Form: Quote Commentary

https://www.youtube.com/all_comments?v=CZIINXhGDcsON “5000 YEARS OF DEBT”

By David Graeber

https://www.youtube.com/all_comments?v=CZIINXhGDcs

(From Elsewhere)

I started to write something substantial about this but I havent read his book. So I’m afraid to criticize his lecture, under the assumption that his book may make some kind of substantial argument where his lecture absolutely fails to.

The lecture is entirely anecdotal. He describes what could be construed as proximal accounting practices when people all know each other, are marginally related, and where their productivity and interests marginally indifferent.

But that’s not why we have debt. we have debt because people who do NOT know each other, are not related, and where their productivity and interests are marginally different.

We have numerical debt because it would be impossible to plan our use of resources without it. This property of money is known as “a unit of account, a medium of exchange, and a store of value”. Without units of account, we cannot plan the complex economies that make our escape from malthusian poverty possible.

His argument that debt has become a component of morality is sensible only in the sense where we DO have numerical monetary debt. Humans and most animals obey reciprocity. if they didn’t they’d cease all cooperation (like apes). Humans would simply go extinct. So non-numeric debt is demonstrable in all societies. And it must be. It is necessary for cooperation.

His argument that we have made debt immoral, and that we must pay our debts is a moral technological innovation that guarantees that people will take the vast risk necessary to lend money to people that they don’t know. Just as the church broke family bonds by giving women property rights and prohibiting cousin-marriage in order to de-capitalize the extended family so that it could more easily acquire lands, the manorial system that resulted made it necessary for farmers as well as merchants to borrow money for tradable goods from people who were NOT in their families. This allowed greater concentration of capital, but also led to the protestant work ethic, and from the protestant work ethic, the high trust society that exists EXCLUSIVELY in the west.

In this sense, Debt is in no small part, part of the reason we have such dramatically lower corruption than the rest of the world. (And why it is counter-intuitive to have a high trust society.)

His argument that the purpose of FIAT MONEY and FIAT CREDIT, which is the requirement that taxes be paid in government currency, and that this allows the government to finance warfare, is true. That the vast expansion of warfare from the traditional european monarchical war, to Napoleonic Total War, is only possible with Fiat Money and the ability for the government to borrow vast sums because of it. (Which we now borrow to pay for services. We do not pay for our military. The rest of the world does through the artifice of petro-dollars, US treasuries, and US Inflation.) Without this artifice we would not be able to possess our military, nor would Europe be able to possess its social programs.

So not only is debt necessary but it’s GOOD. Unless we want to return to dirt scratching poverty again.

Lastly, the current reason to criticize debt is that it’s unclear that it is not more profitable and evolutionarily viable to directly redistribute gains (profits we call taxes, or additional fiat debt we call inter-temporal-redistribution) to consumers in order to stimulate demand. This is the idea behind Modern Monetary Theory. THe general criticism of this theory is that it will not only lead to permanent inflation which destroys risk taking, and economic calculation, but that it would (like the tech and housing booms) misallocate human capital and expose the nation to competitive long term risk. This is why the debate among economists is to determine how much intertemporal debt we can create without dangerous consequences (like our current collapse), by targeting NGDP growth rates rather than inflation. People in my wing of economics argue (rightly I think) that this limit is very low before it causes disastrous booms and busts.

Debt has further value, since it acts as an unorganized police force on human behavior. One can be ostracized from the credit system by bad behavior and impulsive behavior, and doomed to poverty. As such, DEBT= Citizenship.

I hope this is useful to someone on your list. I”ll cross post it on mine.