In a blogpost in July of last year, David Graeber talked about why he wrote Debt: The First 5,000 Years.

The aim of the book was, indeed, to write the sort of book people don’t write any more: a big book, asking big questions, meant to be read widely and spark public debate, but at the same time, without any sacrifice of scholarly rigor. History will judge whether it’s still possible to pull this sort of thing off (let alone whether I’m the person who will be able to do it.)

He further advised that writers of such books should:

back up your statements with extensive, detailed references that actually do say what you think they say. Good scholarship is more appreciated by popular audiences than academic ones. This is a bit scandalous but I have found it to be true. I have about 100 pages of notes and bibliography in the book and non-academics commenting on the book rarely fail to note, approvingly, that I don’t ask anyone to take my word for what I say, but back up all my claims with numerous references. Some show signs of actually having checked a few to make sure I was on the level. It’s an interesting comment on academia that we almost never do this.

There’s a lot to like about Debt, but I don’t think that it delivers on this promise (or, at least, not on the scholarly rigor bit). Much of the specific historical discussion in the book is beyond my pay grade – while I’m interested in the discussion, and enjoyed Graeber’s reconceptualization, I can’t say that much about it. Hence, this response will focus on the stuff that I do know a little more about – today’s international political economy, and the relationship between money and military force within it.

The chapter that I like most in the book is the second chapter, which talks about how economists’ theories blind them to the realities of interactions in non-market economies. This chapter takes an epigraph from Mencken:

For every subtle and complicated question, there is a perfectly simple and straightforward answer, which is wrong.

and goes on to show how economists’ theories about truck and barter don’t describe the kinds of relationships that predominate in non-market economies, largely because economists haven’t bothered to familiarize themselves with how these societies work. Why is this relevant? Graeber himself uses an equally ‘simple and straightforward’ theory to explain the workings of the modern economy – the international debt economy depends on the willingness of the US military to strike fear and terror into the hearts of anyone impudent enough to try to repudiate their debts, or to challenge US seignorage through creating their own challenger reserve currency. The problem is that I don’t think that this theory is supported by the evidence, any more than economists’ beliefs about the ubiquity of barter is.

First though, more about the stuff I like. Chapter Two is a very nice statement of the substantivist position on how economies work, which has a lot in common (although the differences develop as the book continues) with the work of people like Karl Polanyi and Marshall Sahlins. This tradition of argument has both an empirical and a moral dimension. Empirically, it points to the viability of non-market forms of economic interaction. For long periods of history, the primary forms of economic exchange within societies have taken place via what Graeber calls communism (more or less diffuse reciprocity) or hierarchy. Morally, it suggests that something may go wrong when the third means of interaction, exchange, becomes dominant. Unlike communistic forms of exchange (which are embedded in complex social relations of reciprocity and mutual interaction and dependence), it can get out of control, becoming something that is strange, alien and quite unnatural. According to the substantivist account, we live in just such an unnatural world.

However, Graeber tells us, economists are systematically unable to discern this. They cannot see that there could be any form of economic life other than exchange. Hence, they project theories of exchange, with market-based rationalizing actors backwards into non-monetary economies. They believe (or affect to believe, anyway) that these societies work through some sort of truck and barter system, where I want e.g. a sack of potatoes for which I am prepared to swap a pair of shoes. This implies that such societies are horribly inefficient – one needs to find someone whose demand and offer are complementary to one’s own, or else put up with a lot of awkwardness, inconvenience and partial satisfaction. However, as Graeber argues, this is a projection, pure and simple. Bartering does not characterize how people in most non-market societies deal with each other (although it may play a limited role, especially in transactions between different societies). Instead, such societies have recourse to reciprocity, more or less diffuse, on the local level. People are willing to look after others’ needs, in the broad expectation that their own needs will be looked after in turn. Society runs on interlocking favors, which are not specific so that for every jot I give to x, I expect a corresponding tittle from her, but are generalized so that I do not expect exact equivalence, either from x or from someone else. None of this makes it into the econ textbooks.

Graeber’s statement of this case is not entirely original (as he says, he is summarizing a general state of knowledge within anthropology), but that is emphatically not a problem. Even if others have said similar things (at least at this level of generality), it hasn’t diffused into general consciousness. Each year, when I teach Polanyi to my graduate students in international relations, the most difficult thing for them to get is why he is so down on market interactions. Understanding this requires just the kind of background knowledge on anthropological debates that Graeber imparts. I do have some quibbles. Not all economists are ignorant of these debates (indeed, one could make a plausible case that one major strand of the new institutional economics is motivated by a desire to respond to substantivists and reframe their arguments in terms of economic efficiency). Nor is the fit between economic rationality and markets as mutually defining as Graeber presents it as being – just this morning, I got an automated alert about a new paper modeling the Kula ring as a game theoretic equilibrium. But these are quibbles – the Econ 101 view of the world, which is what Graeber is really interested in, and what influences the wider discourse of public debate, systematically fails to engage with these ideas.

Unfortunately, the closing chapter seems to me to be a reverse image of Chapter Two, exemplifying rather than correcting the theoretical faults that Graeber finds among economists. Here, my critique has a lot in common with Gabriel Rossman’s, but was arrived at independently – I suspect that a number of other readers will have had similar reactions. When Graeber starts talking about modern markets, he does so in terms that are startingly reminiscent of the economists whom he rightly disparages in Chapter Two. He takes a very simple theory of how things work – explaining the modern economy nearly entirely in terms of debt and monetary relations – and how these relations in turn rest on a mixture of propaganda and direct coercion. He then applies this theory in ways that not only don’t really come to terms with the existing literature, but don’t fit very well with the available evidence either. The standards of scholarly literature and backing up everything with substantial detailed references take second place to a sweeping narrative that looks to me to be full of holes.

This starts with Graeber’s particular take on the power relations underlying money and debt. Graeber is at pains throughout the book to stress the ways in which state coercion and market exchange fit together. This presumably has a lot to do with his anarchism. For Polanyi, the villain is long distance trading relations, while for Graeber it is the state (in a formulation which is somewhat reminiscent of Althusser’s Ideological State Apparatus and Repressive State Apparatus), which is the actor that keeps the corrupt system going through its ideological and coercive resources.

In fact, it could well be said that the last thirty years have seen the construction of a vast bureaucratic apparatus for the creation and maintenance of hopelessness, a giant machine designed, first and foremost, to destroy any sense of possible alternative futures. at its root is a veritable obsession on the part of the rulers of the world – in response to the upheavals of the 1960s and 1970s – with ensuring that social movements cannot be seen to grow, flourish or propose alternatives; that those who challenge existing power arrangements can never, under any circumstances, be perceived to win. To do so requires creating a vast apparatus of armies, prisons, police, various forms of private security firms and police and military intelligence apparatus, and propaganda engines of every conceivable variety, most of which do not attack alternatives directly so much as create a pervasive climate of fear, jingoistic conformity, and simple despair that renders any thought of changing the world seem an idle fantasy.

On the one hand, this identifies something real. There is a narrow consensus, which sharply defines the things that can or cannot be spoken of by Serious People. Coercion is of course, an important element of how the system survives. But the language here suggests a seamlessness, and a level of shared intention and planning on the part of the “rulers of the world” who have “constructed” and “designed” this system that seems to me implausible. Many of the most important features of modern capitalism have less to do with conscious coordination than with unconscious synchrony. Graeber, it seems to me, radically overestimates the extent to which monetary systems and debt arrangements are the product of conscious design. Furthermore, his apparent contention that the system rests on people’s fears, despair, and desire for conformity systematically ignores the possibility that many people like monetized relations, and that sometimes they have good reason to prefer them over the more embedded forms of interaction that Graeber thinks are preferable. A vignette from Lou Brown’s chapter on trust relations in a Malagasy village in Distrust (Russell Sage: 2004) helps illustrate the point:

Children are expected to host a big feast in honor of their deceased parent four or five years after the death. … When preparing for such a feast, it is important that the children contribute in roughly equal amounts. … There is some sense in which the siblings involved are not so sure their interests converge. The siblings’ desire to have their transactions with one another be explicitly monetarized is interesting. Why did they not simply have Belalahy buy the steer, since he had the cash, and then exchange the steer for the land. To answer this question, it helps to note that Belalahy has the upper hand in this relationship because he has the cash. The siblings … would like to control as much as possible the amount he can extract from them. Though no one ever said this to me, they might fear that if they let him buy the steer first, he would buy a more expensive one than the others could afford. They will then still be obliged to compensate him for the purchase. Why might he do this? One reason might be a desire to gain personal control of more of the family rice fields. … Belalahy also has reasons to prefer that the exchange take place in cash. Aware of the greater power he holds in his relationship with his brothers and sisters, Belalahy might want to avoid the opportunity for any doubt to be cast on his integrity. … Most villagers believe that the type of transaction undertaken by Belalahy and his brothers and sisters is the best way for any type of exchange to occur. They all have more confidence in money than in any other medium of exchange. Of course, this would not seem especially noteworthy if this discussion were not about exchange among family members. …. Under [moral accounts of trust] exchange are conceived as open ended, or, in anthropological terms, characterized by generalized reciprocity. Family members are generally expected to give freely to their kin and trust that they will be treated similarly …. In Tanambao and Ambatobe, the interesting fact is that villagers do not want to leave the exchange relationship unclosed between family members.

What this suggests is that people may sometimes find disembedded relations to be more attractive than embedded ones, precisely because they are disembedded. This is arguably one of the reasons why monetarized economies have succeeded and become ubiquitous – not merelybecause they have been imposed, along with all of the paraphernalia of debt relations that go with them, or because people have been anaesthestized by propaganda and despair, but because (some) people genuinely prefer them (some) of the time, and would continue to do so even if their eyes were opened and the forces of repression magically vanished in a puff of acrid smoke. None of this explains why debt has become moralized so that, in effect, it carries many of the disadvantages of obligation that favors do without the compensations of reciprocity – but it does mean that these forms don’t just persist because of state power.

This state-focused account is then generalized into a very skewed account of international relations. Graeber’s view of how the international economy runs is straightforward. The United States is an imperial power, which uses its military might to command ‘tribute’ from everyone else.

One element, however, tends to go flagrantly missing in even the most vivid conspiracy theories about the banking system, let alone in official accounts: that is, the role of war and military power There’s a reason why the wizard has such a strange capacity to create money out of nothing. Behind him, there’s a man with a gun.


The essence of U.S. military predominance in the world is, ultimately, the fact that it can, at will, drop bombs, with only a few hours’ notice, at absolutely any point on the surface of the planet. No other government has ever had anything remotely like this sort of capability. In fact, a case could well be made that it is this very power that holds the entire world military system, organized around the dollar, together.

Graeber is a little bit too pessimistic about the ability of conspiracy theorists with vivid imaginations to talk about this stuff – there is a thriving sub-literature on the Iranian bourse strategy and the like, none of which seems (to my doubtless limited reading on the topic) to make very much sense. But as he says, this is a big, bold claim that he’s making, one which is flagrantly missing in current discussions. What kind of evidence does he have to support it?

Unfortunately, not much. He relies on timing, suggesting that the US desire to maintain dollar supremacy may explain the first Gulf War.

When Saddam Hussein made the bold move of singlehandedly switching from the dollar to the euro in 2000, followed by Iran in 2001, this was quickly followed by American bombing and military occupation. How much Hussein’s decision to buck the dollar really weighed into the U.S. decision to depose him is impossible to know, but no country in a position to make a similar switch can ignore the possibility. The result, among policymakers particularly in the global South, is widespread terror.

He does provide two footnotes to support these claims, but they don’t provide the kind of evidentiary backup one might have hoped for. One footnote says that the three countries that switched to the euro – Iraq, Iran and North Korea – were exactly those countries singled out as the Axis of Evil, but acknowledges in qualification that “we can argue about cause and effect.” Indeed we can – although there is a lot of evidence out there to support the contention that these countries abandoned the dollar because they and the US heartily detested each other, and none (at least that I am aware of) to support the contention that the US came to detest them because they had abandoned the dollar. I’d have expected Graeber to provide at least a little evidence to support his suggestion that the bombing and occupation were a result of the decision to move away from the dollar. After all, if the intention was to inspire terror in the global South at the very thought of moving away from the dollar, you’d have expected that the US would have hinted at this threat in public pronouncements. But no such evidence is provided. Graeber goes on to claim that it is significant that the core-euro using states – France and Germany – opposed the war, while the U.K., a euro skeptic did not. This not only ignores countries such as Italy, but also begs the rather obvious question of why the US permitted (and indeed effectively assented to) the creation of the euro in the first place, given that the new currency was specifically intended to challenge the US dollar’s reserve currency status. This directly contradicts Graeber’s account of what global monetary politics involves. The US had plenty of levers, up to and including bases in Germany and elsewhere, with quite a lot of troops, aircraft and the like. It didn’t use them. Why?

The sentence on how the Iraq war inspired ‘widespread terror’ among policy-makers in the Global South gets its own footnote – but this footnote does not provide any specific discussion whatsoever of the evidence supporting Graeber’s contention. Instead, it cites to a few “representative takes on the relation of the dollar and empire” without any specifics to support the claim. It could well be that there is evidence somewhere within those takes supporting Graeber’s claims. I couldn’t lay my hands on the Marxist source that he recommends. His suggested ‘neoclassical’ source for further reading is Niall Ferguson in full pith-helmet pontificator mode, and while I’ll do anything for a CT seminar, I won’t do that. Finally, he points us towards Michael Hudson, who (unless I misunderstand him badly) is interested in the opposite causal relationship to Graeber’s – Hudson is interested in how US financial privilege facilitates foreign policy adventurism, rather than how foreign policy adventurism scares people into continuing to cleave to the Mighty Dollar. In other words, if there is any evidence, it is buried somewhere in the sources rather than highlighted in the footnotes. I strongly suspect that there isn’t any very good evidence – this may be, of course, because I think that Graeber’s overall argument about the relationship between military force, seignorage, debt and tribute is flat out wrong, at least in the modern era.

A couple of pages later, Graeber brings the one important recent case of default – Argentina – into his story. But again, his claims seem based on nothing very much in the way of solid facts.

By 2000, East Asian countries had begun a systematic boycott of the IMF. In 2002, Argentina committed the ultimate sin: they defaulted – and got away with it. Subsequent U.S. military adventures were clearly meant to terrify and overawe, but they do not appear to have been very successful: partly because, to finance them, the United States had to turn not just to its military clients, but increasingly, to China, its chief remaining military rival.

This theory of the reasons behind U.S. military adventurism from 2002 on – that it was all intended to scare the bejasus out of debtor countries in case anyone else was inclined to pull an Argentina – has the virtue of originality. But that’s about all the virtue it has. It certainly doesn’t have any obvious evidence to support it. Graeber doesn’t even give us with a footnote here – his extraordinary assertion is supported only by its own, admittedly magnificent grandiosity. And there are lots, and lots and lots of other plausible reasons why the US went to war in Iraq that do not have very much to do with the politics of seignorage and debt repudiation. I’m not even going to get into the ways that he shoehorns the China-US relationship into his framework, since Gabriel’s post talks to this, but suffice to say that it is not any more satisfactory (a longue duree theory about how China has traditionally dealt with the barbarians through cleverly using tribute as a means of civilizing them, which is very long on assertion, and very short on facts).

In short – if there is evidence to support Graeber’s rather sweeping claims about the nature of the global economic system, he doesn’t provide it to the reader. Perhaps this evidence is buried in his sources somewhere. Perhaps not. But when one self-consciously makes grand claims that everyone else is wrong, one should have good evidence, and be prepared to produce it up front. Graeber, unless he’s keeping it very close to his chest indeed, has no strong evidence at all. This doesn’t seem to me to live up to the (admittedly high) standard that Graeber sets for himself.

So how does this relate to the second chapter, the one that I really liked? It seems to me that what Graeber has done in his concluding chapter is precisely to recapitulate the economists’ error that he rightly tossed scorn upon at the beginning of the book. He has let his own pet theory get in the way of the evidence. Graeber comes up with a theory which (like economists’) starts from a very simple claims – that behind the ubiquitous relationship of creditor to debtor lies the coercive power of the state. Unfortunately this theory, again just like the economists, doesn’t work very well outside the context where it was developed. It doesn’t explain state motivations – the evidence suggests that the US is motivated by many factors other than its desire to maintain the predominance of the dollar. It doesn’t explain the relevant relationships – seignorage, contra Graeber is not really a form of tribute, and thinking of it as same doesn’t really get us very far. Finally, and most crucially, it doesn’t explain the kinds of coercion that both the US and market actors can exert. Greece is not suffering today because the US will invade it if it defaults, or even because Panzers are going to start rolling towards the Aegean. It’s suffering because of a combination of more subtle forms of coercion, including the usual anodyne formulation of ‘market forces’ (which are not, contra Graeber, conditioned on the military might of powerful states such as the US, but exercise an influence all of their own).

I’d genuinely like to see Graeber tackle these more subtle questions, and come up with a better account of the role of debt and money in the international economy. It’s an important set of issues, and even if I doubt I’d agree with him much, I think he would have a lot of interesting things to say. I don’t think that he says them in this book in any very satisfactory way. Doing this right that so doing would require the kind of good scholarship that Graeber commends in his blogpost – perhaps a better engagement with the very extensive literature on these subjects, both from traditional sources (some of the more historically minded mainstream economists have interesting things to say) and non-traditional ones (I was surprised that James Buchan’s extraordinary and beautiful book on the history of money, Frozen Desire, isn’t in the bibliography – it is quite as harsh as Graeber, but written by someone with a much clearer understanding of the world economy). This would make for a pretty good book, if he were up to it – but it would also require a lot of new work in rethinking, and, where necessary, tossing out, old ideas that don’t really explain what he thinks they explain.

[Cross-posted at Crooked Timber]

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Henry Farrell is an associate professor of political science and international affairs at George Washington University.