Debt – Updated and Expanded: The First 5,000 Years by David Garber

Graeber, D. (2014). Debt – Updated and Expanded: The First 5,000 Years [Kindle Android version]. Retrieved from Amazon.com


12: The Beginning of Something Yet to Be Determined (1971–present)

Page 365

Again, we are talking about symbolic power. In fact, it’s a form of power that works largely insofar as it remains symbolic.

Page 367

At the same time, U.S. policy was to insist that those countries relying on U.S. treasury bonds as their reserve currency behaved in exactly the opposite way: observing tight money policies and scrupulously repaying their debts.

Page 372

All that I have said so far merely serves to underline a reality that has come up constantly over the course of this book: that money has no essence. It’s not “really” anything; therefore, its nature has always been and presumably always will be a matter of political contention.

Page 372

Perhaps no one put it so eloquently as Martin Luther King Jr., in his “I Have a Dream” speech, delivered on the steps of the Lincoln Memorial in 1963: In a sense we’ve come to our nation’s capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the “unalienable Rights” of “Life, Liberty and the pursuit of Happiness.” It is obvious today that America has defaulted on this promissory note, insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked “insufficient funds.” One can see the great crash of 2008 in the same light— as the outcome of years of political tussles between creditors and debtors, rich and poor.

Page 373

To put it crudely: the white working class of the North Atlantic countries, from the United States to West Germany, were offered a deal. If they agreed to set aside any fantasies of fundamentally changing the nature of the system, then they would be allowed to keep their unions, enjoy a wide variety of social benefits (pensions, vacations, health care…), and, perhaps most important, through generously funded and ever- expanding public educational institutions, know that their children had a reasonable chance of leaving the working class entirely. One key element in all this was a tacit guarantee that increases in workers’ productivity would be met by increases in wages: a guarantee that held good until the late 1970s. Largely as a result, the period saw both rapidly rising productivity and rapidly rising incomes, laying the basis for the consumer economy of today.

Page 374

Almost all of the popular movements of the period from 1945 to 1975, even perhaps revolutionary movements, could be seen as demands for inclusion: demands for political equality that assumed equality was meaningless without some level of economic security.

Page 374

It would appear that capitalism, as a system, simply cannot extend such a deal to everyone.

Page 374

Quite possibly it wouldn’t even remain viable if all its workers were free wage laborers; certainly it will never be able to provide everyone in the world the sort of life lived by, say, a 1960s auto worker in Michigan or Turin with his own house, garage, and children in college— and this was true even before so many of those children began demanding less stultifying lives.

Page 375

The result might be termed a crisis of inclusion.

Page 375

the late 1970s, the existing order was clearly in a state of collapse, plagued simultaneously by financial chaos, food riots, oil shock, widespread doomsday prophecies of the end of growth and ecological crisis— all of which, it turned out, proved to be ways of putting the populace on notice that all deals were off.

Page 375

The moment that we start framing the story this way, it’s easy to see that the next thirty years, the period from roughly 1978 to 2009, follows nearly the same pattern.

Page 375

Everyone could now have political rights— even, by the 1990s, most everyone in Latin America and Africa— but political rights were to become economically meaningless.

Page 376

In the new dispensation, wages would no longer rise, but workers were encouraged to buy a piece of capitalism. Rather than euthanize the rentiers, everyone could now become rentiers— effectively, could grab a chunk of the profits created by their own increasingly dramatic rates of exploitation. The means were many and familiar. In the United States, there were 401( k) retirement accounts and an endless variety of other ways of encouraging ordinary citizens to play the market but at the same time, encouraging them to borrow. One of the guiding principles of Thatcherism and Reaganism alike was that economic reforms would never gain widespread support unless ordinary working people could at least aspire to owning their own homes; to this was added, by the 1990s and 2000s, endless mortgage- refinancing schemes that treated houses, whose value it was assumed would only rise, “like ATMs,”— as the popular catchphrase had it— though it turns out, in retrospect, it was really more like credit cards. Then there was the proliferation of actual credit cards, juggled against one another. Here, for many, “buying a piece of capitalism” slithered undetectably into something indistinguishable from those familiar scourges of the working poor: the loan shark and the pawnbroker. It did not help here that in 1980, U.S. federal usury laws, which had previously limited interest to between 7 and 10 percent, were eliminated by act of Congress. Just as the United States had managed to largely get rid of the problem of political corruption by making the bribery of legislators effectively legal (it was redefined as “lobbying”), so the problem of loan- sharking was brushed aside by making real interest rates of 25 percent, 50 percent, or even in some cases (for instance, for payday loans) up to 6,000 percent annually, the sort of numbers that would once have made the mafia blush, perfectly legal— and therefore, enforceable no longer by just hired goons and the sort of people who place mutilated animals on their victims’ doorsteps, but by judges, lawyers, bailiffs, and police. 29

Page 376

As an ideology, it meant that not just the market, but capitalism (I must continually remind the reader that these are not the same thing) became the organizing principle of almost everything.

Page 376

We were all to think of ourselves as tiny corporations, organized around that same relationship of investor and executive: between the cold, calculating math of the banker, and the warrior who, indebted, has abandoned any sense of personal honor and turned himself into a kind of disgraced machine.

Page 377

In this world, “paying one’s debts” can well come to seem the very definition of morality, if only because so many people fail to do it.

Page 377

In other words, the principle of honor has thus been almost completely removed from the marketplace.

Page 377

As a result, perhaps, the whole subject of debt becomes surrounded by a halo of religion.

Page 377

Actually, one might even speak of a double theology, one for the creditors, another for the debtors.

Page 378

In a way, what Atwood describes might be seen as the perfect inversion of the prophetic voice of Reverend King’s “I Have a Dream” speech: whereas the first postwar age was about collective claims on the nation’s debt to its humblest citizens, the need for those who have made false promises to redeem themselves, now those same humble citizens are taught to think of themselves as sinners, seeking some kind of purely individual redemption to have the right to any sort of moral relations with other human beings at all.

Page 379

All these moral dramas start from the assumption that personal debt is ultimately a matter of self- indulgence, a sin against one’s loved ones— and therefore, that redemption must necessarily be a matter of purging and restoration of ascetic self- denial.

Page 379

What’s being shunted out of sight here is first of all the fact that everyone is now in debt (U.S. household debt is now estimated at on average 130 percent of income), and that very little of this debt was accrued by those determined to find money to bet on the horses or toss away on fripperies.

Page 379

Insofar as it was borrowed for what economists like to call discretionary spending, it was mainly to be given to children, to share with friends, or otherwise to be able to build and maintain relations with other human beings that are based on something other than sheer material calculation. 35

Page 379

One must go into debt to achieve a life that goes in any way beyond sheer survival.

Page 379

Ultimately, it’s sociality itself that’s treated as abusive, criminal, demonic. To this, most ordinary Americans— including Black and Latino Americans, recent immigrants, and others who were formerly excluded from credit— have responded with a stubborn insistence on continuing to love one another.

Page 379

The chief cause of bankruptcy in America is catastrophic illness; most borrowing is simply a matter of survival (if one does not have a car, one cannot work); and for most, simply being able to go to college now means debt peonage for at least half of one’s subsequent working life.

Page 379

Still, it is useful to point out that for real human beings survival is rarely enough. Nor should it be.

Page 381

(And if you think about it, if we have the means to build them, why shouldn’t they? Are there families who don’t “deserve” houses?)

Page 381

Capitalism doesn’t work that way. It is ultimately a system of power and exclusion, and when it reaches the breaking point, the symptoms recur, just as they had in the 1970s: food riots, oil shock, financial crisis, the sudden startled realization that the current course was ecologically unsustainable, and attendant apocalyptic scenarios of every sort.

Page 381

In the wake of the subprime collapse, the U.S. government was forced to decide who really gets to make money out of nothing: The financiers, or ordinary citizens.

Page 381

The results were predictable. Financiers were “bailed out with taxpayer money”— which basically means that their imaginary money was treated as if it were real.

Page 381

Mortgage holders were, overwhelmingly, left to the tender mercies of the courts, under a bankruptcy law that Congress had a year before (rather suspiciously presciently, one might add) made far more exacting against debtors.

Page 382

My own suspicion is that we are looking at the final effects of the militarization of American capitalism itself. In fact, it could well be said that the last thirty years have seen the construction of a vast bureaucratic apparatus for the creation and maintenance of hopelessness, a giant machine designed, first and foremost, to destroy any sense of possible alternative futures.

Page 382

At its root is a veritable obsession on the part of the rulers of the world— in response to the upheavals of the 1960s and 1970s— with ensuring that social movements cannot be seen to grow, flourish, or propose alternatives; that those who challenge existing power arrangements can never, under any circumstances, be perceived to win.

Page 382

To do so requires creating a vast apparatus of armies, prisons, police, various forms of private security firms and military intelligence apparatus, and propaganda engines of every conceivable variety, most of which do not attack alternatives directly so much as create a pervasive climate of fear, jingoistic conformity, and simple despair that renders any thought of changing the world seem an idle fantasy.

Page 382

Maintaining this apparatus seems even more important to exponents of the “free market,” even than maintaining any sort of viable market economy.

Page 382

How else can one explain what happened in the former Soviet Union? One would ordinarily have imagined that the end of the Cold War would have led to the dismantling of the army and the KGB and the rebuilding of the factories, but in fact what happened was precisely the other way around.

Page 382

Economically, the apparatus is largely just a drag on the system; all those guns, surveillance cameras, and propaganda engines are extraordinarily expensive and don’t really produce anything, and no doubt it’s yet another element dragging the entire capitalist system down— along with producing the illusion of an endless capitalist future that laid the groundwork for the endless bubbles to begin with.

Page 382

Finance capital became the buying and selling of chunks of that future, and economic freedom, for most of us, was reduced to the right to buy a small piece of one’s own permanent subordination.

Page 385

What we have seen ever since is an endless political jockeying back and forth between two sorts of populism— state and market populism— without anyone noticing that they were talking about the left and right flanks of exactly the same animal.

Page 385

The main reason that we’re unable to notice, I think, is that the legacy of violence has twisted everything around us. It’s not just that war, conquest, and slavery played such a central role in converting human economies into market ones; there is literally no institution in our society that has not been to some degree affected.

Page 385

As I’ve emphasized, communism may be the foundation of all human relations— that communism that, in our own daily life, manifests itself above all in what we call “love”— but there’s always some sort of system of exchange, and usually, a system of hierarchy built on top of it.

Page 386

This in turn leads to that great embarrassing fact that haunts all attempts to represent the market as the highest form of human freedom: that historically, impersonal, commercial markets originate in theft.

Page 386

More than anything else, the endless recitation of the myth of barter, employed much like an incantation, is the economists’ way of exorcising this uncomfortable truth.

Page 387

Even more, by turning human sociality itself into debts, they transform the very foundations of our being— since what else are we, ultimately, except the sum of the relations we have with others— into matters of fault, sin, and crime, and make the world into a place of iniquity that can only be overcome by completing some great cosmic transaction that will annihilate everything.

Page 388

One of the more common arguments was that it was really a way of funneling resources from the “idle rich,” who, too unimaginative to do the work of investing their own money, entrusted it to others, notably, to the “industrious poor”— who had the energy and initiative to produce new wealth. This justified the existence of banks, but it also strengthened the hand of populists who demanded easy money policies, protections for debtors, and so on— since, if times were rough, why should the industrious poor, the farmers and artisans and small businessmen, be the ones to suffer?

Page 388

Whereas the rich, with their leveraged companies, are now the principal debtors. This is the “democratization of finance” argument and it too is nothing new: whenever there are some people calling for the elimination of the class that lives by collecting interest, there will be others to object that this will destroy the livelihood of widows and pensioners.

Page 388

The remarkable thing is that, nowadays, defenders of the financial system are often prepared to use both arguments, appealing to one or the other according to the rhetorical convenience of the moment.

Page 389

They can go to hell, presumably (quite literally, according to many branches of Christianity).

Page 389

For me, this is exactly what’s so pernicious about the morality of debt: the way that financial imperatives constantly try to reduce us all, despite ourselves, to the equivalent of pillagers, eyeing the world simply for what can be turned into money— and then tell us that it’s only those who are willing to see the world as pillagers who deserve access to the resources required to pursue anything in life other than money. It introduces moral perversions on almost every level.

Page 390

The argument might perhaps make sense if one agreed with the underlying assumption— that work is by definition virtuous, since the ultimate measure of humanity’s success as a species is its ability to increase the overall global output of goods and services by at least 5 percent per year.

Page 390

That giant debt machine that has, for the last five centuries, reduced increasing proportions of the world’s population to the moral equivalent of conquistadors would appear to be coming up against its social and ecological limits.

Page 390

The real question now is how to ratchet things down a bit, to move toward a society where people can live more by working less.

Page 390

I would like, then, to end by putting in a good word for the non- industrious poor. 45 At least they aren’t hurting anyone. Insofar as the time they are taking off from work is being spent with friends and family, enjoying and caring for those they love, they’re probably improving the world more than we acknowledge. Maybe we should think of them as pioneers of a new economic order that would not share our current one’s penchant for self- annihilation.

Page 392

A debt is just the perversion of a promise. It is a promise corrupted by both math and violence. If freedom (real freedom) is the ability to make friends, then it is also, necessarily, the ability to make real promises. What sorts of promises might genuinely free men and women make to one another? At this point, we can’t even say. It’s more a question of how we can get to a place that will allow us to find out.