eternal punishment”)… until all of a sudden we confront the paradoxical and horrifying expedient with which a martyred humanity found temporary relief, that stroke of genius of Christianity: God sacrificing himself for the guilt of human beings, God paying himself back with himself, God as the only one who can redeem man from what for human beings has become impossible to redeem—the creditor sacrificing himself for the debtor, out of love (can people believe that?), out of love for his debtor!
LOL, here's Graeber's reaction to this:
It all makes perfect sense if you start from Nietzsche’s initial premise. The problem is that the premise is insane.
Look at the fav christian prayer, The Lord's Prayer: "Forgive us our debts as we forgive our debtors." Early on, I would say that meant just what it says: forgive debts owed to you. Somehow I don't think modern Prosperity Gospel "christians" go in for that too much.
Graeber contends that all religions grapple with this issue.
World religions, as we shall see, are full of this kind of ambivalence. On the one hand they are outcries against the market; on the other, they tend to frame their objections in commercial terms—as if to argue that turning human life into a series of transactions is not a very good deal. What I think even these few examples reveal, though, is how much is being papered over in the conventional accounts of the origins and history of money. There is something almost touchingly naïve in the stories about neighbors swapping potatoes for an extra pair of shoes. When the ancients thought about money, friendly swaps were hardly the first thing that came to mind.
True, some might have thought about their tab at the local ale-house or, if they were a merchant or administrator, of storehouses, account books, exotic imported delights. For most, though, what was likely to come to mind was the selling of slaves and ransoming of prisoners, corrupt tax-farmers and the depredations of conquering armies, mortgages and interest, theft and extortion, revenge and punishment, and, above all, the tension between the need for money to create families, to acquire a bride so as to have children, and use of that same money to destroy families—to create debts that lead to the same wife and children being taken away. “Some of our daughters are brought unto bondage already: neither is it in our power to redeem them.” One can only imagine what those words meant, emotionally, to a father in a patriarchal society in which a man’s ability to protect the honor of his family was everything. Yet this is what money meant to the majority of people for most of human history: the terrifying prospect of one’s sons and daughters being carried off to the homes of repulsive strangers to clean their pots and provide occasional sexual services, to be subject to every conceivable form of violence and abuse, possibly for years, conceivably forever, as their parents waited, helpless, avoiding eye contact with their neighbors, who knew exactly what was happening to those they were supposed to have been able to protect.
Graeber explores why debt seems to hold such a special place in human society.
It’s particularly striking because so many other things do seem to have been accepted as simply in the nature of things. One does not see a similar outcry against caste systems, for example, or for that matter, the institution of slavery. ... Why was it that the debtors’ protests seemed to carry such greater moral weight? Why were debtors so much more effective in winning the ear of priests, prophets, officials, and social reformers?
...
Some have suggested practical reasons: debt crises destroyed the free peasantry, and it was free peasants who were drafted into ancient armies to fight in wars. Rulers thus had a vested interest in maintaining their recruitment base. No doubt this was a factor; clearly, it wasn’t the only one.
...
What makes debt different is that it is premised on an assumption of equality.
This last point will be returned to and expanded as we get further along. Here is another point of which we will see more:
The problem was that, unlike status distinctions like caste or slavery, the line between rich and poor was never precisely drawn.
One piece of this book that is sticking with me is this story about the distribution of hunt meat among the Inuit. These guys are true communists, Jebus would be proud.
... in the Danish writer Peter Freuchen’s Book of the Eskimo. Freuchen tells how one day, after coming home hungry from an unsuccessful walrus-hunting expedition, he found one of the successful hunters dropping off several hundred pounds of meat. He thanked him. The man objected indignantly:
“Up in our country we are human!” said the hunter. “And since we are human we help each other. We don’t like to hear anybody say thanks for that. What I get today you may get tomorrow. Up here we say that by gifts one makes slaves and by whips one makes dogs.”
Wow.
[Back to the top]
Chapter 5, 177 pages, is titled "A Brief Treatise on the Moral Grounds of Economic Relations". Having set the table, Graeber now begins to set out the meat of the matter.
If we really want to understand the moral grounds of economic life and, by extension, human life, it seems to me that we must start instead with the very small things: the everyday details of social existence, the way we treat our friends, enemies, and children—often with gestures so tiny (passing the salt, bumming a cigarette) that we rarely stop to think about them at all.
...
One of the reasons that human life is so complicated, in turn, is because many of these principles contradict one another.
Oh no, our old friend, Homo Economicus, appears to have misled "sciences" besides Economics:
What’s more, those branches of social theory that make the greatest claims to “scientific status”—“rational choice theory,” for instance—start from the same assumptions about human psychology that economists do: that human beings are best viewed as self-interested actors calculating how to get the best terms possible out of any situation, the most profit or pleasure or happiness for the least sacrifice or investment—curious, considering experimental psychologists have demonstrated over and over again that these assumptions simply aren’t true.
Nice, Graeber gives us an alternative to Homo Economicus, yay!
From early on, there were those who wished to create a theory of social interaction grounded in a more generous view of human nature—who insisted that moral life comes down to something more than mutual advantage, that it is motivated above all by a sense of justice. The key term here became “reciprocity,” the sense of equity, balance, fairness, and symmetry, embodied in our image of justice as a set of scales.
Graeber does his anthropologist thing and recounts several stories showing different cultures' approaches to some if these issues, and then provides the framework for his theories:
there are three main moral principles on which economic relations can be founded, all of which occur in any human society, and which I will call communism, hierarchy, and exchange. [My bold]
As a boomer who was a kid in the 1950s, it is amazing to me how I still cringe at the scare word "communism". Graeber defines communism pretty much as I would:
I will define communism here as any human relationship that operates on the principles of “from each according to their abilities, to each according to their needs.”
Graeber then riffs on "communism":
- Most of the countries we think of as "communist" actually refer to themselves as "socialist".
- The idea that early human societies, hunter-gatherers say, were communistic has been around a while. Following Chapter 3, I'd call that "primordial communism". Graeber refers to it as "primitive communism", or "mythic communism", or "epic communism" - "a story we like to tell ourselves."
- "Almost everyone follows this principle if they are collaborating on some common project. If someone fixing a broken water pipe says, “Hand me the wrench,” his co-worker will not, generally speaking, say, “And what do I get for it?”—even if they are working for Exxon-Mobil, Burger King, or Goldman Sachs. The reason is simple efficiency (ironically enough, considering the conventional wisdom that “communism just doesn’t work”): if you really care about getting something done, the most efficient way to go about it is obviously to allocate tasks by ability and give people whatever they need to do them."
- "This is presumably also why in the immediate wake of great disasters—a flood, a blackout, or an economic collapse—people tend to behave the same way, reverting to a rough-and-ready communism. However briefly, hierarchies and markets and the like become luxuries that no one can afford. Anyone who has lived through such a moment can speak to their peculiar qualities, the way that strangers become sisters and brothers and human society itself seems to be reborn. This is important, because it shows that we are not simply talking about cooperation. In fact, communism is the foundation of all human sociability. It is what makes society possible."
Graeber recounts an anecdote in which an anthropologist studying in the Sudan is purposely given wrong directions. [I love being able to give people directions. Doesn't everybody? Or is it just us hippie/commies?] The reason for the bad directions included the fact that the guy was British & the British had recently been bombing in the area.
The main point, though, is that it requires something on this scale—an immediate threat to life and limb, terror-bombing of civilian populations—before people will ordinarily consider not giving a stranger accurate directions.
Giving directions, giving someone a smoke or a light, helping a drowning person, holding an elevator door, helping a lost child - Graeber refers to these "
small courtesies" as "
baseline communism". In small village-type living, it extends to food and other necessities. Graeber does the anthropologist things and gives examples of society where sharing is carried to great lengths, and transcends into other domains:
The giving and taking of gifts often takes on a distinctly gamelike quality, continuous often with the actual games, contests, pageants, and performances that also often mark popular festivals. As with society at large, the shared conviviality could be seen as a kind of communistic base on top of which everything else is constructed. It also helps to emphasize that sharing is not simply about morality, but also about pleasure. Solitary pleasures will always exist, but for most human beings, the most pleasurable activities almost always involve sharing something: music, food, liquor, drugs, gossip, drama, beds. There is a certain communism of the senses at the root of most things we consider fun.
Nice! Woodstock forever, LOL!
More on the particulars of communism:
Baseline communism might be considered the raw material of sociality, a recognition of our ultimate interdependence that is the ultimate substance of social peace. Still, in most circumstances, that minimal baseline is not enough. One always behaves in a spirit of solidarity more with some people than others, and certain institutions are specifically based on principles of solidarity and mutual aid. First among these are those we love, with mothers being the paradigm of selfless love. Others include close relatives, wives and husbands, lovers, one’s closest friends. These are the people with whom we share everything, or at least to whom we know we can turn in need, which is the definition of a true friend everywhere. Such friendships may be formalized by a ritual as “bond-friends” or “blood brothers” who cannot refuse each other anything.
This "
individualistic communism" gets extended to many types of groups, and finally leads to The Commons - yay!
Graeber concludes his discussion of communism with an interesting point:
Finally, once we start thinking of communism as a principle of morality rather than just a question of property ownership, it becomes clear that this sort of morality is almost always at play to some degree in any transaction—even commerce. If one is on sociable terms with someone, it’s hard to completely ignore their situation. Merchants often reduce prices for the needy. This is one of the main reasons why shopkeepers in poor neighborhoods are almost never of the same ethnic group as their customers; it would be almost impossible for a merchant who grew up in the neighborhood to make money, as they would be under constant pressure to give financial breaks, or at least easy credit terms, to their impoverished relatives and school chums.
I was expecting "heirarchy" to be next, but instead we get "exchange". But 1st, last words on communism.
Communism, then, is based neither in exchange nor in reciprocity—except, as I have observed, in the sense that it does involve mutual expectations and responsibilities. Even here, it seems better to use another word (“mutuality”?) so as to emphasize that exchange operates on entirely different principles, that it’s a fundamentally different kind of moral logic.
I think that it is a really great idea to seek new terminology. With "debt" seeming to override everything, let's get some new words.
Graeber's 1st definition of exchange:
Exchange is all about equivalence. It’s a back-and-forth process involving two sides in which each side gives as good as it gets. This is why one can speak of people exchanging words (if there’s an argument), blows, or even gunfire. [footnote] In a less hostile vein one can speak of an exchange of prisoners, notes, or compliments.
Exchanges are atomic transactions - you buy something from someone, you're both done [except for warranty or fraud or ???]. But they can also occur over extended timespans - you buy my lunch this week, I'll buy yours next week.
Exchanges don't have to match exactly in value - but if there is an imbalance, in an ongoing relationship, there would be an expectation that the person who got the better deal would try to get a worse deal the next time.
As anthropologists have long been in the habit of pointing out, the very existence of such customs—especially, the feeling that one really ought to return the favor—can’t be explained by standard economic theory ...
Once again, Homo Economicus fails.
Exchange is a feature of gift economies, where quite often the competition is to outdo the exchange partner in the extravagance of the gift. Graeber's idea of exchange is that implicitly it is happening between equals - because things happen very differently when happening between people of different status. Which brings us to ...
Heirarchy. So kings and nobles vs common folk - although he points out it's also viking raiders vs peasants being raided.
hierarchy operates by a principle that is the very opposite of reciprocity. Whenever the lines of superiority and inferiority are clearly drawn and accepted by all parties as the framework of a relationship, and relations are sufficiently ongoing that we are no longer simply dealing with arbitrary force, then relations will be seen as being regulated by a web of habit or custom.
Quite often those with power can give gifts to those without power that can never be repaid - an example given is a coveted job in a factory. But even though the gift cannot be repaid, the recipient still might be expected to owe the person in power small gifts, esteem, fealty, etc., and on an ongoing basis. The gift then is a loan on which interest is being paid.
Here's another great anthropological anecdote. I'd forgotten about Santa Claus ...
religious traditions often insist that the only true charity is anonymous—in other words, not meant to place the recipient in one’s debt. One extreme form of this, documented in various parts of the world, is the gift by stealth, in a kind of reverse burglary: to literally sneak into the recipient’s house at night and plant one’s present so no one can know for sure who has left it. The figure of Santa Claus, or Saint Nicholas (who, it must be remembered, was not just the patron saint of children, but also the patron saint of thieves) would appear to be the mythological version of the same principle ...
Getting back to the "habit or custom":
In other words, any gift to a feudal superior, “especially if repeated three or four times,” was likely to be treated as a precedent and added to the web of custom. As a result, those giving gifts to superiors often insisted on receiving a “letter of non-prejudice” legally stipulating that such a gift would not be required in the future.
With heirarchy involved, we now run into things like tribute payments and protection rackets of all types.
LOL, I think I am lucky I don't know many people like this. I did decades ago meet some European nobility trust fund folks who did indeed seem to be from another planet.
Alternately, a person’s nature may be defined by how others have acted toward him in the past. To be an aristocrat is largely to insist that, in the past, others have treated you as an aristocrat (since aristocrats don’t really do anything in particular: most spend their time simply existing in some sort of putatively superior state) and therefore should continue to do so.
While there are indeed some societies that are (were?) almost completely communistic (Inuits e.g.), we are much more used to the more feudal arrangements.
one could judge how egalitarian a society really was by exactly this: whether those ostensibly in positions of authority are merely conduits for redistribution, or able to use their positions to accumulate riches. The latter seems most likely in aristocratic societies that add another element: war and plunder. After all, just about anyone who comes into a very large amount of wealth will ultimately give at least part of it away—often in grandiose and spectacular ways to large numbers of people. The more of one’s wealth that is obtained by plunder or extortion, the more spectacular and self-aggrandizing will be the forms in which it’s given away.
So we have 3 different sets of moral principles depending on who we are dealing with.
We are all communists with our closest friends, and feudal lords when dealing with small children. It is very hard to imagine a society where this would not be true.
The obvious question is: If we are all ordinarily moving back and forth between completely different systems of moral accounting, why hasn’t anybody noticed this? Why, instead, do we continually feel the need to reframe everything in terms of reciprocity?
Where there are/were societies practicing primitive communism, vigilance was always required to keep from slipping into heirarchy. Societies also have ways to force a return to primitive communism - for example, becoming blood brothers, where neither member of the partnership can deny the other member any request they make. "What's yours is mine", up to and including spouses?!?!?
Graeber introduces us to "heroic societies":
I’ve already mentioned the tendency of gift exchange to turn into games of one-upmanship, and how in some societies this potential is formalized in great public contests. This is typical, above all, of what are often called “heroic societies”: those in which governments are weak or nonexistent and society is organized instead around warrior noblemen, each with his entourage of loyal retainers and tied to the others by ever-shifting alliances and rivalries. Most epic poetry—from the Iliad to the Mahabharata to Beowulf—harkens back to this sort of world, and anthropologists have discovered similar arrangements among the Maori of New Zealand and the Kwakiutl, Tlingit, and Haida of the American Northwest coast. In heroic societies, the throwing of feasts and resulting contests of generosity are often spoken of as mere extensions of war: “fighting with property” or “fighting with food.”
Heroic societies also place huge value on
honor. I shudder to think of the crimes that could be tallied to some man "defending his honor". Just off the top of my head, "honor" is probably 1 of the main cornerstones of toxic masculinity.
Another interesting facet of heirarchies that has been mostly ignored:
The law of hospitality in the ancient world, for instance, insisted that any traveler must be fed, given shelter, and treated as an honored guest—but only for a certain length of time. If a guest did not go away, he would eventually become a mere subordinate. The role of such hangers-on has been largely neglected by students of human history. In many periods—from imperial Rome to medieval China—probably the most important relationships, at least in towns and cities, were those of patronage. Anyone rich and important would find himself surrounded by flunkies, sycophants, perpetual dinner guests, and other sorts of willing dependents. Drama and poetry of the time are full of such characters. Similarly, for much of human history, being respectable and middle-class meant spending one’s mornings going from door to door, paying one’s respects to important local patrons.
So many different ways for people who could/should treat each other as equals to establish a heirarchy:
A wage-labor contract is, ostensibly, a free contract between equals—but an agreement between equals in which both agree that once one of them punches the time clock, they won’t be equals any more.
...
It seems to me that this agreement between equals to no longer be equal (at least for a time) is critically important. It is the very essence of what we call “debt.”
...
A debt, then, is just an exchange that has not been brought to completion.
Graeber spends a while exploring those ubiquitous words, "please" and "thank you".
We think of these simultaneously as meaningless formalities and as the very moral basis of society.
...
The habit of always saying “please” and “thank you” first began to take hold during the commercial revolution of the sixteenth and seventeenth centuries—among those very middle classes who were largely responsible for it.
So many of the different phrases used in different languages for "please", "thank you", and "you're welcome" are different ways to say "I'm in your debt." and "No you're not."
The chapter closes discussing "In Praise of Debt", from "Gargantua and Pantagruel" by Rabelais in the 1540s.
If we insist on defining all human interactions as matters of people giving one thing for another, then any ongoing human relations can only take the form of debts. Without them, no one would owe anything to anybody. A world without debt would revert to primordial chaos, a war of all against all; no one would feel the slightest responsibility for one another; the simple fact of being human would have no significance; we would all become isolated planets who couldn’t even be counted on to maintain our proper orbits.
[Back to the top]
Chapter 6, 169 pages, is titled "Games with Sex and Death".
Graeber again quotes the numismatist Philip Grierson, and reacts with incredulity to his statement:
Compensation in the Welsh laws is reckoned primarily in cattle and in the Irish ones in cattle or bondmaids (cumal), with considerable use of precious metals in both.
“Bondmaids”? Doesn’t that mean “slaves”? (It does.) In ancient Ireland, female slaves were so plentiful and important that they came to function as currency? How did that happen? And if we are trying to understand the origins of money here, isn’t the fact that people are using one another as currency at all interesting or significant? Yet none of the sources on money remark much on it. It would seem that by the time of the law codes, slave girls were not actually traded, but just used as units of account.
...
What’s more, if we examine the historical evidence, there seems good reason to believe that the very obsession with patriarchal honor that so defines “tradition” in the Middle East and Mediterranean world itself arose alongside the father’s power to alienate his children—as a reaction to what were seen as the moral perils of the market. All of this is treated as somehow outside the bounds of economic history.
...
These blinders are all the more ironic when one looks at the anthropological literature on what used to be called “primitive money”—that is, the sort one encounters in places where there are no states or markets—whether Iroquois wampum, African cloth money, or Solomon Island feather money, and discovers that such money is used almost exclusively for the kinds of transactions that economists don’t like to have to talk about.
In fact, the term “primitive money” is deceptive for this very reason, since it suggests that we are dealing with a crude version of the kind of currencies we use today. But this is precisely what we don’t find. Often, such currencies are never used to buy and sell anything at all. Instead, they are used to create, maintain, and otherwise reorganize relations between people: to arrange marriages, establish the paternity of children, head off feuds, console mourners at funerals, seek forgiveness in the case of crimes, negotiate treaties, acquire followers—almost anything but trade in yams, shovels, pigs, or jewelry.
Graeber decides to replace the term "primitive money".
I’ve decided therefore to refer to them as “social currencies,” and the economies that employ them as “human economies.” ... they are economic systems primarily concerned not with the accumulation of wealth, but with the creation, destruction, and rearranging of human beings.
Economies such as we have now, with markets, etc., he refers to as "
commercial economies".
Graber introduces us to "a French economist-turned-anthropologist named Philippe Rospabé."
Rospabé’s argument is that “primitive money” was not originally a way to pay debts of any sort. It’s a way of recognizing the existence of debts that cannot possibly be paid.
...
In most human economies, money is used first and foremost to arrange marriages.
"Brideprice" it is called. And, shocker, brideprice is often the same as blood price, or wergild aka bloodwealth. But in both uses of money, the contention is that it is understood that the price can never actually replace a human being - only another human being can do that. "Brideprice" is not buying the woman.
the ultimate significance of the payment concerns the status of the woman’s children: if he’s buying anything, it’s the right to call her offspring his own.
...
According to Rospabé, ... It is really an acknowledgment that one is asking for something so uniquely valuable that payment of any sort would be impossible. The only appropriate payment for the gift of a woman is the gift of another woman; in the meantime, all one can do is to acknowledge the outstanding debt.
This chapter has lots of anthropology-fu:
- The Tiv people of rural Nigeria have as their social currency bundles of brasss rods. Their preferred method of arranging marriage is basically for sisters to be traded between families to become wives.
- The Nuer are "Nilotic pastoralists in southern Sudan ... Among the Nuer, there is a special class of priestly figures who specialize in mediating feuds, referred to in the literature as “leopard-skin chiefs.” If one man murders another, he will immediately seek out one of their homesteads, since such a homestead is treated as an inviolate sanctuary ... Among the Nuer, forty cattle were set as the standard fee for bloodwealth. But it was also the standard rate of bridewealth."
- "Among North African Bedouins ... it sometimes happened that the only way to settle a feud was for the killer’s family to turn over a daughter, who would then marry the victim’s next of kin—his brother, say. If she bore him a male child, the boy was given the same name as his dead uncle and considered to be, at least in the broadest sense, a substitute for him."
- The Six Nations of the Iroquois used white wampum as their social currency. "The Iroquois, who traced descent in the female line, did not trade women in this fashion.". Hmmm, so in matriarchial societies, women are treated less like property? LOL, not surprising!
- "the Lele, an African people ... managed to turn the principle of blood debts into the organizing principle of their entire society." Their social currency were raffia-palm cloth, created by the men, for small change, and "camwood—a rare imported wood used for the manufacture of cosmetics" as their big bills.
The Lele did not use bridewealth.
There was another way that men gained control over women, however. This was the system of blood debts.
It is a common understanding among many traditional African peoples that human beings do not simply die without a reason. If someone dies, someone must have killed them. [I had earlier encountered this belief - reading about Asmat (New Guinea) ancestor poles in the New York MOMA during an June, 2003 visit with my oldest daughter.]
So anytime anyone dies, the culprit is identified by means up to and including divination. And then ...
Once the village was satisfied that a culprit had been identified, that person owed a blood-debt: that is, he owed the victim’s next of kin a human life. The culprit would thus have to transfer over a young woman from his family, his sister or her daughter, to be the victim’s ward, or “pawn." [My bold]
Who knew that the word "pawn" had meanings #2 and #3 - from the American Heritage Dictionary?
- Something given as security for a loan; a pledge or guaranty.
- The condition of being held as a pledge against the payment of a loan.
- A person serving as security; a hostage.
Those last 2 meanings were news to me. But "pawns" aka debt peons are not slaves because:
- they can conceivably be redeemed if the debt is paid;
- they still have brothers, sisters, family, and a place in their society.
Pawnship was inherited. If a woman was someone’s pawn, so would her children be, and so would her daughters’ children. This meant that most males were also considered someone else’s man. Still, no one would accept a male pawn in payment of blood-debts: the whole point was to get hold of a young woman, who would then go on to produce additional pawn children.
Quoting anthropologist Mary Douglas:
Since only women are accepted as blood-compensation, and since compensation is demanded for all deaths, of men as well as of women, it is obvious that there can never be enough to go around. Men fall into arrears in their pawnship obligations, and girls used to be pledged before their birth, even before their mothers were of marriageable age.
And, of course, women could not own pawns.
Even more charming is the institution of "village-wives". [I think this is around the point when I had to quit reading this book for a while.] The Lele were polygamous - the old rich guys liked having younger wifes as well as their older ones - leaving a large deficit of available brides for the younger, poorer men.
Since the old men wished to remain polygynists, with two or three wives, and since adulteries were thought to disrupt the peace of the village, Lele had to make some arrangement to appease their unmarried men. Therefore, when a sufficient number of them reached the age of eighteen or so, they were allowed to buy the right to a common wife.
...
In fact, a newly married village wife was treated very much like a princess. She was not expected to plant or weed in the gardens, fetch wood or water, or even to cook; all household chores were done by her eager young husbands, who provided the best of everything, spending much of their time hunting in the forest vying to bring her the choicest delicacies or plying her with palm wine. She could help herself to others’ possessions and was expected to make all sorts of mischief to the bemused indulgence of all concerned. She was also expected to make herself sexually available to all members of the age-set—perhaps ten or twelve different men—at first, pretty much whenever they wanted her.
...
The domestic arrangements were flexible. Nonetheless, in principle, she was married to the village as a whole. If she had children, the village was considered to be their father, and as such expected to bring them up, provide them with resources, and eventually, get them properly married off—which is why villages had to maintain collective treasuries full of raffia and camwood bars in the first place.
...
villages became corporate bodies, collective groups that, like modern corporations, had to be treated as if they were individuals for purposes of law. There was one key difference, however. Unlike ordinary individuals, villages could back up their claims with force.
Villages could go to war with each other over pawnship disputes.
It’s at exactly this point, too, where the potential for violence enters, that the great wall constructed between the value of lives and money can suddenly come tumbling down.
...
In such a case, rather than abandon his claim to a pawn-woman, he would be ready to take the equivalent in wealth, if he could get it. The usual procedure was to sell his case against the defendants to the only group capable of extorting a pawn by force, that is, to a village.
The man who meant to sell his case to a village asked them for 100 raffia cloths or five bars of camwood. The village raised the amount, either from its treasury, or by a loan from one of its members, and thereby adopted as its own his claim to a pawn.
Once he held the money, his claim was over, and the village, which had now bought it, would proceed to organize a raid to seize the woman in dispute.In other words, it was only when violence was brought into the equation that there was any question of buying and selling people.
...
The value of a human life could, sometimes, be quantified; but if one was able to move from A = A (one life equals another) to A = B (one life = one hundred cloths), it was only because the equation was established at the point of a spear.
- Next up, we meet the Tiv (again???), who currently make up 5% of the population of Nigeria. Their social currency were cloth for small change, and bundles of brass rods as their big bills. Here's an interesting point from Graeber:
Money almost always arises first from objects that are used primarily as adornment of the person. Beads, shells, feathers, dog or whale teeth, gold, and silver are all well-known cases in point.
The metal rods the Tiv use are primarily used as raw material for jewelry.
The Tiv are known for having 3 spheres of exchange.
In principle, these three levels—ordinary consumption goods, masculine prestige goods, and rights in women—were completely separate. No amount of okra could get you a brass rod, just as, in principle, no number of brass rods could give you full rights to a woman.
OK, it definitely gets weird here:
To be able to wheel and deal, to “turn chickens into cows,” as the saying went, and ultimately, broker one’s wealth and prestige into a way of acquiring wives, required a “strong heart”—that is, an enterprising and charismatic personality. But “strong heart” had another meaning too. There was believed to be a certain actual biological substance called tsav that grew on the human heart. This was what gave certain people their charm, their energy, and their powers of persuasion. Tsav therefore was both a physical substance and that invisible power that allows substance and that invisible power that allows certain people to bend others to their will.
The problem was—and most Tiv of that time appear to have believed that this was the problem with their society—that it was also possible to augment one’s tsav through artificial means, and this could only be accomplished by consuming human flesh.
Now, I should emphasize right away that there is no reason to believe that any Tiv actually did practice cannibalism. The idea of eating human flesh appears to have disgusted and horrified the average Tiv as much as it would the average American. Yet for centuries, most appear to have been veritably obsessed by the suspicion that some of their neighbors—and particularly prominent men who became de facto political leaders—were, in fact, secret cannibals.
I mean, WTF? The QAnon horseshit is apparently a memeplex that has appeared in human cultures before now? I guess that makes sense - nothing new under the sun ...
Men who built up their tsav by such means, the stories went, attained extraordinary powers: the ability to fly, to become impervious to weapons, [like a bodhisattva!] to be able to send out their souls at night to kill their victims in such a way that their victims did not even know that they were dead, but would wander about, confused and feckless, to be harvested for their cannibal feasts. They became, in short, terrifying witches.
The mbatsav, or society of witches, was always looking for new members, and the way to accomplish this was to trick people into eating human flesh.
Once a man eats human flesh, he then owes "flesh-debt", and the witches might force him to give up a family member, or himself, to become the next source of flesh.
OK, so let's take the Lele and the Tiv, with their pawns and debts, and expose them to the Atlantic slave trade. Calabar in southeast Nigeria was the major slave port. After a period of chaos with everybody kidnapping everybody else to sell into slavery, some order was restored by merchant societies, notably the
Aro Confederacy.
The most ingenious trick of the merchant societies, though, was to assist in the dissemination of a secret society, called Ekpe, which made its members complicit in their own potential enslavement. Ekpe was most famous for sponsoring magnificent masquerades and for initiating its members into arcane mysteries, but it also acted as a secret mechanism for the enforcement of debts. In Calabar itself, for example, the Ekpe society had access to a whole range of sanctions, starting with boycotts (all members were forbidden to conduct trade with a defaulting debtor), fines, seizure of property, arrest, and finally, execution—with the most hapless victims left tied to trees, their lower jaws removed, as a warning to others. It was ingenious, particularly, because such societies always allowed anyone to buy in, rising through the nine initiatory grades if they could pay the fee—these also exacted, of course, in the brass rods the merchants themselves supplied.
...
Often debtors would be forced to pawn more and more of their own children or dependents, until finally there was no recourse but to pawn themselves. And of course, at the height of the slave trade, “pawning” had become little more than a euphemism. The distinction between pawns and slaves had largely disappeared. Debtors, like their families before them, ended up turned over to the Aro, then to the British, and finally, shackled and chained, crowded into tiny slaving vessels and sent off to be sold on plantations across the sea.
...
What is remarkable is that all this was done, the bodies extracted, through the very mechanisms of the human economy, premised on the principle that human lives are the ultimate value, to which nothing could possibly compare. Instead, all the same institutions—fees for initiations, means of calculating guilt and compensation, social currencies, debt pawnship—were turned into their opposite; the machinery was, as it were, thrown into reverse; and, as the Tiv also perceived, the gears and mechanisms designed for the creation of human beings collapsed on themselves and became the means for their destruction.
...
what I am describing here is in any [no] way peculiar to Africa. One could find the exact same things happening wherever human economies came into contact with commercial ones (and particularly, commercial economies with advanced military technology and an insatiable demand for human labor).
To prove his point, Graeber now turns to Bali.
As the island was drawn into the slave trade, almost the entire social and political system of the island was transformed into an apparatus for the forcible extraction of women.
Wow, Balinese kings were some bastards!
Kings even helped put people into debt by staging large cockfights in their capitals. The passion and extravagance encouraged by this exciting sport led many peasants to bet more than they could afford. As with any gambling, the hope of great wealth and the drama of a contest fuelled ambitions which few could afford and at the end of the day, when the last spur had sunk into the chest of the last rooster, many peasants had no home and family to return to. They, and their wives and children, would be sold to Java.
This chapter ends with a section titled "
Reflections on Violence".
The slave trade, of course, represented violence on an exponentially different scale. We are speaking here of destruction of genocidal proportions, in world-historic terms, comparable only to events like the destruction of New World civilizations or the Holocaust. Neither do I mean in any way to blame the victims: we need only imagine what would be likely to happen in our own society if a group of space aliens suddenly appeared, armed with undefeatable military technology, infinite wealth, and no recognizable morality—and announced that they were willing to pay a million dollars each for human workers, no questions asked. There will always be at least a handful of people unscrupulous enough to take advantage of such a situation—and a handful is all it takes.
Groups like the Aro Confederacy represent an all-too-familiar strategy, deployed by fascists, mafias, and right-wing gangsters everywhere: first unleash the criminal violence of an unlimited market, in which everything is for sale and the price of life becomes extremely cheap; then step in, offering to restore a certain measure of order—though one which in its very harshness leaves all the most profitable aspects of the earlier chaos intact. The violence is preserved within the structure of the law. Such mafias, too, almost invariably end up enforcing a strict code of honor in which morality becomes above all a matter of paying one’s debts.
...
The African slave trade was, as I mentioned, an unprecedented catastrophe, but commercial economies had already been extracting slaves from human economies for thousands of years. It is a practice as old as civilization. The question I want to ask is: To what degree is it actually constitutive of civilization itself?
I am not speaking strictly of slavery here, but of that process that dislodges people from the webs of mutual commitment, shared history, and collective responsibility that make them what they are, so as to make them exchangeable—that is, to make it possible to make them subject to the logic of debt. Slavery is just the logical end-point, the most extreme form of such disentanglement. But for that reason it provides us with a window on the process as a whole. What’s more, owing to its historical role, slavery has shaped our basic assumptions and institutions in ways that we are no longer aware of and whose influence we would probably never wish to acknowledge if we were. If we have become a debt society, it is because the legacy of war, conquest, and slavery has never completely gone away. It’s still there, lodged in our most intimate conceptions of honor, property, even freedom. It’s just that we can no longer see that it’s there.
[Back to the top]
Chapter 7, 216 pages, is titled "Honor and Degradation, or, On the Foundations of Contemporary Civilization". The last chapter finished up speculating on the importance of the role that the institution of slavery has had in the foundation of pretty much all of our civilization. I have just realized that while war is episodic state violence, slavery is perpetual state violence. Slaves started out originally as prisoners of war. But as we saw glimpses of in the last chapter, as commercial economies ate human economies, capitalism of course insisted that humans were no different than anything else in the world, i.e., they can be made into capital.
This is a long chapter, and we take a somewhat circuituous route through history: early medieval Ireland again, then Sumeria, then the Greek city states, and finally the Roman empire.
In Chapter 3, we talked of "convoluted chicken & egg question: which came first, debt, money, markets, or states?" Let's add 3 more players to the question: slavery, honor, and patriarchy.
This is because there is every reason to believe that slavery, with its unique ability to rip human beings from their contexts, to turn them into abstractions, played a key role in the rise of markets everywhere.
What happens, then, when the same process happens more slowly?
Graeber states that tracing the concept of "honor" will let us watch this slower process.
The best way to do so, I believe, is to start from a single, odd, vexed concept: the concept of honor, which can be treated as a kind of artifact, or even as a hieroglyphic, a fragment preserved from history that seems to compress into itself the answer to almost everything we’ve been trying to understand. On the one hand, violence: men who live by violence, whether soldiers or gangsters, are almost invariably obsessed with honor, and assaults on honor are considered the most obvious justification for acts of violence. On the other, debt. We speak both of debts of honor, and honoring one’s debts; in fact, the transition from one to the other provides the best clue to how debts emerge from obligations; even as the notion of honor seemed to echo a defiant insistence that financial debts are not really the most important ones; an echo, here, of arguments that, like those in the Vedas and the Bible, go back to the very dawn of the market itself. Even more disturbingly, since the notion of honor makes no sense without the possibility of degradation, reconstructing this history reveals how much our basic concepts of freedom and morality took shape within institutions—notably, but not only, slavery—that we’d sooner not have to think about at all.
We now have a section titled "Honor Is Surplus Dignity". It starts with more about slavery, and the 1st guy to really study the subject. [I found this increasingly hard going - the legacy of slavery is still at the center of our US disunion.]
Slavery is the ultimate form of being ripped from one’s context, and thus from all the social relationships that make one a human being. Another way to put this is that the slave is, in a very real sense, dead.
This was the conclusion of the first scholar to carry out a broad historical survey of the institution, an Egyptian sociologist named Ali ’Abd al-Wahid Wafi, in a dissertation he wrote in Paris in 1931. Everywhere, he observes, from the ancient world to then–present-day South America, one finds the same list of possible ways whereby a free person might be reduced to slavery:
- By the law of force
- By surrender or capture in war
- By being the victim of raiding or kidnapping
- As legal punishment for crimes (including debt)
- Through paternal authority (a father’s sale of his children)
- Through the voluntary sale of one’s self
Everywhere, too, capture in war is considered the only way that is considered absolutely legitimate. All the others were surrounded by moral problems.
...
The book’s most enduring contribution, though, lay simply in asking: What do all these circumstances have in common? Al-Wahid’s answer is striking in its simplicity: one becomes a slave in situations where one would otherwise have died.
Oh boy, another book about slavery:
"Slavery and Social Death", by
Orlando Patterson, 1982.
First of all, he emphasizes, slavery is unlike any other form of human relation because it is not a moral relation. Slave-owners might dress it up in all sorts of legalistic or paternalistic language, but really this is just window-dressing and no one really believes otherwise; really, it is a relation based purely on violence; a slave must obey because if he doesn’t, he can be beaten, tortured, or killed, and everyone is perfectly well aware of this. Second of all, being socially dead means that a slave has no binding moral relations with anyone else: he is alienated from his ancestors, community, family, clan, city; he cannot make contracts or meaningful promises, except at the whim of his master, who could just as easily take it back; even if he acquires a family, it can be broken up at any time. The relation of pure force that attached him to his master was hence the only human relationship that ultimately mattered. As a result—and this is the third essential element—the slave’s situation was one of utter degradation.
Here is our theory of "honor", v0.5:
It seems to me that this is precisely what gives honor its notoriously fragile quality. Men of honor tend to combine a sense of total ease and self-assurance, which comes with the habit of command, with a notorious jumpiness, a heightened sensitivity to slights and insults, the feeling that a man (and it is almost always a man) is somehow reduced, humiliated, if any “debt of honor” is allowed to go unpaid. This is because honor is not the same as dignity. One might even say: honor is surplus dignity. It is that heightened consciousness of power, and its dangers, that comes from having stripped away the power and dignity of others; or at the very least, from the knowledge that one is capable of doing so. At its simplest, honor is that excess dignity that must be defended with the knife or sword (violent men, as we all know, are almost invariably obsessed with honor). Hence the warrior’s ethos, where almost anything that could possibly be seen as a sign of disrespect—in inappropriate word, an inappropriate glance—is considered a challenge, or can be treated as such. Yet even where overt violence has largely been put out of the picture, wherever honor is at issue, it comes with a sense that dignity can be lost, and therefore must be constantly defended.
To wrap up what we've learned, before beginning our "circuitous route through history":
But what does all this have to do with the origins of money? The answer is, surprisingly: everything. Some of the most genuinely archaic forms of money we know about appear to have been used precisely as measures of honor and degradation: that is, the value of money was, ultimately, the value of the power to turn others into money.
Ahhh, capitalism, capitalism!
Honor Price (Early Medieval Ireland)
We have already met the "cumal", the Irish slave girls who were a unit of currency.
As one historian put it, “Ireland has no mineral wealth, and foreign luxury goods could be bought by Irish kings mainly for two export goods, cattle and people.” Hardly surprising, perhaps, that cattle and people were the two major denominations of the currency.
The slave trade appears to have died out around 600 a.d., thanks possibly to the growing influence of the Catholic Church. [Hah, a gold star for the Catholic Church, against the millions of black marks.] The Irish still had a human economy, England was becoming a commercial economy. The only markets in Ireland were near the coast, for selling foreigners cattle and people.
money was employed almost exclusively for social purposes: gifts; fees to craftsmen, doctors, poets, judges, and entertainers; various feudal payments (lords gave gifts of cattle to clients who then had to regularly supply them with food). The authors of the law codes didn’t even know how to put a price on most goods of ordinary use—pitchers, pillows, chisels, slabs of bacon, and the like; no one seems ever to have paid money for them. Food was shared in families or delivered to feudal superiors, who laid it out in sumptuous feasts for friends, rivals, and retainers. Anyone needing a tool or furniture or clothing either went to a kinsman with the relevant craft skills or paid someone to make it. The objects themselves were not for sale. Kings, in turn, assigned tasks to different clans: this one was to provide them with leather, this one poets, this one shields … precisely the sort of unwieldy arrangement that markets were later developed to get around.
Money could be loaned. There was a highly complex system of pledges and sureties to guarantee that debtors delivered what they owed. Mainly, though, it was used for paying fines. These fines are endlessly and meticulously elaborated in the codes, but what really strikes the contemporary observer is that they were carefully graded by the injured party’s rank.
...
Every free person had his or her “honor price”: the price that one had to pay for an insult to the person’s dignity. Here too there was a graded scale. The honor price of a king, for instance, was seven cumals, or seven slave girls—this was the standard honor price for any sacred being, the same as a bishop or master poet. Since (as all sources hasten to point out) slave girls were not normally paid as such, this would mean, in the case of an insult to such a person’s dignity, one would have to pay twenty-one milk cows or twenty-one ounces of silver.
Note that if you killed someone, the honor price would be added to the blood price of the deceased. Also note, the king was the only person whose blood price and honor price were the same?!?!? And, of course:
Honor is a zero-sum game.
Mesopotamia (The Origins of Patriarchy)
In ancient Greek, the word for “honor” was tīme.
It also referred to an honor price, as above. And in modern Greek, "timi" means both honor and price!
The word “crisis” literally refers to a crossroads: it is the point where things could go either of two different ways. The odd thing about the crisis in the concept of honor is that it never seems to have been resolved. Is honor the willingness to pay one’s monetary debts? Or is it the fact that one does not feel that monetary debts are really that important?
...
When most of us think of a Mediterranean villager’s sense of honor, we don’t think so much of a casual attitude toward money as of a veritable obsession with premarital virginity. Masculine honor is caught up not even so much in a man’s ability to protect his womenfolk as in his ability to protect their sexual reputations, to respond to any suggestion of impropriety on the part of his mother, wife, sister, or daughter as if it were a direct physical attack on his own person. This is a stereotype, but it’s not entirely unjustified. One historian who went through fifty years of police reports about knife-fights in nineteenth-century Ionia discovered that virtually every one of them began when one party publicly suggested that the other’s wife or sister was a whore.
There was no mention of this obsession with female sexual purity in the prior section on the Irish - because they were still an "heroic society", maybe? Here is a key question:
What happens ... when the same money once used to arrange marriages and settle affairs of honor can also be used to pay for the services of prostitutes?
Time to set the wayback machine to ancient Sumeria.
In the very earliest Sumerian texts, particularly those from roughly 3000 to 2500 BC, women are everywhere. Early histories not only record the names of numerous female rulers, but make clear that women were well represented among the ranks of doctors, merchants, scribes, and public officials, and generally free to take part in all aspects of public life. One cannot speak of full gender equality: men still outnumbered women in all these areas. Still, one gets the sense of a society not so different than that which prevails in much of the developed world today. Over the course of the next thousand years or so, all this changes. The place of women in civic life erodes; gradually, the more familiar patriarchal pattern takes shape, with its emphasis on chastity and premarital virginity, a weakening and eventually wholesale disappearance of women’s role in government and the liberal professions, and the loss of women’s independent legal status, which renders them wards of their husbands. By the end of the Bronze Age, around 1200 BC, we begin to see large numbers of women sequestered away in harems and (in some places, at least) subjected to obligatory veiling.
This used to be commonly explained by an influx of more patriarchal nomadic tribes (think Old Testament Hebrews) into the more civilized cities of Sumeria. But
Feminist scholarship has instead tended to emphasize the growing scale and social importance of war, and the increasing centralization of the state that accompanied it. This is more convincing.
Graeber further develops this: armies => money (pay) => markets to spend the money. But, now we have money that can be spent on other things, some of which might offend male honor. Ugh.
As I have emphasized, historically, war, states, and markets all tend to feed off one another. Conquest leads to taxes. Taxes tend to be ways to create markets, which are convenient for soldiers and administrators. In the specific case of Mesopotamia, all of this took on a complicated relation to an explosion of debt that threatened to turn all human relations—and by extension, women’s bodies—into potential commodities. At the same time, it created a horrified reaction on the part of the (male) winners of the economic game, who over time felt forced to go to greater and greater lengths to make clear that their women could in no sense be bought or sold.
The first use of human currency we learned of was brideprice. The brideprice of population poor, land rich nomads becomes in the population rich, land poor cities the dowry - the father of the bride is expected to offset the expense she will incur to her new home.
However, as time went on, this payment, called the terhatum, often began to take on the qualities of a simple purchase. It was referred to as “the price of a virgin”—not a mere metaphor, since the illegal deflowering of a virgin was considered a property crime against her father. Marriage was referred to as “taking possession” of a woman, the same word one would use for the seizure of goods. In principle, a wife, once possessed, owed her husband strict obedience, and often could not seek a divorce even in cases of physical abuse.
Apparently brideprice was debated at the League of Nations in the 1930s.
anthropologists have long emphasized that paying bridewealth is not the same as buying a wife. After all—and this was one of the clinching arguments, remember, in the original 1930s League of Nations debate—if a man were really buying a woman, wouldn’t he also be able to sell her?
...
A Mesopotamian husband couldn’t sell his wife either. Or, normally he couldn’t. Still, everything changed the moment he took out a loan. Since if he did, it was perfectly legal—as we’ve seen—to use his wife and children as surety, and if he was unable to pay, they could then be taken away as debt pawns in exactly the same way that he could lose his slaves, sheep, and goats. What this also meant was that honor and credit became, effectively, the same thing: at least for a poor man
Meanwhile in Sumeria, there were temple priestesses who had sex with anyone at certain feast days. But this became supplemented by straight-up prostitution, with temples coming to be surrounded by red-light districts. But note, this is still pre-money.
It’s also important to emphasize that Sumerian men do not appear, at least in this earliest period, to have seen anything troubling about the idea of their sisters having sex for money. To the contrary, insofar as prostitution did occur (and remember, it could not have been nearly so impersonal, cold-cash a relation in a credit economy), Sumerian religious texts identify it as among the fundamental features of human civilization, a gift given by the gods at the dawn of time. Procreative sex was considered natural (after all, animals did it). Non-procreative sex, sex for pleasure, was divine.
Nice! But of course, you know that is not going to last long.
the origins of commercial prostitution appear to have been caught up in a peculiar mixture of sacred (or once-sacred) practice, commerce, slavery, and debt.
...
“Patriarchy” originated, first and foremost, in a rejection of the great urban civilizations in the name of a kind of purity, a reassertion of paternal control against great cities ..., seen as places of bureaucrats, traders, and whores. The pastoral fringes, the deserts and steppes away from the river valleys, were the places to which displaced, indebted farmers fled. Resistance, in the ancient Middle East, was always less a politics of rebellion than a politics of exodus, of melting away with one's flocks and families-often before both were taken away. ... Then, periodically, they would create their own alliances and sweep back into the cities once again as conquerors. ... nothing there [the Old Testament] mitigates against the suggestion that the extraordinary emphasis we find there on the absolute authority of fathers, and the jealous protection of their fickle womenfolk, was made possible by, but at the same time was a protest against, this very commoditization of people in the cities that they fled.
Graeber quotes feminist historian Gerda Lerner:
By the middle of the second millennium B.C., prostitution was well established as a likely occupation for the daughters of the poor. As the sexual regulation of women of the propertied class became more firmly entrenched, the virginity of respectable daughters became a financial asset for the family. Thus, commercial prostitution came to be seen as a social necessity for meeting the sexual needs of men. What remained problematic was how to distinguish clearly and permanently between respectable and non-respectable women.
I got a great idea how to distinguish! Veils for respectable women! And so it starts ...
the dynamic also led, over the course of millennia, to a systematic demotion of sexuality itself from a divine gift and embodiment of civilized refinement to one of its more familiar associations: with degradation, corruption, and guilt.
...
between the push of commoditization, which fell disproportionally on daughters, and the pull of those trying to reassert patriarchal rights to “protect” women from any suggestion that they might be commoditized, women’s formal and practical freedoms appear to have been gradually but increasingly restricted and effaced. As a result, notions of honor changed too, becoming a kind of protest against the implications of the market, even as at the same time (like the world religions) they came to echo that market logic in endless subtle ways.
Nowhere, however, are our sources as rich and detailed as they are for ancient Greece. This is partly because a commercial economy arrived there so late, almost three thousand years later than in Sumer. As a result, Classical Greek literature gives us a unique opportunity to observe the transformation as it was actually taking place.
So we'll set the wayback machine for Ancient Greece.
Ancient Greece (Honor and Debt)
I think for most of us Ancient Greece begins with The Iliad. And, of course, possibly the main subplot was the feud between Achilles and Agamemnon over ownership of the newly captured slave girl Bryseis. The kings of The Iliad are cut from the heroic mold, like most other places.
Fast forward to the 6th century BC. There is now money.
Greek coinage seems to have been first used mainly to pay soldiers, as well as to pay fines and fees and payments made to and by the government, but by about 600 BC, just about every Greek city-state was producing its own coins as a mark of civic independence. It did not take long, though, before coins were in common use in everyday transactions. By the fifth century, in Greek cities, the agora, the place of public debate and communal assembly, also doubled as a marketplace.
So, again, armies => money => markets. And with money now available, it appears that even then things were pretty much as they are now: all the money in circulation tends to accumulate (fractally) with the rich, the 1%. That led to the standard unrest of poor vs. rich.
Rather than institutionalize periodic amnesties, Greek cities tended to adopt legislation limiting or abolishing debt peonage altogether, and then, to forestall future crises, they would turn to a policy of expansion, shipping off the children of the poor to found military colonies overseas. Before long, the entire coast from Crimea to Marseille was dotted with Greek cities, which served, in turn, as conduits for a lively trade in slaves.
Meanwhile, the Greek aristocracy did as you would expect: look down their noses at the merchant class, the nouveau rich.
Aristocrats disdained the market. Ideally, a man of honor should be able to raise everything he needed on his own estates and never have to handle cash at all.
But, damn, the lure of money - it surely is hard to resist. No wonder it is so hard to move beyond capitalism.
the thing that really seemed to bother them about money was simply that they wanted it so much. Since money could be used to buy just about anything, everyone desired it. That is: it was desirable because it was non-discriminating.
...
nothing was both so undiscriminating, and so desirable, as money.
So against their increasing love/hate relationship with money, the aristrocracy had to redefine their concept of "honor" - and of course, women get to take the brunt of it.
The famous Greek obsession with male honor that still informs so much of the texture of daily life in rural communities ... hearkens back not so much to Homeric honor but to this aristocratic rebellion against the values of the marketplace, which everyone, eventually, began to make their own.
Besides Assyria, Greece was the only country of the time where women were required to be veiled.
Money, then, had passed from a measure of honor to a measure of everything that honor was not.
...
We might say, then, that money introduced a democratization of desire. Insofar as everyone wanted money, everyone, high and low, was pursuing the same promiscuous substance. But even more: increasingly, they did not just want money. They needed it. This was a profound change. In the Homeric world, as in most human economies, we hear almost no discussion of those things considered necessary to human life (food, shelter, clothing) because it is simply assumed that everybody has them. A man with no possessions could, at the very least, become a retainer in some rich man’s household. Even slaves had enough to eat.
Graeber then shares a couple of jokes, and a long story, all of which show how money corrupts both the old heirarchical and the old simple communistic values.
Ha ha, why did this next make me think of Bitcoin?
Pirates and kidnappers do business in cash—yet the loan sharks ... could not have operated without them. It is on this same combination of illegal cash business, usually involving violence, and extremely harsh credit terms, also enforced through violence, that innumerable criminal underworlds have been constructed ever since.
Back to a term to which we were introduced early: moral confusion.
In Athens, the result was extreme moral confusion. The language of money, debt, and finance provided powerful—and ultimately irresistible—ways to think about moral problems. Much as in Vedic India, people started talking about life as a debt to the gods, of obligations as debts, about literal debts of honor, of debt as sin and of vengeance as debt collection.
Graeber then has a long discussion of where Socrates and Plato came down on these issues. LOL, Socrates was a troll!
Socrates eventually gets around to offering some political proposals of his own, involving philosopher kings; the abolition of marriage, the family, and private property; selective human breeding boards. (Clearly, the book was meant to annoy its readers, and for more than two thousand years, it has succeeded brilliantly.)
Graeber also tells a story about Plato being captured by pirates and put on sale as a slave. He is bought by a foreign philosopher who recognized him and immediately frees him. It really drives home the fact that anyone of those times, even kings and emperors, could become a slave at any time.
Ancient Rome (Property and Freedom)
Again, I am appalled by my lack of historical knowledge.
ancient Rome had conquered the world three times: the first time through its armies, the second through its religion, the third through its laws.
...
Law students from South Africa to Peru are expected to spend a good deal of their time memorizing technical terms in Latin, and it is Roman law that provides almost all our basic conceptions about contract, obligation, torts, property, and jurisdiction—and, in a broader sense, of citizenship, rights, and liberties on which political life, too, is based.
I mean, yeah, I have heard of "habeus corpus" and such, but I never connected the dots ...
So here is another place where things just go totally south. Graeber synthesizes that the concept of property in Roman law was primarily constrained in its design to be able to handle slavery. So the right to private property, seen by all, particularly those in rich developed countries, as one of our most important rights, was guided very heavily in its formulation by the need to support slavery!
The most convincing explanation I’ve seen is Orlando Patterson’s: the notion of absolute private property is really derived from slavery.
Here's a brief Latin glossary:
- dominium: absolute private property
- dominus: master, slave-owner
- domus: house, household
- familia: family - but, as proponents of “family values” might be interested to know, familia itself ultimately derives from the word famulus, meaning "slave".
A family was originally all those people under the domestic authority of a paterfamilias, and that authority was, in early Roman law at least, conceived as absolute. A man did not have total power over his wife, since she was still to some degree under the protection of her own father, but his children, slaves, and other dependents were his to do with as he wanted—at least in early Roman law, he was perfectly free to whip, torture, or sell them. A father could even execute his children, provided he found them to have committed capital crimes. With his slaves, he didn’t even need that excuse.
...
It was quite extraordinary, even in the ancient world, for a father to have the right to execute his slaves—let alone his children. No one is quite sure why the early Romans were so extreme in this regard.
I'm going to say, though, that the Romans seem to be way up there in the establishment of partriarchial values. Ugh. More on slavery in Ancient Rome:
What made Roman slavery so unusual, in historical terms, was a conjuncture of two factors. One was its very arbitrariness. In dramatic contrast with, say, plantation slavery in the Americas, there was no sense that certain people were naturally inferior and therefore destined to be slaves. Instead, slavery was seen as a misfortune that could happen to anyone.
...
The second was the absolute nature of this power. ... Only under the early Empire do we see any legislation limiting what owners could do to their (human) property
This absolute power of the dominus led to some counter-intuitive circumstances:
the absolute nature of the master’s power—the fact that in this context, he effectively was the state—also meant that there were also, at first, no restrictions on manumission: a master could liberate his slave, or even adopt him or her, whereby—since liberty meant nothing outside of membership in a community—that slave automatically became a Roman citizen. This led to some very peculiar arrangements. In the first century AD, for example, it was not uncommon for educated Greeks to have themselves sold into slavery to some wealthy Roman in need of a secretary, entrust the money to a close friend or family member, and then, after a certain interval, buy themselves back, thus obtaining Roman citizenship.
The Romans also defined things that we are still arguing about, most notably the meaning of freedom and liberty.
The most insidious effect of Roman slavery, however, is that through Roman law, it has come to play havoc with our idea of human freedom. The meaning of the Roman word libertas itself changed dramatically over time. As everywhere in the ancient world, to be “free” meant, first and foremost, not to be a slave. Since slavery means above all the annihilation of social ties and the ability to form them, freedom meant the capacity to make and maintain moral commitments to others. The English word “free,” for instance, is derived from a German root meaning “friend,” since to be free meant to be able to make friends, to keep promises, to live within a community of equals. This is why freed slaves in Rome became citizens: to be free, by definition, meant to be anchored in a civic community, with all the rights and responsibilities [my bold] that this entailed.
By the second century AD, however, this had begun to change. The jurists gradually redefined libertas until it became almost indistinguishable from the power of the master. It was the right to do absolutely anything, with the exception, again, of all those things one could not do. Actually, in the Digest, the definitions of freedom and slavery appear back to back:
Freedom is the natural faculty to do whatever one wishes that is not prevented by force or law. Slavery is an institution according to the law of nations whereby one person becomes private property (dominium) of another, contrary to nature.
So "slavery" is "contrary to nature"? But, it's OK, we like it anyway.
Meanwhile, I will posit that freedom without responsibility gives the "freedumb" that we see so much of with anti-vaxers, gun nuts, and their ilk nowadays.
This chapter ends with a "Conclusions" section. Graeber reviews the prior 5 chapters defining his theories, before the fun part of following these theories throughout human history.
In what I’ve been calling heroic societies, of course, this kind of addition and subtraction of honor and disgrace is lifted from a somewhat marginal practice to become the very essence of politics. As endless epics, sagas, and eddas attest, heroes become heroes by making others small.
...
In heroic societies, the role of violence is not hidden—it’s glorified.
Here's an odd fact mentioned almost in passing:
Kings surround themselves with slaves for the same reason that they surround themselves with eunuchs: because the slaves and criminals have no families or friends, no possibility of other loyalties—or at least, in principle, they shouldn’t. But, in a way, kings should really be like that too. As many an African proverb emphasizes: a proper king has no relatives either, or at least, he acts as if he does not. In other words, king and slave are mirror images, in that unlike normal human beings who are defined by their commitments to others, they are defined only by relations of power. They are as close to perfectly isolated, alienated beings as one can possibly become.
LOL, our old friend homo economicus! Well, it agrees with something I read lately - that, unlike the rest of us, the 1% and up actually do behave kind of like homo economicus!
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Chapter 8, 47 pages, is titled "Credit Versus Bullion, And the Cycles of History". Before we move on, Graeber gives us some good news about slavery. [This should have been in the last chapter maybe? But putting it here lets Graeber tell us about "a shape to the past"?]
slavery has been eliminated—or effectively eliminated—many times in human history.
In Europe, for instance, the institution largely vanished in the centuries following the collapse of the Roman empire—an historical achievement rarely recognized by those of us used to referring to these events as the beginning of “the Dark Ages.”
...
Remarkably, right around the same time—in the years around 600 AD—we find almost exactly the same thing happening in India and China, where, over the course of centuries, amidst much unrest and confusion, chattel slavery largely ceased to exist. What all this suggests is that moments of historical opportunity—moments when meaningful change is possible—follow a distinct, even a cyclical pattern, one that has long been far more coordinated across geographical space than we would ever have imagined. There is a shape to the past, and it is only by understanding it that we can begin to have a sense of the historical opportunities that exist in the present.
...
The moment we begin to map the history of money across the last five thousand years of Eurasian history, startling patterns begin to emerge. In the case of money, one event stands out above all others: the invention of coinage. Coinage appears to have arisen independently in three different places, almost simultaneously: on the Great Plain of northern China, in the Ganges river valley of northeast India, and in the lands surrounding the Aegean Sea, in each case, between roughly 600 and 500 BC. This wasn’t due to some sudden technological innovation: the technologies used in making the first coins were, in each case, entirely different. It was a social transformation. Why this happened in exactly this way is an historical mystery. But this much we know: for some reason, in Lydia, India, and China, local rulers decided that whatever longstanding credit systems had existed in their kingdoms were no longer adequate, and they began to issue tiny pieces of precious metals—metals that had previously been used largely in international commerce, in ingot form—and to encourage their subjects to use them in day-to-day transactions.
Graeber divides history into 5 periods, the 1st 1 covered in this chapter, the final 4 in chapters 9-12. The main thing distinguishing the periods? Credit Versus Bullion.
- Age of the First Agrarian Empires (3500–800 BC)
[Credit]
The Axial Age (800 BC - 600 AD) [Bullion]
The Middle Ages (600 AD - 1450 AD) [Credit]
Age of the Great Capitalist Empires (1450 - 1971) [Bullion]
The Beginning of Something Yet to Be Determined (1971 - present) [Credit]
Why? The single most important factor would appear to be war. Bullion predominates, above all, in periods of generalized violence.
...
On the one hand, soldiers tend to have access to a great deal of loot, much of which consists of gold and silver, and will always seek a way to trade it for the better things in life. On the other, a heavily armed itinerant soldier is the very definition of a poor credit risk.
Reviewing the 1st period, Graeber notes that in Mesopotamia (3500–800 BC), interest on loans came into being. He speculates that this was to allow banks and lenders to share in the proceeds of merchants, who possibly are distributing their goods overseas or in other somewhat risky circumstances. We hear again about jubilees - general debt forgiveness, and again are told the origin of the word "freedom":
“He instituted freedom (amargi) in Lagash. He restored the child to its mother, and the mother to her child; he canceled all interest due.” This was, in fact, the very first such declaration we have on record—and the first time in history that the word “freedom” appears in a political document.
Interestingly, Egypt (3500–800 BC) "
for most of its history ... managed to avoid the development of interest-bearing debt entirely. Hah, this is interesting:
It’s well known that the Rosetta Stone, written both in Greek and Egyptian, proved to be the key that made it possible to translate Egyptian hieroglyphics. Few are aware of what it actually says. The stela was originally raised to announce an amnesty, both for debtors and for prisoners, declared by Ptolemy V in 196 BC.
Jubilee!
Little is known of India in this time, and China (2200–771 BC) apparently had several different social currencies, including cowry shells. China appears to have created bureaucracies with central storage of resources well after Mesopotamia and Egypt.
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Chapter 9, 128 pages, is titled "The Axial Age (800 BC - 600 AD)".
The phrase “The Axial Age” was coined by the German existentialist philosopher Karl Jaspers. ... Jaspers became fascinated by the fact that figures like Pythagoras (570–495 BC), the Buddha (563–483 BC), and Confucius (551–479 BC) were all contemporaries, and that Greece, India, and China, in that period, all saw a sudden efflorescence of debate between contending intellectual schools, each group apparently unaware of the others’ existence. Like the simultaneous invention of coinage, why this happened had always been a puzzle.
Of course, it's obvious why this happened: ancient aliens! I'm pretty sure I saw this on TV. [Joke]
For Jaspers, the period begins with the Persian prophet Zoroaster, around 800 BC ... Let us define the Axial Age, then, as running from 800 BC to 600 AD. This makes the Axial Age the period that saw the birth not only of all the world’s major philosophical tendencies, but also all of today’s major world religions: Zoroastrianism, Prophetic Judaism, Buddhism, Jainism, Hinduism, Confucianism, Taoism, Christianity, and Islam.
And, meanwhile, at the start of this period, coins were invented (ancient aliens).
What was the connection? We might start by asking: What is a coin? The normal definition is that a coin is a piece of valuable metal, shaped into a standardized unit, with some emblem or mark inscribed to authenticate it. The world’s first coins appear to have been created within the kingdom of Lydia, in western Anatolia (now Turkey), sometime around 600 BC.
...
invented by private citizens, coinage was quickly monopolized by the state.
...
Most precious metals took the form of wealthy women’s anklets and heirloom chalices presented by kings to their retainers, or it was simply stockpiled in temples, in ingot form, as sureties for loans. Somehow, during the Axial Age, all this began to change. Large amounts of silver, gold, and copper were dethesaurized, as the economic historians like to say; it was removed from the temples and houses of the rich and placed in the hands of ordinary people, was broken into tinier pieces, and began to be used in everyday transactions.
How? ... Most of it was stolen.
There's a good word: "dethesaurized". I did not know that "thesaurus" had a 2ndary meaning: a treasury or storehouse. So to dethesaurize is to remove from a treasury or storehouse.
So who were the thieves? All 3 of areas where coinage developed were living in tumultuous times, and armies were transitioning from being a king's posse of retainers to being trained, professional soldiers. The Greek phalanx was invented and gave the Greeks a leg up as mercenaries.
we have already seen why governments might have incentive to do so [create coinage]: the existence of markets was highly convenient for governments, and not just because it made it so much easier for them to provision large standing armies. By insisting that only their own coins were acceptable as fees, fines, or taxes, governments were able to overwhelm the innumerable social currencies that already existed in their hinterlands, and to establish something like uniform national markets.
Actually, one theory is that the very first Lydian coins were invented explicitly to pay mercenaries.
So again, armies => coins => markets. And we now see more clearly what a modern market is: a place where you can do business with strangers using money.
Interesting, more history I did not particularly know.
none of the great trading nations of the Mediterranean had as yet showed the slightest interest in them [coins]. The Phoenicians, for example, were considered the consummate merchants and bankers of antiquity. They were also great inventors, having been the first to develop both the alphabet and the abacus. Yet for centuries after the invention of coinage, they preferred to continue conducting business as they always had, with unwrought ingots and promissory notes.
Carthage, the greatest of the Phoenician cities, started using coins
when “forced to do so to pay Sicilian mercenararies". But, sadly, the merchants and bankers were no match for empires with professional soldiers. Sidon was destroyed by a Persian emporer in 351 BC. Tyre was destroyed by Alexander in 332 BC. And Carthage, after the Punic Wars - yay, I've heard of those - was finally destroyed by Rome in 146 BC.
Interesting, as they spread, mints were located in temples - where most of the precious metals were usually kept.
But, currency also acted as a force for democratization. Rather than everyone being debt peons to the 1%-ers of the time, the government could mint coin and use it to pay their soldiers, who were free farmers when not at war.
So the government wants coins; it needs precious metals to base the coins on; those come from mines; and who gets to work in the mines? Slaves. The destruction of the Phoenician cities created 10s of 1000s of slaves.
Geoffrey Ingham calls the resulting system a “military-coinage complex”—though I think it would be even better to call it a “military-coinage-slavery complex.”
Alexander the Great gives the template for how to finance an attempt to conquer the world militarily:
Alexander was also the man responsible for destroying what remained of the ancient credit systems, since not only the Phoenicians but also the old Mesopotamian heartland had resisted the new coin economy. His armies not only destroyed Tyre; they also dethesaurized the gold and silver reserves of Babylonian and Persian temples, the security on which their credit systems were based, and insisted that all taxes to his new government be paid in his own money. The result was to “release the accumulated specie of century onto the market in a matter of months,” something like 180,000 talents, or in contemporary terms, an estimated $285 billion.
Interesting, that was kind of a "once-in-history" type event. Next up, Rome.
Its early history ... is one of continual struggles between patricians and plebians, and of continual crises over debt. Periodically, these would lead to what were called moments of “the secession of the plebs,” when the commoners of the city abandoned their fields and workshops, camped outside the city, and threatened mass defection—an interesting halfway point between the popular revolts of Greece and the strategy of exodus typically pursued in Egypt and Mesopotamia.
So, duh, debt was the usual topic of the back-and-forth between the Roman patricians and plebians. In the end, tho, free peasantry was replaced by debt peonage to 1%-ers, so the army had to be made of German barbarian import mercenaries - "
with results that need hardly be recalled here."
We now move to India. During this same time, India was highly fragmented just as Greece was. There were republics, who were old school, with the warrior caste providing the army; and there were kingdoms, who used the more modern model, with trained, professional soldiers who had to be paid coins.
Kautilya’s Arthasastra, a political treatise written by one of the chief ministers for the Mauryan dynasty that succeeded it (321–185 BC), stated the matter precisely: “The treasury is based upon mining, the army upon the treasury; he who has army and treasury may conquer the whole wide earth.”
...
By the time of emperor Aśoka (273–232 BC), the Mauryan dynasty controlled almost all of present-day India and Pakistan, but the Indian version of the military-coinage-slavery complex was showing definite signs of strain. Perhaps the clearest sign was the debasement of the coinage, which over the course of two centuries or so had gone from almost pure silver to about fifty percent copper.
Time for Buddhism?
Early Buddhist economic attitudes have long been considered something of a puzzle. On the one hand, monks could not own property as individuals; they were expected to live an austere communistic life with little more than a robe and begging bowl as personal possessions, and they were strictly forbidden to so much as touch anything made of gold or silver. On the other hand, however suspicious of precious metals, Buddhism had always had a liberal attitude toward credit arrangements. It is one of the few of the great world religions that has never formally condemned usury.
...
while Aśoka’s own empire was not long to endure, soon to be replaced by a succession of ever weaker and mostly smaller states, Buddhism took root. The decline of the great armies eventually led to the near-disappearance of coinage, but also to a veritable efflorescence of increasingly sophisticated forms of credit.
On to China. Pretty much the same pattern.
Still, the golden age of Chinese philosophy was the period of chaos that preceded unification, and this followed the typical Axial Age pattern: the same fractured political landscape, the same rise of trained, professional armies, and the creation of coined money largely in order to pay them. We also see the same government policies designed to encourage the development of markets, chattel slavery on a scale not seen before or since in Chinese history, the appearance of itinerant philosophers and religious visionaries, battling intellectual schools, and eventually, attempts by political leaders to transform the new philosophies into religions of state.
There were also significant differences, starting with the currency system. China never minted gold or silver coins. Merchants used precious metals in the form of bullion, but the coins in actual circulation were basically small change: cast bronze disks, usually with a hole in the middle so that they could be strung together. Such strings of “cash” were produced in extraordinary numbers, and very large amounts had to be assembled for large-scale transactions: when wealthy men wished to make donations to temples, for instance, they had to use oxcarts to carry the money. The most plausible explanation is that, especially after unification, Chinese armies were enormous—some Warring States armies numbered up to a million—but not nearly as professional or well paid as those of kingdoms farther west, and from Qin and Han times on, rulers were careful to ensure that this remained the case, to make sure their armies never became an independent power base.
I thought the pattern for these chapters was looking like: Intro, Mediterranean, India, China, Outro.
Nope. We now have a section "Materialism I: The Pursuit of Profit", followed by "Materialism II: Substance". I guess I could characterize these sections as: "The existence of money led to a very materialistic outlook on things, which of course created a backlash." The days of heroic societies, with their emphasis on honor, are done. Profit and advantage are what matter now.
If the underlying assumption very much resembles those of contemporary economists, it’s no coincidence—but with the difference that, in an age when money, markets, states, and military affairs were all intrinsically connected, money was needed to pay armies to capture slaves to mine gold to produce money; when “cutthroat competition” often did involve the literal cutting of throats, it never occurred to anyone to imagine that selfish ends could be pursued by peaceful means. Certainly, this picture of humanity does begin to appear, with startling consistency, across Eurasia, wherever we also see coinage and philosophy appear.
Coinage and philosophy? Is this more ancient aliens foo? Well, apparently there are scholars of this era who it seems are thinking along the lines of, coinage/money has a physical aspect, but also a 2nd aspect, its worth. Plus it is fungible, it can be turned into anything. Is all of matter and existence set up on similar lines? Really??? Yes, really.
In fact, some of the historical connections are so uncannily close that they are very hard to explain any other way. Let me give an example. After the first coins were minted around 600 BC in the kingdom of Lydia, the practice quickly spread to Ionia, the Greek cities of the adjacent coast. The greatest of these was the great walled metropolis of Miletus, which also appears to have been the first Greek city to strike its own coins. It was Ionia, too, that provided the bulk of the Greek mercenaries active in the Mediterranean at the time, with Miletus their effective headquarters. Miletus was also the commercial center of the region and, perhaps, the first city in the world where everyday market transactions came to be carried out primarily in coins instead of credit. Greek philosophy, in turn, begins with three men: Thales, of Miletus (c. 624 BC–c. 546 BC), Anaximander, of Miletus (c. 610 BC–c. 546 BC), and Anaximenes, of Miletus (c. 585 BC–c. 525 BC)—in other words, men who were living in that city at exactly the time that coinage was first introduced. All three are remembered chiefly for their speculations on the nature of the physical substance from which the world ultimately sprang.
...
In India and China, the debate took different forms, but materialism was always the starting point.
...
The ultimate effect was a kind of ideal division of spheres of human activity that endures to this day: on the one hand the market, on the other, religion. To put the matter crudely: if one relegates a certain social space simply to the selfish acquisition of material things, it is almost inevitable that soon someone else will come to set aside another domain in which to preach that, from the perspective of ultimate values, material things are unimportant, that selfishness—or even the self—are illusory, and that to give is better than to receive.
So what led to the demise of the Axial Age?
as warring cities and principalities were replaced by great empires and especially, as those empires began to reach the limits of their expansion, sending the military-coinage-slavery complex into crisis, all this changed.
Time for the Middle Ages.
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Chapter 10, 254 pages, is titled "The Middle Ages (600 AD - 1450 AD)".
If the Axial Age saw the emergence of complementary ideals of commodity markets and universal world religions, the Middle Ages were the period in which those two institutions began to merge.
Everywhere, the age began with the collapse of empires. Eventually, new states formed, but in these new states, the nexus between war, bullion, and slavery was broken; conquest and acquisition for their own sake were no longer celebrated as the end of all political life. At the same time, economic life, from the conduct of international trade to the organization of local markets, came to fall increasingly under the regulation of religious authorities. One result was a widespread movement to control, or even forbid, predatory lending. Another was a return, across Eurasia, to various forms of virtual credit money.
Graeber makes the point that we, in general, think of the Middle Ages as the Dark Ages. But, that was only true for Western Europe, which mostly consisted of Roman outposts that wound up being abandoned. The action was not in Western Europe, the action was in India, China, and Islam, and didn't make it to Western Europe until 400 years into the period.
So we start with a section "Medieval India (Flight into Heirarchy)". The empire of Aśoka was replaced by smaller kingdoms, as India came to be known as a country of small villages. But meanwhile, Buddhism is thriving, and, who knew, Buddhist monks knew finance!
The key innovation was the creation of what were called the “perpetual endowments” or “inexhaustible treasuries.” Say a lay supporter wished to make a contribution to her local monastery. Rather than offering to provide candles for a specific ritual, or servants to attend to the upkeep of the monastic grounds, she would provide a certain sum of money—or something worth a great deal of money—that would then be loaned out in the name of the monastery, at the accepted 15-percent annual rate. The interest on the loan would then be earmarked for that specific purpose.
So credit systems are back. But what happened to all the coins?
When coins go out of circulation, after all, the metal doesn’t simply disappear. In the Middle Ages—and this seems to have been true across Eurasia—the vast majority of it ended up in religious establishments, churches, monasteries, and temples, either stockpiled in hoards and treasuries or gilded onto or cast into altars, sanctums, and sacred instruments. Above all, it was shaped into images of gods.
So like in the "Vikings" TV series, when the Vikings raided England, they plundered monasteries, etc., because that was where the loot was! And some wannabe conqueror looking for a source of coin to fund his army is going to have to try do wrest it away from the churches - generally not a popular thing to do.
India somehow transitioned from Buddhism back to Hinduism.
During much of the period immediately following the collapse of the Mauryan empire, for instance, much of India was governed by foreigners. Apparently, this increasing distance allowed local Brahmins to begin reshaping the new—increasingly rural—society along strictly hierarchical principles.
So this is where the Indian caste system gets locked in?
The Laws of Manu carefully classify slaves into seven types depending on how they were reduced to slavery (war, debt, self-sale …) and explain the conditions under which each might be emancipated—but then go on to say that Sudras can never really be emancipated, since, after all, they were created to serve the other castes.
Sudras === untouchables. Interesting, usury was allowed and variable by caste: 24%/year for the Brahmins, up to 60%/year for Sudras. Hah, not much different from today, with the rates of payday lenders.
The laws also identify five different ways interest can be paid, of which the most significant for our concerns is “bodily interest”: physical labor in the creditor’s house or fields, to be rendered until such time as the principal is cleared. Even here, though, caste considerations were paramount. No one could be forced into the service of anyone of lower caste; moreover, since debts were enforceable on a debtor’s children and even grandchildren, “until the principal is cleared” could mean quite some time ...
Hmmm, but they did include a jubilee, of a sort.
Paying the principle might take generations, but the law stipulated that even if it was never paid, in the third generation, they would be freed.
Graeber again makes a point about debt that seems very counter-intuitive to me.
The British Raj discovered this to their occasional chagrin when they used debt peonage—superimposed on the caste system—as the basis of their labor system in colonial India. Perhaps the paradigmatic popular insurrection was the Deccan riots of 1875, when indebted farmers rose up to seize and systematically destroy the account books of local money-lenders. Debt peonage, it would appear, is far more likely to inspire outrage and collective action than is a system premised on pure inequality.
The next section is "China: Buddhism (the Economy of Infinite Debt)".
here as elsewhere, there was an initial period of breakdown: after the collapse of the Han dynasty around 220 AD, the central state broke apart, cities shrank, coins disappeared, and so on. But in China this was only temporary. As Max Weber long ago pointed out, once one sets up a genuinely effective bureaucracy, it’s almost impossible to get rid of it. And the Chinese bureaucracy was uniquely effective. Before long, the old Han system reemerged: a centralized state, run by Confucian scholar-gentry trained in the literary classics, selected through a national exam system, working in meticulously organized national and regional bureaus where the money supply, like other economic matters, was continually monitored and regulated. Chinese monetary theory was always chartalist. This was partly just an effect of size: the empire and its internal market were so huge that foreign trade was never especially important; therefore, those running the government were well aware that they could turn pretty much anything into money, simply by insisting that taxes be paid in that form.
Here's a good new word:
contumacious, meaning
"obstinately disobedient or rebellious; insubordinate", referring to the Chinese rural populations. China changed dynasties when the nomads to the north got tired of being bribed and invaded, or after successful peasant insurrections.
The Confucian state may have been the world’s greatest and most enduring bureaucracy, but it actively promoted markets, and as a result, commercial life in China soon became far more sophisticated, and markets more developed, than anywhere else in the world.
This despite the fact that Confucian orthodoxy was overtly hostile to merchants and even the profit motive itself. Commercial profit was seen as legitimate only as compensation for the labor that merchants expended in transporting goods from one place to another, but never as fruits of speculation. What this meant in practice was that they were pro-market but anti-capitalist.
So markets use money as a universal means of getting things, but "using money for nothing but to make more money" is capitalism? The Confucian bureaucracy is not a religion. The religious side of the picture comes from the Buddhists, who saw their influence grow in China as it shrank in India. We saw in the last chapter how their members would endow the monasteries to create the "
Inexhaustible Treasury". In the interest of brevity, I am going to skip over 2 new kinds of debt:
karmic debt and
milk debt.
The Buddhists did melt down a lot of coin for statues. That did not help the economy, and periodically the government would crack down on the temples. The government managed to keep some coins in circulation, but the Chinese also used our old friends tally sticks, but made of bamboo rather then hazelwood.
By the 9th century, merchants not wanting to transport lots of coins created a system called "Flying Money", where a note drawn on a bank in 1 city is torn in half, like a tally, and then is honored by another bank. As we've seen before, these can be passed around and become paper currency.
The government, as usual, first tried to ban the practice, then control it (granting a monopoly to sixteen leading merchants), then, finally, set up a government monopoly—the Bureau of Exchange Medium, established in 1023—and before long, aided by the newly invented printing press, was operating factories in several cities employing thousands of workers and producing literally millions of notes.
Graeber ends the section with a little debunking.
Nonetheless, the main point I’d like to emphasize here is that terms like “fiat money,” however common, are deceptive. Almost all of the new forms of paper money that emerged were 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. If it was only China that developed paper money in the Middle Ages, this was largely because only in China was there a government large and powerful enough, but also, sufficiently suspicious of its mercantile classes, to feel it had to take charge of such operations itself.
The next section is "The Near West: Islam (Capital as Credit)". Never forget that Mohammed was a merchant before he became a prophet. So overall, in the Islamic world religion partners with business and gives the cold shoulder to government.
Medieval Islam, on the other hand, enthusiastically embraced law, which was seen as a religious institution derived from the Prophet, but tended to view government, more often than not, as an unfortunate necessity, an institution that the truly pious would do better to avoid.
...
This disjuncture had profound economic effects. It meant that the Caliphate, and later Muslim empires, could operate in many ways much like the old Axial Age empires—creating professional armies, waging wars of conquest, capturing slaves, melting down loot and distributing it in the form of coins to soldiers and officials, demanding that those coins be rendered back as taxes—but at the same time, without having nearly the same effects on ordinary people’s lives.
The government's main tool of statecraft - its army - wound up becoming largely composed of slaves in the Islamic world.
One reason for the recourse to slave soldiers was their tendency to discourage the faithful from serving in the military (since it might mean fighting fellow believers). The legal system that they created also ensured that it was effectively impossible for Muslims—or for that matter Christian or Jewish subjects of the Caliphate—to be reduced to slavery.
...
Islamic law took aim at just about all the most notorious abuses of earlier, Axial Age societies. Slavery through kidnapping, judicial punishment, debt, and the exposure or sale of children, even through the voluntary sale of one’s own person—all were forbidden, or rendered unenforceable. Likewise with all the other forms of debt peonage that had loomed over the heads of poor Middle Eastern farmers and their families since the dawn of recorded history. Finally, Islam strictly forbade usury, which it interpreted to mean any arrangement in which money or a commodity was lent at interest, for any purpose whatsoever.
With interest not allowed, investment was normally done via profit-sharing partnerships. The hero of the time was the merchant prince, like Sinbad the Sailor.
In Islamic society, the merchant became not just a respected figure, but a kind of paragon: like the warrior, a man of honor able to pursue far-flung adventures; unlike him, able to do so in a fashion damaging to no one.
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The veneration of the merchant was matched by what can only be called the world’s first popular free-market ideology. True, one should be careful not to confuse ideals with reality. Markets were ever entirely independent from the government. Islamic regimes did employ all the usual strategies of manipulating tax policy to encourage the growth of markets, and they periodically tried to intervene in commercial law. Still, there was a very strong popular feeling that they shouldn’t. Once freed from its ancient scourges of debt and slavery, the local bazaar had become, for most, not a place of moral danger, but the very opposite: the highest expression of the human freedom and communal solidarity, and thus to be protected assiduously from state intrusion.
LOL, I promised that we would see Adam Smith kicked around some more later in the book, here we go:
There was a particular hostility to anything that smacked of price-fixing. One much-repeated story held that the Prophet himself had refused to force merchants to lower prices during a shortage in the city of Medina, on the grounds that doing so would be sacrilegious, since, in a free-market situation, “prices depend on the will of God.” Most legal scholars interpreted Mohammed’s decision to mean that any government interference in market mechanisms should be considered similarly sacrilegious, since markets were designed by God to regulate themselves.
If all this bears a striking resemblance to Adam Smith’s “invisible hand” (which was also the hand of Divine Providence), it might not be a complete coincidence. In fact, many of the specific arguments and examples that Smith uses appear to trace back directly to economic tracts written in medieval Persia.
The Persian economists were
Ghazali (1058–1111 AD) and
Tusi (1201–1274 AD).
One telling example: like Smith, Tusi begins his treatise on economics with a discussion of the division of labor; but where for Smith, the division of labor is actually an outgrowth of our “natural propensity to truck and barter” in pursuit of individual advantage, for Tusi, it was an extension of mutual aid
...
As a result, he argues, divine providence has arranged us to have different abilities, desires, and inclinations. The market is simply one manifestation of this more general principle of mutual aid, of the matching of abilities (supply) and needs (demand)—or, to translate it into my own earlier terms, it is not only founded on, but is itself an extension of the kind of baseline communism on which any society must ultimately rest.
Here is Graeber's conclusion to the section:
Much of our free-market doctrine, then, appears to have been originally borrowed piecemeal from a very different social and moral universe. The mercantile classes of the medieval Near West had pulled off an extraordinary feat. By abandoning the usurious practices that had made them so obnoxious to their neighbors for untold centuries before, they were able to become—alongside religious teachers—the effective leaders of their communities: communities that are still seen as organized, to a large extent, around the twin poles of mosque and bazaar. The spread of Islam allowed the market to become a global phenomenon, operating largely independent of governments, according to its own internal laws. But the very fact that this was, in a certain way, a genuine free market, not one created by the government and backed by its police and prisons—a world of handshake deals and paper promises backed only by the integrity of the signer—meant that it could never really become the world imagined by those who later adopted many of the same ideas and arguments: one of purely self-interested individuals vying for material advantage by any means at hand.
The next section is "The Far West:Christendom (Commerce, Lending, and War)". We already heard how Charlemagne's virtual currency continued to be used for centuries. There were some local mints, and various kings who would promote their currency. As with the Islamic world, the Christians also had issues with usury.
the early Christian Fathers, who laid the foundation of Church teachings on social issues in the waning years of the Roman empire, were writing amidst the ancient world’s last great debt crisis, one that was effectively in the process of destroying the empire’s remaining free peasantry. While few were willing to condemn slavery, all condemned usury.
Usury was seen above all as an assault on Christian charity, on Jesus’s injunction to treat the poor as they would treat the Christ himself, giving without expectation of return and allowing the borrower to decide on recompense (Luke 6:34–35).
I've commented on this next before - that the apostles in Acts are totally communistic. Of course, that was never going to hold up.
The communism of the Apostles—who pooled all their wealth and took freely what they needed—was thus the only proper model for a truly Christian society. Few of the other Christian Fathers were willing to take things this far. True, they admitted, communism was the ideal, but in this fallen and temporary world, it was simply unrealistic.
I definitely agree with this next statement.
Charity, however, is a way of maintaining inequality, not undermining it.
There is quite a discussion of what the Bible says about usury. The Old Testament says you can practice usury with strangers. So lots of European kings used that to justify their hiring Jewish moneylenders. Yet another raw deal for the Jews, they could be tortured until the king got the terms that he wanted. But it didn't last that long.
Already in the 1190s, preachers were complaining about lords who would work hand in glove with Christian moneylenders claiming they were “our Jews”—and thus under their special protection. By the 1100s, most Jewish moneylenders had long since been displaced by Lombards (from Northern Italy) and Cahorsins (from the French town of Cahors)—who established themselves across Western Europe and became notorious rural usurers.
The rise of rural usury was itself a sign of a growing free peasantry (there had been no point in making loans to serfs, since they had nothing to repossess). It accompanied the rise of commercial farming, urban craft guilds, and the “commercial revolution” of the High Middle Ages, all of which finally brought Western Europe to a level of economic activity comparable to that long since considered normal in other parts of the world.
...
Merchant capitalism of the sort long familiar in the Muslim Near West only really managed to establish itself—quite late, compared with the situation in the rest of the medieval world—when merchant capitalists managed to secure a political foothold in the independent city-states of northern Italy—most famously, Venice, Florence, Genoa, and Milan—followed by the German cities of the Hanseatic League. Italian bankers ultimately managed to free themselves from the threat of expropriation by themselves taking over governments and by doing so, acquiring their own court systems (capable of enforcing contracts) and, even more critically, their own armies.
What jumps out, in comparison with the Muslim world, are these links of finance, trade, and violence. Whereas Persian and Arab thinkers assumed that the market emerged as an extension of mutual aid, Christians never completely overcame the suspicion that commerce was really an extension of usury, a form of fraud only truly legitimate when directed against one’s mortal enemies. Debt was, indeed, sin—on the part of both parties to the transaction. Competition was essential to the nature of the market, but competition was (usually) nonviolent warfare. There was a reason why, as I’ve already observed, the words for “truck and barter” in almost all European languages were derived from terms meaning “swindle,” “bamboozle,” or “deceive.”
Well, I guess we can't talk about the Middle Ages in Europe without the Knights Templar.
A fighting order of monks, they played a key role in financing the Crusades. Through the Templars, a lord in southern France might take out a mortgage on one of his tenements and receive a “draft” (a bill of exchange, modeled on the Muslim suftaja, but written in a secret code) redeemable for cash from the Temple in Jerusalem. In other words, Christians appear to have first adopted Islamic financial techniques to finance attacks against Islam.
But, karma is a bitch ...
The Templars lasted from 1118 to 1307, but they finally went the way of so many medieval trading minorities: King Phillip IV, deep in debt to the order, turned on them, accusing them of unspeakable crimes; their leaders were tortured and ultimately killed, and their wealth was expropriated.
And more Middle Ages fu: fairs, knights, tournaments, jousting ... plus, the Holy Grail - of course, a metaphor for money!
the Champagne fairs... were both the great yearly emporia and great financial clearing houses of the European High Middle Ages.
...
It was around this same time, however, at the height of the fairs of Champagne and the Italian merchant empires, between 1160 and 1172, that the term “adventure” began to take on its contemporary meaning. The man most responsible for it was the French poet Chretien de Troyes, author of the famous Arthurian romances—most famous, perhaps, for being the first to tell the story of Sir Percival and the Holy Grail. The romances were a new sort of literature featuring a new sort of hero, the “knight-errant,” a warrior who roamed the world in search of, precisely, “adventure”—in the contemporary sense of the word: perilous challenges, love, treasure, and renown. Stories of knightly adventure quickly became enormously popular, Chretein was followed by innumerable imitators, and the central characters in the stories—Arthur and Guinevere, Lancelot, Gawain, Percival, and the rest—became known to everyone, as they are still. This courtly ideal of the gallant knight, the quest, the joust, romance and adventure, remains central to our image of the Middle Ages.
The curious thing is that it bears almost no relation to reality. Nothing remotely like a real “knight-errant” ever existed. “Knights” had originally been a term for freelance warriors, drawn from the younger or, often, bastard sons of the minor nobility. Unable to inherit, they were often forced to band together to seek their fortunes.
...
not only the code of chivalry, but the tournament, the joust—all these were more than anything else ways of keeping them out of trouble, as it were, in part by setting knights against each other
...
So, it was not only that the merchants supplied the materials that made the fairs possible; since vanquished knights technically owed their lives to the victors, merchants ended up, in their capacity as moneylenders, making good business out of liquidating their assets.
And finally, the Holy Grail. It really has been explained many times as a financial instrument, starting with Richard Wagner the composer.
Where earlier epic heroes sought after, and fought over, piles of real, concrete gold and silver—the Nibelung’s hoard—these new ones, born of the new commercial economy, pursued purely abstract forms of value. No one, after all, knew precisely what the Grail was. ... In a way, it doesn’t matter. The point is that it’s invisible, intangible, but at the same time of infinite, inexhaustible value, containing everything, capable of making the wasteland flower, feeding the world, providing spiritual sustenance, and healing wounded bodies. Marc Shell even suggested that it would best be conceived as a blank check, the ultimate financial abstraction.
The concluding section is "What, Then, Were the Middle Ages?". Again, Graeber talks about how late - 4 centuries late - Western Europe was in developing financial instruments, trade, and universities such as the rest of the world had.
If the Axial Age was the age of materialism, the Middle Ages were above all else the age of transcendence. The collapse of the ancient empires did not, for the most part, lead to the rise of new ones. Instead, once-subversive popular religious movements were catapulted into the status of dominant institutions. Slavery declined or disappeared, as did the overall level of violence. As trade picked up, so did the pace of technological innovation; greater peace brought greater possibilities not only for the movement of silks and spices, but also of people and ideas.
So what led from the Middle Ages to the next Age - of the Great Capitalist Empires? I think Graeber is saying that the main impetus came from an invention of Western Europe that the Islamic world did not have - the corporation.
Buddhism, unlike Islam, produced something very much like what we now call “corporations”—entities that, through a charming legal fiction, we imagine to be persons, just like human beings, but immortal, never having to go through all the human untidiness of marriage, reproduction, infirmity, and death. To put it in properly medieval terms, they are very much like angels.
LOL! Corporations as angels is definitely the medieval version; nowadays we say that they are semi-immortal artificial intelligences who use individual human bodies and brains as their cells.
Still, the ground was only really prepared for capitalism in the familiar sense of the term when the merchants began to organize themselves into eternal bodies as a way to win monopolies, legal or de facto, and avoid the ordinary risks of trade. An excellent case in point was the Society of Merchant Adventurers, charted by King Henry IV in London in 1407, who, despite the romantic-sounding name, were mainly in the business of buying up British woolens and selling them in the Flanders fairs. ... When such companies began to engage in armed ventures overseas, though, a new era of human history might be said to have begun.
[Back to the top]
Chapter 11, 248 pages, is titled "Age of the Great Capitalist Empires (1450 - 1971)".
The era begins around 1450 with a turn away from virtual currencies and credit economies and back to gold and silver. The subsequent flow of bullion from the Americas sped the process immensely, sparking a “price revolution” in Western Europe that turned traditional society upside-down. What’s more, the return to bullion was accompanied by the return of a whole host of other conditions that, during the Middle Ages, had been largely suppressed or kept at bay: vast empires and professional armies, massive predatory warfare, untrammeled usury and debt peonage, but also materialist philosophies, a new burst of scientific and philosophical creativity—even the return of chattel slavery. It was in no way a simple repeat performance. All the Axial Age pieces reappeared, but they came together in an entirely different way.
So the 1400s in Europe: numerous appearances of The Black Death, with 1/3 the population dead. This was great for farmers and other laborers - wages went up! But then, the gold and silver from South America began to pour into Europe. So, monetarism-based inflation - too much money chasing too few goods?
No. Europe actually had a shortage of silver, because, China had to give up on its paper money and go back to silver coinage.
since Roman times, Europe had been exporting gold and silver to the East: the problem was that Europe had never produced much of anything that Asians wanted to buy, so it was forced to pay in specie for silks, spices, steel, and other imports. The early years of European expansion were largely attempts to gain access either to Eastern luxuries or to new sources of gold and silver with which to pay for them. In those early days, Atlantic Europe really had only one substantial advantage over its Muslim rivals: an active and advanced tradition of naval warfare, honed by centuries of conflict in the Mediterranean. The moment when Vasco da Gama entered the Indian Ocean in 1498, the principle that the seas should be a zone of peaceful trade came to an immediate end. Portuguese flotillas began bombarding and sacking every port city they came across, then seizing control of strategic points and extorting protection money from unarmed Indian Ocean merchants for the right to carry on their business unmolested.
We had been told before how the Indian Ocean was a peaceful trade conduit. One of the Chinese dynastys built ships and visited the coast of Africa - but, no invasions, no bombardments, no sackings. At the same time da Gama is stirring up trouble in the Indian Ocean, Christopher Columbus is discovering the New World, and beginning the rape of the Americas and their people. Man, what assholes!
Back to what caused the inflation of this time:
What really caused the inflation is that those who ended up in control of the bullion—governments, bankers, large-scale merchants—were able to use that control to begin changing the rules, first by insisting that gold and silver were money, and second by introducing new forms of credit-money for their own use while slowly undermining and destroying the local systems of trust that had allowed small-scale communities across Europe to operate largely without the use of metal currency.
The next section is titled "Part I: Greed, Terror, Indignation, Debt". We start with a startlingly clear description of capitalism - which I increasingly characterize as "Anything is OK as long as you're making money."
Can we really use the methods of modern economics, which were designed to understand how contemporary economic institutions operate, to describe the political battles that led to the creation of those very institutions?
This is not just a conceptual problem. There are moral dangers here. To take what might seem an “objective” economic approach to the origins of the world economy would be to treat the behavior of early European explorers, merchants, and conquerors as if they were simply rational responses to opportunities—as if this were just what anyone would have done in the same situation. This is what the use of equations so often does: make it seem perfectly natural to assume that, if the price of silver in China is twice what it is in Seville, and inhabitants of Seville are capable of getting their hands on large quantities of silver and transporting it to China, then clearly they will, even if doing so requires the destruction of entire civilizations. Or if there is a demand for sugar in England, and enslaving millions is the easiest way to acquire labor to produce it, then it is inevitable that some will enslave them. In fact, history makes it quite clear that this is not the case. Any number of civilizations have probably been in a position to wreak havoc on the scale that the European powers did in the sixteenth and seventeenth centuries (Ming China itself was an obvious candidate), but almost none actually did so.
So back to, why were these guys such assholes?
When dealing with conquistadors, we are speaking not just of simple greed, but greed raised to mythic proportions. ... They never seemed to get enough.
So how did Cortês finance his expedition of conquest? Debt. And guess what, despite screwing his soldiers out of their promised shares, he still wound up broke and in debt again - and did so several more times in his life.
If all this seems suspiciously reminiscent of the fourth Crusade, with its indebted knights stripping whole foreign cities of their wealth and still somehow winding up only one step ahead of their creditors, there is a reason. The financial capital that backed these expeditions came from more or less the same place (if in this case Genoa, not Venice). What’s more, that relationship, between the daring adventurer on the one hand, the gambler willing to take any sort of risk, and on the other, the careful financier, whose entire operations are organized around producing steady, mathematical, inexorable growth of income, lies at the very heart of what we now call “capitalism.”
...
All of this helps explain why the Church had been so uncompromising in its attitude toward usury. It was not just a philosophical question; it was a matter of moral rivalry. Money always has the potential to become a moral imperative unto itself. Allow it to expand and it can quickly become a morality so imperative that all others seem frivolous in comparison. ... Even human relations become a matter of cost-benefit calculation. Clearly, this is the way the conquistadors viewed the worlds that they set out to conquer.
It is a peculiar feature of modern capitalism to create social arrangements that essentially force us to think this way. The structure of the corporation is a telling case in point—and it is no coincidence that the first major joint-stock corporations in the world were the English and Dutch East India companies, ones that pursued that very same combination of exploration, conquest, and extraction as did the conquistadors. It is a structure designed to eliminate all moral imperatives but profit.[My bold]
[Fast foward 500 years. Profit still mostly overrides all. Almost anything can be justified in the name of making money. As if the fossil fuel industry in general wasn't doing enough to trash the planet, let's waste megajoules of energy mining Bitcoin. But, hey, it's OK, we're making money...]
Meanwhile around this time, we have Martin Luther and his ilk and the Protestant Reformation. Ha ha, they all started out totally opposed to usury, but they eventually saw the light and usury became A-OK. And let's not forget, the Catholic Church that they were protesting against had vast holdings in land, gold, and other property.
Europe is heading into, what, 200-300 years of Catholic vs Protestant chaos. And usury is OK, so everybody can get into debt over their head. Time for "Leviathan".
With such things happening, it is hardly surprising that men like Thomas Hobbes came to imagine the basic nature of society as a war of all against all, from which only the absolute power of monarchs could save us.
Next up, "Part II: The World of Credit and the World of Interest". Despite the chaos into which Europe was moving, at the local levels, there was still mutual aid; there was still "baseline communism". And this was true of the merchant class and the aristrocracy as well - they might normally be in competition with one another, but, when push came to shove, they would band together to oppose common threats.
The story of the origins of capitalism, then, is not the story of the gradual destruction of traditional communities by the impersonal power of the market. It is, rather, the story of how an economy of credit was converted into an economy of interest; of the gradual transformation of moral networks by the intrusion of the impersonal—and often vindictive—power of the state.
Ha ha, time to kick Adam Smith some more:
Or consider Adam Smith:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
The bizarre thing here is that, at the time Smith was writing, this simply wasn’t true. Most English shopkeepers were still carrying out the main part of their business on credit, which meant that customers appealed to their benevolence all the time.
...
Smith simply imagined away the role of consumer credit in his own day, just as he had his account of the origins of money.
Next, "Part III: Impersonal Credit-money". Coin-based money has now come to be ... money. The old community-based credit systems were quickly forgotten, aided by disinformation such as that of Adam Smith. Now we get new financial instruments. We are on the road to modern derivative investment instruments - of which there are an infinite potential number, and, guess what? To capitalism, all are good, because, they are all making money!
The history of modern financial instruments, and the ultimate origins of paper money, really begin with he issuing of municipal bonds—a practice begun by the Venetian government in the twelfth century when, needing a quick infusion of income for military purposes, it levied a compulsory loan on its taxpaying citizens, for which it promised each of them five percent annual interest, and allowed the “bonds” or contracts to become negotiable, thus creating a market in government debt.
...
While already by the sixteenth century, merchants were using bills of exchange to settle debts, government debt bonds—rentes, juros, annuities—were the real credit money of the new age.
But many of these instruments had maturity dates, etc. It just takes 1 more step, and we have paper money like I have in my wallet.
It was only with the creation of the Bank of England in 1694 that one can speak of genuine paper money, since its banknotes were in no sense bonds.
We now get more discussions of currency being Chartalist or not. There was lots of funny business going on with coins, "clipping" their edges. Currency was frequently called in, reminted, and redistributed at a different rate. But you had to make sure your silver currency was worth less than the cost of silver bullion - else everyone would be melting down and reselling your currency, which kind of defeats its purpose. I forgot that Isaac Newton was Warden, then Master, of the Royal Mint at the end of the 17th century; and that the philosopher John Locke was involved in the discussions of the (chartal) nature of money.
Mainly, though, the reliance on gold and silver seemed to provide the only check on the dangers involved with the new forms of credit-money, which multiplied very quickly—especially once ordinary banks were allowed to create money too. It soon became apparent that financial speculation, unmoored from any legal or community constraints, was capable of producing results that seemed to verge on insanity.
Ha ha! Speculation! I wonder, will there be bubbles, like we have now? Beanie babies, MLM (Multi-Level Marketing), dotCom, bitcoin, pump-and-dump? Duh!
The Dutch Republic, which pioneered the development of stock markets, had already experienced this in the tulip mania of 1637—the first of a series of speculative “bubbles,” as they came to be known, in which future prices would first be bid through the ceiling by investors and then collapse. A whole series of such bubbles hit the London markets in the 1690s, in almost every case built around a new joint-stock corporation formed, in imitation of the East India Company, around some prospective colonial venture. The famous South Sea Bubble in 1720—in which a newly formed trading company, granted a monopoly of trade with the Spanish colonies, bought up a considerable portion of the British national debt and saw its shares briefly skyrocket before collapsing in ignominy—was only the culmination.
500 years of bubbles! I think this could be a job for
Information Is Beautiful.
Next we have an odd riff, conflating politics and markets with ... magic??? Think Goethe's "Faust"???
In this sense, politics is very similar to magic—one reason both politics and magic tend, just about everywhere, to be surrounded by a certain halo of fraud.
...
Thus kings, magicians, markets, and alchemists all fuse in the public imagination during this era, and so do we still talk about the “alchemy” of the market, or “financial magicians.”
The last paragraph of the section:
Having made incessant war on all remaining forms of the communism of the poor, even to the point of criminalizing credit, the masters of the new market system discovered that they had no obvious justification left to maintain even the communism of the rich—that level of cooperation and solidarity required to keep the economic system running. True, for all its endless strains and periodic breakdowns, the system has held out so far. But as 2008 dramatically testified, it has never been resolved.
Finally, "Part IV: So What Is Capitalism, Anyway?".
All this raises the question of what “capitalism” is to begin with, a question on which there is no consensus at all. The word was originally invented by socialists, who saw capitalism as that system whereby those who own capital command the labor of those who do not. Proponents, in contrast, tend to see capitalism as the freedom of the marketplace, which allows those with potentially marketable visions to pull resources together to bring those visions into being. Just about everyone agrees, however, that capitalism is a system that demands constant, endless growth.
Just as five percent per annum was widely accepted, at the dawn of capitalism, as the legitimate commercial rate of interest—that is, the amount that any investor could normally expect her money to be growing by the principle of interesse—so is five percent now the annual rate at which any nation’s GDP really ought to grow.
[That 5% interest figure has I think come up several times. Ad hoc
Stability Economics principle: no rate of change of ANYTHING should be > 5% ! ]
As we complete this book, Graeber throws out conclusions that I would characterize as: "What? Really???". But, I went back and reread my 2005 reaction to Howard Zinn's "A People's History of the United States" - wow, I gave most of what Zinn said very little credence. Well, I'm guessing that somewhere in the 18 years since that post, someone told Dr. Pangloss (me) to "WAKE THE FUCK UP!".
Graeber goes back to bubbles, which he feels are a unavoidable feature of capitalism. The market dynamics are much the same is now; FOMO becomes widespread, nobody wants to miss out on the latest thing. Early entrants tout the investment to protect it; pump-and-dump is of course practiced, as well as other forms of fraud. It's capitalism, after all, right? As long as you're making money, it's A-OK!
At every point, the familiar but peculiarly European entanglement of war and commerce reappears—often in startling new forms. The first stock markets in Holland and Britain were based mainly in trading shares of the East and West India companies, which were both military and trading ventures. For a century, one such private, profit-seeking corporation governed India. ... Almost all the bubbles of the eighteenth century involved some fantastic scheme to use the proceeds of colonial ventures to pay for European wars. Paper money was debt money, and debt money was war money, and this has always remained the case. Those who financed Europe’s endless military conflicts also employed the government’s police and prisons to extract ever-increasing productivity from the rest of the population.
...
the world market system initiated by the Spaniards and Portuguese empires first arose in the search for spices. It soon settled into three broad trades, which might be labeled the arms trade, the slave trade, and the drug trade. The last refers mostly to soft drugs, of course, like coffee, tea, and the sugar to put in them, and tobacco, but distilled liquor first appears at this stage of human history as well, and as we all know, Europeans had no compunctions about aggressively marketing opium in China as a way of finally putting an end to the need to export bullion. The cloth trade only came later, after the East India Company used military force to shut down the (more efficient) Indian cotton export trade.
Even where there was no outright chattel slavery, there was still debt peonage foisted on native populations. Entire populations "owed their souls to the company store", to paraphrase the song "16 Tons".
In reality, then, the Indians had been reduced to slavery; it’s just that, by 1907, no one could openly admit this. A legitimate enterprise had to have some moral basis, and the only morality the company knew was debt. When it became clear that the Huitoto rejected the premise, everything went haywire, and the company ended up ... caught in a spiral of indignant terror that ultimately threatened to wipe out its very economic basis.
It is the secret scandal of capitalism that at no point has it been organized primarily around free labor. The conquest of the Americas began with mass enslavement, then gradually settled into various forms of debt peonage, African slavery, and “indentured service”—that is, the use of contract labor, workers who had received cash in advance and were thus bound for five-, seven-, or ten-year terms to pay it back. Needless to say, indentured servants were recruited largely from among people who were already debtors. In the 1600s, there were at times almost as many white debtors as African slaves working in southern plantations, and legally they were at first in almost the same situation, since, in the beginning, plantation societies were working within a European legal tradition that assumed slavery did not exist. Even Africans in the Carolinas were first classified as contract laborers. Of course, this later changed when the idea of “race” was introduced.
Graeber I think would agree with the informal use of the term "wage slave" to apply to workers on a salary.
both the relation between master and slave, and between employer and employee, are in principle impersonal: whether you’ve been sold or you’re simply rented yourself out, the moment money changes hands, who you are is supposed to be unimportant; all that’s important is that you are capable of understanding orders and doing what you’re told.
This is one reason, perhaps, that in principle, there was always a feeling that both the buying of slaves and the hiring of laborers should really not be on credit, but should employ cash. The problem, as I’ve noted, was that for most of the history of British capitalism, the cash simply wasn’t there.
The (British) mint just couldn't keep up with enough coins to pay people. So companies resorted to issuing company script that local merchants would accept. In remote areas with no local merchants, the companies would open their own company stores.
Also, in the absence of coins for salaries, workers were also allowed to take home from work offal, scraps, defective items as compensation. Then, in the 1800s, the government and the mint got their act together, and now "workplace pilfering" becomes a crime. This is an odd piece of synchronicity:
Samuel Bentham, the engineer put in charge of reforming the dockyards, had to turn them into a regular police state in order to be able to institute a regime of pure wage labor—to which purpose he ultimately conceived the notion of building a giant tower in the middle to guarantee constant surveillance, an idea that was later borrowed by his brother Jeremy for the famous Panopticon.
The section concludes with Graeber acknowledging "
the political freedom, technological progress, and mass prosperity that this economic has also produced", but he hesitates to give the credit to capitalism, and has huge concerns about its stability.
We could no more really have a universal world market than we could have a system in which everyone who wasn’t a capitalist was somehow able to become a respectable, regularly paid wage laborer with access to adequate dental care. A world like that has never existed and never could exist. What’s more, the moment that even the prospect that this might happen begins to materialize, the whole system starts to come apart.
Hmmm, we have 2 Part IVs?!?!? We now get "Part IV: Apocalypse". The Apocalyptic concept here is that, as capitalism cannot stop out-of-control speculative bubbles which must of their very nature burst, it always knows, consciously or subconsciously, that Ragnarok is coming, that soon it will self-destruct yet again, and again, and ...
[Wow, that was some odd anthropomorphizing of capitalism. But, it is a "spirit of the times"? An entity? As much an entity as a corporation, but a different order?]
Greaber starts out returning us to Cortés, the Aztecs, and Moctezuma, Emperor of the Aztecs. Montezuma invited Cortés & his men to visit, they took him captive, they played an Aztec gambling game, Cortés & his men cheated outrageously, Montezuma didn't call them on it.
This is an interesting theory of what was going on: Montezuma was waiting for the gods to give him a sign that would allow him to immediately win the game - like a coin standing on edge. Apparently the Aztec games had such an "immediate win" feature. Sign from the gods came there none, oops!
[In a different theory in TOOCITBOTBM, the Aztecs were still running bicameral mind software, which did not allow lying or know there was such a thing (the wily Odysseus's superpower - lying). So they asked the Spaniards, "Are you gods?", the Spaniards said "Yes.", and they believed them.]
Graeber's takeaway from Cortés and Moctezuma:
If there’s something to be learned here—and as I say, I think there is—it is that there may be a deeper, more profound relation between gambling and apocalypse. Capitalism is a system that enshrines the gambler as an essential part of its operation, in a way that no other ever has; yet at the same time, capitalism seems to be uniquely incapable of conceiving of its own eternity. Could these two facts be linked?
I should be more precise here. It’s not entirely true that capitalism is incapable of conceiving of its own eternity. On the one hand, its exponents do often feel obliged to present it as eternal, because they insist that it is the only possible viable economic system: one that, as they still sometimes like to say, “has existed for five thousand years and will exist for five thousand more.” On the other hand, it does seem that the moment a significant portion of the population begins to actually believe this and, particularly, starts treating credit institutions as if they really will be around forever, everything goes haywire.
Graeber tells us later, "haywire" is "
a series of increasingly reckless bubbles". Where does MMT fit into this?
Hmmm, The Enlightenment briefly rears its head - then hides it again?!?!? Graeber introduces us to another debt: the National Debt of nations.
the French Revolution introduced several profoundly new ideas in politics—ideas which, fifty years before the revolution, the vast majority of educated Europeans would have written off as crazy, but which, fifty years afterward, just about anyone felt they had to at least pretend they thought were true. The first is that social change is inevitable and desirable: that the natural direction of history is for civilization to gradually improve. The second is that the appropriate agent to manage such change is the government. The third is that the government gains its legitimacy from an entity called “the people.” It’s easy to see how the very idea of a national debt—a promise of continual future improvement (at the very least, five percent annual improvement) made by government to people—might itself have played a role in inspiring such a revolutionary new perspective. Yet at the same time, when one looks at what men like Mirabeau, Voltaire, Diderot, Siéyes—the philosophes who first proposed that notion of what we now call “civilization”—were actually arguing about in the years immediately leading up to the revolution, it was even more about the danger of apocalyptic catastrophe, of the prospect of civilization as they knew it being destroyed by default and economic collapse.
Part of the problem was the obvious one: the national debt is, first, born of war; second, it is not owed to all the people equally, but above all to capitalists—and in France at that time, “capitalist” meant, specifically, “those who held pieces of the national debt.”
We've seen this idea before, attributed to Keynes & Marx both: that capitalism will be gone soon.
In fact, even the Victorians were haunted by the dangers of degeneration and decline. Most of all, Victorians shared the near-universal assumption that capitalism itself would not be around forever. Insurrection seemed imminent. ... Almost none of the great theorists of capitalism, from anywhere on the political spectrum, from Marx to Weber, to Schumpeter, to von Mises, felt that capitalism was likely to be around for more than another generation or two at the most.
This next seems odd to me. Again, really??? Coincidence, not causality, maybe?
One could go further: the moment that the fear of imminent social revolution no longer seemed plausible, by the end of World War II, we were immediately presented with the specter of nuclear holocaust. Then, when that no longer seemed plausible, we discovered global warming. This is not to say that these threats were not, and are not, real. Yet it does seem strange that capitalism feels the constant need to imagine, or to actually manufacture, the means of its own imminent extinction. It’s in dramatic contrast to the behavior of the leaders of socialist regimes, from Cuba to Albania, who, when they came to power, immediately began acting as if their system would be around forever—ironically enough, considering they in fact turned out to be something of an historical blip.
His conclusion to this section, and this chapter:
Presented with the prospect of its own eternity, capitalism—or anyway, financial capitalism—simply explodes. Because if there’s no end to it, there’s absolutely no reason not to generate credit—that is, future money—infinitely. ... The period leading up to 2008 was one in which many began to believe that capitalism really was going to be around forever; at the very least, no one seemed any longer to be able to imagine an alternative. The immediate effect was a series of increasingly reckless bubbles that brought the whole apparatus crashing down.
I think, though, he doesn't see the problem as JG/ELR or UBI - these are both mechanisms for creating economic stability. He sees the problem with capitalism as speculation and bubbles, "
a series of increasingly reckless bubbles", which culminated in the 2008 financial meltdown. And, as the companies created during the various dotcom bubbles become more and more enshittified, it's increasingly easy to see what a pile of crap "move fast and break things" is. Capitalism does not need more gambling and risk-taking - but, hey, whatever, a lot of those guys got rich, so it's all A-OK!
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Chapter 12, 144 pages, is titled "The Beginning of Something Yet to Be Determined (1971 - present)". Why did Nixon take the US off the gold standard in 1971? Duh, it was our old friend, war. The Vietnam War was getting too expensive, they didn't have enough gold in Fort Knox to cover it. So, roll the presses!
Did this really mark the beginning of a new era for civilization and the world economy? As someone living as an adult through this period, my gut-level-feel would be "No". But, let's see what Graeber has to say. What happened immediately after Nixon's action?
The immediate effect of Nixon’s unpegging the dollar was to cause the price of gold to skyrocket; it hit a peak of $600 an ounce in 1980. This of course had the effect of causing U.S. gold reserves to increase dramatically in value. The value of the dollar, as denominated in gold, plummeted. The result was a massive net transfer of wealth from poor countries, which lacked gold reserves, to rich ones, like the United States and Great Britain, that maintained them. In the United States, it also set off persistent inflation.
Why is it that everything seems to result in the rich getting richer? (Capitalism.) I will disagree with Graeber's statement re inflation. My belief is that the
Arab Oil Embargo of 1973, which led to a 3x increase in the price of the lifeblood of industry, oil, is what led to the inflation of the "stagflation" era.
Here is some fun facts about the US gold supply. Note, this is fertile ground for all manner of 9/11 and other conspiracy theories:
The United States Treasury’s gold reserves are ... kept at Fort Knox, but the Federal Reserve’s gold reserves, and those of more than one hundred other central banks, governments, and organizations, are stored in vaults under the Federal Reserve building at 33 Liberty Street in Manhattan, two blocks away from the Towers. At roughly five thousand metric tons (266 million troy ounces), these combined reserves represent, according to the Fed’s own website, somewhere between one-fifth and one-quarter of all the gold that has ever been taken from the earth. Children are taken on tours of it ...
Oh boy, more conspirary theories! This book predates QAnon, who don't seem to have much of an economic component to their delusions.
In America, the banking system since the days of Thomas Jefferson has shown a remarkable capacity to inspire paranoid fantasies: whether centering on Freemasons, or Elders of Zion, or the Secret Order of the Illuminati, or the Queen of England’s drug-money-laundering operations, or any of a thousand other secret conspiracies and cabals. It’s the main reason why it took so long for an American central bank to be established to begin with. In a way there’s nothing surprising here. The United States has always been dominated by a certain market populism, and the ability of banks to “create money out of nothing”—and even more, to prevent anyone else from doing so—has always been the bugaboo of market populists, since it directly contradicts the idea that markets are a simple expression of democratic equality.
I think that this "market populism" is part of the appeal of the cryptocurrencies.
Graeber brings us back to reality:
One element, however, tends to go flagrantly missing in even the most vivid conspiracy theories about the banking system, let alone in official accounts: that is, the role of war and military power. There’s a reason why the wizard has such a strange capacity to create money out of nothing. Behind him, there’s a man with a gun.
Graeber reviews the US financial system: it's the Fed that can just roll the presses and print money, which it then uses to purchase financial instruments from the US Treasury. The Fed rolls the presses whenever Congress passes legislation which spends money, which the Fed then dutifully creates.
Graever points out that, as of when this book was printed, the US National Debt and the US military budget were largely equal, and had been since WWII - and, of course, pretty much equal to the military budgets of the rest of the world combined.
The U.S. military, unlike any other, maintains a doctrine of global power projection: that it should have the ability, through roughly 800 overseas military bases, to intervene with deadly force absolutely anywhere on the planet. ... The essence of U.S. military predominance in the world is, ultimately, the fact that it can, at will, with only a few hours’ notice, drop bombs at absolutely any point on the surface of the planet.
We know how very many $100 bills are in circulation around the world. What happens to these in other countries central banks? They are used to purchase US treasury bonds.
These bonds are, like all bonds, supposed to be loans that will eventually mature and be repaid, but as economist Michael Hudson, who first began observing the phenomenon in the early ’70s, noted, they never really do:
To the extent that these Treasury IOUs are being built into the world’s monetary base they will not have to be repaid, but are to be rolled over indefinitely. This feature is the essence of America’s free financial ride, a tax imposed at the entire globe’s expense.
What’s more, Hudson notes, over time, the combined effect of low interest payments and the inflation is that these bonds actually depreciate in value—adding to the tax effect, or, as I preferred to put it in the first chapter, “tribute.” Economists prefer to call it “seigniorage.” The effect, though, is that American imperial power is based on a debt that will never—can never—be repaid. Its national debt has become a promise, not just to its own people, but to the nations of the entire world, that everyone knows will not be kept.
At the same time, U.S. policy was to insist that those countries relying on U.S. treasury bonds as their reserve currency behaved in exactly the opposite way: observing tight money policies and scrupulously repaying their debts.
My immediate impulse is to question "a promise ... that everyone knows will not be kept". Before Agent Orange, I would have felt sure that the world did feel that the US would keep the economic promises its bonds represent. After all, the bonds are never repaid, they are just rolled over - no reason the US wouldn't just keep doing that indefinitely.
But, as Doctorow says, "Anything that can end will end". All things must pass. So I think that I must accept his statement - at the least, the US is not going to last forever.
I have run into "seigniorage" before - originally, the fee charged by a mint to convert bullion into coins. Generalized to fees charged by governments when they are kind enough to create money, of whatever medium, for us to use. As Graeber references in Chapter 1, I think that equating this with "tribute" is ... provocative.
Ha ha, another conspiracy theory - but one that makes a good point:
the global status of the dollar is reinforced by the fact that it is, again since 1971, the only currency used to buy and sell petroleum, with any attempt by OPEC countries to begin trading in any currency stubbornly resisted by OPEC members Saudi Arabia and Kuwait—also U.S. military protectorates. When Saddam Hussein made the bold move of singlehandedly switching from the dollar to the euro in 2000, followed by Iran in 2001, this was quickly followed by American bombing and military occupation. How much did Hussein’s decision to buck the dollar really weigh into the U.S. decision to depose him? ... what’s important here is that there were widespread rumors that this was one of the major contributing factors, and therefore, no policymaker in a position to make a similar switch can completely ignore the possibility. Much though their beneficiaries do not like to admit it, all imperial arrangements do, ultimately, rest on terror. [My bold]
That last statement seems like a truism, and it is one of the major thrusts of this book and Graeber's thinking. And, agreed, I am a beneficiary and I do not like to admit it.
This next is interesting recent history. Visa and MasterCard started the year I graduated high school.
The American Express card, the first general-purpose credit card, had been invented a mere thirteen years before [1971], and the modern national credit-card system had only really come into being with the advent of Visa and MasterCard in 1968. Debit cards came later, creatures of the 1970s, and the current, largely cashless economy only came into being in the 1990s. All of these new credit arrangements were mediated not by interpersonal relations of trust but by profit-seeking corporations, and one of the earliest and greatest political victories of the U.S. credit-card industry was the elimination of all legal restrictions on what they could charge as interest.
Graeber now seems to somewhat confirm my skepticism re the world entering a new era. "
If history holds true" === "If my theories are correct".
If history holds true, an age of virtual money should mean a movement away from war, empire-building, slavery, and debt peonage (waged or otherwise), and toward the creation of some sort of overarching institutions, global in scale, to protect debtors. What we have seen so far is the opposite. The new global currency is rooted in military power even more firmly than the old was. Debt peonage continues to be the main principle of recruiting labor globally: either in the literal sense, in much of East Asia or Latin America, or in the subjective sense, whereby most of those working for wages or even salaries feel that they are doing so primarily to pay off interest-bearing loans.
Man, that rings true to me. During our child-rearing years, it was all about keeping up with your loan payments - and heaven help you if you were unable to do so.
This chronic debt may be what is contributing to the current general malaise of 90% of the US population. Which 90%, you might ask? Why, the bottom 90% economically, of course. The top 10% is pretty happy with how things are going, with all the wealth rising to the top, and controlling the government, and ...
And, as much as the top 10% like how things are going, the top 1% like it MUCH more, the top 0.1% like it MUCH, MUCH more, and the top 0.01% (billionaires) like it MUCH, MUCH, MUCH ... MORE!
Apparently in 2011, when this book came out, people were already expressing concern about the US debt held by China [IMO, complete & utter BS]. Graeber talks about how, for much of its history, when China was the largest and most prosperous country in the world, it's dealings with other countries were handled in a way very unlike what I think we would expect nowadays.
The unique thing about the Chinese empire is that it has, since the Han dynasty at least, adopted a peculiar sort of tribute system whereby, in exchange for recognition of the Chinese emperor as world-sovereign, they have been willing to shower their client states with gifts far greater than they receive in return.
For most of their history, the Chinese paid off the peoples north of them to not invade, so "reverse tribute" was not an unknown concept to them. Plus, the Chinese were kind of chauvinistic - what could these barbarians (non-Chinese) possibly have to offer us in trade?
After WWII, the US gave many former Chinese client states - Taiwan, Korea, Japan, SE Asia - very advantageous economic terms, looking like the Chinese "reverse tribute". Since the Chinese economic explosion of the last few decades, Graeber suggests that China is moving to regain its dominant world position by reconnecting with its old clients via "reverse tribute". Plus, they are moving to gain new clients. Their Belt and Road Initiative is aggressively pursuing infrastructure projects in underdeveloped parts of the world. Ha ha, and, they are generously extending their benificence to the US by buying up our bonds! Nice!
[I so think that the US policy with regard to China should be to share, with a goal of a handoff, the world hegemony. The US has been the world hegemon since 1945 - almost 70 years now. Maybe if we arrange an orderly (and presumably advantageous to us) handoff of power to China, we can avoid ending up in the dustbin of history like the prior hegemon, Great Britain.]
LOL, don't tell the conservatives!
There is every reason to believe that, from China’s point of view, this is the first stage of a very long process of reducing the United States to something like a traditional Chinese client state.
Aw, come on! It is completely hard for me to imagine China pursuing policies in the 21st century that date back to the Middle Ages. Sorry, I'm just not buying it.
Hah, this next is interesting. The language of debt ...
it also opened the way to seeing government itself as a moral debtor, and freedom as something literally owed to the nation. Perhaps no one put it so eloquently as Martin Luther King Jr., in his “I Have a Dream” speech, delivered on the steps of the Lincoln Memorial in 1963:
In a sense we’ve come to our nation’s capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the “unalienable Rights” of “Life, Liberty and the pursuit of Happiness.” It is obvious today that America has defaulted on this promissory note, insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked “insufficient funds.”
Oh boy, oh boy, oh boy! We get some Keynes now. Graeber describes (without using the term) "Les Trente Glorieuses", the 30 years after WWII where there were strong unions, wages that rose with productivity, and access to college educations and upward mobility for the children of the workers. [Note, my dad was a union man most of his working life (he worked in management briefly but didn't like it) - I am indeed a yuppie who got to make good on this system.] Graeber includes one of my fav Keynes quotes:
I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work. And with the disappearance of its rentier aspect much else in it besides will suffer a sea-change. It will be, moreover, a great advantage of the order of events which I am advocating, that the euthanasia of the rentier, of the functionless investor, will be nothing sudden ... and will need no revolution.
As we have read many other places, tho, this era came to an end with Thatcher & Reagan. But Graeber blames this on too many people everywhere wanting in on the deal represented by Les Trente Glorieuses, and there not being not enough to go around - supply side shortages. Graeber does not seem to on board with abundance, with the
Economy of Plenty.
By the late 1970s, the existing order was clearly in a state of collapse, plagued simultaneously by financial chaos, food riots, oil shock, widespread doomsday prophecies of the end of growth and ecological crisis—all of which, it turned out, proved to be ways of putting the populace on notice that all deals were off.
Guided by Thatcher/Reagan and neoliberalism, we see
capitalism entering the final stage of a 50 year Kondratiev wave: financialization.
the financialization of capital meant that most money being invested in the marketplace was completely detached from any relation to production or commerce at all, but had become pure speculation.
All this is not to say that the people of the world were not being offered something: just that, as I say, the terms had changed. In the new dispensation, wages would no longer rise, but workers were encouraged to buy a piece of capitalism. Rather than euthanize the rentiers, everyone could now become rentiers—effectively, could grab a chunk of the profits created by their own increasingly dramatic rates of exploitation.
And so pensions became 401-k's, and all of us got to become speculators and gamblers (fingers crossed). You WILL take part in capitalism, or face no retirement funds.
Even "christianity" got involved. "The prosperity gospel" comes to take over the christian right. Graeber identifies "Wealth and Poverty", by George Gilder, 1981, as the seminal text. [I am not linking to it, don't want to spread the memes.] God loves us so much that, just as he created the world, he has given us the power to create money! Nice!
But, for most people, increasingly debt plays an ever greater part in their lives. And, of course, debt is framed in moral terms.
All these moral dramas start from the assumption that personal debt is ultimately a matter of self-indulgence, a sin against one’s loved ones—and therefore, that redemption must necessarily be a matter of purging and restoration of ascetic self-denial. What’s being shunted out of sight here is first of all the fact that everyone is now in debt (U.S. household debt is now estimated at on average 130 percent of income), and that very little of this debt was accrued by those determined to find money to bet on the horses or toss away on fripperies.
...
the role of discretionary spending itself should not be exaggerated. The chief cause of bankruptcy in America is catastrophic illness; most borrowing is simply a matter of survival (if one does not have a car, one cannot work); and for most, simply being able to go to college now means debt peonage for at least half of one’s subsequent working life.
Graeber brings us up to the 2008 meltdown - and, again, his explanation seems to be supply-side shortages - there isn't enough to go around???
Just as in the 1945–1975 cycle, this new one culminated in another crisis of inclusion. It proved no more possible to really turn everyone in the world into micro-corporations or to “democratize credit” in such a way that every family that wanted to could have a house (And if you think about it, if we have the means to build them, why shouldn’t they? Are there families who don’t “deserve” houses?) than it had been to allow all wage laborers to have unions, pensions, and health benefits. Capitalism doesn’t work that way. It is ultimately a system of power and exclusion, and when it reaches the breaking point, the symptoms recur, just as they had in the 1970s: food riots, oil shock, financial crisis, the sudden startled realization that the current course was ecologically unsustainable, and attendant apocalyptic scenarios of every sort.
The handling of who got bailed out after 2008 is still 1 of my greatest disappointments in Obama. [He was prolly the most inspirational speaker of my lifetime, & even though I understand the tightrope he was walking as the first black POTUS, still, the disappointments keep coming.]
In the wake of the subprime collapse, the U.S. government was forced to decide who really gets to make money out of nothing: The financiers, or ordinary citizens. The results were predictable.
Graeber now starts to wrap it up (yay!).
the legacy of violence has twisted everything around us. It’s not just that war, conquest, and slavery played such a central role in converting human economies into market ones; there is literally no institution in our society that has not been to some degree affected.
This next seems like it should be in Poor Richard's Almanac or some such:
the difference between owing someone a favor and owing someone a debt is that the amount of a debt can be precisely calculated.
This last is yet another "What? Really???" But it does make sense ...
This in turn leads to that great embarrassing fact that haunts all attempts to represent the market as the highest form of human freedom: that historically, impersonal, commercial markets originate in theft. More than anything else, the endless recitation of the myth of barter, employed much like an incantation, is the economists’ way of exorcising this uncomfortable truth. But even a moment’s reflection makes it obvious. Who was the first man to look at a house full of objects and immediately assess them only in terms of what he could get for them in the market? Surely, he can only have been a thief. Burglars, marauding soldiers, then perhaps debt collectors, were the first to see the world this way. It was only in the hands of soldiers, fresh from looting towns and cities, that chunks of gold or silver, melted down, ... could become simple, uniform bits of currency, with no history, valuable precisely for their lack of history, because they could be accepted anywhere, no questions asked. ... Any system that reduces the world to numbers can only be held in place by weapons, whether these are swords and clubs, or, nowadays, “smart bombs” from unmanned drones.
It can also only operate by continually converting love into debt.
This chapter concludes with the section "Conclusion: Perhaps the World Really Does Owe You a Living".
So, we are all rentiers now. Our 401-k's provide capital to (debt-ridden aka leveraged) speculators with which they can create ever new and more creative bubbles. But now that capitalism has eaten so much of the world, will the popping of bubbles bring complete global catastrophe?
Graeber finishes with a couple of interesting notions. 1st, maybe a little bit whimsical:
I would like, then, to end by putting in a good word for the non-industrious poor. At least they aren’t hurting anyone. Insofar as the time they are taking off from work is being spent with friends and family, enjoying and caring for those they love, they’re probably improving the world more than we acknowledge. Maybe we should think of them as pioneers of a new economic order that would not share our current one’s penchant for self-annihilation.
2nd, yay, 1 of my fav words, jubilee! Interesting arguments ...
In this book I have largely avoided making concrete proposals, but let me end with one. It seems to me that we are long overdue for some kind of Biblical-style Jubilee: one that would affect both international debt and consumer debt. It would be salutary not just because it would relieve so much genuine human suffering, but also because it would be our way of reminding ourselves that money is not ineffable, that paying one’s debts is not the essence of morality, that all these things are human arrangements and that if democracy is to mean anything, it is the ability to all agree to arrange things in a different way.
...
At this point ... the principle [we all must pay our debts] has been exposed as a flagrant lie. As it turns out, we don’t “all” have to pay our debts. Only some of us do. Nothing would be more important than to wipe the slate clean for everyone, mark a break with our accustomed morality, and start again.
Finally, the last paragraph of the book!
What is a debt, anyway? A debt is just the perversion of a promise. It is a promise corrupted by both math and violence. If freedom (real freedom) is the ability to make friends, then it is also, necessarily, the ability to make real promises. What sorts of promises might genuinely free men and women make to one another? At this point, we can’t even say. It’s more a question of how we can get to a place that will allow us to find out. And the first step in that journey, in turn, is to accept that in the largest scheme of things, just as no one has the right to tell us our true value, no one has the right to tell us what we truly owe.
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The 2012 Afterword is 34 pages. Graeber explains how the looming 2008 bubble-burst made him swing for the fences with this book. Ah, I mentioned "50 year Kondratiev waves" above, Graeber mentions them here as well - but 60 year?
It was clear that 2008 marked a historical watershed of some sort—the real question was one of scale. After all, when one is in the middle of dramatic historical events that seem to represent some kind of break, the most important thing one has to do is to get a sense of the larger rhythmic structure. Is this crisis some kind of generational phenomenon, or a mere movement of capitalism’s boom-or-bust cycle, or the inevitable unfolding of some sixty-year Kondratieff curve of technological innovation and decline? Or is it something even grander or more epochal? How do all these rhythms weave in and out of each other? Is there one core rhythm pushing the others along? How do they sit inside one another, syncopate, concatenate, harmonize, clash?
Graeber explains why he thinks an anthropologist is better suited to write such an overarching history book than:
- an economist - they want everything to revolve around their models;
- an historian - they are so resolutely empirical that they often refuse to extrapolate at all.
I think this next assertion by Graeber is backed up by the fact that before Adam Smith wrote "The Wealth of Nations", he wrote "The Theory of Moral Sentiments".
Economic language has always been—and still is—fundamentally moral, even when it insists that it is not (as in the cutthroat realpolitik of the Axial Age, or the “rational” cost-benefit analysis of economists today), and a genuine economic history must therefore also be a history of morality.
Graeber gives props to "
early twentieth-century French anthropologist Marcel Mauss".
both because he was perhaps the first to recognize that all societies are such a jumble of contradictory principles, and also, much more specifically, because he was one of the first to try to combine the insights of ancient history with those of contemporary ethnography, in order to unmask the bizarre assumptions about human life and human nature on which modern economics is constructed. Above all, he tried to provide an alternative to the “myth of barter,” which he correctly identified as in most important ways, the founding myth of our contemporary civilization.
Graeber follows Mauss in being a political activist.
Mauss was also a political activist, a cooperativist, and an avid contributor to socialist newspapers and magazines who very much sought to apply the insights of social theory to political problems, and here his efforts met with almost no success at all.
Interesting observations from Graebers time helping to organize Occupy Wall Street:
when the occupation of Zuccotti began—and we had no idea who, if anyone, was actually going to show up to the occupation—we discovered that the largest contingent by far were debt refugees. After the suppression of the camps, we began a series of popular assemblies to explore where people wanted us to take the movement, and the assemblies around debt were far and away larger and more enthusiastic than the others.
Because of this book, Graeber had at 1st avoided becoming involved with the debt wings of Occupy, but later he "
helped formulate the strategy for the Debt Resistors’ Operations Manual, the Rolling Jubilee, and other projects." Interesting, the Rolling Jubilee used donations to buy debt for pennies on the dollar and forgive it, like
RIP Medical Debt, which I've been contributing to for several years.
Graeber thought that this book was ahead of its time, and that it will take years before people can have really meaningful discussions of its concepts.
Many American liberals, for instance, accepted the basic premise (that there has for thousands of years been an intimate connection between the organization of empires and other forms of state violence, debt, and forms of money-creation) as a fascinating historical revelation—and then reacted with outrage when I went on to suggest that this continued to be the case even after 1945. (We are supposed to believe that the old system has now been replaced with a purely voluntary and non-imperial system that just happens to look and operate in almost exactly the same way.)
Ha ha, at the end Graeber apologises for kicking Adam Smith around. And, in grand anthropologist style, he ends with a joke suggested to him by a joke attributed to Plutarch by Smith in "Theory of Moral Sentiments", updated and set on the island of Samoa, told to Graeber by his "
graduate school adviser, the anthropologist Marshall Sahlins". The joke recounts a discussion between a Samoan lying on the beach and a missionary. The missionary tries to instill some Protestant Work Ethic on the poor guy, charts his future as a capitalist, until he becomes so successful he can just lie around on the beach all the time. The Samoan of course rejoins that this is just what he is doing now, FTW!
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So what are my takeaways? (LOL, the summary of the summary!)
- Human economies running on barter are and always have been rare to non-existent.
- Theories of primordial debt are bullshit.
- Debt is hopelessly intertwined with morality.
- there are three main moral principles on which economic relations can be founded, all of which occur in any human society: communism, hierarchy, and exchange. Debt is an uncompleted exchange.
- Honor is a toxic concept, possibly at the root of toxic masculinity.
- Accounting aka credit systems has been around since ~3500 BC.
- Money aka coins aka bullion has been around since ~600 BC. Its main purpose was to pay professional itinerant soldiers.
- This led to the viscious circle: money => pay armies => conquer places and take slaves => put the slaves to work in the mines to get more precious metals for => money. The “military-coinage-slavery complex".
- Markets were created, encouraged by government, to give soldiers (probably strangers to the merchants => no credit) a place to buy things with money.
- Throughout history, humans have invented a truly disgusting # of ways to implement slavery.
- Once money could be used as a fee for sex from prostitutes as well as a bride price or dowry, the patriarchy became compelled to make sure their females could not be seen as prostitutes. Enter veils, and the enslavement of women to the patriarchy, virginity checks, forced birth, etc.
- All western legal systems are based on Roman law. Particularly sanctified are property rights. The primary consideration in creating Roman property law was integrating support for slavery.
- Slavery, always enforced by state violence & terror, has thus been integrated into the substrate of most Western cultures, including ours.
- Graber's Theory of Human Economic History: 50 yrs ago, we entered the 5th cycle of credit vs. money. The 5 Cycles: credit (3500 BC - 800 BC), money (800 BC - 600 AD), credit (600 AD - 1450 AD), money (1450 AD - 1971 AD), credit (1971 AD - ?). Most of these are named in the TOC.
- With Nixon dropping the gold standard in 1971, human economic history entered its 5th cycle. How that's going to turn out is anybody's guess. We may not have much of a feel for how it is working out for ~500 years or so. LOL, this is a way optimistic book, in assuming that human culture will have survived 500 years from now & still care about such shit!
- [Updated 2024-01-20 14:05 - Doctorow's "The Lost Cause" made me think of this, because of the realization that soon anyone could become a climate refugee.]
In Roman times, slavery was such that anyone could become a slave - even the Emperor of Rome, when defeated by an Eastern emperor. But after slavery mostly went away in the Middle Ages, racism was invented to justify the enslavement of black and brown people during the Age of the Great Capitalist Empires which started in 1450.
So much stuff here. It very much has a feel of heterodoxy, which is somewhat off-putting to me? I'm getting too old?
It's funny though. For years decades I have had a dad joke, where I hold the door for someone, or perform any of the other things we do for one another gladly, acting as communists, giving directions, happy to score some cheap good karma points - and then I say "That'll be a dollar." Now I know why that is so stupid and nonsensical - when you are at the "basic human decency" level of interaction, aka communism: "From each according to their ability, to each according to their need" - asking for payment is completely un grand faux pas. And this book also shows me how wise were the very few people who would reply to me: "Put it on my tab." Credit forever ...
Well, Graeber says we've moved into a credit era. Let's see if we can get that to help everyone, rather than just the 1%. Ooh, that just made me think of some (UBI?) proposals, of giving every US citizen an automatic account with the Fed. Then, just like the banks, every one of us can take debts presented to us and say, "Put it on my tab." That sounds like a good grad student project: if every US citizen had a Fed account & could use it to cover their debt, how much $$$ and interest would that amount to? Oh, and let's go back to ZLB interest rates ...
I am definitely planning on revisiting this a few times over the next year - see what, if anything, distills out.
I purchased Graeber's (with David Wengrow) complete history of the world, "The Dawn of Everything", subtitled "A New History of Humanity", 2021, 822 pages, 244k words, about the same as "Debt". I will definitely not be reading that this year. Question, can I read such a book without highlighting & creating a review/ summary/ precis/ Cliff Notes?
I have also purchased his last book, "Pirate Enlightenment, or the Real Libertalia", 2023, 157 pages, 48k words. Who knew that pirates created some of the most democratic and egalitarian societies in all of history?
Other books of his that look interesting (and heterodox):
- "The Utopia of Rules", subtitled "On Technology, Stupidity, and the Secret Joys of Bureaucracy", 2015, 295 pages, 80k words.
- "Bullshit Jobs", subtitled "A Theory", 2018, 449 pages, 122k words.
This has really been a slog to create. I finished reading this book mid-January, 2023. It looks like I started writing this review/ summary/ precis/ Cliff Notes in February. I quit working on it for a month or 2 a few times. Why did I get so bogged down? I will not bore you with my laundry list of excuses.
Regardless, this review/summary has run WAY long: holy crap, 35.8k words, a new record! 226k word book => 15.8%. Prior record holder was "Modern Money Theory", 24k review words/ 129k book => 18.6%. Well, at least a little better %-wise.
[Prolly my most popular, tweeted by the author as "the Cliff Notes", was "Doughnut Economics", 8.2k words review/summary, 107k book => 7.7%. Much more reasonable. Piketty, "Capital in the 21st Century": 14.5k, 273k => 5.3%, even better. Hmmm, longer than "Debt". Didn't seem so.]
Well, maybe it's because this book just has SO, SO MUCH info that is worth knowing, and in areas of which I know very little. Sorry I couldn't make it more concise.
AAAARRRGGH! I just realized, I should have published this in 2/3/4 pieces! As I did with "Wealth of Nations". Oh well, (hopefully) live & learn! Or, on the other hand, I think I've about dilettanted my way out of economics, so the point may well be moot.
[Updated 2024-02-03 18:00]
I have a fellow snowbird/musician friend from Canada who wanted to read the book (I tell all kinds of people about it). So I ordered a hard copy. This is the 2021 addition with the Preface by Thomas Piketty. The Preface is only a little over 3 pages. Here's I think Piketty's overall summary, the last 2 lines of the 3rd paragraph:
This book is fundamental because for the first time it sets the long history of the cycles of debt and debt abolition that have punctuated human destiny since the invention of writing and the first tablets recording the assets and liabilities of creditors and debtors in a multi-millennium perspective. Above all David Graeber shows that this story is also to a large extent that of equality and inequality, because there is a fundamental link between debt, power, and extreme forms of social domination, especially between debt and slavery.
Not surprising that the guy who brought inequality to the world's attention in
"Capital in the 21st Century" brings inequality into the analysis.
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