A Review of 'Debt: The First 5000 Years - Part I'
This appears to be a common-sense principle of economics; in fact, it is a moral statement. In economics, whether you have to repay your debts or not seems to depend on who you are - which is not usually how morality works.
So has economics distorted our morals?
That’s the question anthropologist David Graeber explores in “Debt: the first 5000 years.”
Economics as a separate discipline is only a couple of hundred years old. It was founded by Adam Smith, who was Professor of Moral Philosophy at Glasgow University. Graeber’s review of the entire span of human records suggests that the tail is now wagging the dog: economics is justifying behaviour that we would otherwise consider unjustifiable.
Debtors’ prisons caused public outrage in the early 18th century when it was revealed that aristocratic in-mates were still attended upon by servants and their ‘crime’ was regarded almost as a fashion statement whilst other prisoners were languishing in squalid conditions and told they only had themselves to blame.
The United States Treasury owes other people more money than it makes and one third of its debt is owed to foreign countries. Whilst US debt is allowed to remain in bonds, the World Bank is most insistent that loans made to developing countries must be repaid on time.
If we overspend, the bank holds us responsible; when the bank overspends, the bank holds us responsible.
The Bank of England was established in 1694 when a group of wealthy individuals lent King William III’s government £1.2 million to rebuild the royal navy. The bank divided up the government’s I.O.U. and used it to raise funds for other enterprises, effectively saying lend us £1,000 and we’ll pay you back when the King pays us back. To this day, that debt has never been repaid. If it had been repaid, the I.O.U. would have been ripped up and Britain’s currency would have ceased to exist.
Graeber defines debt as an obligation that is quantifiable;
money is the means of quantifying a debt.
Our economic systems depend on debt being treated as impersonal so that it becomes transferrable. But therein lies the problem: when our relationship with other human beings becomes impersonal, we no longer treat each other as human beings.
Economics treats the market as if it were separate from the rest of human activity, controlled by impersonal forces like the laws of nature (the “invisible hand”) which can be studied through scientific investigation. This is a hypothesis, Graeber argues, for which there is no affirming evidence but which leads us to assume the economy is generally beyond us.
In fact, 5000 years of human history consistently shows people (be they individual leaders like emperors or mass movements like revolutions) cancelling debts in order to liberate people from situations that were dehumanising (like selling their children into slavery).
There are times when the right thing to do morally is not to insist that a debt be repaid but rather to cancel it. These things are not beyond our powers of either comprehension or action.
The “Wizard of Oz” was apparently written as a parable to make exactly this point. At the time people (especially mid-Western farming families) were suffering the results of natural disaster and economic recession. There were calls to address these evils by unpegging the US currency (with its emerald green banknotes) from gold (measured in ounces, abbreviated to oz). Campaigners believed that people were too stupid, cowardly or heartless to reveal the economic system for the “smoke-and-mirrors” that it actually was.
We may or may not be in a position to affect the entire system, but we are all responsible for the way we treat people in a commercial setting.
The economy – money, debt and whatever other systems we create - should serve humanity not the other way around. We can start by treating people that we relate to in business as fellow human-beings, ensuring that we apply the same moral principles we espouse in other areas of our life to our economic relationships.