I just finished reading Debt: The First 5000 Years by biologist David Graeber. This book looks at the history of money, credit, and how they relate to social structures from a lens that departs from the conventional wisdom of economic thought.
Conventional wisdom paints a picture of people trading goods and services unfairly, and the money that has naturally arisen from the problems inherent in this. Graeber presents this narrative through an anthropological perspective. Primitive societies simply shared their resources freely, living a communal life, with trade rarely occurring, and only in the case of different societies dealing with each other. It played no role in the affairs of ancient societies.
Money, as in commodity money, began to be used in informal transactions between communities in distant places. Economies in local regions did not begin to use such methods of exchange. They used credit. Credit is used and supervised by the government, as in Ancient Sumer. This system grew out of the informal “credits” people considered when allocating resources in primitive societies. But it was formalized and maintained by the power structure of the Sumerian government and temples. No money could change hands during the exchange, people simply recorded the debts held in the temple, and occasionally settled their obligations with real assets that could be bought.
Credit came before coinage, and was created and maintained at a rate by the government. Commodity money came later, and was created and distributed by the state, as the great civilizations based on trust collapsed and opened up to warring empires. Debt and credit make little sense in a time of constant wars and roving armies, without the slightest certainty that they will return to pay the debts after advancing.
Since then, with the confusion of the modern era and central banks, human societies have alternated between virtual credit money and coins depending on whether the time period was predicted for great war and victory. The same patterns have been repeated over the years as well, with people building their own informal and local credit networks after the collapse of major coinage empires, the government gradually inserting itself into these to mediate, and eventually the return of coinage as violent empires grow.
Bartar, as is commonly taught, was never part of this monetary development process, and the state had a direct role in the creation of financial systems and markets.
I’m sure many people were incredibly moved to read that, but Graeber’s case is very strong and is built on actual historical and anthropological evidence, rather than speculation. Especially the idea that Chartalism has a sounder basis than many in this space would like to admit.
This actually makes Bitcoin more profound for me. Bitcoin is not just to go back formless money, I don’t think a person ever really existed after reading Debt. Bitcoin i first of all money that will never exist. To me, that makes it a very big achievement and a historic change.
Regardless of your economic inclinations, I recommend this book to be read. It will give you a lot to think about in the context of Bitcoin.
This article is a Take it. The views expressed are entirely those of the author and do not reflect those of BTC Inc or Bitcoin Magazine.
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