This review of David Graeber’s 2011 book, Debt: the First 5,000 Years, was authored by Tony Norfeild and originally published at his website, Economics of Imperialism. As always, reposting here does not imply full agreement, endorsement, or affiliation.
The main value of this book is to analyse debt as a social relationship, not simply as an amount of money one person owes to another, or some other obligation between two isolated individuals. It does this by examining the evolution of debt relations in a wide range of societies over the past 5000 years, from Africa and the Americas to Europe and Asia. Graeber’s anthropological and historical approach has many benefits for those brought up on the thin gruel of modern day economics. His book gives fascinating details that highlight the social character of economic relationships, with extensive footnotes for those who may wish to follow up particular issues. The book is a powerful antidote to the idea that the market is the natural arbiter for organising society. Unfortunately, however, it is not much use for giving us a view of contemporary debts, despite its aim to put the current crisis in a historical context.
Graeber uses a concept he calls ‘baseline communism’ to describe many forms of society where, at least among those who do not consider themselves enemies, some version of mutuality is at work on the principle of ‘from each according to their abilities, to each according to their needs’ (p98). He counterposes this fundamental social humanity to the relationships between people that can predominate when impersonal market or state-driven norms prevail. Rightly, he argues that market economics is not the basis for relationships and, in a striking phrase, says that ‘communism is the foundation of all human sociability’ (p96), a sociability not based on exchange or reciprocity, except in the sense of mutual responsibilities and expectations (p102).
It is in this context that he theorises the sweep of history, examining how social relationships change in the context of money and debt. Debt: the First 5,000 Years is very ambitious, as the title suggests, and he goes beyond a simplistic concept of debt to one that has links to morality, religion, family relationships, the state, slavery and notions of honour and degradation. This has disadvantages, however, because he is not able to dwell for long on what is specific about so many historical periods and societies. Successive examples he gives to make his case tend to jump around, with hundreds of years and thousands of miles between them. The examples given are interesting, but not necessarily convincing.
A bigger problem with his thesis is that he groups together broad historical phases and presents them as cycles of history. For Graeber, these cycles are driven by the alternation between a ‘bullion economy’ and a ‘virtual credit money’ economy’ (p383). The ‘Axial Age’, from 800 BC to 600 AD, was characterised by wars and violence, the rise of materialist philosophy and peasant revolts. Markets and states grew together, with coinage, taxation, military spending and debt-bondage (Chapter 9). The ‘Middle Ages’, 600-1450 AD, was a more peaceful phase of history, with a greater role for religious authorities, a widespread movement to control or prohibit predatory lending (notably with Islam, but also with the Christian church) and a return to forms of credit money in Europe and Asia (Chapter 10). The ‘Age of the Great Capitalist Empires’, 1450-1971, began with a turn away from virtual currencies and credit and going back to gold and silver. The latter development, he argues, was initially driven by China’s demand for precious metal as coinage after it abandoned paper money (as payment for trade and taxes) and by the Spanish plundering of Latin America (Chapter 11). From these beginnings, he traces the later developments of ‘impersonal credit-money’ and the replacement of ‘moral networks by the intrusion of the impersonal – and often vindictive – power of the state’ (p332). Now, post-1971, we are in another transition stage of history, since in August 1971 Nixon broke the link of the US dollar to gold (Chapter 12). Thus began the phase of free-floating global currencies and the massive accumulation of debt. The ‘world entered a new phase of financial history – one that nobody completely understands’ (p362).
This argument is basically idealist, as the dynamic for the historical periods is driven by his concepts of money, credit and debt. These concepts are common denominators of all periods, with not enough attention paid to the role they play in each. While Graeber examines their links to state policy, the market, taxes and war, this does not involve much discussion of their relationship to the different forms of social reproduction. In my view, it makes little sense to see money, credit or debt as the driving forces – or even as the organising concepts for the book’s thesis – when the role they play in society is derived from the way in which the relations of production between people are organised, as in feudalism, capitalism, etc. This is a particular problem for analysing today’s debt crises, because it cannot get to grips with analysing imperialism and to see what is at stake.
In his concluding chapter, Graeber notes the huge build up of debt in the US and that it has been financed by borrowing from foreign banks and governments, especially from China. He explains this growth of indebtedness largely as a function of US military spending, with higher consumer debt due to the stagnation of incomes. Yet Graeber then concludes his book with the point that ‘we are long overdue for some kind of Biblical-style Jubilee: one that would affect both international debt and consumer debt’ [my emphasis] and that nothing would be more important than to ‘wipe the slate clean for everyone, mark a break with our accustomed morality, and start again’ (p390-1). But, in voicing this opinion, he does not spell out who should bear the costs of this debt forgiveness – or debt renunciation – when the clear logic is that the bill for such a Jubilee party will be laid at the door of Asian creditors!
Part of this omission may be due to his argument on money. It would seem that because he has documented how money has been represented by a wide variety of tokens, how banks can create money as just another form of credit money, that he can declare that ‘money has no essence’, but is a ‘matter of political contention’ (p372). This ignores the fact that money, even token or credit money, is a claim on the produce of society and represents value. To be sure, that claim may be devalued in various ways or even be declared null and void by the state. In the latter case, if the debtor renounces the claim, then the creditor will suffer. Graeber says that ‘paying one’s debts is not the essence of morality’ (p390), which is true. But what morality is there in a rich imperialist power repudiating its debts to poor countries?
The final chapter dealing with the post-1971 period is by far the weakest, but should not be allowed to detract from the historical insights and information on society contained in the rest of the book. The chapter nevertheless highlights that it is not possible to understand the issues facing the world today from a national perspective. If one views the US debt problem in isolation, even if noting how foreign creditors have financed US deficits, then this does not put the crisis in the correct context.
Key questions to answer are what led to the debt crisis in the first place, and what its ‘resolution’ implies. Graeber recognises in his global approach to history that this is indeed a world crisis, but he has no means of explaining it other than through suggesting that the crisis in the 1970s showed that capitalism had reached the limits of what it could offer the working class (p374). I did not expect to find an analysis of the origins of the world crisis in this book, but the anti-capitalist sentiment that the book generally expresses is severely lacking because it does not understand that under imperialism there is a basic split in the world economy between oppressor and oppressed countries. It is not just an opposition to capitalism in general that is needed, but a political recognition of which ruling classes are running the global system of oppression.
Graeber has to some extent singled out the US ruling class, but only from a narrow perspective of showing that their actions have been against workers in the US. He makes no mention, nor shows any recognition, of how workers in the US, as in other imperial powers, benefit from the oppression of other countries. When it comes to the ‘debt forgiveness’ question, in this book he has been ambiguous, to say the least, about where he stands on its resolution. Does he mean that the huge US debts, in a country where average incomes are more than 10 times those in China, should be subsidised/written off by the Chinese?! True, there are Chinese millionaires or billionaires who might bear the losses in practice, and who should be subject to a reckoning from their own workers, but the point remains: for someone in the US, especially, the enemy is at home. This is all the more necessary to see when the changing balance of economic power in the world is making the US more aggressive against a rising China.
-Tony Norfield, 27 August 2012
 One interesting fact is that the main purpose of the text of the famous Rosetta Stone was to announce an amnesty for debtors and prisoners, declared by Ptolemy V in 196 BC (p219). This was one of the periodic ‘clean slates’ declared in the Axial Age, and at other times.
 Graeber notes that an opposition to usury did not constrain the growth of commerce or the ‘development of complex credit instruments’ in Islamic areas (p275). Investors received a share of the profits as a partner, not as interest on a loan. Islam combined commerce and the mosque, with the Prophet Mohammed on one occasion refusing to force merchants to lower prices during a shortage in Medina because ‘prices depend on the will of God’ (p279). Handshake deals and paper promises were common in Islamic business, with the mosque rather than the state acting as regulator/enforcer. Christians condemned usury, but needed loans. In 11th and 12th century Europe, Jews were excluded from most professions and many focused on money lending (though their role is often exaggerated). Christian princes or monarchs encouraged Jewish moneylenders and put them under their protection, until it suited the governing class to encourage anti-Jewish pogroms and persecution (p288).
 I don’t think I am being unfair here. Graeber gives no indication that he is talking about a debt amnesty for ordinary people that is borne by US banks or the US government (via a US taxpayer liability), even though he shows sympathy for the plight of highly indebted Americans and complains that the banks got bailed out while ordinary people did not. Neither does he indicate anywhere that his ‘international debt’ reference means cancelling the debt of poor countries. By a debt Jubilee, he may be referring to all countries. However, apart from such a proposal being absurdly utopian, that is not the sense one gets when reading his final chapter, which has an almost exclusive focus on problems in the US.
 On page 75 he notes that ‘money is almost always something hovering between a commodity and a debt-token’, which is fair enough, as is his brief discussion of the gold standard elsewhere. However, his theoretical view of money stresses the social acceptability aspect at the expense of its role as a representation of value, even if, as a token or piece of paper, it is not embodied value itself.