Debt: The First 5,000 Years by David Graeber
My rating: 5 of 5 stars

Back to the Future of Credit

Despite its title this book is really a deconstruction of the idea of money. The economist's idea is that credit (loans, cash advances etc.) arises in a well-developed monetary or 'cash on the barrel head' society which in turn had been an improvement on the previous system of barter.

Not so says Graeber and rather convincingly: credit, or more precisely the ledger of who owes what to whom, is the most primitive form of commerce which is only supplemented by either barter or immediate monetary exchange when social conditions deteriorate sufficiently to make credit arrangements impossible. Wars, revolutions, and various social upheavals are what cause the demand for cash, that is, the immediate settlement of commercial transactions.

Cash only becomes king when there is no trust, either between parties to a transaction or in the stability of the social environment. Credit in a very practical sense is the fundamental invention and promoter of civilisation.

Graeber's thesis is in fact confirmed by recent technological developments like Bitcoin. Bitcoin is in its simplest terms 'merely' an unfalsifiable ledger of who has 'rights' in the community and how much, essentially what members of the community are worth to each other.

The Bitcoin ledger differs from bank accounts because (among other things) it cannot be interfered with either by criminals or governments. In other words the ledger can be trusted even when its members have no personal knowledge of each other. The social system is its own guarantor.

If only Immanuel Kant (not to mention Leibniz) were alive to see it! He spent his life trying to find a way to guarantee the integrity of life's accounts, in every sense of the word. Double-entry bookkeeping was a start but not enough to warrant complete trust. With modern technology it looks as if we might be able to create enough trust to return to the most efficient commercial system possible: pure credit. Without the need for banks or their regulators. Or for that matter, their scams and frauds.

Fascinating, provocative and stimulating. If you have an interest in uncovering the myths of economics and how those myths become part of what you then see in the world, this is a must read.

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An Addendum

This article appeared in my feed today. It is yet further support for Graeber's position and the superiority of an unmediated credit economy: https://www.commonwealmagazine.org/in...

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