1. An introduction to the book

In this blog post, we will explore the role of debt in society. In his book Debt: The First 5000 Years, David Graeber explores how different societies have created and used their own forms of currency over time. He looks at what happens when a society has more debts than it can pay back (i.e., bankruptcy), how 'debt' is constructed socially and politically, why debt is necessary for economies to function properly, and much more.

Graeber aims to dispel the widely accepted notion of money's truck-and-barter beginnings. This is a conventional classical and neoclassical economic theory. But Graeber thinks it's all a lie - a fictional narrative that has never happened in actual pre-state cultures.

Graeber's argument looks solid. But why is it important? It's like saying the state is legitimate because all people agreed to build it. But debunking the founding myth tells us nothing about the system's functioning. Today's economic system is based on money and credit. Does it matter how it came about? That Graeber is concerned about it suggests that his perspective of human behaviour – self-serving acts meant to maximise one's own utility – is a historical universal, extending to pre-modern and non-western social contexts as well as the New Orleans cotton exchange.

Money allowed us to see ourselves as a collection of individuals and nations whose main job is exchanging goods. The gift relation and the practise of open-ended reciprocity are far more indicative of the human situation, according to Graeber.

2. What is debt and how does it work

Debt is a form of social relation that goes back as far as human society. Debt has been around for millennia and continues to play an important role in modern day society. David Graeber's book 'Debt: The First 5000 Years' investigates the history, function and impact of debt on our lives today. In this blog post we will explore 5 insights from his book about debt, how it works and its relevance to us all.

Insight 1: The first insight is that debt has a much longer history than was previously thought. Graeber shows how the origins of money and markets are rooted in our social relations with others. Rather than being about buying and selling, money was created as part of a system which enabled people to settle debts between each other without having to be physically involved.

Debt has played a central part in many major historical events such as the French and Russian revolutions, where it was used to fund wars. As well as this debt is still present today with examples like the 2008 financial crisis and Greece's economic struggles. Understanding how debt works can help us make sense of our world and understand it better.

Insight 2: The second insight is that debt and credit are two separate things that get mixed up in popular discourse. Debt refers to money owed, while credit can be either a source of funds or the practice of extending trust to someone with the expectation they will reciprocate in some way later on. Credit is not just about money, but also the trust which is required in order to function within society.

Insight 3: Debt must be understood as a moral and political issue rather than an economic one. Debt has been used by people who hold power for their own benefit at the expense of others - with little to no regard for its wider impacts. Debt is a way of controlling others and limiting their actions through the threat of violence, while allowing those who hold power to benefit from doing nothing at all.

Debt can create social relations which are not based on violence or coercion. In the past, violence and coercion were a common way of enforcing debts. But in many societies throughout history debt has been about creating social relations between people which are based on trust rather than violence or force.

Insight 4: Debt within society has always been bound up with systems that enforce inequality between different groups in society. Debt has often been used as a way of controlling and exploiting those who are different to us. Whether it's using debt as a means of enslaving others or punishing people for not adhering to social norms, systems based on debt have always emerged from unequal power relations within society.

Insight 5: Debt can also create social change. Debt has been used as a way of controlling people, but it also gave rise to new ideas about the individual and society which have led to economic theories such as marginalism - where everything in our economy is subject to market forces - being developed. This shows how debt can be a tool for both social control and our own empowerment.

Debt must be approached as a social relation rather than an economic transaction. We should not see money and markets as separate things, but understand how they function within the wider society we live in. Debt is something which has been made possible through our relationships with other people and its role throughout history cannot be separated from that fact.

3. The history of debt

Debt has always been a part of human society, but it’s never been quite this bad.  The numbers are staggering: the total amount of money owed in global debt is an estimated $200 trillion USD. This means that for every dollar you earn, there’s another dollar out there somewhere that someone owes to someone else.  So what can we learn from looking back at the history of debt?

One insight is that debt is not just something that individuals owe, but also something that communities owe and they have to work together to pay off their debts. Even when everyone agrees on the same system, it doesn’t mean that everyone will agree on how to use its rules. There are always people who want to bend the rules and there are other people out there trying stop them from doing that.

Different cultures view debt differently - for example there’s a history of people not being able to repay their debts in certain cultures because it’s seen as a sign that they are incapable. This is different than the Judeo-Christian culture where debtors were sent to prison, which can be traced back to biblical teachings about how lending money was an act of grace and should never create shame or guilt.

A fifth insight is how economies can be based around debt - for example when people used to borrow from neighbours in times of need. Now we have consumer loans, mortgages and credit cards that are all examples of this kind of economy where money is essentially lent out at interest.

4. Debt as a tool for social control

Graeber argues that debt is a tool for social control. He details how the use of debt – and its accompanying language – has been used to justify the exploitation of the many by the few. For example, he suggests that "the idea of a 'jubilee,' a periodic cancellation of debts which has haunted us from antiquity to today" was "a way to keep societies from being overwhelmed by crushing levels of economic inequality."

5. Debt as an engine of inequality - from ancient Mesopotamia to today's global economy

Debt is one of the most pervasive and powerful forces in society.  It shapes our beliefs, attitudes, and actions every day. Debt has been with us since ancient Mesopotamia created the first written records of it around 5000 years ago. Debt was an engine of inequality even then - but now it's a global phenomenon that affects all aspects of economic life across the globe.

6. How should we think about debt in light of Graeber's insights - what does this mean for society, especially under neoliberalism and austerity measures ?

The author Graeber argues that debt is a social and moral relation, not just an economic one. He says we should view debt as a promise, or obligation to pay the money back with interest. Not only does this perspective change how we think about our personal debts but also offers insight into society at large. For example, it explains austerity measures in Greece and elsewhere because they are really just another form of debt for these countries' citizens - something that must be paid off with added interest over time by way of structural adjustment programmes such as privatisation and wage cuts imposed by the Troika (European Union, European Central Bank and International Monetary Fund).  So what does this all mean for society? For Graeber, the moral obligation to repay debt is one of the most crucial points in our understanding of modern economics.

If we look at how banks work and operate today, they are a perfect example of viewing money as a social relation rather than just an economic tool that creates wealth; when you borrow money from a bank, you are really borrowing it from the depositors' account at that particular institution. Deposits are loans to banks which they pay interest on for using this loaned-out money - since most of these deposits come in as electronic transfers rather than hard cash (97% is digital) what we have here is an accounting system.

This is why banks are able to function as effectively as they do - since our money supply is all based on accounting, it means that the bank's ability to create credit and new loans comes from their "bookkeeping". In this way, we can see how sovereign debt plays a role in supporting public services within countries because without these debts, there would be no interest or money to provide these services. Not only that, it also means the financial system relies on everyone continuing to believe in debt as a moral obligation - if people stopped believing this and decided not to repay their debts (as has happened before), then banks wouldn't have any funds coming into them anymore which could lead to another financial crisis.

The moral obligation that we believe in is also what gives the government its power to levy taxes and collect money from us which they then use for public services such as healthcare, roads and schools - it means we all have a stake in society by playing some part not just through our work but through financial contributions too. At least this was how it used to be - the system we have now is deeply flawed and leaves many people feeling disenfranchised because they can't repay their debts leading them into poverty.

This changes how we think about debt beyond just personal finance but for society as a whole too since there are so many other areas that build upon this such as taxation, government spending and the financial system itself.

7. Conclusions on the role that debt plays in our lives today, and some thoughts on what can be done about it going forward

Debt is a complicated concept that has no easy definition. It can be argued that debt, in some ways, is good for society and the economy: it allows people to purchase things they could not afford otherwise and enables others to make investments which would not have been possible without borrowing money. On the other hand, there are many who feel today's high level of debt poses risks to our economic future. There are also those who argue that we need more debt to grow our economy and allow people better access to credit (by lowering interest rates).

The bottom line is this: Debt is an integral part of the global financial system; but with such high levels of indebtedness today, it's worth examining whether or not debt really does help us achieve our financial goals.


David Graeber's insights about debt in society are profound and far-reaching. The role of debt, even today under neoliberalism and austerity measures, is pervasive. We all owe something to someone else - whether it be our employer or government for taxes owed; the bank that gave us a loan; or any number of other social institutions like marriage (some forms of which can involve implicit debts) - but this doesn't mean we're always aware of what those debts entail. This blog post has discussed some ways that these dispositions have changed over time as well as how they may play out going forward relative to the current economic climate. What do you think? Let me know by commenting below!

Further Reading:

The Millionaire Next Door: The Surprising Secrets of America's Wealthy

The simple path to Wealth

I will teach you to be rich

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