Anthropologist David Graeber elucidates the social and economic function of debt through an analysis of the history of money and credit in civilizations worldwide from the time of the Sumerians to the present. One clear pattern emerges: the use of violence is closely connected to mathematically precise quantification of exchange value, and even more so to the embodiment of value in tangible cash. The informal reciprocation of favors is not subject to precise calculation. It becomes quantifiable economic debt when failure to reciprocate is subject to penalties enforced by violent acts; precision is introduced because so much hinges on whether or not reciprocation has been adequate. Yet economic debt retains the morally binding quality of the informal reciprocation of favors; insolvency is seen as a moral lapse. Quantification, in turn, makes debt transferable or negotiable, and can ultimately lead to the embodiment of negotiable value in cash. This pathway of development—from reciprocation of favors, to economic debt, to tangible money—is nearly the opposite of the “barter myth” commonly presented in economics textbooks, according to which barter leads to exchange of cash, and then to credit as a substitute for cash.
Throughout history, the enslavement of insolvent debtors as debt peons has often been a major mechanism of dominance of the rich over the poor; in the ancient world, it frequently led to “debt jubilees”, or general cancellations of debts by royal decree. Cash has been even more closely associated with violence than credit. World history has gone through cycles in which at some times economic exchanges were primarily transacted on credit, and at other times significant amounts of cash have circulated. The latter eras have been associated with war, plunder, empire, and slavery, all of which have been facilitated by the anonymous and impersonal transactions that cash makes possible. The wide use of cash does not, however, entirely supplant credit; instead, the demand for ready cash motivates widespread usury and loan sharking. The depredations of conquistadors and other imperialists during the Age of Exploration and the subsequent capitalist era were often motivated by their indebtedness.
In the last few decades, the world economy has shifted back toward an economy based principally on credit, yet there have been no significant measures taken for the protection of debtors; instead, rapidly increasing debt has been coupled with a political and ideological milieu that heavily favors creditors. Graeber proposes a debt jubilee as part of the solution, together with an unequivocal rejection of the idea that debts are absolute moral obligations.
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