The book Debt: The First 5000 Years by David Graeber was given to me by someone kind of on a whim. Neither of us had any idea what it was. At first glance, it seemed like a very detailed historical account of debt, which might be somewhat interesting, but probably also very dry.
Actually, it is a very detailed history of debt. And the book is very long. However, it turned out to be a book that I could not put down, and the length was well worth the read. The historical detail was interesting and novel. Furthermore, the historical evidence was supplemented by anthropological research (which always makes for a great analysis). Graeber challenged so much conventional wisdom that in 300 and whatever pages, I never found myself thinking, "Yup, read this before" (well, aside from some anthropological concepts/studies that I happen to already be familiar with).
Some common assumptions that Graeber refutes with historical and anthropological evidence:
1. Money has it origins in barter (and debt was the last to appear)
Actually, the real historical sequence (at least so far as the evidence points us) is the reverse. Complicated system for managing debt arose before the existence of any currency. Furthermore, each stage of this "evolution" was accompanied by a profoundly new order of violence. For example, debt arose out of "human economies" (or ritual spheres of exchange) that highlight the incalculability of human life, and serve to create or strengthen social bonds through marriage, exchange of ceremonial objects, and the like. When violence rips people out of their social context (say, through a murder or kidnapping) then the ritual means of payment are used "compensate" the family/village for the loss, even while the use of such payment simultaneously serves as a reminder that the loss can never be repaid, as ritual exchange objects signify the incommensurability of human life rather than serve as its equivalent. Thus, something quite like "debt" emerges.
In the history that Graeber delineates, the development of the phenomenon of debt is inseparable from this type of violence, as well as the history of slavery. In some sense, Graeber sees debt as a perversion of a more fundamental human mentality: I will give things to people in need when I have the means, in the expectation that others will provide for me when I am in need. The nature of the perversion is to remove the expectation from the context of a social bond. Rather than a relation of equality - that of mutual aid - it is an inequality in which one party has recourse to the violence necessary to force the other party reciprocate (even if that "reciprocation" takes the form of slavery).
Similarly, the rise of currency is tied to creation of large state militaries and the building of empires. The return to reliance on metallic currencies, in the early era of capitalism, was also inextricably linked to the slave trade. Graeber also notes that periods where currency predominates are characterized by increased warfare and general social instability. Debt requires a minimum amount of trust and faith in others in order to function. When no such trust exists, one has no choice to but to rely on currency.
2. The state are the market are two independent, often even oppositional, forces.
Graeber's historical evidence indicates that, quite to the contrary, markets actually originated in the state. Throughout history, states have created markets for strategic purposes - for example, as a means of provisioning a large standing army. Only in the Middle East during the Islamic Golden Age were markets able to develop relatively independent of the state. Very precise historical circumstances (conquest of state power by an external nomadic tribe, distance between state centers and commercial fringes, etc.) allowed this to occur. Interestingly, Graeber supplies compelling evidence that the writings and ideas of Adam Smith can be traced back to Middle Eastern scholars of that time period (some of his examples are nearly word-for-word identical to theirs). However, Adam Smith attempts to universalize based on the experiences of a particular group of people whose social life is shaped by very singular historical/social forces.
3. Capitalism is characterized by free markets.
Actually, I have already attacked this idea at length. David Graeber simply provides additional support to the contention that capitalism has, more than anything, limited the freedom of the market.
4. Debt is a sign of moral failing, for states or individuals
On the individual level, Graeber notes that debt is part of the very fabric of our social relationships, for better or worse.. For better, when it exists as an expectation of mutual aid; for worse, when it is backed up by violence.
On the state level, Graeber argues that entire currency systems are literally based on debt (say, the loan made by the Bank of London to the British monarchy). If this debt were ever repaid, the entire system would crumble. For the United States, government debt serves to maintain a vast imperial tribute system, where client states buy U.S. debt, and then wealth is transferred to the U.S. (who remains in possession of a large portion of the world's gold) when the value of the U.S. dollar falls in comparison to gold.
Thus, according to Graeber, debt is not the result of individual or national moral failings, or lack of fiscal responsibility. It is built in to the way our society functions, by which relationships are maintained and managed.
Nevertheless, Graber insists that we are in need of a Jubilee. He says that now is the time to erase all debts, wipe the slate clean, and determine on what sort of moral foundation we would like to rebuild our society.
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