Review Part Eight Of Dr David Graeber’s “5,000 Years of Debt”

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Review: DR DAVID GRAEBER, DEBT: THE FIRST 5,000 YEARS, NEW YORK, 2011

Part Eight

[My review-reports of Dr Graeber’s Book have been interrupted by end of term examinations and my requirement to grade MBA/MSc papers in three subject that I taught for many years. I have continued reading when I can and making notes. I expect more papers to arrive before close of play this evening and my grading to continue over the holidays.]

The next three chapters, 8, 9, and 10 cover a wide geographical spread (The Celtic Fringe on the British Isles, through Europe to India and China) and to what Dr Graeber calls the ‘Axial’ economies, and the early market societies that blossomed almost simultaneously across the known world (Africa, the Americas and Australia remained predominantly hunter-gatherer and elementary agricultural societies).

He postulates that there are times of “historical opportunity’ and by “understanding” them we “can begin to have a sense of the historical opportunities that exist at the present” (p 212).

Critical to then (“roughly between 660 and 500 BC” (BCE) was the invention of coinage. This invention was guided from the top when “local rulers” (in the “Great Plain of Northern China, in the Ganges river valley of northeast India, and in the lands surrounding the Aegean Sea”, almost simultaneously replaced existing credit systems, though why and how this ”social transformation” happened remains unknown. It continued as issued coinage for a thousand years and then “dried up” around 600 AD (CE), and slavery was abolished, creating a cyclical process of periods of “credit money” (accurate records) alternating with “gold and silver” (accurate scales) (p 213), possibly coinciding with periods of “relative social peace“ and periods of generalised” violent periods (fall of Rome and warlords in Western Europe). Dr Graeber’s account of these periods is worth reading, if only to grasp his quite original thesis.

The “First Agrarian Empires (3500-800 BC”) (BCE) with their “virtual credit” give way to “Axial Age” (800 BC- 600 AD) when “coinage and bullion” took over. Then the “Middle Ages” 600-1450, a return “virtual credit money”, which led to the “Capitalist Empires” (1450-1971), and now we are back to “virtual money” (p 214).

Points to note: that “virtual money” implies a “lack of trust” (anonymity?) (p 215). Debts become “negotiable instruments” passed on in third-party transactions. Creditors must have had some faith in the final redeemer of the note; the trick being to pass on a credit note ‘before the music stops’. It’s not clear to me in what form a merchant repaid the lender – with what? Another credit note? Bullion? In this period Kings started wars to recover debts and to cancel all debts in their kingdoms (p 215-16). Also debtors and lying were endemic partners. “Peasant revolutionaries” made standard demands to cancel debts and led to “social breakdown” and disorder entirely (p 216).

Debts could be repaid in the form of agreed items, no doubt requiring bargaining as to what counted and the amount (nascent bartering behaviour?), though not mentioned by Dr Graeber (pp 218-20). Charging interest emerged but still requires agreement on what is added to whatever form of repayment of the debt is acceptable. Even one’s children could be accepted as a repayment, surely a barter-type transaction: which children, what age and sex, how healthy, and so on, against how much of the debt? Dr Graeber does not discuss or report such likely behaviours, which I find disappointing.

Chapter 9 on the Axial Age is most interesting (Dr Graeber never bores the reader, at least not this one for whom the parallel phenomenon across the large geographical space is quite new). Among the events was the issuing of coins as currency by all the petty kingdoms (p225). Bullion was “stockpiled in temples “as sureties for loans” , borrowed for what purpose is not stated. Once removed and broken into small pieces it was “placed in the hands of ordinary people” to be “used in everyday transactions” (p 227). Such as ….? With the king’s stamp on them, coins were a pictorial symbol of a king’s power, and when paid to soldiers, who spent them among the civilian population for whatever “necessaries, convenience, and amusements”(Adam Smith) that they required, they helped to fuel markets that made available whole ranges of products – many more than in a barter or a debt system of payment in fewer items. “Constant warfare” can be a “powerful impetus to the development of market trade” (p 226) but was not “ultimately a winning proposition” (p 227). The carnage of Axial warfare was extremely high; it also produced an “unprecedented outpouring of ideas” (p 228), (as did the Second World War, and as the 18th-century naval competition earlier).

Dt Graeber’s account of monetisation in India and China is most interesting (pp 232-37). His discussion of cash transactions is hampered by his view that “cash transactions” is about “how many of X will go for how many of Y, calculating proportions, estimating quality, and trying to get the best deal for oneself”, which Dr Graeber presents as a “new way of thinking about human motivation”. At root, Dr Graeber (p 238) believes that trade is an exchange of “equivalents” (X = Y) when exchange is actually a ratio (X/Y). It may be that X/Y for one party is > 1 and for the other it is also > 1; they do not need to be, nor are they normally, equivalent. I usually value what I get for what I want more than I value what I give up; indeed, this is the common motivation for exchange. Kids realise this when they trade their cds for video games. We can be both “better off” after the transaction than we were before it and they do not need to “calculate’ the ratio (far too complicated for everyday exchanges); they only have to “feel” better-off. Dr Graeber’s summary discussion (p 248-9) shows his counter-poising “materialism” to “morality and justice” when in reality the need for “morality and justice” is a product of the absence of material necessities among the poor.