I’m just getting around to reading a 2014 book some Creditslips readers may be familiar with, Debt: The First 5000 Years. In this utterly fascinating work, Anthropologist David Graeber exhaustively recounts the history of debt and money. He begins by debunking the myth of barter, the story told in introductory economics textbooks that money was spontaneously invented to permit merchants to exchange goods and services in imaginary markets, as an improvement over primitive market economies based on barter. In fact, early human societies all relied on central planning (by kings and high priests), communism, gift-giving, redistribution, and various forms of debt, notably in Mesopotamia, Egypt and Greece, the earliest western civilizations, and probably in India and China as well. Debts and their units of account (i.e. money) arose to compensate for injuries, to seal marriages and other relationships, and to tabulate taxes paid and owed to sovereigns. Kings invented coinage both to relieve the poverty of their subjects and to provision their armies by spending coins, and as a convenient means to collect taxes. Modern monetary theorists like to cite this research to make the essential point that money and markets are created by sovereigns and states, and rarely if ever arose spontaneously. The idealized construct of a free market based solely on exchange first arose much later in economic history, in mercantilist societies and then with the liberal philosophers (Bentham, Owen, Smith, Ricardo) of the Industrial Revolution. 

Bankruptcy has always been with us. From the earliest times debt-based money led to  periodic crises and debtor revolts, and wise rulers from the dawn of written history periodically decreed the cancellation of all debts, sometimes memorialized by the physical destruction of debt tokens. The biblical inscription on the Liberty Bell from Leviticus, “proclaim liberty throughout the land”, was the announcement of a debt jubilee including the liberation of debt slaves. The Rosetta Stone was a similar Ptolemaic royal decree announcing a tax and debt jubilee.

Capitalism had its origins not in the exchange of goods and services between free traders and workers but in slavery and debt peonage, not only in the United States but in every colonial empire.  After reminding us of Martin Luther King’s description of the founding documents as an unpaid debt to Black Americans, Graeber concludes by reminding us that the validity and morality of various debts can and should be determined democratically. Thought provoking in a moment when we hear calls for both payment of reparations and cancellation of student loan and housing debts.