A History of Money Without the Just-So Stories
Debt: The First 5,000 Years by David Graeber
My rating: 4 of 5 stars
I've had this book on my TBR pile for several years now, in which time the library's recalled it at least twice and I had to check it back out again. During that time I'd glanced through it, reading bits and pieces, but never actually giving it a systematic reading. Finally I decided it was time to actually read it, rather than just glancing here and there.
The most fascinating thing about this book is how the author dismantles the notion that money was developed because bartering for things was simply too cumbersome. This image of early humans trading a haunch of meat for ten arrows, or five arrows for a pair of sandals, and having trouble when the person who has what they want doesn't want what they have to trade simply isn't borne up by the earliest historical record or anthropological studies of peoples still living at the hunter-gatherer and hoe agricultural village levels. People simply don't do formal barter with other members of their community. If barter in that sense occurs, it is invariably with people from outside the community, strangers who are not part of the community's mutual aid system.
The story of hunter bartering a haunch of meat with the fletcher for ten arrows comes from Adam Smith's The Wealth of Nations, and appears to have been more on the order of a thought experiment about how people would get along without money, except handled in a very presentist way, assuming a society just like his present, but with money somehow whisked away. Given that Adam Smith was writing in the late 1700's, when the Egyptian and Mesopotamian court and temple documents were still untranslated, when anthropology as a scientific discipline was barely in its infancy, his assumptions are forgivable, and the general idea is useful as a simplified Just So Story for explaining the concept of money, but when later generations of writers on economics repeat it as if it were proven historical fact, it's much less so (I about fell out of my chair laughing at the author's story of being taken to visit a spirit medium who supposedly was channeling a spirit from the days before money, who solemnly pronounced that they bartered good for good).
From the fairy tale of primitive people bartering with one another for ordinary goods, the author then delves into the actual use of the various so-called "primitive money" systems, whether they be the giant stone "coins" of the island of Yap or the wampum of various indigenous North American nationalities, were not used as currency for everyday transactions. Instead, they were almost invariably used in ceremonies that involved significant changes in the relationship between human beings: births, marriages, deaths. In many senses, these various kinds of "primitive money" were symbolic substitutes for a human life, or even an acknowledgement that no mere material object could ever truly substitute for a human life, but it was being given as a pledge that in good time the actual exchange (for instance, a bride for a bride) would be properly made.
Even surprisingly sophisticated civilizations were able to function without money as we would understand it. Instead, economic activity tended to be carried out by credit, with ordinary transactions being put on a person's tab and the person settling up periodically (often after the harvest). Even temple treasuries tended to receive tithes in kind, and the gold bars that were units of account almost never left the vaults deep within the temple.
The development of coinage appears to have been the result of governments wanting to equip large standing armies, and thus paying them in coin and requiring taxes to be paid in coin, which compelled merchants to accept those coins as payment when soldiers bought things. Even then, it took many centuries to reach the point at which ordinary people not only viewed gold and silver coinage as money, but also viewed government-issued money as the proper medium of exchange for all economic transactions, and the old informal credit arrangements to be suspect.
Throughout all this we also have the story of interest, and how it turned what had been mutual promises into something that could turn into an all-devouring monster that impoverished the poor at their most desperate and vulnerable points. The Mesopotamian records are filled with debt protests, often in the form of complaints that the debtors have been forced to sell their daughters into prostitution -- and the kings' periodic jubilees, by which debts were canceled. Over history, cultures seem to go through cycles of debt (or at least the interest-bearing kind) being viewed as abhorrent and debt becoming acceptable and commonplace. Christianity sought to condemn lending at interest, but Western Christendom ended up outsourcing that activity to the Jewish community, with tragic results as kings discovered they could cancel their debts by drumming up anti-Semitic stereotypes to launch yet another pogrom. Islam set an absolute prohibition on lending or borrowing at interest, with mixed results (although I fear the author paints an overly positive picture of Medieval Islamic finance).
The author then takes the story of debt and money into the modern era with the redevelopment of slavery amidst the Age of Exploration and the need of conquerors for a readily available workforce, particularly for the mining of gold and silver to satisfy creditors in Europe. From there we get into the development of modern capitalism alongside the Industrial Revolution (although he really doesn't delve a lot into how the growing use of machine power and resultant vast increase in the availability of goods transformed concepts of value and of labor) and into the contemporary era of fiat currencies, digital banking, and the leveraging of all parts of society.
The book was written right after the 2008 financial crash, which was largely a result of overleveraging and speculation in the housing market, at least partly because of government pressure to make mortgages and home ownership available to poor and minority households -- with the result that these loans simply weren't vetted as closely as mortgages had previously been. When enough people became unable to keep up with their mortgage payments at once, the whole system started collapsing like a house of cards -- and it's arguable that much of the current situation is the result of that situation having been papered over instead of being addressed properly.
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