What is Debt?

[indio007]

I found this an interesting interview about the history of money and debt.
 Check it out.

What is Debt? – An Interview with Economic Anthropologist David Graeber

David Graeber currently holds the position of Reader in Social Anthropology at Goldsmiths University London. Prior to this he was an associate professor of anthropology at Yale University. He is the author of ‘Debt: The First 5,000 Years’ which is available from Amazon.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.

Philip Pilkington: Let’s begin. Most economists claim that money was invented to replace the barter system. But you’ve found something quite different, am I correct?

David Graeber: Yes there’s a standard story we’re all taught, a ‘once upon a time’ — it’s a fairy tale.

[miscreanity]

I found this an interesting interview about the history of money and debt.
 Check it out.

What is Debt? – An Interview with Economic Anthropologist David Graeber

David Graeber currently holds the position of Reader in Social Anthropology at Goldsmiths University London. Prior to this he was an associate professor of anthropology at Yale University. He is the author of ‘Debt: The First 5,000 Years’ which is available from Amazon.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.

Philip Pilkington: Let’s begin. Most economists claim that money was invented to replace the barter system. But you’ve found something quite different, am I correct?

David Graeber: Yes there’s a standard story we’re all taught, a ‘once upon a time’ — it’s a fairy tale.

Excellent article, thanks for posting it. It highlights the cyclical nature of economies and financial structures very nicely. The analysis appears to be based on societies with written language, so I'd be curious to know what the Graeber's perspective is on those cultures that were spoken-language only. There also seems to be an assumption of exchange only in goods for goods.

It would seem to me that barter would dominate at seasonal tribal gatherings, during which surpluses would be offered in exchange for other surpluses. The exchange wouldn't have to be for physical goods: surpluses have been offered as a communal good, indicating a particular tribe's success and garnering respect or support. The intangible reputation in that case being the return. Records for these transactions simply don't exist and inferring as such would be virtually impossible.

There's a small archipelago nation in the South Pacific that holds such seasonal meetings, although exposure to modern society is eroding the practice. During these events, each tribe would contribute to a communal 'pile' of goods that formed the cumulative surplus of their respective production after providing sufficiently for themselves. The greater the pile, the prouder the society. The greater the share of the pile offered by a particular tribe, the greater the respect for that tribe. Out of the surplus, all tribes would then partake of the excess during festivities.

No one blanket explanation seems to cover everything, so I find it's still a chicken & egg situation, but it's good to have different persepectives.

A major point outlined is something that I agree with entirely - debt slavery is occurring and taking root now more than at any other point in history, especially with the mechanism and timing by which it is being expanded. Graeber's explanation helps to pull back the veneer of absurdity that is todays' status quo. I am left wondering whether this is the final stage of our species as we know it.

The issue of capitalism is one that I think isn't as clear, though. I find capitalism to be more of an observation of natural behavioral interaction. Whereas communism, socialism or other forms of centralized governance describe a structure to be maintained, capitalism is an observation of an order that arises naturally. This is actually very well examined by Eric S. Raymond in The Cathedral and the Bazaar.

[hugolp]

Excellent article, thanks for posting it.

Yes, it was interesting to read. You had to filter his obvious marxist views, but its worth the read.

The issue of capitalism is one that I think isn't as clear, though. I find capitalism to be more of an observation of natural behavioral interaction. Whereas communism, socialism or other forms of centralized governance describe a structure to be maintained, capitalism is an observation of an order that arises naturally. This is actually very well examined by Eric S. Raymond in The Cathedral and the Bazaar.

I think the titles capitalism and socialism are worthless. There are too many ideologies under those tents, even opposing ones inside the same tent, that it does not tell you anything that someones call himself socialist or capitalist.

[gdubya]

Excellent read, and some thought provoking ideas.

Thanks for posting!

[indio007]

I find it stunning that debt came before money but it makes sense.

[hugolp]

I find it stunning that debt came before money but it makes sense.

Better said debt was used as money before coin was used as money, according to him.

[caston]

I read it last night when I had a fever but the first half I read was very interesting especially the part about barter coming before money being a fairytale. I can remember we were taught this in school and
Barter trade associations use it to promote themselves.

[BubbleBoy]

It's an interesting anthropological and historical view, but it all goes down hill towards the end when talking about how the way towards "democracy" is sovereign default.

The national debt is not slavery, it's the crack on which nations get high; nobody goes to the streets when the foreign capital flows into the country at abysmal interest rates, when socialist governments rack up the bill under the pretense of economic growth. It's only when the bill must be paid that people start to cry for sovereignty and democracy. Furthermore, the money states owe is not some made up fiat of the international elite, it's usually the savings of some foreign or domestic pensioners, or someone else's college fund. Defaulting on the debt will not hurt the fiat issuer of the currency, but the savers of the world.

I can very much agree that many 3rd world countries were ruled by dictators that borrow billions for weapons and personal luxury. In those cases, sure, it's your choice to finance those leaders, and your risk to lose everything when the next revolution happens. But for countries like Greece and Italy ? Functional democracies that chose socialism en-masse, increased their national debt by 50% in the last 5 years alone, and somehow forgot they need to pay it back eventually ? Bitch, please.

[jtimon]

The issue of capitalism is one that I think isn't as clear, though. I find capitalism to be more of an observation of natural behavioral interaction. Whereas communism, socialism or other forms of centralized governance describe a structure to be maintained, capitalism is an observation of an order that arises naturally. This is actually very well examined by Eric S. Raymond in The Cathedral and the Bazaar.

There's approaches for free market without capitalism. Silvio Gesell saw the interest as the source of capitalism, identifying money as the only true capital. According to him, the fact that real capitals have a sustained profit (that doesn't drop to zero by competition) is a byproduct of money-capital (basic interest on money, excluding the risk premium).
Kevin Carson has a different view, but he claims to be a free market anti-capitalist.

Oh, that looks exponential. Let's see 224 * (1.11 ^ 4 ) = 340.047772. It seems that Greece has made efforts to reduce debt, but that vertical line is what they got. Interest makes debts grow exponentially.

For me, the more interesting fact of the article is that LETS-like temples existed in Mesopotamia long time ago, maybe even before gold cash. The fact that precious metals can be cash (not a relation between two parties but between an individual and the rest of the cash acceptors as a whole) represents an advantage over credit money and explains its success. In this sense, the current fiat moneys are not pure cash, because their are kind of a liability from the central bank to the holder, but being widely accepted checks, they become effectively cash. And when cash is everlasting, interest is unavoidable.
I bet those temples didn't charge interest, after all charging interest on a check you issue is kind of weird if you think about it. The fed lending money to existence at interest is like a joke.

[Jenskie]

The debt is the borrowing money for someone or company that you also need to pay when it comes to duedates.

[rynah011991]

debt. an amount of money owed by a person, firm or government (the borrower) to a lender. Debts arise when individuals, etc., spend more than their current income or when they deliberately plan to borrow money to purchase specific goods, services or ASSETS (houses, financial securities, etc.).

[paaatrisya]

a charge against a bank deposit account.

[patchot]

Debt is a duty or obligation to pay money, deliver goods, or render service under an express or implied agreement. One who owes, is a debtor or debitor; one to whom it is owed, is a debtee, creditor, or lender.
Use of debt in an organization's financial structure creates financial leverage that can multiply yield on investment provided returns generated by debt exceed its cost. Because the interest paid on debt can be written off as an expense, debt is normally the cheapest type of long-term financing.

[Leane Lee Natividad Cuenc]

Excellent article, thanks for posting it.

Yes, it was interesting to read. You had to filter his obvious marxist views, but its worth the read.

The issue of capitalism is one that I think isn't as clear, though. I find capitalism to be more of an observation of natural behavioral interaction. Whereas communism, socialism or other forms of centralized governance describe a structure to be maintained, capitalism is an observation of an order that arises naturally. This is actually very well examined by Eric S. Raymond in The Cathedral and the Bazaar.

I think the titles capitalism and socialism are worthless. There are too many ideologies under those tents, even opposing ones inside the same tent, that it does not tell you anything that someones call himself socialist or capitalist.

What is debt??? DEBT is a sum of money that owed or due....For example,I paid off my debts...its Financial obligation and outstanding payment that is what you called DEBT.

[Hydrogen]

I like quasi thermoeconomic models which might model money as being energy, with debt representing energy consumption or the conduction/transmission of energy. Then larger abstractions such as finance or economies could be modeled somewhat like abstract engines where the efficiency of energy consumption would need to retain a certain degree viability for economies/finance to function.

To some degree, it is possible the "something for nothing" mentality which is somewhat pervasive in culture right now, is overwhelming tit-for-tat common sense illustrating the limits of things like deficit or debt, which leads to economic instability and reduced living standards for all.

When an engine no longer produces more energy than it consumes, it ceases to function properly. An excess of deficit or debt which contributes towards economic/financial inefficiency could well have a similar effect.

[CherRic]

I found this an interesting interview about the history of money and debt.
 Check it out.

What is Debt? – An Interview with Economic Anthropologist David Graeber

David Graeber currently holds the position of Reader in Social Anthropology at Goldsmiths University London. Prior to this he was an associate professor of anthropology at Yale University. He is the author of ‘Debt: The First 5,000 Years’ which is available from Amazon.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.

Philip Pilkington: Let’s begin. Most economists claim that money was invented to replace the barter system. But you’ve found something quite different, am I correct?

David Graeber: Yes there’s a standard story we’re all taught, a ‘once upon a time’ — it’s a fairy tale.

Debt is a responsibility and a liability. It is something borrowed that you have to return or pay with interest. If you dont pay it on time, a certain percentage will be paid and becomes a liability. But if you paid on time, then it became your responsibility.

[y0kzero]

debt it's a nightmare of our life  , can activate your cancel cells because of  stress, if you can't pay on the deadline period.
don't borrow a money or things that you can't pay back...

[Razick]

Debt is when you borrow money that you do not have in order, usually, to fund some business or something that will make you more money in the long run than the interest you are paying on said debt. I do not really like the concept of debt because it essentially makes you a slave. You will have no choice but to work and become a minion for your lender who will sit back and collect profits on your work for doing nothing at all.

[Dreamchaser21]

Debt is designed to ruin your life and not to help you, it can ruin your financial status and also your family. As long as you don’t need much the money don’t borrow, or else you will suffer in the long run.

[Cryptosaphire18]

Debt is designed to ruin your life and not to help you, it can ruin your financial status and also your family. As long as you don’t need much the money don’t borrow, or else you will suffer in the long run.

Debt is like addiction for me,it may help you for the main time but make most suffering in the long run.Though there are so many kind of debt,it maybe bad or good depends on how you apply it.Also,it maybe financially debt or a good deed by someone that favorably making u debt in return for example someone save your life,so as we usually do,we have to offer a reward as nature to us human individual or for our logical thinking,we did have a debt on that someone for saving our life.