Debt and Social Relations 5000 Years Later

In his Debt: The First 5000 Years, anthropologist David Graeber provides a series of insights that, when properly understood, challenge the central tenets of conventional economic thought. Most significantly, Graeber’s claim that all money is debt, and by extension a social relation, fundamentally undermines decades of economic orthodoxy which claims that the government must balance its books and, more generally, that ‘one must pay one’s debts’. Indeed, if all money is debt and everyone including governments around the world settled what they owed tomorrow, the global economy would cease to exist.

Graeber advances this idea that money is debt, not with an economic model or a mathematical proof, but via an investigation into the history of commercial and social relations between humans dating back to ancient Mesopotamia. Central to his critique of traditional ‘folk’ theories of money, which claim that money as a commodity emerged as a handy solution to the ‘double coincidence of wants’ problem in barter economies (i.e. the village baker wishes to understand the reasons for which he bakes bread, and the local philosopher (notwithstanding his choice of profession) wishes to put bread on the table), is that they are a complete fantasy. There is simply no anthropological evidence suggesting that barter economies of the kind theorised in economics textbooks ever existed. In fact, such a model of the origins of money implies a practical paradox where commodity money is simultaneously less valuable as more people stockpile for exchange in the market, and more valuable as people desire it for its ability to acquire goods. 

Instead, Graeber outlines a historical model of exchange, for which there is far more anthropological evidence, based first and foremost in debt, and in which coinage came thousands of years later. In this model, individuals trade with others in their local community through a web of debts that need not be paid instantly and need not be settled in the same way they were incurred. The basis for this alternative theory of exchange in ancient history, is the idea that people are socially bound to those they share a community with, making the supposed barrier to trade of requiring a ‘double coincidence of wants’ meaningless.

If you don’t have something I want now, you will probably have something I want later, and since I’m not leaving the village anytime soon, I will just ask that you pay me back when you have something I want. Similarly, even if you are unlikely to have a good that I want in return for a trade, I might ask you to pay me back in service by fixing the roof that caved in from heavy rain two days ago. The origins of exchange, therefore, was not ‘on the spot’ barter replaced by commodity money exchange as economics orthodoxy suggests, but a complex web of debt obligations and gift giving, underpinned by close social relations between individuals. In fact, some of the earliest written documents found by archaeologists are Mesopotamian clay tablets accounting the debts owed by individuals to other members of their community (p. 21).

Such an account of the history of debt is striking. This is particularly so for readers that have been taught their whole lives that money is a thing, and not an idea or an institution that merely serves to facilitate exchange by denoting the value of a wide variety of goods so these may be traded for each other at equal rates (p. 39). Indeed, in ancient Mesopotamia, the value of goods traded was tracked using the weight of silver as a unit of account. Naturally, the exchange rate of grain with silver was carefully calculated, as this was most people’s medium of exchange. However, there is little evidence that any silver was used in commerce, primarily because there have been no findings of scales small enough to weigh the amount of silver that the most traded goods would be worth (p. 424, fn 7). 

Reading Graeber’s book in the 21^st Century, some of the ideas and evidence he presents can seem a bit alien. Economics is a cold, calculating science, we are told, and according to the conventional wisdom, the divisions between the spheres of behaviour of economic exchange, love, hatred, and community are clearly demarcated. I personally found it hard to imagine how such social debt relations would look like in a world where everyone alive has only ever engaged in exchange though currency and has never been taught to think otherwise. That was when the Birmingham Christmas market changed my perspective of the economy forever.

I was about to buy my second Bratwurst of the day, when my phone battery gave up on me and was no longer able to pay for my gluttony, given I had also left my physical debit cards at home and had no cash. There is a lesson to be learnt here, but I can’t quite put my finger on it. Regardless, my partner had luckily brought along a £20 note she had found in her car the week before and offered to subsidise my eating habits. Feeling bad for making her spend a considerably large amount for what in all honesty was a 6/10 Bratwurst at most, I offered to make her dinner when we got home to pay her back. She refused my initial offer, but I eventually won her over. 

In that moment, I realised that the social relations and dynamics underpinning exchange and debt 5000 years ago were alive and well, and I had been upholding them without realising it. It was precisely the social bond I shared with my significant other which facilitated my acquiring the good I desired. If I had been by myself that day and approached a random member of the public with the offer to cook them dinner that night in exchange for buying me a Bratwurst, they would have naturally looked at me like I was insane. Similarly, If I had gotten into an argument with my girlfriend just before, depending on how bad that argument was and its effect on our social bond, she may have been more reluctant to grant me a loan at that moment. If the argument had turned especially sour, I might not have even asked.

Taking this analysis further, we can begin to understand why our relations with money and exchange differ when we interact with different people. As an example, if I am taking an uber to a social event with a group of friends I know well, I might ask them to pay their share a few days later or remunerate me with a kebab at the end of the night. If I am taking an uber with people I don’t know very well, not only might I ask them to pay me the exact amount they owe for the carshare, but I might even ask them to pay before our ride has even arrived to ensure they don’t forget and to avoid awkwardly raising the issue later. It is the closeness of my social relation with the people I interact with, and by extension the faith and trust I am comfortable placing in them, that determines the nature of our exchange.

This idea also explains why we have such an adverse reaction when someone takes the debts you owe too seriously. The roommate who asks you to pay the exact amount of water you use up for every shower is constantly ridiculed and parodied online precisely because his attitude to debt violates the implied social bond you have with each other as roommates. They might be technically correct, but the social bond you share, despite it being clearly forced upon the pair of you, implies that you give each other a certain leeway because, at the end of the day, you have to get along with the people you live with.

This extends to family relations too. In Greta Gerwig’s Lady-Bird, Saoirse Ronan’s character, Christine, asks her mum to give her a figure for the cost it took to raise her, so that she can pay it off one day and be finally rid of her mother’s overbearing presence. This is a particularly extreme example, but it strikes at the heart of what I have discussed thus far. Christine’s decision to quantify, in an impersonal number, the effort, emotion, time, and resources it took her mother to raise her, is intended to completely settle ‘debt’ to her mother, and by extension sever their social bond. This scene strikes us as dramatic, precisely because social relations, and especially the social relations you have with your family, are assumed to have a special, almost metaphysical, significance. Thus, the attempt to quantify them in something as crude and vulgar as hard cash violates an unspoken social rule and speaks to the depth of Christine’s torment at the hands of her mother.

Indeed, it was in the system of fines that humans living thousands of years in the past were extra careful to make debt payments exact. When a person committed a crime against another, such as severing an ear in a tavern brawl, the price the perpetrator had to pay to the victim had to be exact. In fact, there is evidence of documents codifying the payments one had to make for a variety of common crimes across ancient civilisations. This tracks Graeber’s broader trust-based theory, as the leeway they may have given each other in their prior debt relations could no longer be extended, as their mutual trust had been violated by the crime. For neither individual to keep fighting, their debts had to be settled exactly, and their social relations severed until they were prepared to trust each other again.

So far, I have shown that small-scale economic exchange relations are virtually inseparable from social relations, but this fact extends, in a much more subtle way, to exchange relations at the macroeconomic level. For example, when one takes out a loan from a bank, one is first evaluated on the basis of socially constructed criteria, one’s credit score, before application acceptance. More fundamentally, every time someone takes out a loan, they form a social relation with the bank underpinned by the mutual trust that both the bank and the individual will pay their debts to each other. Not only do they form a social relationship with the bank, but more importantly they enter a social relationship where there is an asymmetry of power, where one party determines the conditions of payment, and the other is forced to comply or suffer the consequences.

We need only look at the politics of budget-balancing to see how such social dynamics are replicated on the national and international level. The inherent power the creditor holds over the debtor manifests itself, for example, in the British political class’s obsession with gilt yields, and the potential blowback from bond investors if they put forward a policy that does not satisfy a very small class of elite financiers and their insatiable desire for profits. Outside the British and even western context, the power of the IMF to enforce its loan conditionality on third-world countries, forcing them to cut back on public spending and bring their national debt down as a percentage of GDP, is facilitated by such countries’ lack of economic, political, and military power.

While this might paint a bleak picture, I like to think the social underpinnings of debt life and the economy reflects something quite beautiful about our bond with other people. At a fundamental level the fact that we, generally and for example, find the idea of expecting payment for a kind act perverse, speaks to a collective belief in the inherent debt we owe to one another. We do not expect to be reimbursed for holding a stranger’s shopping or the door open for them, because it is us who owe them kindness and empathy as a human being. In a world where community has been eroded by decades of neoliberal individualism and the rhetoric of division permeates our public discourse; we would do well to acknowledge the simple fact that all economies are human economies, and we cannot survive without each other.

Image: Flickr/Internaz (Francesca Leonardi)

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