Russia would like the EU to vanish. Carl Bildt

And Forgive Us Our Debts

A lesson from our forefathers: we have the obligation to remit debt.

Our economic system is built on a range of implicit premises. One example is the idea that supply and demand will generally constitute a self-regulating system: more demand can drive supplies or prices up. More supply can lower prices or be used to stimulate demand. We don’t just buy the goods we require to survive, but also consume luxury items. All of this happens within the so-called “market,” a metaphor that has its origins in the physical marketplaces of earlier times.

A comparison to the physical marketplace also reminds us of the wider context of economic activity: adjacent to the market were City Hall, pubs, and churches – the bedrock of a town’s social and political life. Trading was usually done in the shade of their walls.

The anthropologist David Graber has recently published a book – titled “Debt: The First 5000 Years” – in which he explores the setting and conditions of human economic activity. According to classical economics, people flocked to the marketplace to do business with each other mainly by trading. Potatoes were swapped for shoes, et cetera. Soon, money was invented to facilitate trading and to account for the fact that supply and demand did not always neatly match up: the person who needed potatoes did not necessarily have shoes to offer to the potato seller – but someone else might. Instead of trading physical goods, people started exchanging goods for money.

Graeber challenges this explanation of early human economies with anthropological observations and explanations. At first, this might strike us as bizarre: why would an anthropologist have something to contribute to economic discourse? But it’s good to remember that the premises of economic theory are premises about humans. Economy cannot be divorced from anthropology.

Graeber’s ideas are worth considering: he challenges the economic premise about the relationship between trade and money. The metric of money – the estimation of value and the comparison of different goods across a monetary scale – is an age-old mechanism. Its origins are often deeply infused with cultic traditions. Graeber gives the example of a culture where oxen were used as a reference (as in: “This is worth the equivalent of two oxen”). Why? Because oxen were sacrificial animals in that culture.

Is religion linked to economics? Pursuing Graeber’s thoughts, one arrives at the conclusion that religion equals economics – and not only in an exploitative sense. We recognize ourselves through the connections we form with the people around us, with nature, and with the cosmos. We are defenseless against the raw forces of nature and reliant on the goodwill of others, especially as children. Thus, we are deeply indebted: to our parents, and to nature. Can we ever hope to compensate our parents for their generosity and devotion? No. Can we ever repay our debt to the gods? Impossible.

According to Graeber, the social contract in each society is based on debt. Indeed, the same word is used for “debt” and “sin” in Greek, Aramaic, and Latin. The language of economics is synonymous with the language of morality.

Societies are composed of a myriad of lender-debtor relations. We know that we cannot ever hope to repay the “big” debt to our parents and our gods. But when the simple tenant farmer cannot repay the money he borrowed from his landlord, his wife and children are taken into slavery and forced to work on the landlord’s estate. Later, the farmer himself might become enslaved. The cycle of indebtedness can hardly be broken. And this is where state power enters the picture.

According to Graeber, markets do not exist without the state. Because economics pertains to the social aspects of human societies and because we use the language of economics to explain relationships, rulers have always tended to exert control over the economic realm. Kings issued coins that were stamped with their portrait on one side, and with the value they guaranteed for this particular coin on the other side. Often, kings used special occasions like birthdays to shower their subjects with coins – money that they had previously collected from the very same people as taxes. They also had the power to nullify debt, to free slaves, and to redistribute the land. Remember recent discussions about the annulment of Greek national debt? Those discussions are as old as the country itself. To our forefathers, it was evident that some debt cannot be compensated even if the debtor sells himself into slavery.

Graeber’s insights fit well with the writings of another prolific author, the Czech economist Thomas Sedlacek. He makes the point in his book “The Economics of Good and Evil” that society and economy are inextricably linked. Social relations are the product of economic constellations. Debt and compensation feature prominently in Sedlacek’s book as well. He argues that debt becomes manifest in language and is rooted deep in the sediments of our culture:

… and forgive us our debts,
as we also have forgiven our debtors.

This passage from the Lord’s Prayer isn’t a metaphor – it’s meant to be taken literally. We have the obligation to remit debt. Our economic system is based on the possibility of securing loans and amassing debt, and on the attempt to repay them. But it would be good for those in business and banking to reflect on the anthropological bases of economic thinking.

Newconomy is the new weekly column for the start-up industry. It focuses on the intersection of classical and new economies and of politics and entrepreneurialism. Newconomy is sponsored by Factory, the new start-up hub in Berlin.


comments powered by Disqus
Most Read