TSElosophers meeting 13.11. 2018. Ekaterina Panina, Joonas Uotinen, Kari Lukka, Milla Wiren, Otto Rosendahl
Debt – The First 5000 Years (chapter 2), David Graeber 2011
The central theme of the book (chapter) we read this time relates to the two stories about how money came about. The more prevalent story tells us that first there was barter, then money and finally debt, whereas Graeber insists that the reverse order is historically more accurate. This led to the following themes discussed at length and depth in the meeting:
- What is the key point the author wishes to make with the book? We deduced that his main statement is that paying ones’ debt is not always the most moral choice, as there can be circumstances where this commonsensical notion actually causes more harm than good.
- How can the boundaries between when it is, and when it isn’t “right” to pay debts be drawn?
- The benefits of debt: debt as an investment implies a faith in a better future.
- The necessity of this faith in the future – do we need the sentiment of going forward, towards “more”, or is this linear notion of time one root cause of the environmental problems we are facing (considering the finite nature of our planet)?
In the book, concerned about the power of debt to cause inhuman, immoral consequences to debtors (including examples of daughters being sent to prostitution, or people dying in thousands in developing countries as IMF and other creditors have demanded their debts to be repaid) Graeber asks whether it really is so that debts always need to be paid back?
To this end, he trails the historical development of credit. In chapter 2, he reviews the history of money and debt told today in economics’ textbooks. This story goes that first there was barter; then currency or money was developed to ease the economic exchange of stuff; and, later on, credit developed. By juxtaposing the story with anthropological evidence, he concludes that the now common narrative in economics is wrong. Actually, the opposite is true: the order would actually be that credit developed first, and from it, money. Barter in turn has never been a wider-scale social practice.
He claims that only by introduction of money and interest rates did credit become decoupled from considerations of the needs and situations of all involved: what started out as a simple trust-based I-owe-you that helped people to rely on each other in circumstances where someone had a surplus at anothers’ time of need and vice versa, became an industry in itself. The focus shifted to numbers that do not heed the real life circumstances: when trust between the debtor and debtee was removed and interest rates introduced, debt took on a life of its own. He argues that our confusion of debt as a moral duty is just that – a confusion, and that not all debts need necessarily to be paid back.
On the way, he also argues that it was the economics’ story of development of money, and credit that allowed markets and monetary credit to be artificially disentangled from other social institutions and phenomena. This is because the story makes the development of currency and ensuing monetary credit seem like natural, good solutions to practical problems involved in barter, that all of humanity would have done earlier. This would have entailed the understanding that these institutions are natural, somehow, they need to be maintained by police force and law, and that they can be detached from considerations of other aspects of life and morality. This would, in turn, make these institutions further inhumane supporting the idea that debts need to be paid back unconditionally.
The chapter and the book elicited discussion on several tangential topics. We discussed that credit seems to have positive aspects to it. We considered that Graeber did not give a balanced handling to the issue of debt. He concentrated on the immorality in debt relationships, although monetary debt may also lead to beneficial outcomes. For example, it (1) enables transition of wealth from where it is in excess to where it is scarce; and (2) it enables people to initiate projects that would otherwise be beyond their reach financially. However, Thomas Piketty’s finding in his book “Capital in the Twenty-First Century” (2014) that returns on capital grow faster than returns on labor seems to pose the question that is the function (1) illusionary?
We hypothesized that the transition from a cyclic experience of time to a linear time likely relates to the appearance of monetized, interest-growing credit. There was controversy over what came first: the need to enhance future or monetized, interest-growing credit. It might also be that before monetized credit people got from neighbors what they needed as a kind of a gift and when their neighbors were in need they would reciprocally give what the neighbors needed – and only with the appearance of monetized credit would also the idea of enhancing future, and of linear, progressive time, appear. However, never mind the order, the notions of linear time and the “better” tomorrow seem to be linked.
Graeber’s book inspired us to discuss the relation between markets and well-being. From the anthropological evidence and discussion on alternative distribution and production mechanisms, arose the topic of what are the limits of markets to yield well-being. As Graeber observes, more intimate, familial, “warm” relationships between people do involve exchange of services and goods; but not through money.
Indeed, an effort to “balance the accounts” in such a case so that no
“imbalance” anymore exists between “credits” and “debits” be they monetary or not, seems to be a violation of such a relationship, a sign of a will to terminate such a relationship. He gives an example of a father who asked his son to pay back all the costs associated with the son’s upbringing resulting in the son, after paying the debt back, never to contact the father again. Anthropologically, barter, where one seeks to maximize one’s own benefit without regard to the other, seems to only happen between people who are neutral, possibly hostile towards each other. It, then, seems that salable commodities can never replace such relationships and introduction of money to such exchange violates and destroys such relationships that likely are crucial for human well-being. This notion sheds a different light to for example
contemporary attempts to commodify well-being into salable services: by replacing social relationships with money, also the main component of value in such services, namely the exact social relationships, disappear.
We also discussed ecological sustainability and its relation to interest-growing credit. Is endless growth necessary? Why, when we
see that the human impact on some of the boundaries of our planet are already threatening our existence? But if we lose the faith in the always better tomorrow in aligning collective action to pursue that better tomorrow, how can we replace that as an enabler of collective action? We need to find alternative coordination mechanisms for our societies.
All in all, while the book appeared somewhat confusing and possibly one-sided, it seems to raise worthy issues. After all, as the other side of the debate is amply occupied, this voice of dissent is welcome. We
liked how Graeber exposed the often hidden assumption by which our institutions of private ownership, markets, and interest-growing credit would be the natural consequence of human development towards better, and questions that assumption: there are many other ways of organizing societies and the merits of each may need reassessment. Also, we enjoyed the questioning of the moral supremacy of paying
ones’ debt as it indeed seems that there are cases when paying back the debt is not the “right” thing to do, no matter how counter-intuitive that for a contemporary member of the current socio-economic system may seem.