DEBT IS UBIQUITOUS. It is also insidious, since debt imposes a power relationship (amplified by the state) between borrower and creditor. We are diminished by debt. The ongoing financial crisis has revealed the degree to which most Americans (myself included, alas) are seriously indebted — and being so, we are more controlled than controlling.
David Graeber — of Occupy Wall Street fame — has written, in Debt: The First 5,000 Years, a grand intellectual project and a call for action. He investigates debt across time and across cultures and finds it to be a primary institution, preceding exchange, money and any notion of “the economy.” Debt is a building block for ever more elaborate social organization, because it creates fluid structures of subordination. Though in principle the sum of all debts should equal the sum of all credits, in practice debtors are many and creditors few. Today, there is growing concern about income inequality in America — but it is wealth inequality that captures the relation of debtors and creditors.
Debt is central to most Americans' life experience. We obtain housing, education, transport and medical services through our access to credit — and as such we spend most of our lives deeply indebted. How dispiriting debt is; it gnaws at us, this non-dischargeable burden.
But most Americans begin life woefully undercapitalized for the life we lead — we are unable to purchase homes, raise families, provide for medical care or retirement, or even buy cars and refrigerators, from our own resources. Rather, we stealthily borrow to enjoy “basic” requirements, taking comfort, I suppose, in the notion that everyone does it. And Americans are, of course, rich. The life cycle of most Americans involves getting a job and then using one’s anticipated future income to access credit, which is then used for obtaining life's necessities (and then some). The resulting debt persists thereafter; we no longer celebrate paying off mortgages, we refinance and extend up through the hour of our death.
The economy thrives when we take on debt. Indeed, assuming our fair share of debt can be seen as an American duty. Without the fuel of debt (that is, without access to credit) the American economy can and will collapse. The ongoing economic malaise results in part from the deleveraging of American households, depressing our consumption. Consumer debt drives the American economy — America is built on debt.
Yet we can imagine a better life. The root of our notion of freedom (echoed, as Graeber points out, in religious imagery) is freedom from debt — and if this is so, then by no means is America the land of the free.
Graeber's book is hardly a call for the renunciation of personal debt. He does, however, applaud his late brother's success in avoiding debt during his brief American life, and elsewhere boasts of having paid off his student loans — though he would not judge another who failed to do so.
Graeber asks us, instead, to consider the role debt plays in defining contemporary social relations. Our creditors are anonymous: the holders of our mortgages are generally hidden from our view and their nasty enforcement tasks (dunning phone calls at dinner-time, wage garnishments and the like) are delegated to agents. This practice is cunning. While we do not encounter our faceless creditors in the street (and so avoid whatever shamefacedness that follows), we are tied to our quietly desperate lives by the specter of our debts. We the respectable cannot (even in our imaginations) walk away from our jobs and communities, because we cannot run from debt. Debt ties us, debt grounds us. From the perspective of social order, this may not be a bad thing; from that of freedom and liberty and justice for all, perhaps less so.
The story of the poor is of course darker still. Their need to borrow is greater, and their access to credit much more difficult. The poor face punishing financial terms as they struggle to obtain shelter, clothing, refrigerators, and cars — or to pay for weddings and funerals (universal wants, according to Graeber). If the poor lack regular employment, servicing their debts weighs them down tragically. And the consequences of default are worse for the poor: homelessness, loss of society, even imprisonment.
And so, as a matter of identity, we Americans find ourselves to be either debtors or creditors. David Graeber's brilliant gift to the Occupy Movement, his slogan/manifesto, expresses this division: "We are the 99 percent!"
Debt is a larger phenomenon, of course, than our personal obligations. Our institutions are also indebted. Pity our “poor” universities, saddled by witless borrowings to pay for tony student centers, luxo-dorms, and pampered professors. Cities and towns cut back on public services as debt takes greater bites from budgets. States watch their credit ratings slide with each new social program. Indeed, a progressive’s take on the current budgetary stalemate (the proverbial Fiscal Cliff) involves a cynical embrace of public debt reduction by the “fiscal conservatives” in order to justify rollback of social entitlements.
The current financial stress has revealed all these points of weakness. And even at the highest level of social organization — the interactions among sovereign nation-states — we find debt everywhere. There is the unconscionable and unpayable debt owed by the world's poorest countries; if any debt merits a Jubilee it is certainly this. But even rich countries (the United States first among them) are significantly indebted.
The United States remains a special case — for the technical reason that its debt is expressed in dollars, the value of which the United States partly controls. And so we have the curious situation of complete fiscal and political dysfunction, while the United States continues to borrow at seductively low rates — signaling that (at least for the moment) our usual creditors are not perturbed by our antics. Graeber also explores these “higher” categories of debt — though he perhaps too easily presumes that national debt differs from common debt in degree and not in kind.
The grander perspective Graeber provides — his overview of 5,000 years of debt — demonstrates that debt is not a neutral social institution. It is first and foremost an institution allowing for the exercise of power. Debt is the foundation of hierarchy and hence much social structure. Its presence marks the divided spheres of our lives: between the “communist” family and small community domains where obligations reflect caring, resist quantification and meld into a richer cultural and moral life, and the larger, grossly more impersonal economy with its rigid demands.
Graeber begins his investigation with observations about the moral confusion surrounding debt. On the one hand, common morality instructs that one should pay one's debts. On the other, we are taught to forgive our debtors. Lenders are generally detested, now and then. The exaction of interest is frequently found to be immoral. Yet the sovereign zealously protects the lender.
We are conflicted in our experience of debt, and so we are distracted in our assessment. In a startling early chapter, Graeber argues that debt is older than money. He debunks the Myth of Barter; money is conventionally proposed to have developed as a solution to the inefficiencies of barter, but Graeber claims that there never has been — and never will be — a society built primarily around barter. Graeber also debunks the Myth of Primordial Debt: the idea that each of us is born indebted to our parents, our ancestors, our god or our nation. Notions of primordial debt run deep, but these are artifacts of cultural practices. Ordinary debt supersedes these more abstract obligations. Graeber provides rich examples across religious traditions, demonstrating the extent to which we properly and improperly express our relationships to higher powers in the language of debt. He also points to the irony contained in the Lord's Prayer: we ask God to forgive us our debts as we forgive others. There is little substance here: we know (and God knows!) that in common practice we do not forgive others' debts.
The essence of debt is obligation — but not all obligation is debt. Rather, debt is a quantified obligation, discharged by the payment of money. As such, debt takes on a peculiarly impersonal character. One's debt obligation is isolated from the human consequences it causes. A foreclosing bank need not consider resulting homelessness.
Moreover, debts are intrinsically enforceable. Graeber describes debt as depending on violence — and there is no doubt that the history of debt is intertwined with the history of violence. This violence includes the exertions of the modern state — the state's ability to seize the debtor's goods, home, earnings, and person to force discharge of the debt obligation. Many of Graeber's stories depict the forms of control that creditors exercise on debtors, and it is worth noting that significant control obtains regardless of whether the debtor is in “default.”
The quantification and impersonality of debt contribute to its mobility. One’s debt may come to rest in a stranger’s hands, thus compounding its impersonality. Here Graeber sees the origin of true money — debt quantified and freely assigned. Graeber makes a stunning argument that state-issued money arises when the state purposely creates debt to facilitate social control. Money — that is, debt of the state — has imputed value as it may be used to discharge tax burdens — the people “owe” the state money. And in order to meet these obligations, they obtain state money by selling to markets. Soldiers furnished with money can use the money to buy provisions. And so the circle closes, according to Graeber. By exercising its money issuance and taxation functions, and by furnishing violence to enforce debts, the state creates the market.
Graeber draws on anthropological and historical records to describe the various routes to the formation of debt. Gifts can create debts, particularly in societies with strong norms of reciprocal giving. The gift recipient, in a society where giving is competitive and potentially hostile, may find himself in an arms race: to fail to match the gift is to accept subordination. Yet a gift can, in some societies, impose debt-like obligations on the giver. One who saves a life may find herself charged with the care of the survivor.
The important common feature here is that debt forms an ongoing social relationship. Only by extinguishing the debt may the relationship be severed. And so — in certain social contexts — great care is taken to avoid full satisfaction. One repays the borrowing of a dozen eggs with 11 or perhaps 13 eggs, but not the equivalent 12, as this would rupture the relationship involved. And therefore, some obligation — the direction is often less important — is deliberately maintained.
There are certain features of modern debt that Graeber misses. Our perverse tax system drives many to borrow against the value of their homes in order to generate tax deductions. And businesses have similar tax incentives to prefer borrowed capital to use of their own funds. Similarly, bankruptcy and family law considerations create unexpected motives for taking on debt.
And Graeber may miss the essence of the modern American debtor’s predicament. For the most part the faceless creditor has little or no desire to exert domain over the debtor’s person (Chase doesn’t really want us to scrub the floors) so long as the debtor continues to earn. The American is not so much chained to his creditor as he is chained to his job, for it is from his periodic wages he metes out his various tributes.
Yet Graeber's historical chapters explore this relationship between debt and servitude. At times, debt peonage is the ordinary result of the failure to discharge debt — indeed, pledging oneself (or one's spouse and children) is frequently the only security a borrower may offer. During hard times entire communities may be swept off their land and into the bonded service of their creditor. In the extreme, debt can lead to enslavement. In other situations, mass servitude can create sufficient social unrest to trigger a political reaction. The Jubilee was just such a response to such uprisings — restoring to debtors their freedom and their land.
Graeber's Debt: The First 5,000 Years is intended to move debt to the center of political discourse — and makes the case for a Jubilee. Graeber's Jubilee would extend to both international debt and individual debt — and would greatly increase the world's freedom.
But there is something morally ambivalent about a Jubilee (no matter how much one might long for one). Time extends beyond the Jubilee — and the post-Jubilee accretion of new debt is accepted as a human inevitability; in Leviticus, the Jubilee happens every 49 or 50 years. A Jubilee is, at best, an accommodation with debt — it is not the destruction of debt.
In the days running up to December’s Mayan Cataclysm, a mock loan provision circulated on the Internet by which the lending bank retained all rights to collect in the Hereafter (“Borrower agrees that the end of the world shall not be deemed or construed to constitute a valid excuse or defense to payment”). We moderns are too facile for Jubilees — our lenders would either discount the prospect (that is, charge us more interest to counteract any relief a Jubilee would provide) or would devise an “offshore” avoidance. The Jubilee works as a mirage, driving us forward in false hope.
Which suggests that there remain certain positive aspects to the existence of debt — the weddings and funerals perhaps that would not otherwise take place. The shadow of our mortality affects our view of debt. Death promises release — our private Jubilee; it is little surprise that suicides are almost always debtors.