Promises, Promises: A History Of Debt

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Omnibus Episode 220160805

Anthropologist David Graeber explores the ways debt has shaped society over 5,000 years.

Anthropologist David Graeber explores the history of debt from the use of virtual money in the medieval period and the rise of the slave trade, to the financial crash of 2008. He draws on his years of groundbreaking research to deliver a series that challenges established wisdom over the banking system, the moral power of debt and even the very definition of money itself.

In this second episode, David takes us back to the medieval period when coinage largely disappeared and money become virtual. He reveals the importance of debt during the conquest of South America and the birth of the modern world economy.

David goes on to explore the influence of debt during the birth of capitalism and the centrality of debt to the slave trade. The conventional view is that the innovations during the birth of capitalism led to greater material prosperity enabling us to lead happier lives. David argues that, in fact, these times were marked by extraordinary levels of war and violence. He goes on to examine the rise of virtual money since the 1970s and the power of international creditors such as the IMF.

To conclude, David analyses the financial crash of 2008 and more recent debt crises in the context of the long history of debt. David argues that we are currently living in the early years of a new era in which physical money - cash passing from hand to hand - will be replaced by virtual money. There have been many eras of virtual money over the past 5000 years and David says we cannot yet know what this latest phase will mean as we are just a few decades years into a historical epoch likely to last 500 years.

Presenter: David Graeber

Producer: Max O'Brien

A Juniper production for BBC Radio 4.

01The Moral Power of Debt20150302

Anthropologist David Graeber explores the ways debt has shaped society over 5000 years. In this episode, he examines the moral power that debt holds over us.

David argues that whenever we think about debt we end up in a deep moral confusion. We resent the "deadbeats" who fail to pay us back and yet many of us believe that people who get us into debt - money lenders - are immoral if not downright evil.

Gangsters like Don Corleone frame what they do in terms of debt. They do so in the knowledge that debt is a powerful tool for taking even pure extortion and making it seem like it's the debtor who is in the wrong. We can't help but believe Don Corleone when he tells us we owe him one.

It's not just gangsters who utilise the moral power of debt. Over the course of history commanders of foreign armies, wealthy landlords, corrupt officials, and local thugs have been able to tell their victims that those victims owe them something. If nothing else, they "owe them their lives" (a telling phrase) because they haven't killed them.

For most of human history, most human beings have been told that they are debtors. In this series, David examines the human consequences which have profound implications for the politics of the present day.

Producer: Max O'Brien

A Juniper production for BBC Radio 4.

02What Is Debt?20150303

In the second episode, anthropologist David Graeber asks the obvious question - what actually is a debt?

It might seem that the answer is perfectly simple - a debt is a promise by one person to pay another person a certain sum of money, usually under certain specified terms and conditions, at some point in the future. But what about other forms of debt that have nothing to do with money? We also speak of debts to society, debts of honour and debts of gratitude.

Attitudes to debt vary wildly across the globe. We hear an account written by a European missionary in a distant land of a situation in which he saved a native's life only to find that, as a result, he was now in the native's debt.

Debts have a very different meaning when there is a power imbalance between debtor and creditor. Normally, when a debt is between equals it can be renegotiated and even written off entirely. However when the creditor has all the power, debts transform into absolute imperatives that must be repaid, no matter what the cost.

Crucially, David argues that a debt is an obligation which can be quantified. It's not just a matter of owing someone a favour. We can specify exactly what is owed. This has the advantage that we can know precisely when the debt has been paid. But it has further effects - it means a debt is impersonal, and transferable.

Producer: Max O'Brien

A Juniper production for BBC Radio 4.

03The Origin of Money20150304

In this episode, anthropologist David Graeber explores the origin of money. Defining money is a surprisingly tricky task. We use it all the time and yet, even among economists, there's no consensus about what money actually is.

You'll commonly hear that money is a measure of value, a store of value and a means of account. David argues that this all boils down to a central question - is money merely an abstraction, an accounting technique, a way of saying five of these things equal six of those, or is it primarily an object, a commodity, a physical thing, that passes from hand to hand?

We're so familiar with money, we rarely stop to think about how it actually originated. Those who do tend to come across the same story: "Once upon a time there was no money, so everyone had to make do with barter. People would simply swap things directly with one another and prices could be negotiated by supply and demand."

This barter story appears in every economics textbook. But there's a problem - it simply isn't true. David Graeber reveals that the barter narrative is in fact a myth and that when anthropologists fanned out across the globe, nowhere did they find people swapping goods as the economists describe.

We tend to think of buying on credit as a modern phenomenon, however David reveals that the earliest transactions were all carried out on credit. He concludes by arguing that money itself emerged not from barter, but as a way of measuring debts.

Producer: Max O'Brien

A Juniper production for BBC Radio 4.

04The Theology of Debt20150305

Anthropologist David Graeber explores the theology of debt.

The Bible is peppered with the language of debt. Sin, forgiveness, reckoning, redemption - all of these words actually derive from the language of ancient finance. What's more, this seems to be true in all the great religious traditions - not just Judaism and Christianity, but Hinduism, Buddhism, Taoism, and Islam - all of their texts are filled with financial metaphors, many of which relate to issues surrounding debt.

We tend to think of these religions as teaching us that we must repay our debts. But the truth is that the financial metaphors in religious texts are oddly ambivalent. The original translation of the Lord's Prayer from 1381 reads "Give us this day our daily bread, and forgive us our debts, as we also have forgiven our debtors". But do we forgive our debtors? Actually, most of us don't.

David Graeber explains that the great religions talk about the forgiveness of debt more than the repayment of debt and that the deeper teachings they offer is that it is the annihilation of debt which is ultimately divine. To understand why all the religious texts discuss the forgiveness of debt with such frequency, David examines the historical context of when these works were written and reveals that, in the ancient world, the institutionalised forgiveness of debts was commonplace.

Producer: Max O'Brien

A Juniper production for BBC Radio 4.

05The Classical World20150306

Anthropologist David Graeber examines debt in the Classical period. It was during this age that coinage first emerged as an efficient way of paying soldiers.

The spread of coinage had enormous political and intellectual consequences. It was invented on the fringes of military operations - whether in Greece, India, or China - but was quickly taken up by enterprising kingdoms, some of which gradually gobbled up their neighbours. Eventually, vast empires emerged - the Athenian, Hellenistic, and Roman empires, Magadha, Nanda, the Qin, the Han. Armies are expensive to run and, in the end, we witnessed a cycle of violence and repayment in coinage.

Debt has an important role to play in the story of coinage. While coins were invented to pay soldiers, it was through taxation that they became embedded in the lives of entire populations. Ancient rulers indebted their subjects by demanding taxes which had to be paid in coinage. David reveals that this system of taxation was in fact an ingenious ploy to make subjects feed and provide for the army by creating a universal need for coinage.

Under ancient conditions, keeping say 50,000 men supplied with provisions was an extremely challenging undertaking. By distributing coins to soldiers, which could be exchanged with locals for provisions, ancient rulers co-opted their populations into keeping their armies fed, watered and primed to keep on conquering.

Producer: Max O'Brien

A Juniper production for BBC Radio 4.

06The Medieval Period20150309

Anthropologist David Graeber examines the medieval period when coinage largely disappeared and money become virtual once again.

During this period, the great popular religious movements of the Ancient world - Christianity, Islam in the West, Buddhism in Asia - became the dominant force in society. Religious authorities took over the management of the new credit systems because, during the Middle Ages, the economy did not, as text-books have long assumed, "revert to barter." What the Middle Ages really saw was the rise of an endless variety of credit arrangements.

In the West, tally sticks were commonly used to facilitate credit based transactions. These were short pieces of hazel wood which served as a receipt for payment. The stick would be notched in order to indicate the amount that had been paid, then the stick would be split lengthways and both the payer and the receiver would receive one half. This was quite a convenient sophisticated system as they were easy to store and they were very hard to forge. A tally stick could act as a receipt for money advanced, as a receipt for a loan, or as evidence of a debt and could later be proffered in court if there was a dispute.

With transactions carried out on credit, the religious authorities had to act in order to prevent those with the means to create credit from enslaving entire populations. Their response was to ban the charging of interest.

David Graeber pays particular attention to Islamic attitudes towards interest and finance, revealing the surprising fact that Adam Smith's free market ideology was heavily influenced by the work of medieval Islamic scholars.

Producer: Max O'Brien

A Juniper production for BBC Radio 4.

08The Birth of Capitalism20150311

Anthropologist David Graeber examines the influence of debt during the birth of capitalism and the centrality of debt to the slave trade.

The conventional view is that the innovations during the birth of capitalism led to greater material prosperity enabling us to lead happier lives. David argues that, in fact, these times were marked by extraordinary levels of war and violence. This was an age of giant empires, standing armies and chattel slavery - a time when money came to be seen as a physical thing and debts had to be repaid.

The enormous productivity of the era was only made possible by the existence of extraordinary mechanisms designed to pump out more and more disciplined labour. The history of the Atlantic slave trade is a perfect example and debt underpinned the entire process.

In the late 17th century, ship owners based in Liverpool or Bristol would acquire goods such as copper wires and brass rods on easy credit terms from local wholesalers, expecting to make good by selling slaves (also on credit) to plantation owners in the Antilles and North America. Ship owners would then transport their wares to African ports like Ouidah, Bonny, or Calabar. The goods were then advanced to African merchants, again on credit, and those African merchants would pay back what they owed in slaves.

David Graeber also discusses the foundation of the Bank of England, the first successful experiment to create a central, national bank. Since the first loan that the bankers made to King William III, bringing the Bank of England into existence, money has been essentially circulating government debt.

Producer: Max O'Brien

A Juniper production for BBC Radio 4.

10Hope20150313

To conclude his series, anthropologist David Graeber examines recent events in the context of the long history of debt.

According to David, we are currently living in the early years of a new era in which physical money - cash passing from hand to hand - will be replaced by virtual money. There have been many eras of virtual money over the past 5000 years and David argues that we cannot yet know what this latest phase will mean as we are just a few decades years into a historical epoch likely to last 500 years.

To put the matter in perspective, capitalism's existence as an economic system has been entirely within one oscillation back and forth between physical and virtual money. There is every reason to believe that, if we are indeed heading towards a long period of virtual money, the predominant economic system in this period might also be something different.

David Graeber argues that, when the creditor has all the power, the repayment of debt becomes a sacrosanct principle and writing it off becomes inconceivable. The events of the 2008 financial crash provide us with a perfect example. When the banks were poised to go under, they were bailed out even if it meant making billions of pounds worth of debt disappear through a taxpayer funded injection of cash. By contrast, no matter what the circumstances, the requirement for small-scale debtors to pay back at agreed rates of interest was considered a matter of simple morality.

The financial crash might be over, but the international debt crisis continues. David concludes by arguing that we need to reinstate the ancient and medieval customs of institutionalised debt forgiveness in order to get out of our current malaise.

Producer: Max O'Brien

A Juniper production for BBC Radio 4.