Chapter 8 Credit vs. Bullion, Debt The First 5,000 Years by David Graeber
In asking how we managed to eliminate chattel slavery worldwide, Graeber discovered that in peacetime, a credit system is the dominant practice.
Dear Reader,
It is not quite summer here, yet. We only get snatches but that is the best part. We should not take for granted the season of the slow down when you can simply sit and let your mind wander.
Take advantage.
Regards,
Melanie
Slavery and the Cycles of Boom and Bust
In Chapter 7, we concluded that slavery and the violence of debt became the cornerstone of Western property laws and individual freedom. Graeber asks this time around,
How and why did different civilisations eliminate slavery all at the same time around 600 AD?
The clincher is that he is attempting to link slavery with credit and coinage cycles across human history.
…credit systems tend to dominate in periods of relative social peace, or across networks of trust…, in periods characterized by widespread war and plunder, they tend to be replaced by precious metal
Graeber made the connection by looking at the boom and bust cycle between coinage and credit systems in three different places:
Great Plains of Northern China
Ganges river valley of Northeast India
Lands around the Aegean Sea
He has learned that since coinage first appeared in 600-500 BC, various states have issued their own system thereafter. For whatever reason, the credit systems of trust were no longer adequate and were substituted by tiny ingots of precious metals for daily transactions. It was not eliminated for good though.
What Graeber saw was that credit systems and the use of these tiny ingots shifted through different periods in human history.
His main thesis is that
during periods of war, money would dominate the economy
during periods of social peace, credit systems dominate the economy
Slavery seemed to have followed these trends but the question of when or how it was eliminated is something that remains to be seen. Let’s see how he answers these questions.
In the next coming weeks, we shall be travelling through the cycles of bust and boom cycles through different human epochs to uncover answers to our big questions.
Peacetime: cycle of credit
The First Agrarian Empires shows the wide ranging presence of credit, debt, and loans. The findings here, of course, rely on archaeological finds and language transcription that are only beginning to shed light on debt. Unlike the Mesopotamian region, the Chinese and India cases require further research and uncovering relevant finds. In this section, we begin from civilisations with little debt slavery to a highly punitive system.
How Egypt avoided the debt trap
It is surprising to hear that Ancient Egypt (2650 - 716 BC) did not have interest-bearing debts in its economy. Egypt was self-sufficient thanks to the Nile. It had state and temple bureaucracies, taxes, distribution of wages, and payment from the state.
While there appears to be coin usage, loans, according to Graeber, are considered as mutual aid. In one account of a Syrian slave girl purchase in 1275 BC an Egyptian lady Erenofre, borrowed from her neighbours ‘bronze vessels, a pot of honey, ten shirts, ten deben of copper ingots’ to complete the payment. Graeber had not found sufficient evidence to show of the existence of debt slaves or bondservants. The failure to pay for a debt is considered a criminal offence. One can be hauled to court and be forced to pay on a stipulated date upon which, the failure will mark the accused as a liar or a thief.
Can the presence of slaves in Egyptian society explain this? As we have seen in Roman society, the presence of foreign slaves substituted the work of debt slaves. Thereby, minimising any value from this arrangement. Debt bondage was considered to be an unusual outcome in Egypt during that time.
However, it was only after Egypt was annexed to the Persian Empire that the crisis of debt began to appear. It became necessary for rulers to regularly issue decrees of cancelling financial liabilities and debt bondage, such as during the reign of Pharaoh Bakenranef (720-715 BC) and the Ptolemeic Dynasty (323 - 30 BC).
As the Egyptian society integrates to a wider network, they have incurred the pernicious effects of debt bondage, even with the presence of foreign slaves in society.
China’s monetary transformation?
There is little information on Early China’s relationship with coinage and debt (Shang Dynasty - 1700 - 1100 BC; Zhou Dynasty 1100 - 222 BC). For instance, there is little evidence to indicate the need for coinage given the lack of centralised temple or palace system with administrators and store rooms. Thus, Graeber points out that a uniform unit of currency is unsurprisingly absent.
Cowrie shells along with other specialist items of value were prolific. These seemed to be used for ornamental, ritual, and religious purposes as most of them were found in burials of elites. It was cited by Graeber as gifts given by rulers and kings to their subjects for their services. Though cowrie shells seem to be a measure of value, it is unclear whether they are used as commodity currency.
A wide range of coin types appear during this time such as bronze cowrie shells, spade shaped coins and knives made from bronze. It is more likely, says Graeber, that these are social currencies, used commonly as presents and fee payments. However, these were also used as transactions between strangers and tabulating debts. It would appear that this is an instance where social currencies are increasingly becoming an all-purpose currency.
The records of debts were scant but there were indications in the Guanzi, one of the earliest written accounts about the political, economic, and social life in China, that children were bought and sold.
Selling children indicated to Graeber that perhaps there are some onerous debt practices. The Guanzi indicated that money was coined, though it would not happen until a thousand years later, to relieve people from hunger and desperation due to natural disasters. The document mentioned that 30 percent of harvests stored in public granaries shall be used for emergencies. With that arrangement, a unit of account might be the incentive needed to have a commodity currency.
Until there is more evidence, we are still left speculating on the form of a credit system in existence.
Mesopotamia’s credit culture
Unlike the two previous culture areas, this region is the origin of the earliest credit money in the form of a clay container. This clay envelope called the bullae contains a token, sealed shut, and fired to secure the content. Scholars have theorised that it was meant to ensure that the contents will not be changed. Inside is not just a promise to pay the lender but actually a guarantee is stamped outside that the bearer would receive the amount indicated with interest. This is actually the first clay promissory note. It is as good as money.
It is unknown how such tokens are used in transactions but there are indicators that these could be used in merchant guilds or among neighbours who trust each other. It is quite possible that shopkeepers and taverns accepted such tokens.
The use of credit is not strange since it had such a long history in Mesopotamia (3500 - 800 BC). Temples and palaces would set fixed returns for their commercial products. They have managed to overcome the lying that usually accompanies the act of borrowing or delayed payments.
We know the situation was dire for the common folk because the rulers had annual decrees eliminating debts, restoring cultivation rights to lands, mortgages, and other forms of debts. It happened during the rule of King Enmetena of Lagash in 2402 BC, his successor Uruinimgina in 2350 BC and the famous Hammurabi in 1761 BC. It appeared that a cyclical debt crisis has been a feature in Mesopotamian life.
Slavery and the boom in credit
Using these three culture areas, Greaeber wants to show the predominance of credit systems during peace time. However, the credit system in these three areas cannot be truly compared against each other. They have an uneven credit experience.
There is little evidence in China and India about an extensive credit network. No doubt it existed but we have no record yet how it worked. What we do know is that there is an absence of a temple complex with goods redistribution or bureaucracy that required a credit currency.
Egypt is an interesting example of a culture area with little evidence of onerous debts. It possesses a temple complex bureaucracy, state taxation, and a slave system. On the surface, it seems to have similar features as the Roman society and it appears that there is little need for any punitive effects of debt or credit systems. Foreign slaves provided much of the services as local debt slaves would. Mutual aid still dominates social relations. This will all change when it was annexed and incorporated into a system of debt peonage.
Mesopotamia has one of the most documented credit system as part of its every day life. It not only possessed a temple bureaucracy it operated negotiable instruments and promissory notes as part of its transactions. This is an indicator of wide trading and influence in the region that required such instruments.
Graeber’s hypotheses is tenous at the moment. I suppose he is looking at the period when the credit system has not toppled over into citizen unrest just yet. However, in societies with a punitive debt and credit system like Mesopotamia, there is greater risk of societal dissolution and revolution.
At the conclusion of the chapter, Graeber did not link the development of slavery with the prevailing credit system. There is not much to go on. We know that the presence of foreign slaves seems to me reduces the risk of locals ending up as slaves themselves like Rome and Egypt. However, it was not the case for Mesopotamia. The presence of war slaves did not in any way reduce locals becoming debt slaves themselves. In fact, it seemed to have little effect. The relationship between slavery and the debt/credit system is something that will emerge later on.
Round-Up
This chapter is the boom cycle: the peacetime proliferation of the credit system. Graeber argues that money and coinage replaces the credit system during war. Here he shows us three culture areas as comparative examples to support his first idea of the extensive use of the credit system.
Based on archaeological data, there are more findings on credit systems and its effects in Egypt and Mesopotamia. The former, a curious case where the presence of currency, a temple complex, and slavery result in the absence or minimal debt slavery. The latter has all three features and yet, registers the highest and worst consequences of debt slavery. We can eliminate China and India because of a lack of solid evidence though currency was in use in those societies.
We can say that indeed during this formative period in human history, credit and social currency were in different stages of transformation. Therefore, it still was a dominant way to transact on a daily basis. Commodity currency was emerging and at the periphery. We shall find out more in the succeeding chapters whether Graeber’s argument has strong merit.
Let us hold off answering his question on how slavery was ultimately eliminated until the coming chapters.
Re-read the previous post