DEBT: THE FIRST 5000 YEARS // A CRITIQUE
I was previously unacquainted with the field of ‘economic anthropology,’ and it was therefore with interest that I picked up David Graeber’s ‘Debt: the first 5000 years.’ What I believed to be a book on economic history was nothing of the sort, and instead aimed to elucidate the reader about debt and money through the study of different civilisations, from the Tiv people of Nigeria to the ancient Athenians and Romans.
So far so good, I thought. Although I knew that Graeber was not exactly revered amongst liberty-minded individuals (he was, in fact, a leading figure in the 2011 Occupy Movement), I thought it would be worth reading anyway, and that the book would contain many useful insights through this alternative approach to studying what constitutes the foundation of our modern economies: debt.
It is one of the few books I’ve read that I do not recommend.
Whilst there are no doubt useful insights that can be gained from this anthropological approach to economics, the author’s clear bias against market mechanisms, capitalism, and the subject of economics itself is evident throughout and makes it difficult to take this work seriously. Rather than rejecting 200+ years of acquired knowledge, anthropology should be studied alongside economics rather than in opposition to it.
Before diving into the history of debt itself in chapters 8–12, Graeber explores different conceptions of debt through inspecting various historical civilisations.
Chapters 2 and 3 did contain good insights; Graeber outlines that the idea that barter preceded commodity, representative, and fiat money is incorrect and that there have been no real examples of this. It is the Myth of Barter. Rather than bartering and trading directly early societies used a primitive sort of credit — a sort of delayed barter. This solves the ‘double coincidence’ problem. From this evolved more elaborate credit systems, the clay tablets of Mesopotamia for instance. A recurring point throughout the book is that money can be both an IOU based on debt, and a physical commodity, and that civilisations have switched between the two throughout history. The latter point is invariably correct with plenty of evidence to back it up, whereas a number of economists have challenged the former point that Barter did not exist, notably Robert Murphy in his critique of Debt. Murphy claims that just because there is no evidence of barter, it does not mean it didn’t exist — it would just have existed very briefly before more suitable forms of trade were found.
Chapter 3 is also quite interesting, exploring different conceptions of debt and how some civilisations saw debt as existential — something to be repaid to one’s Gods, one’s ancestors, or one’s country. Though of course, we do not owe anyone anything for our existence — the existence of our life is not a transaction. Debt in this sense makes little sense and is just used to extract labour from a large group of people to benefit a few.
This is all well and good, and up to around Chapter five I felt there were many useful insights to be gained. Whilst none of it was ground-breaking, for I had already read quite a lot about the theory and history of money, it remained interesting. Though from this point on, the book went downhill.
Many of the points that Graeber made, based on anthropological evidence, were valid and somewhat interesting. Though what bothered me was that from these stories, he extrapolates greatly and comes to many conclusions which simply aren’t true. I also felt that the book lacked a clear thesis other than ‘debt bad, altruism good,’ which in itself was argued poorly.
For example, he described the Lele people of the Congo who traded women and for whom money was used not to exchange goods but to reorganise social relations. Whilst all this might be true, it is hardly how we use money today. I see the point he is attempting to make: by showing how money could be used to exploit in the past he tries to show that this continues to be the case today, in the final chapter outlining the changes he thought should be made. Though many of the examples used are very distant and bear very little relation to how we use debt today.
Debt seems to ignore the current uses for credit and the many important uses for it. Whilst true that many become ensnared by debt and are unable to manage it, many more others can manage debt perfectly well. It is thanks to debt that we have been able to finance large infrastructure projects, build our railways, and through which many invest in their education.
Graeber would prefer for us to live in a world based on the principle of for each according to his ability, to each according to his need — altruism that is, but this is neither how humans naturally operate, nor should it be. In practice, altruism is only made possible through the use of force and serves to benefit a select few. It is for this reason that it has failed everywhere where it is tried.
The book is filled with linguistic tricks to make one believe things that simply aren’t true in real life. For instance, Graeber believes that he has uncovered a ‘scandal’ of capitalism in that within most businesses, people operate on this of altruism (he uses the word ‘communism’ to describe this). This is only true if you accept his meaning of the word ‘communism’ — which looks at things from a very micro-scale and excludes medium and long-term exchanges. Though even he accepts that if you widen the scope, people are not acting altruistically at all.
The book was infuriating at times. Again and again, rather than addressing the real-world uses that debt serves, Graeber holds onto incorrect and ideological assumptions.
He condemns markets several times but fails to recognise that whereas markets are based on voluntary exchange which benefits both parties, the alternative being force which occurs at the muzzle of a gun. Perhaps the world Graeber would like to see is one based on a utopian altruistic ideal where people simply gift each other everything. This just doesn’t bear any relation to reality though.
Overall, this is not a great book if you are looking for an introduction to economic history. I would instead suggest Niall Ferguson’s ‘Ascent of Money,’ a book which Graeber trashes at the end of his own, but which provides a much more well-rounded and accurate portrayal of the history of money. Philip Coggan’s ‘Paper Promises’ is an equally good and somewhat shorter read. Personally, I’ve picked up a copy of Mises’ ‘Theory of Money and Credit’ and look forward to reading some sound economics.
If you are truly interested in understanding Graeber’s thought process I would suggest instead watching one of the many interviews in which Graeber lays out his ideas. This will consume an hour of your time rather than the 15–20 hours it would have taken to read the book, and you’ll come away having understood almost everything.
I do not doubt that there is a lot to be gained from anthropology, but this must be done alongside the field of economics, and not in isolation from it!