The Invention of Debt
What you may not know is that debt arose recently on the human stage. Throughout more than 99% of our history we have not even had a concept for debt. (The interested reader can pick up David Graeber’s excellent book Debt: The First 5000 Years for full story.)
Anthropological studies of hunter-gatherer societies reveal that there were no barter systems, no currencies to use for money, and — in the absence of these cultural artifacts — there was no debt. With all the great variation cross cultures one might expect from ethnographic research, the anthropologists found that some tribal communities engaged in “gift economies” where status arises from how generous a person is who has acquired wealth, while others have remained egalitarian and non-hierarchical for thousands of years by sharing their food and materials based on the principles of “from each as they are able, to each as they need.”
This belies the great misunderstanding about communism that treats it as a state-centric governing system, when in truth it is the foundational sentiment of any community that builds upon the trust and good will of social relations between people who know and depend upon one another — a condition that has held for all hunter-gatherer societies throughout our long 200,000 year history as a species.
Pick up an economics textbook at random and you will find a classic (and false) “just so” story about the need for barter systems to have money. They all go something like this: Steve has potatoes and needs some shoes. Bob has shoes but does not need any potatoes. They are unable to directly exchange goods due to this mismatch of need, and so must introduce a money system to preserve the value of currency across multiple exchanges that enable Steve to sell his potatoes to Sue and acquire money that he can then use to pay Bob for a pair of shoes. What this simple narrative conceals is the broad evidence from ancient cultures studied by anthropologists that no such problem arises in this way.
What really happens is that a warring society has arisen somewhere (to get a sense of how this happens, read my article about psychopaths and agrarian city states) and is in a mode of conquest. When this burgeoning empire conquers new land, the ruler imposes a system of taxation on the local populace to pay for the costs of war. This imposition of scarcity, by extracting resources from the local population to be hoarded by the warrior chieftain, is what leads to the emergence of barter systems and — in some instances — the introduction of a money system by the ruler.
In the absence of war and conquest, hunter-gatherer societies do not spontaneously create barter systems. Instead they share more or less equally within their tribe and only trade with other tribes through highly ritualized and often conflict-ridden exchanges that take place when two tribes come together for a brief interaction. The pathway that does lead to the emergence of barter systems takes place in agrarian societies where some kind of accounting system has been created to track debts. And from these accounting systems we do find that debt is present.
So where does debt come from if it isn’t naturally a part of human societies? Again it is the imposition of scarcity by the ruling class — designed to extract and hoard wealth in the hands of a powerful elite — that creates the notion of debt. Does this sound familiar in today’s context? Many countries were “modernized” throughout the 20th Century by introducing market systems that structure debt into the economies of newly founded nations. These nations now must pay tributes — in the form of interest payments — to external banks that extract wealth from the poor countries and hoard it in the coffers of wealthy countries.
Stated plainly, debt is created when a powerful group of people impose scarcity upon another group of people who have been conquered. This is the root cause of poverty. It is the destabilizing force of unequal societies that breeds civil unrest and revolution. Thus the need for Hebrew kings to introduce Jubilee. They knew that a revolution might cause the people to rise up and clear their own debts, while also uprooting the monarchy from power. In order to preserve their power base, they would routinely erase the debt and start again.
A Note About Debt and Moral Accounting
The astute reader may already be asking, “What does this story about the creation of debt say about the religious use of moral accounting?” You may have noticed that all the world religions have at their core a transactional relationship between God and humans — where each person owes a debt to their creator and must pay it either by relinquishing sin from their lives or by returning to their maker upon death.
This economic transaction frame for moral accounting is not present in all human societies. Those hunter-gatherer tribes practicing the ethic of distribution based on need have no concept for trading an eye-for-an-eye. Nor do they see a gift as something to be repaid, expressing disgust at the insult of treating their generosity in such a transactional manner.
Instead what anthropologists have found is that debt-based morality is only present in societies that already have accounting systems and also engage routinely in barter and monetary exchange. In other words, this moral accounting system is a product of war and conquest and not a natural part of human society. So the next time you feel a debt to one of your friends, society, or your maker it may help to keep this in mind.
What Would It Mean to Erase All Debt?
We are living in a time when too many of our financial resources are allocated to non-productive activities — principally the accumulation of wealth by “making money with money” and a myopic focus on economic activities that service our massive debts. This is why people work at jobs they hate. It is why investments are not being made in renewable energy, public education, the arts, health care, or the eradication of poverty. We have built a massive financial house of cards on debt — with money itself coming into being when loans are taken out, a pool that grows exponentially due to the interest that accompanies it — and so we are not able to bring consumer culture to an end or focus our creative talents on planetary sustainability.
By the way, this is exactly what my friends at /The Rules are trying to address in their global mobilization effort.
So if we were to erase all debt, the 7 billion people alive today could focus on their passions. We could all come together to address global threats — be they resource-based like the scarcity of fresh water or peaking of global oil production; or cultural like the loss of spiritual meaning in the secularization of society or the soullessness of employment drudgery that comes from working long hours at a mind-numbing job.
What comes to my mind is the way cities try to implement broad solutions to address economic development, transportation, resource management, social justice, and environmental concerns. They must operate within constrained budgets that keep draining further without a clear end in sight. I imagine what would be possible if everyone was able to set out on their own intellectual and experiential journeys without the fear of a debt-collector coming to their door. How then would the peoples of this world choose to live out their lives?
Perhaps you have your own dreams of a better world for you and your loved ones. What comes to mind for you? This is not merely an academic question, by the way, because we each participate in the social realities that are lent our beliefs, our actions, and our obligations. If we were to collectively decide that our debts are no more, they would cease to exist.
This is because what we take to be real in many respects becomes so as a self-fulfilling prophesy. We each have the power to be accountants — defining “the real” by choosing what to measure and imbuing it with significance. In this way, the Gross Domestic Product was claimed as an economic alter for measuring the progress of civilization in the 20th Century. Perhaps in the 21st we will replace it with Gross National Happiness or some other novel metric for capturing the essence of our values and purpose as a civilization on this Earth.
Watch the video below:
Joe Brewer is co-founder and research director of Culture2 Inc., a culture design lab for social good. He is a former fellow of the Rockridge Institute, a think tank founded by George Lakoff to analyze political discourse for the progressive movement.