Debt: the First 5000 Years

If you went back in time to a prehistoric village and asked, “how do you solve the coincidence of wants problem?” they’d look at you strangely: “What? We don’t have that problem. If I need grain and my neighbour has it, he gives it to me, and then I owe him one.” This idea, “I owe him one”, is simple and powerful: the fundamental unit of commerce i... See more

The average life cycle of early coins was not facilitating trade among stranger after stranger. A typical coin or precious metal object might be exchanged once or twice, but then promptly deposited at the local temple or church as tribute, where it would then remain permanently.

To summarize this view, the foundation of the human economy is built on bartering and swapping for mutual benefit: it makes us human, and let us specialize. Money and coinage evolved as an abstract representation of scarcity, in order to facilitate that bargaining. And then credit and banking evolved on top of that.

It’s also hard not to read this book in the context of what’s going on with Bitcoin right now, which is basically a pure, digital expression of money as fungible, abstract scarcity, where interpersonal trust has been fully engineered out of the picture.

The book opens with a strong statement: our conventional origin story for money is totally wrong.

According to Graeber, that narrative is fully false, and has the story backwards.

The IOU system works perfectly well for debts that can be repaid. Money evolved to solve a different problem, which is how to deal with debts that could not ever be repaid. We’re not talking about commerce here. We’re talking about religion, and debt to God.

Here’s the version of the story we’re usually taught: Before money, commerce happened through bartering. If I had extra wood and you had extra grain, we could negotiate and swap for mutual benefit and both be better off.