I just finished reading Debt: The First 5000 Years by anthropologist David Graeber. The book examines the history of money, debt, and how they relate to social structures from a lens that departs sharply from the conventional wisdom of economic thought.
Conventional wisdom paints a picture of people inefficiently bartering goods and services directly with one another, and that money arises naturally as a result of the problems inherent in this. Graeber dissects this narrative by looking at anthropological history. Primitive communities simply shared their resources freely with each other, living a communal lifestyle, with barter occurring rarely and only in the context of separate communities interacting with each other. He had no role in the intra-municipal affairs of the first companies.
Money, like commodity money, began to be used only in rare intercommunity interactions over great distances. The economy in local regions has not begun to use such exchange mechanisms. They used credit. Credit managed and supervised by the government, as in ancient Sumeria. This system arose from the informal “credits” that people considered when sharing resources in more primitive societies. But it was formalized and maintained by the power structure of Sumer’s government and temples. No money would change hands during exchanges, people would simply record their accumulated debts in the temple and periodically pay off their obligations with actual consumer goods.
Debt came before coinage and was created and maintained on a large scale by the state. Commodity money only arrived later, newly minted and put into circulation by the state, when large-scale trust-based civilizations collapsed and gave way to warring imperial states. Debt and credit make little sense in a time of constant war and roaming armies, with no certainty that they will ever return to pay off their debts after moving on.
Since then, with the anomaly of the modern era and central banking, human societies have oscillated between virtual credit money and coinage depending on whether or not the era of the time was predominantly based on large-scale wars and conquests. The same patterns have also repeated themselves over the centuries, with people creating their own informal, localized credit networks after the fall of great empires that used money, the government slowly inserting itself into these to mediate, and inevitably the return of money with the growth of violent empires.
Bartar, as conventionally taught, was never really part of this process of money development, and the state always had direct involvement in the formation of money systems and markets.
I’m sure many people are incredibly affected by reading this, but Graeber’s case is very solid and built on real historical and anthropological evidence, rather than speculation. Especially the idea that Chartalism has much more solid foundations than many in this space would like to admit.
This actually makes Bitcoin even deeper for me. Bitcoin is not simply returning to a stateless coin, I don’t think one ever really existed after reading Debt. Bitcoin is the first stateless money could ever exist. For me, this makes it an even more immense achievement and historic change.
Regardless of your economic leanings, I recommend you read this book. It will give you a lot to think about in the context of Bitcoin.
This article is a Take. The opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.