One of the first myths debunked by Graeber in this book is the myth of barter. Most of us educated in western school systems are taught that before there was physical money, people of the ancient world traded goods and services in a simple economy dominated by bartering with others. This couldn’t be farther from the truth. Caroline Humphrey, a professor and anthropologist from Cambridge, wrote in her book Barter, Exchange, and Value that “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing.” So why are we taught this myth in schools? Because on its face, it makes sense. Only when we study history with a closer lens does it fall apart.
Let’s say we are members of an ancient society (pre-coinage) and I need a new pair of shoes. You, the shoemaker, have plenty of shoes to barter with. Perhaps I have a few chickens with which to trade, but what if you don’t want chickens? Or perhaps you already have some and are in need of corn instead? How do we trade? We can try to find a third person who has corn (and hope that they need chickens) and make a three way trade, but this could prove difficult and time consuming, with no guarantee of success. Or, you could give me the shoes on credit, and I’ll promise to pay you back at some point in the future. This second strategy is how people from throughout history have completed economic transactions: through credits and debts.
Say you give me the shoes, but because you have no use for chickens, we agree to sign an IOU and each take home our respective half of the contract. That IOU is now worth a pair of shoes whether it remains in your hands or not. Perhaps you then take that IOU and trade it with another neighbor for the corn you want, and my debt now transfers from you to them. This is, in effect, how money came into being; at its core, money is a promise.
This only takes us so far though, because we must then determine the value of the pair of shoes you have given me. Are they worth one chicken, two, or three? Does it even make sense to measure the value of shoes next to the value of chickens in the first place? Here we are at another impasse. The solution, then, is to find a third thing that everything can be measured against. This third thing is what we call ‘money.’ Different societies throughout history have used many different things as money, like beads, shells, barley, salt, silver, and gold. It’s less important what this third thing is, and more important that everyone in society agrees upon its value. So, let’s apply this to our theoretical example: you give me the pair of shoes that I desire, and we mutually agree that they are worth 5 bushels of barley. I am now in debt to you for the equivalent of this amount. While I can certainly pay you back with 5 bushels of barley, if I don’t have it, then the equivalent number of chickens will suffice. This is only doable because all of these goods have a recognizable and agreed upon value in barley, which in this instance is our ‘money.’ Oftentimes nobody actually had barley (or whatever was considered money in their society), it was simply used as a way to measure the value of shoes and chicken and everything else. IOU’s were passed around as money and most people were both creditors and debtors to most others.
When societies were small, simple IOUs etched out on bark or bamboo sufficed as a token of debt. As societies grew larger, and people became more anonymous to one another, it became harder and harder to trust your neighbor. What would you do if you made a trade, received an IOU, and then that person left town never to return? The need for actual money grew as societies did, which leads us to another important question: Who are the biggest financiers of history? The answer is governments. Eventually, governments became the enforcers of debt, the minters of money, and the regulators of the market because “historically, war, states, and markets all tend to feed off one another.”
In previous centuries throughout human history, societies grew by conquest. This conquest was done via armies, composed of men who wanted something in return. They couldn’t take an IOU (or a chicken or a bushel of barley) because they were often on the march and might be in a different part of the world tomorrow. This drove governments to mint coins with which to pay them, money that could be redeemed anywhere throughout the empire. This minting of coins then catalyzed the creation of markets because the soldiers needed a place to spend their money. As armies and empires grew, so did the demand for coins, and governments became the only organizations large enough to keep up with the demand. More conquest meant larger armies which fueled more coins which enlarged the markets, a cycle that perpetuated itself (until the empire eventually collapsed).
Debt is not just a monetary and economic phenomenon, but also a political and philosophical one. Think about the feeling we get when someone does us an unexpected favor: we feel like we owe them a similar favor in return—we’re in debt to them. Or, think about how we behave with family and close friends: often times we give our money (and time) freely without expecting to be reimbursed, a system that’s closest definition is communism. This is the relationship I have with my mother: I fix the fence and she prepares dinner. While we are communists in our immediate family, we exist within a larger capitalist system, one that has simultaneously brought our modern world into being while also weaponizing debt against the poorest among us. Capitalism is 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.”
Let’s revisit our earlier example: I want to buy a pair of shoes from you but I don’t have the necessary 5 bushels of barley. This time, instead of a fixed amount, you declare that for every week I do not pay my debt back to you, it will increase by another bushel. You do not intend to trade my IOU to anyone else; you plan to collect. What happens when my debt becomes more than I can pay? For many people throughout history, this resulted in debt peonage—selling themselves (or their family members). This is how farmers became slaves on their own land: they borrowed from a wealthy lender, perhaps had a poor harvest year, defaulted on their loans, and become so deeply indebted to their financier that they effectively became slaves (as did their wives and children, if they had not already been sold). This is the basis for why many believe capitalism to be such a predatory system: the interest.
At its most fundamental level, a lot social life is based on the principle of reciprocity; if I scratch your back, you scratch mine. Therefore, “all human interaction can best be understood as a kind of exchange.” If so, then debt is at the root of all morality, because debt is what happens when some balance has not yet been restored. “The criminalization of debt, then, was the criminalization of the very basis of human society.” When humans lived in small, tight-nit communities, asking for interest on a loan was seen as immoral (I would never ask my mother for two dinners). As societies grew and times changed, usury slowly became more and more acceptable, to the point where now it is common practice. There is a problem with always asking for interest on a loan, however, which is that it requires growth—I need more money than I am borrowing in order to pay it back. Herein lies the fatal flaw in capitalism: it is a system based upon growth, but something that only grows cannot exist forever. At some point, it must end. On the one hand, our debts give us a sense of purpose towards one another, as it is the fundamental way in which we exchange and relate, and yet, on the other, the debts of capitalism are simultaneously slowly strangling us.
“For thousands of years, the struggle between rich and poor has largely taken the form of conflicts between creditors and debtors” and our current day and age is no different. The United States has been the global empire for the past century, but our power is slowly slipping as we remain engaged in foreign wars and watch the purchasing power of our dollar shrink. The gap between rich and poor in this country (and indeed in most western countries) has never been larger, a trend that is continuing. As Graeber details in his book, for the last five thousand years of recorded history, with remarkable regularity, population insurrections have begun with “the ritual destruction of the debt records—tablets, papyri, ledgers, whatever form they might have taken in any particular time and place.” In the ancient world, all revolutionary movements had a single program: Cancel the debts and redistribute the land.
What does this truth about history reveal for us today, as Americans (and Westerners as a whole) are more in debt than ever before? What does it say about governments that are more in debt than ever, printing money to pay for their own bills? Might we see a revolution of poor debtors against rich creditors?