Book Review: “Debt: The First 5,000 Years” by David Graeber

Debt: The First 5,000 Years by David Graeber

I had heard that this was a good book, but I was really surprised. It is a great book, much better than the recommendations.

For one thing, people seem to take away little pieces from here and there, which are valuable in themselves but insignificant in light of the whole picture.

The picture is a broad study of the global history of the concepts of debt, credit, and money. Not surprisingly, he also deals with power, violence, and law, as well as the mythologies promoted by “economics”.

I encountered this book in the context of cryptocurrencies, and it is extremely interesting in that context. He gives us reason to think that virtual money is central to this era in deep and broad ways, but also gives us reason to question the current approaches and narratives about cryptocurrency.

Above all, he shows us that we can and must clear our minds and think anew about pretty much everything.

What He Says (in short)

This is a sweeping book, 5,000 years is basically since people started living in cities. Graeber is looking at the question of “what is money?”, and from the beginning he finds that the important concept is actually “debt”.

The real history of markets is nothing like what we’ve been taught to think it is. The earlier markets that we are able to observe appear to be spillovers, more or less, side effects of the elaborate administrative systems of ancient Mesopotamia. They operated primarily on credit. Cash markets arose through war: again, largely through tax and tribute polices that were originally designed to provision soldiers, but that later became useful in all sorts of other ways besides. It was only in the Middle Ages with the return to credit systems, that saw what might be called market populism: the idea that markets could exist beyond, against, and outside of states[…] But market populism is always riddled with paradoxes, because it still does depend to some extent on that state, and above all, because it requires market relations to be founded, ultimately, in something other than sheer calculation: in the codes of honor, trust, and ultimately community and mutual aid, more typical of human existence.” (p. 384)

People have many different ways to think and talk about various forms of “debt”. At the most personal and elementary level, we owe each other and promise each other, sharing and trading are the essence of human relations everywhere. But, Graeber tells us, these “debts” are not and cannot be precisely accounted, nor is there a need to do so.

However, during “the Axial Age” (a couple of thousand years ago), money came into use, and this led to distortions of these ordinary human relations by creating enumerated values for various debts. This changes them from social glue into abstractions, and generally leads to socially destructive situations, almost always including debt slavery.

Graeber finds that the move from local, personal money-free “debts” to monetary transactions and accounting is associated with war and military rule. States create money and markets in order to pay their armies, and to recycle loot into portable wealth (coins).

Looking further, Graeber finds a very long world wide historical cycle, from “virtual money” (in the form of local credit), to “hard money” (coins) during the Axial age (Greece, Rome, India, China), back to virtual money (local credit, enumerated ledgers) during “medieval” times, and back to hard money (silver and gold) at the beginning of the age of empires. You’ll have to read the book to walk through this argument, it’s very interesting.

By this reckoning, the world entered a new age of “virtual money” when the US went off the gold standard in 1971. Following his thesis, we should expect major changes in the world, upending almost everything in the next few centuries. (Forty five years isn’t really time enough for things to really change yet.)

If history holds true, an age of virtual money should mean a movement away from war, empire-building, slavery, and debt peonage (waged or otherwise), and toward the creation of some sort of overarching institutions, global in scale, to protect debtors.”

Unfortunately,  “What we have seen so far is the opposite.” (p. 368)

Throughout this treatment, Graeber comments on the close relationship between hard money, war, and slavery. They are all tied together by ways that people think about and act out “debt”. (Hence the title of the book.)

Why It Is Interesting, In General

For many people, the book is read as a political tract, though it will not satisfy most readers on that front. While he certainly slaps around conventional academic economists (as they well deserve) and bone headed conservative stories about austerity and market populism, he has little good to say about most progressive critics who cannot see beyond markets.

For me, the book is so interesting because it is a work of Anthropology, concerning itself with broad questions of human culture over time. As a good anthropologist, Graeber musters evidence from every corner of the world, and certainly has no trouble laying the mythology and quaint customs of academic economists in perspective of other peoples and times.

While it is important to be very cautious with ethnographic evidence (as Graeber is well aware), mustering all these different strands of evidence into his coherent story is quite compelling, exciting, and thought provoking.

I wish I could write like this!

Why iI Is Interesting In Cryptocurrency Land

I actually first encountered this book in the context of cryptocurrencies—virtual money in its extremest form! Specifically, Wences Casares, a deep believer in Bitcoin (with a generally constructive approach to cryptocurrencies) cites this book as seminal in leading him to dive into cryptocurrency. (This is recounted by Nathaniel Popper in “Digital Gold”, p. 157).

Now that I have read Graeber, I can certainly see that, if we take the notion that we are in a new age of “virtual money”, that we should push forward technologies in ways that move us toward new, better social organizations. Casares is from Argentina, and is intensely interested in booting up a populist economy free of debt slavery and the tyranny of hard money (using my own words for what I think he is up to). From this perspective, cryptocurrency is a potentially revolutionary technology, and, used right, can liberate the 99.9999% of us.

Of course, Graeber’s book is also interesting because he absolutely demolishes the hard money and “free market” ideology that motivates the Nakamoto document and so much of the cryptocurrency community. Most of the economic theory currently propounded by crypto enthusiasts is bogus. If nothing else, such Randian libertarians mistakenly believe that states and markets are separate and conflicting institutions, when they are in fact closely allied and mutually necessary.

It is important to note that one of Graeber’s arguments is that by abstracting and reducing everything to precise numerical values, it is necessary to tear things and people out of their context. Treating people as if their primary, indeed, only motivation is to maximize personal gain ignores human nature and turns everyone into strangers, if not enemies.

From this point of view, the widespread use of digital money, including cryptocurrencies, is anti-human and spreading distrust and misery. While “decentralized” cryptocurrency may be free (or free-er) of corporate and state control, it still reduces our lives to nothing but microtransactions. Precise accounting down to the nano-penny is probably a terrible idea, and, if you accept Graeber’s conclusion, will lead to violence and slavery. Indeed, in the Uberization of work perhaps we already see the new form of micro-wage slavery.

Graeber also emphasizes that ordinary (and I would say, healthy) human relations are all about a web of promises, gifts, and above all, trust. If you trust people, you don’t need money, you only need money for strangers.  Viewed this way, the entire design of cryptocurrencies to be “trustless” is the worst possible feature it could have.  It’s not so much that Bitcoin creates distrust, as that it completely rules out trust as a possibility.

Indeed, in an important sense our human identity is defined by this web of relationships with other people. Who we are is defined by who we have as family, friends, and neighbors, and the web of exchange among us.  What then can we think of anonymous and trustless exchanges?  This is the realm of machines, not people. The philosophical design of Bitcoin is ideal for machines (and possibly gangsters), but antithetical for peaceful, friendly human beings.

Overall, this is a Very Bad Idea ™.

On the other other hand, cryptocurrency is a very flexible technology, and can be attached to many different cultural narratives. We should be able to build useful new things with it—though we’ll have to ditch most of the yickety yack coming out of the crypto community. We’ll also have to create cryptocurrencies that are not primarily the tool of criminals, as Bitcoin is becoming. That way leads to violence and slavery.

For that reason, I have been interested in digital currencies backed by socially valuable commodities (for example BitSeed or even MangoCoin)  or, best of all, that represent positive human relationships. Perhaps cryptocurrency can be generated by caring for others, by sharing, and by stewarding the Earth and all who live here.


This book is one of the handful of really interesting works on political economics in the past few years, standing nicely alongside, for instance, Picketty or Krugman .

Graeber does not prescribe specific ways forward, though he certainly favors a global debt jubilee. I’m not sure whether his long wave “new age of virtual money” helps us know what to do or not. But he does make us want to think really big, and try to break out of our mental shackles.

I think the key point is to try to rearrange life so that people can live like people, not like “optimizing economic animals”. In the past, this move was implemented by overarching, transnational institutions, mainly religious. I’m not a big fan of religion myself, but that doesn’t mean we can’t imagine some way to get beyond the violence of nation states. We shall have to see.

In my own areas of interest in sociotechnical systems, I can see that his suggestion of a move to “virtual money” and debt relief, with concomitant reemphasis on social relationships and “debts” has implications not only for cryptocurrencies, but also other phenomena.

Social network systems a la Facebook would seem to be interesting ways to implement certain kinds of vritual wealth–until you try to monetize it and trun people into “eyeballs” to sell.  And it easy to see that dating services modeled on shopping for shoes are likely a bad idea–people should not be treated as commodities.

We can see that Uberization of work is the digitally enabled logical end point of the “hard money” philosophy Graeber associates with a coiage-military-slavery complex. It is certainly the ultimate form of wage slavery, made possible by the Internet. (Sorry about that–we certainly did not mean for the Internet to be used this way.)

At the same time, I can see that the “New Mutualism” of  the Freelancers Union, the Coworking Movement, and  the “Sharing” Movement are efforts driven by a desire to push away from monetary debt and toward more virtual “accounting” for mutual debts.

Most of all, Graeber’s observation that “What we have seen so far is the opposite.” of a new, debt free, global system. makes me think about whether digital technology is playing a decisive role.  Digital technology is an incredibly powerful “virtual” technology, capable of creating imaginary worlds with their or rules systems.

But these worlds can implement any rules people can imagine, and computer systems are mostly used to virtualize existinng physical systems.  We see this very clearly in the case of Bitcion, which was explicitly designed to create a virtual analog to gold coins. to the extent that Bitcoin succeeds, it is using “virtual” technology to perpetuate the concepts of hard money philosophy.

The same observation can apply to social networking systems, dating apps, and, for that matter, coworking, digital libraries, and even “digital government”. To the degree that the “virtual” is mimicking and even enhancing the “person as a commodity” concept, who described by a product profile, and operates mainly in a market expressed in(micro)transactions, it is simply a more extreme version of the coinage-military-slavery complex. A chilling thought.

Do we need to get off the grid? I don’t know.  But we sure need to become a lot more Amish, and be very selective about how we design take up digital technologies.

Interesting ideas here. Isn’t this what Anthropology is supposed to be?


  1. David Graeber, Debt: The First 5,000 Years, Brooklyn, 2011.

A personal blog.

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