Monday, January 16, 2012

Review of Graeber's Debt

David Graeber has emerged as one the of the founding intellectuals of the Occupy movement, and his book Debt: The First Five Thousand Years has received a good bit of attention as a result. It promises to reveal a new and powerful way to look at the world, reconfiguring our notions of money, credit, and basic human relations. Even better, from my perspective, it has a worked-out theory in opposition to the libertarianoid, market-based view of humanity, and an explanation of how that displaced the truth. Sounds perfect for me! But I wanted to like this book more than I actually did.

The traditional economic story is that we started with barter, and when that proved inconvenient, invented money and markets. Graeber will have none of that. According to him, no real society ever operated on barter in the usual sense. The real start of economics is loose systems of personal obligation and credit. In tribal or village societies where everyone knows everyone else, it is not hard to keep track of what favors are owed to who. Enumerated exchanges, whether by barter or by money, are reserved for strangers with whom one can expect to not interact with much in the future. Society is more like a potluck party than a market -- everyone is expected to bring something to the table, but it would be very rude to make explicit demands, or try to bargain prices.

Graeber calls this "baseline communism" and it is the economics of ordinary human relations, dinner parties, and exchange within a community, firm, or workgroup (he doesn't mention Coase, oddly). This vision runs completely counter to the usual economists's ways of thinking, where self-interest is paramount and nothing that is not priced and convertible to utility units can exist. Graeber's agenda seems to be in part to assert a new common sense, one based on normal human relations rather than calculation. As a mathematical type myself, I am only partly buying this -- or, as a rationalist, I have to believe that self-interested motives underlie human behavior at some level -- which doesn't mean that Graeber is wrong that naked, explicit calculation is something more recent, new, and anti-human.
The way violence, or the threat of violence, turns human relations into mathematics will crop up again and is the ultimate source of the moral confusion that seems to float around everything surrounding the topic of debt (p14)
This introduces another theme of his, which is that the concept of debt confuses the moral and the mathematical, it turns the normal idea of obligatory behavior into something quantifiable, fungible, and as a result more sinister and onerous. I confess to not quite getting this idea enough to describe it very sensibly. But I think his agenda is clear enough -- in his view, monetary debts have become tools of oppression, sometimes obviously such as in the cases of debt-peonage, but more subtly as a tool of social control. That this has been allowed to happen is because of the confusion of such debts with moral obligations, and breaking that link is what he is about. the ancient world, all revolutionary movements had a single program: "Cancel the debts and redistribute the land"
As hinted above, it is war and violence that, as a side-effect of destroying traditional society, replaces it with the cash nexus:
Cash transactions between strangers were different, and all the more so when trading is set against a background of war and emerges from disposing of loot and provisioning soldiers; when one often had best not ask where the objects traded came from, and where no one is much interested in forming ongoing personal relationships anyway. Here, transactions really do become simply a figuring-out of how many of X will go for how many of Y...and trying to get the best deal for oneself. The result...was a new way of thinking about human motivation, a radical simplification of motives that made it possible to begin speaking of concepts like "profit" and "advantage" -- and imagining that this is what people are really pursuing, in every aspect of existence....(p238-9)
So, Greaber is telling a story that has been told many times before -- the fall of traditional societies to centralization, bureaucratization, war, the state, rationalization -- but he's doing it through a lens that is new (at least to me), that of debt and differing conceptions of money and trade.

He ends with a concrete proposal:
It seems to me that we are long overdue for some kind of Biblical-style Jubilee: one that would affect both international debt and consumer debt. It would be salutary not just because it would relieve so much genuine human suffering, but also it would be our way of reminding ourselves that money is not ineffable, that paying one's debts is not the essence of morality,, that all these things are human arrangements and that if democracy is to mean anything, it is the ability to all agree to arrange things in a different way. (p 390)

So, what didn't I like? Something in the tone of the book seemed off to me. It's an odd mix of academic anthropology and political special pleading. This makes it difficult for me to read, because one never knows how much to trust the authors' objectivity. A more self-critical spirit would be welcome.

Graeber is constantly speculating on the thinking and motivations of people who lived thousands of years ago and/or half a world away, in a breezy and offhand manner, as if they are going to be applying his version of common sense in what is merely a different context. This runs counter to what I normally think of as the anthropological style, which heightens the strangeness, difference, and ultimate unknowability of different cultures. At one point in my life I ate that kind of stuff (eg, Cliffeord Geertz and Michael Taussig) right up. Graeber's more down-to-earth approach is quite different, and perhaps refreshing in a certain way, but I don't trust it.

My mistrust is heightened by one rather glaring example where he refers to a world that I do know well, and gets quite a large number of things wrong:
Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garages. (p96)
I can count at least six errors in that one sentence. Which may not be important, but doesn't lead me to trust Graeber on the areas where I am less expert. Also, I went into this book hoping to learn more about the tradition of Jubilee and debt-forgiveness, but he didn't get into that very much.

One more quote:
We have already seen how both Vedic and Christian teachings thus end up making the same curios move: first describing all morality as debt, but then, in their very manner of doing so, demonstrating that morality cannot really be reduced to debt, that it must be grounded in something else.

and a special note for MLK day: it occurred to me that in his I Have a Dream Speech he inverts the metaphoric use of debt that is Graeber's subject:
In a sense we have come to our nation's capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the unalienable rights of life, liberty, and the pursuit of happiness. It is obvious today that America has defaulted on this promissory note insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked "insufficient funds."


jlredford said...

I count four errors in the quote:
- they broke from HP, not IBM
- it was the 70s, not 80s
- the Homebrew Club wouldn't have been particularly democratic
- they didn't have laptops, since they weren't possible for another 10 years.

Which were yours?

mtraven said...

Yours, plus:
- it was Apple Computer, not Apple Computers
- Not 100% sure of this one, but I seriously doubt that the Apple founders or early engineers were "mostly Republican".

TGGP said...

Oddly enough, the connection between money and memory of past favors/gifts is most emphasized by that epitome of Krugman's "Dark Age of Macroeconomics", the University of Minnesota.

I haven't read Graeber's book, but it seemed odd to me that he was emphasizing the foundational importance of debt (as opposed to barter) while also trying to argue that debt is some unnatural intrusion we need to discard.

James Scott also argued that peasant revolutionaries seek to destroy the record books. Being of the "knowledge is good" and "information wants to be free" inclination I see things differently, but I am the lucky future beneficiary of the suffering of Malthusian peasants.

Anomaly UK said...

Is there any overlap with Arnold Kling's view of money originating as division of loot within gangs of bandits?

scw said...

I can't say what the validity of Graeber's hypothesis about the historical origins of debt are, nor do I suppose anyone can. Let us just say that it is a speculation that happens to fit his politics neatly - rather too neatly, perhaps. One might as well read Ezra Pound on usury. Pound has no more merit than Graeber does as an economist, but may at least be accorded some as a poet.

The notion of a modern-day jubilee is unworkable and ridiculous. It is the sort of thing that appeals to people who have not thought through its consequences thoroughly, and of course to those who are head over heels in debt. That is to say, it panders to a self-interest on the latter's part just as greedy as that of which the OWS-Flea Party crowd accuse Wall Street, the 1%, or whatever they identify as their bug-a-boo du jour. Let's not cloak it in the trappings of altruism or charity.

A jubilee might have been possible without great harm among a primitive pastoral people like the Hebrews of the Old Testament, who measured wealth in terms of land and livestock - but not for those who live in a money-credit economy such as ours, in which wealth is primarily defined by entries on the books of financial institutions.

Do you want to cancel all debt? Then what about the money you have on deposit at your bank? That is the bank's debt to you, shown as a liability on the its balance sheet; your deposits are what make possible the bank's loans to its borrowers. How would you like it if your bank deposits were wiped out at the same time the borrowers' notes were? What about the money your employer owes you for work done, but not to be paid until the next payday? That's an accrued liability on your employer's books. Would you be happy if it ceased to exist?

If "international debt and consumer debt" are to be annulled - if obligations owed to business corporations and banks are to be cancelled - then, pari passu, should be the obligations owed by them.

Imagine the damage to the economy by cancelling those obligations of businesses and banks to the vast public! The great majority of bank deposits are owned by ordinary people of modest means.
To expunge one debt (or kind of debt) and not the other hardly meets any reasonable standard of fairness or justice. To appeal to "democracy" as the "ability to all [sic] agree to arrange things in a different way" as justifying such steps is highly dishonest. "All" would certainly not agree to them. For the majority to cancel its debts owed to a minority, but not the debts owed by that minority to it - would serve only to demonstrate Benjamin Franklin's aphorism that democracy is two wolves and a lamb voting on what's for dinner.


Joseph said...

I have trouble reconciling this theory with the fact that there were trade networks bigger than governments.

For that matter, even if it were true, it makes no more sense to abolish money on the grounds it used to be a creature of the State than to abolish the Internet (or even written language) on similar grounds.

mtraven said...

@AMcGuinn -- yes, much to my surprise, Kling's theory is very similar to Graebers's, or at least part of Graeber's. He too suggests that war and loot was a big part of the way in which value becomes a fungible, tradable thing, detached from a rich network of social relations. The surprise is due to Kling and Graeber being ideological opposites.