5000 Years of Debt by Peter Graeber

Posted on Oct 23, 2014
Berlin, Germany

Graeber’s main point of the work is to unhinge the notion that debt is a physical force of nature, inviolable as gravity and the law of the preservation of heat throughout the universe. In this regard, his historically and culturally broad research does accomplish this aim. There are two main threads that his analysis follows, a historical and a cultural. The historical asserts that broadly, over the past 5000 years, the notion of debt has shifted when there were credit-based economies, known as human economies, and cash-based economies. It is a bit difficult to explain the difference between these two modes of debt since we currently live in a cash-based credit society, and thus we tend to view our interpretation of debt as the objective form, but here’s my attempt: In a human economy people owe other people things that cannot be qualified, as values placed on things are stated in terms of people and it’s very difficult to qualify people. The need for revenge is better understood when interpreted through a human economy. In cash-economies though, everything can be quantified. Cash-based economies create an exterior material good, usually gold, that is used as the measurement of value of all things, and in doing so, allow debt to be easily quantifiable. For example, the price of a book is not an obligation to preform the book-maker a service at some future point of time, it is in-fact exactly $12. That $12 represents a quantifiable value that anybody that grew up in societies that resemble ours can grasp.

Graeber also demonstrated a connection between the creation of cash and militarization. His argument runs this line: coins are created only when societies cannot rely on credit, and usually societies cannot rely on credit when it is paying a group of mercenaries to invade, slaughter and maim other groups of people. Cash is used with those whom personal connections are not possible, like mercenaries. So coins are minted.

One other take-away I had from the book was the historical phenomenon that whenever debts between classes become too heavy to meet, revolutions ensue. These grievances are ignited when the debtors consider themselves the equals of the creditors. This did not apply to African slaves in the new world because equality was never assumed. When the debts of the poor can not be repaid because the interest is too great then poor people revolt. Historically, absolute rulers have dealt with this issue by issuing what are known as jubilees–general debt amnesties. This is like a pressure-valve that sets interpersonal, though not commercial, debts back to zero and allows the cycle of debt-creation to start again.