Between Credit, Bullion and Rebellion: Debt by David Graeber

[The WRL blog is excited to feature a third book review by Jeanne Strole, co-director of the A.J. Muste Memorial Institute, with which the War Resisters League shares a long history, as well as the building at 339 Lafayette St. in Manhattan.]

Debt: The First 5,000 Years by David Graeber (2011)

Review by Jeanne Strole

Right now, everyday people are increasingly feeling stress from all directions. Pressure from the faltering economy, violence and warfare, debt/deficit worries, and austerity measures are taking things to a breaking point. Human-scale economic considerations are being crushed beneath the massive weight of a world-wide permanent war economy and a bloated, lawless global financial system. The lingering 2008 financial crisis has this year sparked worldwide protest movements in one form or another that are hunkered down and gaining momentum in rebellion of the immense financial stresses effecting all but the richest among us.

Into this moment of epochal crisis comes Debt: the First 5,000 Years, by David Graeber, a book examining the real history of the economic forces that seem so permanently entrenched and that are affecting our lives so profoundly. It is an engaging, thoroughly researched text that is at times humorous and always thought-provoking. It presents a fascinating history of human financial systems and illustrates how changeable these systems actually are when viewed over time. Graeber takes the reader through an examination of various aspects of economic mechanisms and systems of exchange, then on a journey down a timeline of economic evolution, beginning from around 800 BC up through the present. While chapter by chapter, Debt is an accessible and interesting read, the book is also extremely dense and detailed, making it a long read.

The dynamic between debt and credit, and how they function, is the primary focus of the book. The author examines how debt is experienced very differently by economically disenfranchised people and countries in the global south compared to how privileged people and wealthy countries experience it. He notes that there are deep contradictions and economic double standards that have been at play for centuries and which have evolved into the power dynamics in force today. Graeber observes that it is the power and capacity to create violence that determines how an entity, a country, for instance, experiences debt and the pressure to repay that debt. “In the final analysis”, he notes simply, “the man with the gun doesn’t have to do anything he does not want to do.”

The underlying forces that govern which economic systems are employed when throughout history is also dictated by the absence or presence of violence, in the form of wars, military adventures and empire building. In order to facilitate the maintenance of armies and the fighting of wars, gold and silver exchange markets replaced debt and credit systems….but not permanently. Throughout the last 5,000 years, Graeber explains, human society has shifted back and forth between credit and bullion or gold and silver exchange systems based on the presence of institutional violence. The concept of how “violence, or the threat of violence, turn human relations into mathematics” is explored throughout the book.    

The author observes that the 2008 financial crisis presented an opportunity for a conversation about how our current financial systems might once again be dismantled and/or reinvented, this time to more intentionally serve human needs rather than violence, power and greed. But this conversation never really got started, the banks were never held accountable for their greed and incompetence, they never faced oversight and regulation, and the militarization of the economy was allowed to carry on. Graeber notes that, since then, in the wake of that missed opportunity, the financial crisis has worsened, like a global economic flu. Real people all over the world are enduring an accelerated degradation of their financial situations, loss of homes, the crush of consumer debt, mortgages and student loans, and draconian cuts in education, healthcare, and social welfare systems as the financial elite squeeze the last drops of blood from the world economy.

Graeber asks the question “How did we get here?” He suspects that what we are seeing and feeling is the last stages of the complete militarization of American capitalism. He goes on to speculate that “the last thirty years have seen the construction of a vast bureaucratic apparatus for the creation and maintenance of hopelessness, a giant machine designed, first and foremost, to destroy any sense of possible alternative futures.”

But he then writes that this ongoing crisis does present an opportunity for alternative solutions, for conversations about debt forgiveness for economically vulnerable countries and people and for reform of the system in general. Graeber writes that, in order to begin this process, “to begin to free ourselves, the first thing we need to do is to see ourselves again as historical actors, as people who can make a difference in the course of world events. This is exactly what the militarization of history is trying to take away.”

Enter 2011, witnessing the widespread protests of the Arab Spring and Occupy Wall Street, movements that are gaining momentum, each encouraging the other, and joining with the austerity protests breaking out all over Europe. The world seems poised to form the makings of a vast global rebellion and people seem to be taking up active roles to make change. Finally, it seems, also, that the conversation which did not happen in 2008 is beginning now in earnest.

Graeber points out that, when economic pressure has reached critical points in the past, people have been able to work for change. Jubilee or debt forgiveness and a re-distribution of resources have happened in many civilizations throughout history and he posits that we have reached again exactly such a moment.

How might debt forgiveness work for homeowners and students, for instance? Graeber’s comments on debt forgiveness may seem revolutionary, but he is by no means alone in this debate. This 2009 article from Business Week, for instance, describes one aspect of the growing movement for forgiving student debt to stimulate the economy. Many involved in this movement have begun to make progress pressing their congressional representatives for debt forgiveness and income-based repayment relief legislation. Mortgage forgiveness for homeowners is being fiercely debated but the prevailing sentiment is that any allowances for re-financing, principle forgiveness or overall mortgage forgiveness would endanger the mortgage-backed securities industry. Graeber would likely argue that the unregulated proliferation of questionable mortgage products and predatory lending practices started the problem, so the companies and banks responsible should be made to pay….and not out of taxpayer’s pockets.

The question of debt forgiveness on a national scale is another discussion. Haiti might be the first country that comes to mind when thinking about national debt forgiveness. Graeber writes that, when the slave population of Haiti won their independence in 1804, France levied a debt of reparations upon the new country of 150 million francs, the equivalent of 18 billion dollars today, a sum impossible to pay back. Haiti has been crippled beneath the weight of that debt ever since and is, consequently, the poorest country in the world. Ongoing debate about forgiving Haiti’s debt intensified after an earthquake devastated the island country in January of 2010. Some of that debt was forgiven, but Haiti still struggles under a burden of more than one billion dollars that it owes to various countries and international entities, much of that more recent debt accumulating during the brutal reigns of Papa Doc and Baby Doc Duvalier.

Graeber also notes that, often times, loans to countries in the global south end up in the bank accounts of dictators and not in the countries’ treasuries, and he questions the fairness of making these countries pay back the debts, rather than demanding the money back from the people who stole it from those national treasuries. Recently, the post-Mubarak transitional government in Egypt has been working on lobbying their lender countries like the United States to forgive some or all of its national debts. The Obama administration is currently considering some form of debt forgiveness as part of its next aid package to Egypt.

Some countries that have been pushed to the brink of default by foreign debt burdens have even managed to successfully negotiate refinancing terms with their creditors without the International Monetary Fund installing itself as the mandatory intermediary. Argentina, in debt restructuring negotiations with its creditors in the wake of its 2002 fiscal crisis, is one example.

Graeber notes that he wrote Debt, in part, to encourage people to begin to view economics as being changeable and not monolithic, and to spark some creative thinking about what the possibilities for the future of human beings might look like. He admits that it is anyone’s guess what might happen next but he suggests that new forms of human exchange and cooperation, forms reliant on human compassion, creativity and love, can break with the forces that continually have sought to reduce human activity to commodity.

We are taking back power, restoring ourselves as engaged, creative, socially interacting beings, retrieved from the shrunken, two dimensional roles as producers and consumers of goods and services that accepted economics would relegate us to. Debt, the First 5,000 Years, is an attempt at understanding the past in order to understand the possibilities of this moment in time and our future economic survival. Human economics based on relationships and efforts based on creativity, love, and passion could form a new system from within the shell of the old. We can change the system for the better forcing governments and financial institutions to forgive the debts of economically vulnerable people and countries alike, and re-ordering the future for people, not for armies and banks.

Jeanne Strole is an artist and social justice activist living in New York City. She is currently a co-director of the A.J. Muste Memorial Institute.

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