Debt: The First 5,000 Years

The Axial Age (800 BCE-600 CE) saw the simultaneous development of large militaries comprised of trained professionals, metal-based coinage, and the creation of major religious traditions in three parts of the world: the Mediterranean, India, and China. Graeber begins by asking why coinage was invented during this time. His answer: war.

While war and plunder are nothing new, Graeber suggests that the Axial Age begins with “a new kind of army, made up not of aristocratic warriors and their retainers, but trained professionals” (226). These new professionals needed to be rewarded in a meaningful way. Private citizens already invented coinage. Governments recognized that they could use these coins to pay their armies. As discussed in Chapter 3, governments came to monopolize the production of coinage. They demanded that their citizens pay taxes, fees, and fines using coins. Governments then used the coins generated from their people to pay the military. Impersonal markets, where even neighbors were treated as strangers, became a byproduct of this system. Rulers used captives from war to work the gold and silver mines, allowing governments to create even more coinage. Graeber calls the resulting system the “‘military-coinage-slavery complex’” (229).

This complex radically altered everyday life for most people leading to the emergence of philosophers and religious visionaries. These visionaries initially preached peace and rejected violence and war. They also tried to come up with a new basis for morality due to impersonal markets changing the way humans thought about motivation. Cash transactions are much colder than credit systems since people’s motives are about getting the most for themselves and not mutual aid among neighbors. These new philosophical ideas in the Mediterranean, India, and China initially adopted the notion that the pursuit of profit is the driving force of humanity (also known as materialist philosophies). Some religious leaders reacted negatively to these ideas embracing “the importance of charity, a concept that had barely existed before” (249). This led to the first division of markets and religion, which endures today. Rulers eventually adopted these new religions (Christianity, Buddhism, and Confucianism) as state religions.

Graeber turns to three successive examples of the military-coinage-slavery complex in the Mediterranean, India, and China. What is remarkable about all three areas is that the same basic pattern described above repeats itself. There are, however, differences between all three areas. Leaders in the Mediterranean (Athens and Rome) and India (the empires of Kosala and Magadha) produced gold or silver coinage, but China produced small bronze disks that could be strung together. Graeber suggests the reason for this difference is that while enormous, the Chinese armies were not as professional or well paid as their counterparts in the other more west areas. The new religious and philosophical movements in China were also social movements, whereas they gradually became so in the Mediterranean and India.

One major consequence of the military-coinage-slavery complex was mass literacy. The loss of trust and rise in the notion that people might be trying to take advantage in the markets spurred mass literacy. Governments encouraged literacy to help fuel their military campaigns and markets.

The Middle Ages took place between 600 CE and 1450 CE after the collapse of many of the Axial Age empires. This time represents the age of transcendence where thinkers and laypeople alike believed true value lay beyond the material world. Graeber focuses on India, China, the Near West, and Western Europe.

The same general features characterized these four geographic areas. There was a return to more localized forms of government after the collapse of the Axial Age empires. Virtual credit money dominated. Coinage ended back up in “religions establishments, churches, monasteries, temples, either stockpiled in hoards and treasuries or gilded onto or cast into altars, sanctums, and sacred instruments” (254). Religious leaders took control of the administration of law, including regulating the credit systems. There was also generally more peace and stability. Graeber suggests that “slavery declined or disappeared as did the overall level of violence” (297), although debt peonage (a system where a worker is compelled to pay off their debt through work by whomever owns the debt) persisted. Mass literacy also declined with learning returned to the domain of the wealthy.

Graeber also points out differences between the manifestation of the Middle Ages in all four geographic areas. China, for example, was the “one place where an Axial Age empire managed to survive” (268). It also uniquely combined bureaucracy and religion (Confucianism). Confucian orthodoxy was hostile to merchants, believing they were not good people since they “were driven by greed and basically immoral” (260). This hostility and suspicion helped the everyday people. Rulers would institute dramatic debt reform programs and were careful about the amount of taxes they collected from their people.

As another example, the Islamic attitude toward law, government, and merchants was the exact opposite of that prevalent in China. Medieval Islam was suspicious of government and believed it was “an institution that the truly pious would do better to avoid” (272). It had a positive view towards merchants, in part because Mohammed (founder of Islam) was a merchant himself. This veneration of the merchant led to “the world’s first popular free-market ideology” (278). While markets were never truly independent of Islamic regimes, there was a strong popular belief that the government should not interfere in the markets. The local bazaars (markets) were seen as “the highest expression of the human freedom and communal solidarity, and thus to be protected assiduously from state intrusion” (279).

Graeber concludes by discussing how the shift from coinage to virtual credit money resulted in debt playing a bigger role in people’s lives compared to the Axial Ages. He notes that, “the striking thing about tallies is that even though they might begin as simple tokens of friendship and solidarity, in almost all the later examples, what the two parties agree to create is a relation of inequality” (302). Virtual money is, in essence, debt. The major religious traditions at the time each grappled with arguments about debt and morality.