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Man is born free and everywhere he is in debt

Like Jean-Jacques Rousseau, David Graeber is fascinated by the past. Indeed, Graeber might have started his book (“Debt: the first 5,000 years”) with an echo of the famous opening of The Social Contract: “Man is born free and everywhere he is in chains”. But perhaps he thought that would be presumptuous.


Graeber starts off with similar questions as The Money Trap: Why do we feel trapped? What is the nature of the trap? My book takes a close-up view of recent history to probe the underlying causes of our discontents. Graeber takes the whole of history for his canvas and brings his training as an anthropologist to bear. Does this help us find a way out?


One critic accused me of being driven by a sense of messianic zeal – enough to put any central banker off. Graeber is also – but then I don’t think central bankers are his target market.


Graeber says the financial and political elites want to shut down discussion of alternatives. “There is no alternative” has become the politician’s favourite.


“Yes there is!” is Graeber’s defiant reply. I agree. His 500+ page book is a sustained and eloquent plea to reject this fatalistic and self-serving doctrine. Do not submit to the logic of debt! Nobody has the right to tell us what we owe. It is always a matter of negotiation and political contestation.


Let me kick off with a few quotes:

“Money is an accounting tool – a yardstick for measuring debt”

“Money emerged from the thing most suitable for giving to God. Kings took over that idea of original, primordial debt.”

“Money has no essence.”

“Money is almost always something hovering between a commodity and a debt token.”

“Deferred payment, not coinage, makes barter unnecessary.”

“Capitalism feels the constant need to imagine, or actually to manufacture, the means of its own imminent destruction.”


Behind the lies, an ugly story ….

After the crash of 2008, Graeber says, people were ready for “a conversation” about debt, money and their role in society. They had been told lies – leave money to the professionals, they had been told, you can’t understand it. The professionals showed they couldn’t be trusted. But the conversation hasn’t happened. Big questions need to be asked: what is an economy for?

Digging the monetary system up by its roots, as Graeber has done (drawing on the work of  scholars such as Keith Hart and Michael Hudson) brings many ugly things to light. The history of money, as he tells it, is not pretty. Nor is the evolution of markets and market economies. The midwives of our modern monetary mechanisms had bloody hands. The birth of modern money and markets involved untold violence, long periods of almost continuous warfare, slavery, debt peonage, rape and theft on a cosmic scale. Moreover, if you look hard enough, even today the global monetary system relies on much the same mechanisms – military power, a pervasive apparatus of surveillance, police and the courts, an insistence that the weak pay their debts in full, while the strong do not, and a labour force sucked into positions of inferiority through the debt machine which now operates on a global scale.


What we are offered in textbooks and the general picture held by many people today of the story of money, banking and debt is a fairy tale. It bears no relation to historical reality.

 ….and the politics of fear

Skipping the first 4,900 years of his story, modern money is based on government debt, created – you guessed it – to finance wars. Central banks represent the permanent institutionalisation of the marriage between the interests of warriors and financiers that had begun to emerge in Renaissance Italy and that became the foundation of capitalism.

Wars, or the drums of war, are everywhere. Nixon floats the dollar to finance the Vietnam war. The dollar becomes pure fiat, backed only by military power.

The dollar’s reserve currency role is supported by the US national debt – which is a promise to the whole world that everybody knows will not be kept. Countries invest in the US — lend it money that will not be repaid – as tribute owed to its power. All other countries have to repay on the nail. Historically, the main buyers of US treasuries have been countries that are or have been under US military occupation or protection.

But China is treating the US as it always does potential client states – softening it up with gifts before….

“The new global currency is more firmly rooted in military power than the old was”. The only important global institution is the IMF, which insists that (unless you are the US) you must repay, as a default could bring catastrophe….

Catastrophe is about the only thing we can imagine. That is no accident. Without fears of the imminent demise of capitalism, credit explodes and the financial system collapses. The real cause of the global financial crisis was that, for a few short years, we had begin to believe in the system. No wonder the establishment does not want us, the people, to find a way out of the money trap – ever.

 Towards a new social currency

Yet is there hope? If in Graeber’s grand sweep of history we stand at the turning point of another cycle, then, he claims, a new age of credit or virtual money will dawn. In such ages, like those of ancient Mesopotamia, the European Middle Ages, or classical Islamic civilisation, money becomes subject to social or religious rules and obeys a different logic. History proves that money can be tamed by morality, and by institutions, the Temple, the Church. Then debt becomes negotiable.


Rousseau is not mentioned in the index to David Graeber’s book, but as David Hart has pointed out (see link above) his presence hovers. Do we need a new Jean-Jacques to show us how to rebel against modern money and debt slavery? If so, step up David.

Post-it note

The currency proposed in The Money Trap could be viewed as a modern “social currency”. The Ikon would give everybody who holds any money, whether a coin, claim, deposit, whatever – a direct claim on the world’s productive potential. It would not be under the control of any financial group, or any government, or a world government. Moreover, it would do all this without sacrificing the necessary complexity and sophistication of modern finance and money markets. More on that in future. For a brief account of the Ikon, see here. For a longer account, see the book.

“Man is born free and everywhere he is in debt”