For as long as there has been such a thing as money, morality and debt have been intimately intertwined. We see this today in discussions about the debt crisis. Do mortgage debtors, credit card debtors, and student loan borrowers have a moral obligation to pay back their debts? Is it unethical for debtor nations to default on their loans?

Most folks, thinking themselves as honorable people, feel a strong moral obligation to “make good” on their debts, to honor their debts, to follow through on what looks very much like a promise to repay. We even speak of “redeeming” a promise, hinting again at the moral dimensions of debt repayment. Yet, paradoxically, we also tend to look askance at lenders, at those who enrich themselves by lending money at interest to others. Few moneylenders enjoy positive portrayals in literature. Islam, Christianity, and Judaism have all gone so far as to prohibit lending money at interest. Neither the malingering debtor nor the creditor who hounds her have much claim to our moral approval.

This and many other paradoxes become transparent in David Graeber’s recent book, Debt: The First 5000 Years. It is a magisterial and deeply scholarly history of how debt – and money – came to be what it is today, and how human relations evolved around it.

Debt: The First 5000 Years covers a vast sweep of history, anthropology, and political economy, arguing not so much for a single thesis as for a braid of complementary ideas. Among them are:

  • That money originated as “social currencies” used to rearrange relationships among human beings (marriage, funerals, blood money, and other social functions), and was not used to buy and sell things. Indeed, this kind of money is to be found even in societies without a significant division of labor.
  • That the first money used for commerce took the form of credit: tallies of transactions and loans denominated in a common unit of account and periodically settled by delivery of various commodities.
  • That the conflation of these two different kinds of money led to debt peonage, slavery, the demotion of women’s status, and other iniquities that one might expect to happen when human relationships are mediated by the same currency as commercial transactions.
  • That much of the psychology and morality around money traces its origins to the violence and slavery that have been part of creditor-debtor relationships for thousands of years. War and slavery were crucial in creating the economy we know today, which should not be surprising, as our economic habits still encode the anxiety one might expect from such origins. As well, they perpetuate violence and, if not outright slavery, debt servitude to this day.
  • That history has alternated between periods of credit money and coinage, with the latter corresponding to times of greater violence, social chaos, slavery, and the repression of women. So for example, the Middle Ages saw the virtual abolition of slavery and the flowering of complex credit relationships facilitating trade across the Indian Ocean and beyond. Coins were seldom used. Compared to the Axial Age that preceded it, it was a time of relative peace and prosperity, ending with the rise of Europe and the influx of vast amounts of silver from the New World. A new age of coinage began.
  • That markets have never been “free” in the sense of being separate from government, but, to the contrary, were created by governments to facilitate their acquisition of various goods (especially for their armies). They have been intertwined ever since.
  • That all major world religions grew in response to money, whether informed by the beliefs of people living in a money economy, or in reaction to its evils.
  • That the origin of capitalism as we know it today is “the story of how an economy of credit was converted into an economy of interest.” Debt, he says, is the primary instrument of colonization whether internal or abroad – keeping in mind that behind the man with the ledger is a man with a gun. Moreover, the enforcement of debts is key to maintaining the political power relationships the prevail today.
  • That the invasion of market relations into every sphere of life has always been accompanied by violence. War, debt, and the market are inextricably linked. Even today, our money system is based mainly on the monetization of government war debts. If there is one persistent theme to this book, it is that our association of debt repayment with morality is false; that, indeed, the debt relations that hold today are rooted in a history of violence; that debt and money itself are social creations and not unalterable facts of nature; that our understanding of human nature is deeply colored by the market-based, debt-based world we live in. The world could be different. We are right to want it to be different.

This view inevitably clashes with much of modern economics, particularly its air of inevitability and mathematical certainty. His critique, which is usually implicit (he writes more as an historian than a critic of economics) goes all the way to the bottom: what is “money,” anyway? Consider his treatment of what some critics call “fiat money.” Graeber always puts it in sarcastic quotations, understanding how that term carries so many assumptions about what money is that aren’t true. For example, writing in the context of China’s medieval paper currencies (used during a period “usually considered the most economically dynamic in Chinese history”), he points out that China’s paper currency, like all so-called “fiat money,” was “not originally created by governments at all; they were simply ways of recognizing and expanding the use of credit instruments that emerged from everyday economic transactions.”

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

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

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

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

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

Despite his well-known political radicalism, and the radical insights of his book, Graeber abides by fairly conservative conventions of scholarly decorum. He avoids sweeping generalizations and programmatic statements. While his cross-cultural comparisons of Chinese, Indian, and Occidental economic history certainly lend themselves to metahistorical conclusions, he seems wary of taking his argument to its final step. This circumspection might make the book palatable to a broader spectrum of readers, but it is frustrating to activists who want to do something with it.

Some of the policy implications of Debt are obvious. For the last seventy or eighty years, economic policy has always been predicated on the moral and practical necessity of enforcing the repayment of debts. By showing that there is no such necessity, Graeber opens a wider door to existing proposals for Third World debt amnesty, usury laws, debt forgiveness, principle reduction on underwater mortgages, and so forth.

Less obviously, many radical proposals from the fringes of economics could draw powerful support from Graeber’s research. For example, Graeber describes how ancient rulers declared debt jubilees to right the social wrongs – concentration of wealth and loss of liberty – that arose through interest-based lending. A modern-day equivalent might be a negative-interest (demurrage-charged) currency, implemented perhaps as a liquidity tax on bank reserves, which is essentially a slow-motion jubilee. Another important idea in alternative economics is mutual-credit currencies – which bear a striking resemblance to the tally system used in Medieval villages. Graeber laments the incursion of market economics onto social relationships – and there are movements today, such as slow living and reskilling, that seek to reclaim various realms of life from the market economy. Even his call to overthrow the cult of “industriousness” and (by implication) recover a playful, pleasure-positive way of life has an economic analog in the idea of a social wage. If Graeber had made these alternative-economics connections explicit in his book, he might have empowered solutions that reach to the root of our systemic maladies.

I found myself wishing that he would apply the wisdom and intelligence that infuses his scholarship a little beyond it. What political prescriptions might he offer? What personal prescriptions for living in a world still so subject to insidious logic of slavery, violence, usury, and debt? How might we become active change agents on a personal or political level? Graeber seems reluctant to offer much speculation on what the future might bring, saying that the forty years that have elapsed since the resurgence of a credit-based system are nearly insignificant in comparison to the historical span he addresses.

A related shortcoming (I hesitate to use such a word for so breathtaking a work of scholarship) of the book is its hesitance to articulate any general principle of human nature. While he ably debunks the assumption that human economic behavior is motivated primarily by self-interest, he doesn’t offer an alternative that might be the foundation of an economic philosophy. Perhaps he would say, “Human beings are complicated,” or, “Human nature is largely an artifact of culture.” True, perhaps, but having surveyed five millennia of economic behavior across so many cultures, mightn’t Graeber attempt to discern some unifying, general feature of human economic psychology?

I would like to offer one. Throughout the book, amid lengthy discussion of debt, obligation, honor, credit, and money, there is strikingly little mention of gratitude. He offers a sophisticated appraisal of the “primordial debt” theory of economic philosophy (and of theology); what about a theory of primordial gratitude? Instead of being born into debt (to society, the ancestors, God, the cosmos), perhaps we are born into gratitude: the knowledge of how much we have received, and the desire to give in turn. As I illustrate in Sacred Economics, the assumption of primordial gratitude generates a very different economics: one that need not be coercive in nature, but understands people’s natural desire to create and contribute; one that internalizes costs rather than exporting them onto other people and future generations; one that, like gift economies of yore, discourages accumulation and makes wealth and status a function of giving.

Immersed in a system that enslaves us to debt and forces us into competition merely to survive, we are unused to expressing our innate desire to give. But when normal breaks down, that desire bursts forth. Many people in the Occupy movement (in which Graeber was deeply involved) have told me that the most amazing thing about it was how people stepped forward, without being paid to or ordered to, to meet whatever needs called to them. A gift economy – even a gift politics – quickly emerged. Even if it devolved into infighting and paralysis, we caught a glimpse of something real. “I saw how human beings are supposed to live,” one Occupier told me. I have seen the same happen after natural disasters disrupt the flow of normalcy: neighbors who ordinarily have no occasion to speak to one another emerge from their houses and everyone helps each other out. The desire to give, to contribute to the general welfare, lies latent in all of us. Could we build an economic system consciously designed to encourage this impulse? Because, as Graeber illustrates in so many vivid examples, the debt-pressure inherent in an interest-based system inhibits it.

Even if Graeber does not venture to offer proposals to address current economic problems, nor a vision of the future, nor a new philosophy of economics, others will surely carry his insights forward into their own work. I read this book with a combination of excitement and dismay: excitement because this is a work of prodigious erudition, profound insight, and vast explanatory power that, if it enters the discourse of economics, will lay to rest once and for all many of its most pernicious fallacies. Dismay, not only because it painfully illuminated the shortcomings of my own recently published book on money, but even more because if I’d only had the chance to absorb and digest it, my own work would have been all the richer. I am sure many economists, social theorists, and political scientists will share this sentiment as they come to terms with this trenchant and highly ramified piece of scholarship.




Charles is the author of Ascent of Humanity and Sacred Economics and writes a monthly essay for Reality Sandwich. He is on the faculty at Goddard College's Health Arts and