That the world’s financial system is presently the source of considerable economic trouble is a statement that no one could reasonably deny. Beyond that, opinions divide sharply, over the origins of the crisis, never mind the solutions. For those who favour austerity programmes, it is essential that debts to financial institutions be paid. Of the various responses to this, one is to ask how these debts came to exist, and therefore the wisdom and justice of destroying social infrastructure to pay off the institutions who created the problem in the first place. It is possible to look deeper than this however, and to question the underlying system of production and property on which the financial sector depends. The two sectors exist within one whole system, but the distinction which is possible to make between them has, since the nineteenth century, encouraged many people to focus on monetary issues as the source of our society’s problems.
The anthropologist David Graeber has developed a new tack on all this through focusing on the role of debt and credit throughout human history. This is an immensely ambitious work, which effectively becomes a history of Eurasian civilisations and their systems of money or exchange. The purpose is to demonstrate the centrality of concepts of debt to social dynamics for the last five thousand years. In so doing he points out several severe flaws in the standard economic analysis of the origins of money, the most important of which is the notion that money emerged from primordial barter systems, and that developed systems of credit could only emerge after coin money was invented (pp.22-8).
This is an important argument since it highlights the degree to which economics as a profession has isolated itself from the rest of social science. It has been known to historians and anthropologists for some time that there has never been a stable ‘system’ of barter as the main means of exchange. Also it is a fact that complex credit systems of various kinds preceded coined money, which is however a different issue from that of money as a commodity in itself. As others have also observed, orthodox economics is riddled with assumptions that do not stand up to the evidence of actual human history and observed behaviour (see for example Steve Keen, Debunking Economics, Zed Books 2011).
However, Graeber goes well beyond pointing out some home truths to economists as, for him, ‘debt’ in a broad sense is the key dynamic of human society. The concept of exchange can be used to describe human relationships in general. The source of our current predicament thus needs to be sought not merely in capitalism as a system, but in the whole development of money from its very origins. Briefly, Graeber begins by outlining systems of exchange in societies without formal money. Here relationships of mutual debts are conceived within elaborate systems of social obligation, and localised ‘money’ systems can thus come into being using a host of more or less concrete means, from cowrie shells to tally sticks. A developed system of abstract money, credit and debt came into being in the Mesopotamian temple cities of Sumer around 3000BC. While silver is present as a base of measurement from the start, actual coinage first appears elsewhere much later, in the seventh century BC. Graeber then offers a somewhat original periodisation of history to match his central dynamic, the alternating rise and fall of bullion and credit systems, with the two most unpleasant periods, 800BC-600AD and the ‘Age of Capitalist Empires’ being dominated by bullion. The attempt to substantiate this thesis produces a species of world history, and shows an undeniably impressive breadth of erudition. As well as being simply fascinating, the book is full of intriguing and powerful insights that should fuel many more discussions.
The first period of bullion money Graeber calls the ‘Axial Age’, adapted from Karl Jaspers’ original formulation, extended to the whole period bound by the creation of the great world religions, Judaism, Buddhism and so on, and the collapse of several ancient empires, from Rome to China. One of the striking observations with which this book is peppered is the co-incidence of the rise of the universalising religions with the age of universal coin-money (pp.244-7). The religious cults of earlier societies had tended towards the intensely local; gods of particular cities, and non-exportable practices which related to precise areas and communities. From Zoroastrianism to Islam, these world religions apply universally, and are not tethered to one polity or geography (although those can be important too). Similarly the older credit systems of money were embedded in particular societies and did not travel easily, whereas bullion is potentially exchangeable on a universal basis. There are several objections that could be made to the correlations attempted here, but the perception of some connection is certainly worth further exploration.
However, this is just a way station in Graeber’s argument on the transition from what he calls ‘human economies’ that used forms of ‘social currency’, to the apparently more brutal societies governed by bullion currency. This form of money, he argues, likely emerged as a means of paying mercenaries, and is therefore bound up with the violence of predatory empires. Whatever the levels of violence in previous Bronze Age states, the point seems to be that the logic of the market first appears in full form in the ‘Axial Age’. This argument contains another challenge to orthodox economists, for whom markets are natural phenomena, which can only be distorted by the state. In fact, Graeber argues, markets were created in the first place by states, and the two institutions are tightly bound up with one another. Nevertheless, the heights of commercial exchange of the ancient world fell back as the ‘Axial Age’ empires disintegrated. A loosely defined ‘dark age’ emerged across Eurasia, in which there was a return to abstract credit and debt forms, and to ‘social currencies’. The Middle Ages are then a period of preparation for the re-emergence of bullion-dominated exchange, beginning with the earliest European colonial empires and up to America’s abandonment of the gold standard in 1971. The present period is therefore marked by the possibility of the emergence of something new, as the imperial system seems to be disintegrating once again.
The whole span of this argument is breathtaking in its way, and certainly creates a coherent whole that appears to account for a whole range of relevant phenomena. However, there are problems with the analysis right from the start, as Graeber is given to making some quite large claims that are not fully supported by his evidence. First of all, social and economic change comes out of this scheme curiously one-dimensional. His periodisation of history takes on the appearance of a cycle rather than a development, since the constant, central relationship is that between debtor and creditor, and everything is dissolved into this one form.
Thus early on, he claims that ‘for thousands of years, the struggle between rich and poor has largely taken the form of conflicts between creditors and debtors’. Moreover, ‘with remarkable regularity, popular insurrections have begun the same way: with the ritual destruction of the debt records’ (p.8). Now these are very large claims to make, and the obvious objection is that most peasant revolts were in fact primarily concerned with taxation, from the Bacaudae at the end of the Roman Empire to the English Peasants’ Revolt of 1381, to the French rebellions against the taille in the seventeenth century. Graeber does not really justify his argument here, simply collapsing tax into debt in a footnote (p.393, n.4). While states might like to claim that tax is a legitimate debt, this is surely part of the ideological justification of taxation, not a true description of the reality of the social relationship.
Similarly, when he considers Chinese peasant rebellions later on, he makes much of the role of indebtedness, while most accounts emphasise the tax burden on the peasantry when considering these revolts and the cyclical collapses of the Chinese state (pp.257-9). Graeber concludes his introductory claims about what might be called the debt struggle with a quotation from M. I. Finley: in the ancient world, the programme of revolutionaries was always ‘cancel the debts and redistribute the land’ (p.8). Now debt relations clearly were crucial in ancient Middle Eastern and early Greek societies, but Graeber does not really acknowledge the second element in his quotation: control of land. Debt is an important relationship, particularly in the ancient world, but so is property and therefore class.
Graeber stresses that debt presupposes a relationship between equals in at least a legal sense, although noting that this is ‘the most ruthless and violent form of equality imaginable’ (p.191). He also does acknowledge that in the ancient world the rich tended to lend to each other at favourable terms while treating the poor quite differently (p.86). Thus the discussion is alive to the role of power in social relationships, and how this distorts gift-exchange types of relationships. Yet the way in which class and property affect the more egregious sorts of debt relations fails to carry much weight in his analysis. There is an assumption that ancient societies like Sumer were not characterised by class, but rather that they were largely made up of free citizens. Where he discusses the origins of taxation, Graeber notes that ‘the inhabitants of independent cities did not usually have to pay direct taxes at all’ (p.63). Elsewhere he acknowledges that the origin of interest-bearing debt is unknown, although it existed in Mesopotamia around 3000BC (p.400, n.47). However, the social structures under which such a practice arose are surely crucial.
An explanation for interest might be found in the existence of class relationships in ancient Sumerian society. Those free farmers that existed may not have paid taxes, but the temple economies assuredly became wealthy on the basis of both the exploitation of slaves, and the rents charged on other categories of dependent labour. Debt-relationships between rich and poor free citizens is important, but appears prominently probably because these ancient states needed a certain number of free citizens to serve as reliable soldiers. The regular jubilees, or debt-cancellations, would have been then the result not just of debt and creditor relationships, but of deeper struggles within a stratified class society.
One of the great strengths of the book is the detailed and extended attention it gives to the civilisations of China, India and the Middle East, so that Western Europe does not always take centre stage. Certainly in the theme of financial structures, China’s history is impressive early on, with paper money in wide circulation even by the twelfth century. However, for all the fascination of Graber’s research here, it is hard to know, without specialist knowledge, how confidently it is possible to accept his conclusions. The question arises because there are mistakes and misjudgements in his discussion of the European Middle Ages.
Some of these errors are relatively trivial, as in the confusion of the first medieval appearance of the Jewish blood libel in Norwich in 1144 with the massacre of Jews in York in 1190 (pp.288-9). Others are more central to the argument. Graeber rightly objects to the traditional assertion that at the collapse of the Roman Empire, European societies ‘reverted to barter’ (p.252). However his description of the reappearance of virtual credit money systems rests on flimsy ground. For example, the use of Roman money in the post-Roman ‘barbarian’ law codes does not show that ‘people were still carefully keeping accounts in Roman money as they calculated interest rates, contracts and mortgages’ (p.252). The relationship of these law codes to actual social or economic practice is remote and very tricky to establish. The appearance of ‘abstract’ Roman money in these documents may not amount to more than a kind of literary reference, and it would certainly not have had any significance beyond a tiny literate elite. The law-codes are repeatedly asked to do altogether too much work in support of Graeber’s thesis.
To then claim that ‘however oppressed Medieval serfs might have been, their plight was nothing compared to their Axial Age equivalents’ is to miss the point on several levels. The disappearance of state taxation in most successor states was good for free peasants, unless they simply came under the domination of new, more localised landholders. In any case the slaves and serfs of the great estates would have experienced little change. Subsequently, Graeber erroneously links the return of commercial relations, or at least ‘rural’ usury, with a non-existent rise of a free peasantry in the 1100s (p.289).
In fact the reverse relationship is the case. The reduction of the surviving free peasantry to some form of bondage and dependency by 1200, alongside the increasing productivity of agriculture, meant a larger and more prosperous ruling class. More efficient exploitation, based on rent, enabled the growth of luxury trade, and hence the markets of the high middle ages. Rather than the Church being in charge of ‘the regulation of markets’, those ‘markets’ grew up around clerical as well as aristocratic centres of luxury consumption (p.283). The reappearance of certain sorts of debt relations is consequent on property and class relationships. The ability of lords to impose what they sometimes admitted were ‘bad customs’ on the peasants is more important than any form of exchange relationship.
What predominates in the European Middle Ages is the power of landed property. Consequently laws affecting debtors and creditors in thirteenth-century England favoured landowners over their creditors (the reference to debtors’ prisons on p.288 is anachronistic). Missing this, Graeber also fails to note that the persecution of Jews, such as the incidents noted above, arose largely from the hands of their debtors, the knightly class. The distortions here seems to arise because Graeber is arguing that Jewish and other money lenders were the tools by which a bullion economy was being re-imposed upon supposed rural virtual money systems (p.439, n.114). In the over-estimation of his favoured category of economic relationship, Graeber fails to notice that class relationships are key here.
The analytical misjudgement produces a very peculiar reading of Arthurian romance, where this form of literature is held to reflect the lives of merchants rather than knights. The Holy Grail is even found to be a symbol of abstract money (pp.294-6). Graeber is not the first scholar to come up with an absurd interpretation of Grail symbolism, which clearly has something to do with bridging the gap between secular and religious authority, but these and other judgements do not produce a convincing picture. The concepts of debt relations and abstract money systems turn out not to be keys with which to unlock the mysteries of social relations, but ever-expanding categories which suck all available evidence into their orbit. In so doing, Graeber gives a tremendously unbalanced overview of medieval Europe.
The rise of capitalism as a world system offers much opportunity for moral outrage at what bullion money can do to societies and human relationships. Nevertheless the perspective here is not particularly illuminating in explanation of events; unless the point is simply a moral one at what universal money does to the human conscience. If so, this is a somewhat mechanical view of the relationship between economic and ideological forms. As for the economics, Graeber seems to collapse ‘financial speculation’ and the activity of capitalists into the same thing, while ignoring the roles of property and production (p.260). Graeber rues the destruction of local credit systems by the imposition of bullion money in Europe, but this discussion proceeds without any consideration of other developments that would explain how capitalism spread within European economies (p.313). The dispossession of the peasantry by the enclosure acts in Britain, for example, should be more than just an afterthought as an accompanying factor of the ‘price revolution’. When he says that the Atlantic slave trade can be considered to be ‘a giant chain of debt-obligations’ (p.347), it is possible to feel that debt relations have become a metaphor stretched beyond its capacity to explain the real relationships involved.
Graeber has produced an impressive, detailed and fascinating account, but his analytical focus on exchange systems acts to the almost total exclusion of class relationships, and is thus deeply problematic. Much of the time, Graeber seems to assume that the really important people in every society are the small producers who, left to themselves, would produce equitable credit systems to manage exchange. Indeed he argues that ‘under genuine free market conditions – in which the state is not involved in regulating the market in any significant way, even in enforcing commercial contracts - purely competitive markets will not develop, and loans at interest will become effectively impossible to collect’ (p.321).
At this point it is clear that for all of Graber’s criticisms of mainstream economics, he shares certain assumptions with them. Strikingly there is the same predominant emphasis on exchange over production and labour, the latter elements being normatively excluded from analysis (see for example, Michael Perelman, The Invisible Handcuffs of Capitalism, p.56). In none of the discussions of virtual credit systems here does the structuring role of ownership or control of the means of production come into focus. Debt slavery in the ancient world surely arises precisely because a small farmer was more vulnerable than a larger landholder, and the former could use his predominance in property to exercise class power. All the transformations of debt and exchange systems, from the webs of social obligation in non-class societies to pernicious forms of money, are unexplained in Graber’s account, except through moral and ideological developments. For all the complexity in the discussion, this in the end produces a mechanical relationship between money and morality.
Graeber began by claiming that markets were unnatural creations of the Axial Age empires, but by the time capitalism is being discussed, a natural market economy reappears as a possibility after all. Discussing the small scale debt relationships in the early modern European village economy, he argues that ‘the great untold story of our current age is of how these ancient credit systems were ultimately destroyed’ (p.327). Here he claims that systems of ‘mutual aid and solidarity’ were not understood to be distinct from ‘the market’, and certainly it is true that ‘the market’ is *not* the same thing as capitalism. However, his model of the early modern English village is strangely classless; there is no comment on the divisions between landowners and their tenants, or between the richer farmers and the poorer peasants, who were being reduced to wage-earning labourers. Despite nods to the existence of servants and labourers, Graeber seems to be straining to characterise this society by equitable relationships between small producers.
Later he claims that markets ‘when allowed to drift entirely free from their violent origins, invariably begin to grow into something different, into networks of honor, trust, and mutual connectedness’ (p.386). The evidence for this astonishing statement seems thin at best, but certainly in the early modern English village it was the small landowners and farmers who broke the bonds of mutual obligation. The historian Keith Thomas famously explained the witch craze of this era precisely as an attempt by village elites to escape into capitalist market relations, and away from mutual obligations, particularly from those which entailed helping the poor and vulnerable. Those who objected to such abrogation of responsibility, often poor old women, were, of course, in league with the devil (see Keith Thomas, Religion and the Decline of Magic).
Nonetheless, what if Graeber’s interpretations were accepted? The goal would appear to be the return to a system of virtual credit money, since bullion is the key source of power and violence in the last few thousand years. The implication seems to be that we could all then once again interact in a non-competitive market, which would not lead to the domination of some over others. That is as maybe, but it would, as always, depend upon our access to work, to due reward for the value of our labour, and therefore to the means of production. At the start Graeber claims that ‘communism’ is not in fact ‘the common ownership and common management of collective resources the means of production’ but rather simply mutual aid (p.95). We need ‘to look past the question of individual or private ownership... [to focus on] much more immediate and practical questions of who has access to what sorts of things and under what conditions’. Well, that would be precisely questions of class, property, and the means of production. Also notably absent from this book, but crucially important for the mass of people, are traditions of democratic politics.
The current world system of finance does indeed work in such a way that it resembles a giant system of imperial plunder and rapine, but Graeber appears to think it could collapse just as the Axial Age empires did (pp.382-3), and leaving us free to return to a ‘human economy’ of virtual credit money. Perhaps, but it is hard to see, existing underneath the present system, a potential world of small producers who could interact equitably in some natural market of social debt obligations. Rather, the collective, and indeed, global democratic control of resources, and collective determination of our social labour will surely be needed. This will require egalitarian solidarity, not through exchange relationships, but through the collective political and economic action of those with no resources to exchange but their own labour.
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