Debt the First 5,000 Years
David Graeber (2012)
In this presentation, anthropologist David Graeber talks about his 2012 book Debt: The First 5,000 Years
For me, the most interesting part of the talk is his discussion of the historical link between debt and the rise of the world’s major religions (Hinduism, Christianity, Confucianism, Islam, Buddhism, Judaism) between 500 BC and 600 AD.
As Graeber describes it, all commerce was based on credit prior to the development of coinage around 500 BC. In all societies, coinage arose in conjunction with the onset of empire building – traveling armies had to be paid in hard currency rather than credit. The result, according to Graeber, was the simultaneous rise of military/coinage/slavery* empires in Greece, China and India.
According to Graeber, all the major religions arose around the same time – as a “peace movement” opposing militarism, materialism and slavery.
Around 400 AD, when the Roman and other empires collapsed, coinage vanished, along with the standing armies that necessitated its creation. During the Middle Ages, nearly all financial transactions were based on credit. Until 1493, when the “discovery” of the New World initiated a new cycle of empire building, accompanied by militarism, coinage and slavery.
I was also intrigued to learn that Adam Smith stole most of his thinking about free markets from medieval Islamic philosophers. The Islamic ban on usury enabled the Muslim world to operate pure free markets that were totally outside of government influence or control. Trying to operate an economy without such a ban (or a system of debt forgiveness like the Biblical practice of Jubilee) leads to inevitable economic chaos and ultimately collapse, even with government intervention.
People who like this talk will also really like a series Graeber recently produced for BBC4 radio entitled Promises, Promises: The History of Debt. In it, Graeber explores the link between Native American genocide and the harsh debt obligations imposed on the Conquistadors. He also discusses the formation of the Bank of England in 1694, the role of paper money as circulating government debt and the insanity of striving for government surpluses.
* In ancient times, the primary mechanism by which people became enslaved was non-payment of debt.