Debt is bad, creditors are violent creatures that spoil everything and society should clear debt for everybody because some rich and powerful do not pay their debts anyway.
1 On The Experience of Moral Conclusion
Author starts by establishing his leftist credentials as participant of anti-globalization movement. As such he demanded abolishment of 3d world countries debt. In one of his encounters with civilians he bumped into a new and alien for him idea that debt should be paid. This started his research that produced this book about debt. Being leftist author considers debt as something very bad, but he is not satisfied with just moral side of it. He goes to history to trace debt origins and development.
2 The Myth of Barter
The first step of his review author is trying to disqualify typical economic idea of origination of money–based market: impracticality of barter leading to creation of money as universal exchange tool. The main point of this chapter is that barter in real primitive one-tribe economy was not used because there were no real exchange of goods and services, just mutual help and cooperation in survival process. However, when he turns to actual anthropological research he brings example of barter exchange, albeit not within a tribe, but rather between tribes as part of regular encounter. Even more interestingly he comes to conclusion that original medium of exchange was credit with money invented much later.
3 Primordial Debts
This is more detailed review of the Credit Theory of Money – theory that money was invented as unit of measure of debt. From here author links debt to the state power claiming that debt and consequently money were not created to meet exchange needs of people, but as tool of robbery forcing people to pay taxes with state issued money which could be acquired only by selling goods and services to representatives of the state. Another theory discussed is theory of primordial debt that was recently developed as part of intellectual foundation for Euro. The main idea is that all humans born already in debt to society because without it they could not possibly exists. The state and government is embodiment of the society and therefore every human is in debt to government and the only meaning of his life is to pay this debt back. To author’s credit he is capable to think it through to logically inevitable conclusion of individual being the slave of the state as in USSR. The final point is made that usual dichotomy of the market vs. the state is wrong. As author sees it states created markets and markets require states.
- Cruelty and Redemption
This is discussion of duality of the money: IOU on one side and commodity on another. Somehow it goes into discussion of economic ideas of Niezsche but then successfully goes back to evils of debt.
5 A Brief Treatise on the Moral Grounds of Economic Relations
Here author brings in anthropological research to establish qualitative and moral difference of debt comparatively to all other obligations. The first step he does is to try redefining communism as a system of mutual obligations that exists always and everywhere in compliance with slogan “from each to each”. He even states: “Communism is the foundation of all human sociability”. After that he is moving to “Exchange” treating it as an inferior method of interaction comparatively to Communism. Somehow he believes that exchange implies hierarchy so he tries to show that “exchange” produces “hierarchy”. At the end of chapter he goes into discussion of meaning of debt stating that it is just an incomplete exchange.
6 Games with Sex and Death
This starts with a strange statement that if we reduce human life to “exchange” only eliminating “communism” and “hierarchy”, we somehow move all humanity who is not adult males into background. He also introduces a new notion of “human economy” meaning “economic systems concerned not with the accumulation of debt, but with the creation, destruction, and rearranging of human beings. Then he goes into anthropological example of such economies running on blood debt, flesh debt, slavery, and such.
7 Honor and Degradation or On the Foundation of Contemporary Civilization
This chapter is about mainly non-material debts of honor and honoring one’s debts. Author brings it to an interesting point about “human economy” starting with slavery. He sees slavery not as primarily regular economic phenomenon, but rather as human relations phenomenon that he defines as “a human being ripped out of one’s contest”. From here he goes to defining slavery as “social death” and then to linking it to honor. He defines honor as “surplus dignity” often achieved by diminishing dignity of other especially by eliminating dignity of slaves. It is kind of human non-economical exploitation. Finally he links honor to money and debt by claiming that they are more measure of honor than actual economic tools. In conclusion of this chapter author comes up with a mind bugging and charming idea that we are masters and slaves at the same time and our freedom comes down to our ability to drive ourselves as slaves.
- Credit versus Bullion, and the Cycles of History
Here author returns to economy and money, looking at historic process of exchange development similar in multiple cultures from non-quantifiable Credit / Debt to Commercial loans to money exchange and quantifiable debt with term conditions. He believes that this process went in parallel in Mesopotamia, China, and Egypt and was completed about 750 BC in all these cultures with establishment of money exchange and formal debt processing.
9 The Axial Age (800 BC – 600 AD)
The next step was development of philosophies by such figures as Pythagoras, Buddha, and Confucius all living at the same time around 500 BC. German philosopher Karl Jaspers called it Axial Age and claimed that it was the age of philosophical awakening of humanity. Author is trying to link to invention and expansion of coinage to destruction of “human economies” by wide scope conquests such as Alexander’s and needs for easily transferrable and transportable media of exchange independent from human relations of credit. This need came from dramatic expansion of markets when individuals exchanging goods and services would have transactional encounters and may never meet again in their life times. Coins also where a great tool to support mercenary armies when soldier could carry acquired wealth wherever he would go. At the end of chapter author tries to combine historical development of interconnection between market, state, war, and religion into 8 steps process:
- Markets appear as side effect of government administrative systems and then provided logic and practical tools for mercenary warfare eventually subjugating government itself
- As result military-coinage-slavery complex emerges ideologically supported by materialistic philosophies
- As reaction and rejection of this materialism philosophies of humanity and soul are developed, creating foundation for ethics and morality
- Clash of these philosophies and elites supporting them led to prolong period of struggle between various ideologically based social movements
- Same social movements rejected war and aggression becoming peace movements
- The next step was development of market based philosophical ideas with non-material debt in foundation of many of them
- Rulers embraced these philosophies and managed to control empires on their ideological foundation such as Constantine’s Christianity
- Eventually the stability was achieved by dividing everything into separate spheres: one sphere of spiritual, religious, and human considerations and another one of crude materialistic, based on market, and driven by money and power actions.
10 The Middle Ages (600AD – 1450 AD)
The Medieval period saw the end of big empires and return to “human economies” in their feudal form either in smallholdings of European knights and kings or big bureaucratic Empire of China or Cast Aristocracy of India. It also produced new religion and civilization of Islam.
- Age of the Great Capitalist Empires (1450-1971)
Here author reviews West European development of contemporary capitalism and its expansion around the world. He divides it into several parts:
- “Greed, Terror, Indignation, debt” is about territorial expansion of European states based on superiority of actions of European adventurers and profit seekers often driven by debt who conquered America over potential competition like China who did not really care to compete.
- “The World of Credit and Interest” is about “break of old system of mutual aid and solidarity” and substitution it with market mechanisms of Cash, Credit and Interest.
- Development of the new system into “ Impersonal Credit-Money”
- Final formation of capitalism’s all financial features specific for this economic system occurring even before industrial revolution. Author is also claiming that capitalism was never based on free labor. His reason: slavery, Chinese laborers, and even all forms of wage labor (which author seems to believe is a form of slavery).
- Apocalypse: Author believes that capitalism, as economic system cannot stand idea of its own permanency and constantly in search of the new form of apocalypse looming ahead from world revolution to nuclear holocaust to global warming. He somehow manages to link it to accumulation of national debt that is infinite expansion of credit into the future.
12 The Beginning of Something yet to Be Determined (1971-)
The beginning of the end of capitalism and start of something new author assigns to the date in 1971 when USA stopped exchange of dollars for gold. Then he goes into discussion of national debt, fiat money, and comes with conclusion that it could not keep going on for much longer and will have to be changed by some mass movement based on new ideas. Interestingly enough he expects the new big idea that will turn world around to come from Iraq and Islamic tradition built around notion of debt, or maybe it would come from feminism, or from Islamic feminism.
In conclusion author declares that debt and credit drives economy and it is actually bad for two reasons: one is that only industrious individuals would prosper, while lazy would suffer, which is morally not acceptable; and the second reason is that the industrial prosperity and hard work lead to destruction of environment, global warming, and/or some other calamity yet to be defined. The author’s proposal to save the world therefore is to clear all debts and start again from the scratch as pure and moral society with no debt whatsoever.
MY TAKE ON IT:
This book is somewhat fascinated trip into leftist notions of economic history and finance. In this leftist worldview the economy is divided into good “human economy” where there is no money, no credit and consequently debt, and people just share what they produce without expecting something in exchange. Author even trying to bring back from dust been of history and beautify the old name for this – communism. It seems to me that there is lack of understanding here that finance is nothing more than automatic resource allocation to where it would produce most good, meaning under “good” goods and services. Therefore debt as integral part of finance is just a part of this process of allocation. Obviously when such allocation is done not by capitalist based on where it would produce most profit, but by politician or bureaucrat based on where it would be most beneficial for his/her career, then it would be unreasonable to expect increase in quantity and/or quality of goods and services. So I would suggest to keep in place all debt created in market economy and liquidate all debt created by politicians and bureaucrats. And since this debt is often to majority of regular people who for example paid into social security all their lives, lets cover this debt liquidation by confiscating wealth from politicians, bureaucrats, and other individuals who earned their living from government salaries, grants, and other transfers beyond minimal amount necessary for survival. We do not want anybody, even socialist professors to starve.