Thursday, August 23, 2012

DEBT – The First 5,000 Years


The Slick-Rock Irregular Book Report                                  Posting No. 1208-03


The Slick-Rock (Irregular) Book Review

 Title:      DEBT – The First 5,000 Years
             A Reversal of Conventional Wisdom Regarding National & Personal Debt
             By: David Graeber

Book Type:   Non-Fiction   Economics, Anthropology, Cultural Anthropology

Writing from London, David Graeber is the author of twelve books and is a contriributor to Harpers, The Nation, Mute and the New Left Review.  He has delivered the prestigious Malanowsky Memorial Lecture at London School of Economics which honors the outstanding anthropologist who has fundamentally shaped the study of culture.  He begins with a world-shattering concept:  Debt does not have to be repaid.
In this soon to be classic work, the author examines what constitutes debt, how is began and some of the modern features such as compound interest.  But the basic forgotten tenant behind debt is that it is not an economic statement, is it a moral statement, the concept of Debt has always taken into account the concept that there will be less paid back than was lent in the first place.  Hence, the idea of interest.  However, with modern commandments of debt andhow it works, this is nevertheless an understatement of the fact which falls woefully short of telling the whole story. 
            One of the first inaccuracies is that debt involves one lender and one borrower; One debtor and one creditor.  This is a gross over simplification. Very often debt involves entire populations.  The creditor was the conqueror and imposed huge tributes upon the defeated.  In fact, the very principal of exchange emerged largely as the result of conquest and violence.  The fact is that the real origins of money arose from crime, conquest and recompense, war and slavery, debt and redemption.
            The second myth is that money arose from a system of barter. Traditional economics from Adam Smith on down had held that unsophisticated people adopted a system of “I give you six bags of potatoes for that cow.” For centuries now, researchers have been trying to find this fabled land of barter. After years of research, none ever did.
The author quotes another pre=eminent economist from Cambridge, Carolyn Humphrey who says “ No example of a barter economy, pure and simple has ever been described.”
            Instead, going back for thousands of years, there has been w system of credit from even the more primitive of people.  Indeed, there is good reason to believe that barter is actually not a widespread phenomenon at all anciently, but is an invention of relatively modern times.  One of the popular fallacies is that a money saving device called credit was invented and before that all transactions were paid in coin.  A careful investigation shows that exactly the reverse is true.
            In fact, our standard account of the history of money is precisely backwards.  We did not begin with barter, discover money and eventually develop credit systems.  It happened precisely the other way around.

            Graeber then discusses the dark side of credit.  “ Living with massive debt has more of an effect that a college education.”   Living with never ending debt
Is like living with a terminal disease.   When a nation is defeated in war, to the victor belongs the spoils.  It has been a long reaching practice to enclave the vanquished.
            When the Romans defeated the Jews at Mosada, their mountain top fortress the 987 people who were left got together and elected ten men whose job was to kill every man; woman and child left living because death was preferable to living as slaves to the Romans.   One of the precipitating factors that started World War II was the huge wartime debt from World War I that the allies burdened Germany with and the inability for the Germans to ever pay it off.
            After treating the concepts of credit w. bullion and precious metal as the foundation for all money, the author looks toward what comes next.  His occlusion is that in the twenty-first century we have begun something as yet to be determined in the history of money and debt that extends Io the foreseeable future.



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