Forty years ago this month, in 1971, President Nixon took the U.S. off the gold standard. Anthropologist and author David Graeber points out in his new book “Debt: The First 5,000 Years” (Melville House Publishing, 2011) that this decision marked an important shift in how we think about money. With U.S. dollars no longer backed by actual gold reserves, money essentially became a government promissory note. According to Graeber, Nixon’s decision ushered in an era of virtual money or credit, which we all know often leads to debt — something on everyone’s mind these days.
Historically, when a country’s economy becomes overly reliant on credit, institutions spring up to protect those who end up in debt. Recently, Graeber writes, we’ve seen the opposite: “The new age of credit money we are in seems to have started precisely backwards. It began with the creation of global institutions like the IMF designed to protect not debtors, but creditors.”
Graeber’s ambitious book also reminds us that debt crises have a long provenance that stretches back millennia: “For thousands of years, the struggle between rich and poor has largely taken the form of conflicts between creditors and debtors – of arguments about the rights and wrongs of interest payments, debt peonage, amnesty, repossession, restitution, the sequestering of sheep, the seizing of vineyards, and the selling of debtors’ children into slavery.”
“Debt” challenges certain conventional wisdoms that are central to the way we understand modern-day economics, including the myth that the state and the market are diametrically opposed. Graeber also explores the existential dimension of debt, and asks how it became so closely intertwined with morality. He writes that, “…money did not originally appear in this cold, metal, impersonal form. It originally appears as an abstract measurement and also as a relation (of debt and obligation) between human beings.”
While the author does not call for direct action, the book does encourage the reader to re-examine her relationship to debt, the state and the world. Graeber hopes that revisiting history will prompt individuals to ask “the fundamental questions about what human beings and human society are or could be like — what we actually owe each other, what it even means to ask that question.” Heady stuff, but then again we’re smack in the middle of some very heavy times.