Monday, April 01, 2013

Debt: The First 5,000 Years: Conclusions

(For my summary of David Graeber's Debt: The First 5,000 Years, see here.)

Perhaps the most important general theme in Graeber's book is the historic interrelationship between debt, religious obligation, and violence. Graeber describes a very old, if complicated, relationship between violence and debt: indebtedness frequently led to enslavement, the breakup of families, and the redefining of people as things, and indebted merchant-adventurers engaged in violent or morally opprobrious pursuits in order to keep ahead of their own interest payments. Public debt, while it is not much older than the modern nation-state, is similarly linked to state violence: the nation-state created public debt to finance its war machine, and the modern state that cannot cheaply borrow money is one which cannot defend itself.  Conversely, however, the modern state with lots of military bases and nuclear weapons can usually “persuade” its creditors to keep the money spigot open.*

The relationship between debt and moral obligation, however, has changed repeatedly in the last 5,000 years; as recently as the Medieval era, several of the world's largest religions (Buddhists, Muslims, Christians) either stigmatized debt or downplayed it as a distraction from one's religious debts. It is only in the more materialistic early modern era that we (by which I mean “Westerners and their 20th-century imitators”) have come to see human beings as mere bundles of rationalized economic capacities and interests, and debt and compound interest as engines of positive progress. The notion that an individual, particularly a wage laborer, can free him/herself of debt, is even more recent: Graeber argues it only became possible for large numbers of workers when the governments of industrializing countries enlarged their money supply in the 1800s.**  Westerners subsequently began to assume that individuals could free themselves of debt through hard work and thrift, and that therefore debtors must be lazy, profligate, and immoral. Since 1970, however, as wages stagnated and as governments around the world dismantled progressive tax codes and social safety nets, this idea has become much harder to sustain. (One of my colleagues continues to defend thriftiness, of a sort, by distinguishing between “bad” debt, like consumer debt, and “good debt,” like student loans and mortgages. The collapse of the Western housing market in 2008 and the explosion of high-interest student loans in the United States makes even this ideological crutch a rickety one.)

It is past time, Graeber concludes, to change the way Westerners and other industrializing societies view private debt. The notion that debtors are immoral rather than unlucky is quite a recent one, and therefore subject to change. State-sponsored debt relief is an old and morally well-grounded institution, practiced by governments both ancient (Sumerian city-states, Egyptian pharaohs) and modern (American state governments in the 1780s), and justified by several world religions' traditions, like the Jewish practice of jubilee. It is also a good economic policy: people crippled by debts they cannot avoid incurring, like medical debt or student loan debt (which American students can only avoid if they accept the likelihood of long-term unemployment), cannot become good customers for American businesses.

Perhaps, though, we need to take an even more radical approach, and question not only the legitimacy of debt, but the legitimacy of capitalist values. Modern capitalism, Graeber observes, mandates continual productive growth in order to allow investors (and workers) to stay ahead of their debts. In practice, this now means that workers need to slave away at multiple jobs just to stay financially afloat, societies need to promote the continual expansion of consumer demand and consumer debt, and businesses need to exploit their workers and destroy the environment. Some of us, I think, assume toil, debt, and consumerism are worthwhile social goods, insofar as they keep the rabble under control. People who are exhausted by mindless work, held down by debt, and drugged by television and junk food are less likely to cause trouble for the ruling class. (George Orwell made these observations, substituting radio for television, in Down and Out in Paris and London and The Road to Wigan Pier.) But not all of us agree with this, and even if we did we cannot allow businesses to keep damaging the environment unless we aim at collective suicide.

We must, Graeber argues, no longer promote hard work as our highest socioeconomic good. Graeber says he'd like us to stop criticizing the “undeserving poor,” those who produce little but don't do their neighbors much harm.  He also argues that it is much more humane, and much more typical of human societies until very recently, to value leisure and collective celebration over one's “career.” My own experience is that there are some people in capitalist countries, like teachers and airline pilots, who really do like their jobs, but for the vast majority of workers there is nothing to be gained from extra effort. Since the 1970s gains in worker productivity have all gone to the top decile of salary-earners, and even losing one's job has had much more to do with stupid corporate managerial decisions than with one's own ineptitude. We should be placing more value on our relationships and our hobbies, shifting away from a consumerist lifestyle that turns people into hoarders, and making “I resolve to do less” a more common workplace slogan.  "Better living through laziness" may not have the same ring as "Workers of the world, unite!", but it's likelier to appeal to those of us in the slacker generation, and less likely to kill the planet than 7 billion people living by the code of "Root, hog, or die."

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* I'm not sure how valid this argument is. The Soviet Union had a huge army and thousands of nuclear weapons in the 1980s, and yet this didn't stop European banks from threatening to cut off its credit if Gorbachev tried to suppress the Eastern European revolt in 1989. The United States' ability to borrow money cheaply, which Graeber attributes to our being armed to the teeth, actually has more to do with our large, relatively secure tax base and the federal government's disinclination, until quite recently, to default.

** Graeber is incorrect when he attributes industrial-era inflation to deliberate government policy. Eric Hobsbawm observed (in The Age of Capital, 1848-1875) that this was instead due to the huge 19th-century gold strikes in California, Australia, and South Africa. Otherwise the general tendency in industrializing countries was toward deflation, which would have made life more difficult for debtors and workers.

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(Above image via StrikeDebt Chicago and StrikeDebt Tucson.)

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