Transcript for David Graeber on "Debt: The First 5,000 Years"

Jim Fleming: Before there was money, there was debt, boldly states David Graeber in his book “Debt, The First 5000 Years.”Now Graeber brings a lot to the table.  He’s considered one of the world’s leading anarchists.  He’s a Professor of Anthropology at Goldsmith’s University of London, and he’s one of the founders of that little thing called “Occupy Wall Street.”Graeber says all those experiences help him understand the role of debt in our lives.  Steve Paulson was intrigued.  He asked why Graeber believes we can’t afford to be middle class anymore, that is, without going into debt. 

 

 

David Graeber:  It has to be.  You really can’t pursue, you can live a basic life in terms of providing food for yourself, providing some kind of housing, maybe medical care.  If there’s catastrophic medical needs probably won’t be covered.  If you want to go beyond that, if you want to send your kids to college, if you want to have some chance of advancing in life, which is a prospect that seems increasingly distant to so many American families, you basically have to go into debt, and also if you want to have a social life.  I mean, most of that money that is borrowed, it doesn’t go to people’s personal luxuries.  It goes to things like your grandfather’s birthday party, because these sort of social events are things which are time sensitive.  You need the money at a certain time and that’s why people go into debt, even beyond their income.  They say why do they borrow the money if they could avoid it?  Well, usually it’s because there’s some pressing social need, your daughter is only going to be 12 once.

 

 

Steve Paulson: Well, it raises the question of whether there’s always a problem with debt or maybe debt is, maybe we should accept this is just part of life and it’s a necessary part of life, both on a personal level, because occasionally we need the money to pay for something that we want, or at a societal level, maybe debt is necessary to fuel economic growth. 

 

 

Graeber: Well, I mean that’s the assumption of people like the Federal Reserve.  There has to be a certain inflation rate.  There has to be a certain lending rate.  This is the case.  The problem is, that debt has an historical tendency to go out of hand, and that’s especially true in historical periods like we have today.  It was one of the most striking things that I have discovered when I started doing a long-term history of debt.  First of all, that virtual credit money, you talk about we’ve entered this domain of virtual money, cashless transactions, and if this is something new, it’s been made possible by computers and has never existed before.  Well, I discovered this is not the case at all. 

 

 

Coinage was invented perhaps 600 B.C., but you can go back 2000 years before that and find people with fluctuating interest rates, the equivalent of expense accounts, bar tabs.  People were actually using money, but money is for the most part, virtual credit money.  People are not actually using cash of any sort.  They didn’t have coins and they didn’t even bother making scales sort of accurate enough to weigh out the tiny amounts of silver you’d have to spend if you wanted to buy a chicken or something like that.  Clearly people were doing things on credit in ancient Mesopotamia for example.  Well, you have this back and forth, then cash comes in and you have a period of time, roughly maybe 600 B.C. to 600 A.D., people actually are using cash in everyday transactions.  Middle ages, it disappears.  People go back to credit again.  That’s when checks are invented.  It’s an Arabic thing actually, a check.  They’re using paper money in China.  They’re using tally sticks in Europe.  So you have credit again, and around the time of Columbus, suddenly you have this infusion of gold and silver and people go back to a bouillon based economy again.  That’s ending now, but it’s a back and forth. 

 

 

Now what you always find in periods dominated by what we would not call virtual credit money such as we have today, and have had since roughly 1971 when Nixon went off the gold standard, is some kind of mechanism to make sure things don’t go out of hand, and the people who do have access to credit don’t end up enslaving everybody else.  The great social nightmare of antiquity was exactly that.  A tiny percentage of the population would effectively reduce everyone else to slaves.  They would fall into debt traps. They couldn’t get out.  They would lose their lands.  They would lose their flocks.  They would have to sell their wives and children into slavery.  The way to head that off was always to provide some kind of mechanism, cut things off when they started to get crazy. 

 

 

Paulson: Are you talking about forgiving the debt at a certain point?

 

 

Graeber: Precisely.  That was one of them.  In the really ancient world in Mesopotamia, they would simply cancel the debts.  Often they would cancel consumer debts and not commercial debts.  Every new king, often in Mesopotamia, would simply say okay, clean slate, start over again, debts are canceled. 

 

 

Paulson: Why would they do that though?  They stand to lose a lot if they canceled the debt.

 

 

Graeber: They stand to lose even more if they don’t because what would happen is society would be thrown in to utter chaos.  People would start fleeing their farms because they were terrified their creditors were going to take everything away.  Large parts of the population would end up servants or slaves in other people’s households, so you have a few rich people basically eating up everybody else and the kings would panic.  Society would fall apart.  There would be unrest.  People would run off and become desert nomads to escape, so really, the fear was of total social breakdown and the dangers of slowing the economy, because people would be afraid to lend money, were far less than the consequences of not doing it.  Similarly, Biblical Jubilees, they institutionalized every seven years or 49, depending on the reading.  They would simply cancel debt and start over again. 

 

 

Paulson: You said that we should resurrect that idea of the Jubilee.  Obviously there are, we keep  hearing about countries that are in serious debt and you’re saying maybe it’s time just to cancel those debts.

 

 

Graeber: Well, I think it would be a way of reminding us what kind of world we really live in, because another thing I discovered in looking at the history of debt, is that debts are always negotiable.  They’re not really sacred.  What they are is a promise.  Now it is true that one’s honor is bound up in promises, but when you think about it, promises almost by definition are renegotiated or can be renegotiated if they are between two honorable people and their situation changes.  The strange thing about debts is that once number enter in, once you can quantify exactly who owes what to whom and how much, they become impersonal.  You don’t have to think about the other person’s situation, and you can transfer them.  Of course, if I make you a promise, you can’t give that promise to someone else, but a debt, you can.  In a way, that’s all that money is, is circulating promises, circulating debt.  Now, when it is a matter of debts between rich and powerful people, this is what happens anyway.  We saw it in 2008, of course, when AIG was several trillion dollars in trouble or whatever it was.  Well, they figured something out.  They played around with the numbers, they adjust things, they do something with the Federal Reserves, suddenly the debt’s gone.

 

 

Paulson: Because the assumption was that AIG was too big to let fail and there would be catastrophic repercussions if they just went out of business, so okay, let’s figure something out.

 

 

Graeber: Exactly, that’s the excuse, but as I say, for the really big players, that is always the case.  There is always a way to work something out, readjust the numbers, play around with interest rates, play around with money production.  There’s a way to do it.  So what you see historically is, that’s always the case between the big players, but it’s only when you have debts between the big players and the little players, between AIG and you, that suddenly debt is treated as a sacred obligation.  How could you even imagine breaking that, or between a poor country and a rich country.  If Madagascar owes money to the U.S., that’s a sacred obligation.  If the U.S. owes money to China, well, we can play around with that.  People are playing around with it all the time, so in a way in 2008, they let the cat out of the bag.  There were all these understandings that we had.  Well, markets basically run themselves, debts are sacred obligations, the big players are these incredible geniuses who know what they’re doing and they’re the only people who know how to run the economy, so just shut up and let them do their thing, and we kind of realized that none of that was really true. 

 

 

I think there’s a kind of democratic awakening happening.  It’s what’s happened in places like Spain and Greece and it’s spread to the U.S.  There’s this realization like, no, this isn’t true.  Money is just a promise.  It’s a social construct, it’s something we make up.  If banks can lend us money, it’s not because they have that money.  It’s because we, the people, have given them the right to make up money.  Well, if that is the situation, we have given them the right to make up money because we think it will help people have houses, it will help the economy grow.  The economy isn’t growing, people don’t have houses, something went wrong.  We can change that around because it really comes from us to begin with, so I think if democracy is to mean anything, it has to mean that everybody can weigh in on that process of deciding what kind of promises we make and what kind of promises we readjust when we have to do that. 

 

 

Paulson: Now you are typically identified as an anarchist, which I think in most people’s minds conjures images of chaos.  If you don’t have a clear hierarchy of authority with leaders at the top, how are you going to get anything done.  Is there an anarchist perspective on these questions of debt and income equality, inequality, and what’s happening in these Occupy protests?

 

 

Graeber: Well, the Occupy protests started on anarchist principles in the sense that we believe in directly democratic process.  We believe that the idea of direct action is that we should act as if we are already living in a free society, which means a society in which you don’t have anybody showing up with weapons and saying shut up and do what you’re told.  What we find is that if people act purely on conscience, collectively, democratically, in terms of what they think is right, for example, show up at a park and say we are the public, this is a public park, we should have the right to peacefully assemble here, people with weapons will show up.  It rather startles people who think they’re already living in a free society, so I think that it would be possible to have a free society of that sort, one which is not ultimately enforced through weapons. 

 

 

Paulson: It would seem that perhaps another sort of anarchist element in the Occupy Wall Street protest is, people are always asking what does this movement want?  Where’s the list of demands?  Is that the wrong question?

 

 

Graeber: Well, it is the wrong question in the sense that when you make a series of demands, what you’re saying is we want to be a part of the system.  We are appealing to the people in power to do something for us.  We want them to behave differently, but we assume that they are the people who are going to be solving our problems.  The reason people held back from the list of demands in the beginning, is that that draws you into a certain sort of politics where you essentially get absorbed into the existing structure.  Well, what the people at Occupy Wall Street movement are basically saying is their start point is the existing structure is inherently corrupt.  It’s not a democratic system.  It claims to be a democratic system and I suppose it has a few moderate democratic elements, you get to vote occasionally, but really it’s a system where you select between one or two people who have already been selected by people with big money, and who are ultimately going to be answerable to big money.  Big money controls both political parties and appealing to those guys is pointless.

 

 

Paulson: Which raises the question then of what do these people at Occupy Wall Street want?  Obviously they’re pointing out what they see to be the inequity of society and that top one percent, but where do you go from there?

 

 

Graeber: Well, I think what we’re trying to do is introduce the notion of what democracy would actually be like.  We pride ourselves on being a democratic society, perhaps the most or greatest democratic society that has ever existed, but how many Americans have had the experience of sitting down with a bunch of other people and coming to a democratic decision together?  We almost never do it, maybe when ordering pizza, so we’re trying to introduce democratic institutions. 

 

 

Now where that goes, that’s a very interesting question, but it’s a very thrilling thing for almost anybody.  I was thrilled when I first became involved with it.  I didn’t realize it was possible for thousands of people to stand around and make democratic decisions.  Now in terms of what larger effects that’s going to have, well we don’t want to legitimate the existing system. We want the existing system to have to try to legitimate itself to us, because we’re the people.  We don’t have to prove anything to them.  Now we’re not going to do that by saying we recognize you as the authority and here’s what we want you to do.  We want to do that by saying you have de-legitimated yourself as democratic authorities.  You are not that.  If you want to go off and try to prove that you are, well great.  Maybe you can do that.  That’s what normally happens with social movements.  Social movements that are successful don’t start by coming up with a plan and then lobbying because it’s totally stacked against them.  What they do is they frighten the people in power with the prospect of actual democracy breaking out in this country because nothing frightens the people running this country more than the prospect of actual democracy breaking out. 

 

 

You look at the Civil Rights movement which also used this sort of direct democracy, horizontal politics, civil disobedience, direct action consensus process, it terrified people in power and very quickly caused them to make all sorts of concessions.  If you look at the anti-nuclear movement in the ‘70's, the global justice movement, in each case we achieved our aims much more quickly than we expected and it was largely because we didn’t fall back on this conventional politics of lobbying our leaders to do something different.  We frightened them, not by an uprising in the sense of anything violent at all, but by the prospect of real democracy and democratic institutions emerging.

 

 

Jim Fleming: David Graeber is the author of “Debt, The First 5000 Years.”He teaches Anthropology at Goldsmith’s University of London and was one of the founders of Occupy Wall Street.  Steve Paulson spoke with him.

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