A Brief History of Debt

08/17/2011 4:00 AM |

Debt: The First 5,000 Years

By David Graeber

(Melville House)

We try not to think about debt. American student loans are at $930 billion and counting. The federal government owes $14.6 trillion to a network of bondholders around the world. These numbers are too large to comprehend, too large to think about without becoming afraid.

In short, the world of borrowing needs a little demystification, and David Graeber’s Debt is a good start. By his lights, borrowing brings up all sorts of conflicting emotions in the modern soul. We feel a moral duty to pay back what we owe, but we also find the whole business unsavory. Annual interest feels like creating money out of nothing, and all the parties involved are implicated in the same financial voodoo—from hedge fund managers to overmortgaged homeowners. It’s unfair, but it explains a surprising amount of American politics.

As the world’s foremost anarchist intellectual (and one of the world’s leading anthropologists to boot), Graeber is well-positioned to make the case. Across 400 pages, he traces the history of those social norms, starting with Vedic monasteries subsisting on an early form of endowments. The book’s first half is devoted to tribal examples like dowries or the debt the rescued man owes to his rescuer—debts that were more social than economic. Over time, we see the social conventions get stripped away, as debt is whittled down to a question of dollars and cents, a matter between strangers. By the time we reach present-day America, there’s almost a duty to treat anyone who owes money as if they’re less than human.

Graeber doesn’t see debt as a bad thing, though. For him, it’s inseparable from society itself, predating coinage by centuries. He’s more concerned with the rules of debt, the contemporary web of laws built to protect lenders at all costs, and the depersonalization built into every transaction. In simpler times, unpaid debts were used to forge alliances between villages, but when there’s a chance the borrower might simply skip town, that’s not an option. The result is the modern debt collection industry, an adversarial system that uses debts to break social bonds rather than strengthen them. One of the book’s more powerful points is that borrowing is always premised on equality—something that’s easy to forget in the age of high finance. You’re an economic citizen, with all the same rights as Bank of America. They’d just prefer you didn’t act like it.