Review - "Debt: The First 5,000 Years", David Graeber - Melville House Publishing (New York), May 2011, 534 pp [hardback $32.00]

Along with capitalism’s voluminous debt mountain a veritable avalanche of books on debt and the financial crisis has descended onto the market place. With almost four hundred pages of text, a further sixty of notes and a substantial bibliography, David Graeber’s book is an encyclopaedic attempt to situate today’s global debt crisis into the wider context of credit, indebtedness and obligation which he argues make up the web of human relations that exist in one form or another in all human societies.

Despite the title, this is not a history book. It is rather a treatise on how the existence of money — in both metallic and ‘virtual’ or tally accounting form — always undermines the basic ‘give and take’ that is the essence of any human community. Once someone’s debt to another becomes monetised, whatever form that money takes: whether cattle, nubile females, cowrie shells or silver coin, then danger lurks. From a simple “rearrangement of relations between people” one of the sides in the arrangement “becomes unequal when obliged to the other” and eventually “hierarchy takes hold”. When that happens tribute, debt peonage, slavery are the order of the day. It is a version of the money is the root of all evil proverb. And yes, you’ve guessed if you didn’t know already, David Graeber is an anarchist — an anarchist anthropologist at that. He’s also a Wobbly — or at any rate he’s in the modern version of the IWW and (in an online video) cheerily maintains that these days ‘most Wobblies are anarchists’. Maybe so. In any case the working class hardly feature in his narrative, much less the prospect of workers taking over industry and thereby establishing communism.

When it comes to communism it is the influence of Kropotkin that is far more in evidence. This is despite the fact that in his section on ‘Communism’ Graeber defines ‘communism’ as “any human relationship that operates on the principles of from each according to their abilities, to each according to their needs.” Churlishly he refuses even here to acknowledge the words are those of Karl Marx. This is no accident. His intention is to replace materialism with moralism. This communist principle, he boldly asserts, “is the foundation of all human sociability” and as such is a “principle of morality rather than just a question of property ownership” which means “that this sort of morality is almost always at play to some degree in any transaction — even commerce.” When it comes to ‘exchange’ (whether it be barter, simple commodity exchange or presumably full-blown capitalism, since Graeber does not distinguish one from the other) there is always a moral aspect in both sides of the relationship which the author now prefers to call ‘mutuality’. This moral aspect to any ‘deal’ can be anything from one-upmanship to saving face, keeping one’s word and maintaining integrity etc. The meaning becomes decidedly vague but he consistently argues that “any system of exchange is always necessarily founded on something else, something that is, in its social manifestation at least, is ultimately communism” (p.267).

As if this were not enough to destroy any vision of communism as a specific communal way of organising production to directly meet human needs, some of Graeber’s other remarks fly in the face of even (surely?) an anarchist vision of a classless society without private property. In fact Graeber specifically rejects the notion of what he calls ‘discrete societies’ (well, you would if communism is simply a timeless issue about morality) and makes some utterly daft assertions such as: “We are all communists with our closest friends, and feudal lords when dealing with small children.”(p.114) For Graeber there can be communism amongst the rich (when they help each other out) just as “communistic relations can easily start slipping into relations of hierarchical inequality…”. So, like the poor, like debt, like hierarchy, communism is always with us. It’s just a matter of teasing it out.

But if this is the essence of what Graeber has to say, why bother reading the book? It would be ungenerous not to acknowledge that his wide-ranging narrative, based on anthropological research, sociology, histories from near and far, plus anecdotes and even jokes, makes for a good, at times fascinating, read. In this sense it is recommendable. However, behind the chatty style there is a not-so-hidden agenda which is basically to sideline Marx and historical materialism. In the process Graeber manages to jettison any prospect of capitalism being superseded by a “new and higher social structure than was the case in the preceding forms of slavery, serfdom, etc” (Marx). This is not because the book is an ‘academic’ work rather than a political tract. It is the very heart of his overview of world history.

At first the argument appears innocuous enough even if he does set up a straw man in order to easily prove his point. Briefly, Graeber argues that economists always assume that money first arose from barter in its role as medium of exchange and this is how they explain the origins of ‘the market’. On the contrary, says the anthropologist, history shows that money first arose around 3000 BC as unit of account, or rather a record of ‘who owes what to whom’ in a complex web of debt and obligation in the ‘great agrarian empires’ of the Near East. The role of this ‘virtual money’ had little to do with exchange, was not based on coinage and only incidentally involved silver bars at the great grain storage sites of the temples. Coinage, he maintains, is indeed associated with the market which, far from being free from the state is indirectly created by states when rulers (kings) introduce coins in order to pay the armies they need for their imperialist aggrandisement they turn to as a way out of their debt crisis. This is not just a pot shot at Adam Smith and the modern capitalist myth of the free market (and of course at Marx, who is criticised in a footnote for tacitly agreeing with Smith), the argument that ‘virtual money came first’ (and indeed is always present in some from or other) is central to his interpretation of what capitalism is today.

For Graeber, who does not ask what is the basis of any particular society’s wealth, who does not see how the value produced by a minority of productive wage workers can support a much wider population, who in fact denies that wage labour is the basis of modern capitalism, who cannot see beyond merchant capital and does not take on board the function of money as capital nor how the credit system within capitalism differs from usury, history is an eternal cycle. Basically he portrays history as divided into alternating ages according to whether they are based on credit and virtual money or on bullion. “… while credit systems tend to dominate in periods of relative social peace … in periods characterized by widespread war and plunder, they tend to be replaced by precious metal”. (p.213) Thus:

The Age of the First Agrarian Empires (3500-800 BC) characterised by periodic debt cancellations (at least for personal debt, not for trade) “in the face of a world plunged into chaos” secured the continued existence of the regimes. Followed by:

The Axial Age (800BC - 600AD), a time of commodity markets, born of war and typified by the decline or end of slavery and appearance of world religions (which were opposed to slavery and debt). Followed by:

The Middle Ages (600-1450AD) and the return to virtual credit money where, “However oppressed medieval serfs might have been, their plight was nothing compared with that of their Axial Age equivalents.” Followed by:

The Age of the Great Capitalist Empires (1450-1971) which “turned away from virtual currencies and credit economies and back to gold and silver” and brought with them a host of other nasty things which had been held at bay in the Middle Ages (“vast empires and professional armies, massive predatory warfare, untrammelled usury and debt peonage”) but also had some good sides, such as “scientific and philosophical activity”. The classification itself is part of Graeber’s refusal to acknowledge any significant difference between mercantile capitalism (based on profits derived from commodity exchange) which gave way to the domination of industrial capitalism (based on the production of commodities by wage labour).

In any case this era came to an end with Nixon’s floating of the dollar (which is roughly when we Marxists identify the return of capitalism’s cyclical crisis of profitability). This ushered in the present period or:

The Beginning of Something Yet to Be Determined. With little understanding of why Nixon was obliged to de-link the dollar from gold (he opts for “the need to pay for bombs” for the Vietnam War) Graeber argues that this opened up another age of the domination of ‘virtual money’. At the same time he tries to take on board the significance for US power in the world by the dollar being the world’s reserve currency, something he thinks began in 1971, not in 1944 when the greenback was made the standard by which all other currencies were fixed (albeit linked to gold). What happened in 1971 was that the rest of the world, with currencies still linked to the dollar, felt the immediate impact of the devalued US currency which doubled up as the currency of international trade. In any event, Graeber takes the present international financial crisis with its ballooning of government and state debt, unpaid credit card loans, the yet-to-be-written-off losses from financial speculation and banking black holes, as evidence of a return of the world to an age of virtual money where,

If history holds true, an age of virtual money should mean a movement away from war, empire-building, slavery and debt peonage (waged or otherwise), and toward the creation of some sort of overarching institutions, global in scale, to protect debtors.(p.368)

He admits that “What we have seen so far is the opposite.” But then, its early days yet … sooner or later, who knows? He leaves unsaid the obvious conclusion from his own historical overview: Maybe capitalism will save itself by a programme of wholesale debt forgiveness, as with the ancient Sumerians or the Hebrew Jubilee year of the Old Testament when every 50 years or so the land was returned to its original owners, debts were cancelled and slaves were freed. (Perhaps on 5 June we’ll see more than street parties on the streets of Britain.) Maybe the slate will be wiped clean, but apparently not before “capitalism — “or anyway, financial capitalism” — simply explodes”. Then we can start all over again, with debts and obligations mounting up on one side and the power over others that accrues to the creditors…

It’s not much to look forward to. Instead of the ‘end of history’ we have a never-ending cycle where the best we can hope for is that people be kind to one another in some sort of moral economy. Abolition of wage labour? It doesn’t matter. What matters is mutual aid, whether between employers and workers or between workers. Capitalist production having created the material basis for a classless society where production will directly meet human needs? Nonsense. There will always be exchange of some sort. In the face of the almost inescapable evidence that capitalism is a system in historical decline Graeber is unable to see a way out. At the end of the day his a-historical anthropological approach only reinforces his essential petty bourgeois anarchist outlook: ignore the fundamental robbery of the surplus value produced by wage labour and demand that human relations be placed on a fairer footing where debtors are protected.

This is the mind set of a radical reformist. (For Graeber is not just an academic, he has a track record as an activist, from campaigning for the abolition of Third World debt to his more recent infamous involvement in the Occupy Wall St movement.) In the right sort of circumstances radical reformism can be transformed into millenarianism: it’s not impossible to imagine a modern version of the Peasant’s Revolt sweeping the capitalist world, demanding cancellation of debts. But even if all personal debts were cancelled as in ancient times, this would simply exacerbate the capitalist crisis and bring even harsher wage cuts and austerity.

Moreover, Graeber does not understand that by far the largest part of the global ‘debt burden’: is in the form of a gargantuan mass of fictitious capital that has amassed since the freeing up of financial markets in the 1980s. The flight to finance is one of the consequences of the low rate of return (due to the falling rate of average profit) on capital invested in production. Once this fiction is destroyed the real crisis of capitalism will be even more acute than it is already.

And historically the ultimate solution of capitalism to its crisis of profitability is to devalue real capital values: in the last century this was done on a global scale through two World Wars. A universal debt amnesty is a utopian dream that would not put an end to the advance of the capitalist crisis. Ultimately this has earth-shattering implications.

Rather than waste effort demanding that capitalism reform itself, rather than watch capitalism descend into its own particular form of barbarism in the hope of a millenarian revolt to cancel debts, communists, as always, call for a conscious political act not simply to forgive debts but to overthrow the existing ruling class and with it the whole method of producing and distributing wealth.

Despite David Graeber’s scholarship and easy style what starts out as a good read gradually reveals itself as an underhand challenge to Marxism and any idea of working class revolution. Read it by all means but don’t expect to be any the wiser about how to get from capitalism to communism.