Belated Debt Post: Ancient Efficient Markets Hypotheses

by John Holbo on March 3, 2012

Fortunately I didn’t contract with Chris in advance to contribute to the Graeber seminar, so I’m not in debt on this score, paying late and therefore a bad person.

Right. I’m only about halfway through the book – on audiobook: must have something to do on the bus – and quite enjoying it. Some skepticism about Graeber’s scholarship has been expressed in the wake of revelation of that embarrassing bit about Apple computers that he got totally wrong. I am not an expert on all the ancient and exotic anthropological and etc. evidence Graeber cites, but I’m not an absolute beginner. I started studying the history of ideas of debt, and related subjects, a few years back. See here and here. I started because it occurred to me the Plato I was teaching was, to a surprising extent, about debt, reciprocity and, generally, the convertability of moral into monetary categories, and vice versa. Euthyphro on piety. It’s ‘care of the gods’, which – this is his final suggestion – turns out to be the capacity to enter into healthy exchange relations. Meno on whether being good boils down to getting your hands on the goods. Cephalus, the old man, launches the mighty ship, Republic, with the thought that justice is ‘speaking truth and paying debts’, which morphs into the lex talionis thought that justice is payback – doing good to friends and harm to enemies. Plato, like Graeber, is really really concerned to shred this stuff, if he can. So I find Graeber interesting. I haven’t gotten to the bits where Graeber discusses Plato, but I see he does discuss him. And I haven’t found any flagrant inconsistencies between what he says about other ancient stuff and what I have read in other authors about ancient stuff. So I’m inclined to think the Apple slip was a one-off accident, not indicative of larger problems. As to the tribute system stuff. It sounds like Henry is right about that and Graeber is wrong. I haven’t gotten to that part of the book yet.

Right. Getting down to business. Here’s what seems to me a fundamental tension in the book. On the one hand, Graeber wants to emphasize that debt is a very specific relation. Everything isn’t debt, human relations-wise. More generally, everything isn’t exchange. For him, this is the larger significance of defeating the myth of barter and the double-coincidence and all that (go read the other posts if you don’t know what I’m talking about.) Money emerges as a way of accounting for debt, but not everything is debt. So money isn’t a way of accounting for everything. I’m simplifying, but this is the gist. (One of many gists, but enough for one post.)

And yet: human beings (not just economists), when called upon to explain how society works, have a strange tendency to reach first for efficient market hypotheses, and to hold on like grim death. Natural or even cosmic orders of orderly payback. That’s the ticket. We are ‘in debt’ to the gods, or our parents, or society. Graeber is quick to point out the inadequacies of these metaphors. Is a debt you can never pay off really a debt? If peasants are exchanging wheat for prayers by priests and protection by nobles, exactly how many prayers does a bushel of wheat buy, on the going feudal market? If these questions have no non-absurd answers, then there is something wrong with the question. Like Plato, I’m inclined to buy this part of the argument. These attempts to cash out holiness as payback, or justice as fair exchange (retributively or reciprocally), have conceptual problems. The tension comes in when Graeber tries to argue, further, that there is something bourgeois, hence peculiarly modern about this seemingly timeless – at least ancient – and cross-culturally ubiquitous compulsion to describe society by debt-ifying and exchang-ifing and reciprocity-ifying all of human relations, in descriptively inaccurate fashion. Everyone says it’s all debt. But it isn’t all debt.

Graeber says, for example, that Rabelais is prescient about how the modern world is falling prey to this debt-ified frame of mind, having Panurge wax eloquent about how debt makes the world go round, so by being perpetually in debt, he is a benefactor of all. But it seems to me that this bit of wit is timeless. Rabelais is playing with exceedingly ancient ways of thinking, not peculiarly modern ones. It’s close to being a cultural universal to think things work this way (not for things actually to work this way). If someone asks you how society works, and you haven’t really thought about it much, you will say it’s a debt system. By extension, what makes it ok that society is as it is (however that may happen to be) is that it is all a cosmically efficient credit market, in which everyone pays and gets paid and accounts even out.

I’ll just conclude with this classic bit of Anaximander, courtesy of Wikipedia:

Whence things have their origin,
Thence also their destruction happens,
According to necessity;
For they give to each other justice and recompense
For their injustice
In conformity with the ordinance of Time.

The universe is in hock to itself up to the armpits. Everything that moves is debt and payback in motion. The nub of Panurge’s joke is here. If you like the universe, with all its moving around ways, you’d better love debt.

Graeber appreciates that you find this sort of thinking everywhere, at all times, but he also wants to hammer home that the tendency of economists to think this way is blinkered and parochial. And bourgeouis and modern. It’s not exactly a contradiction to have it both ways. It may be perfectly true that this style of thinking is highly characteristic of economists and the modern, commercial bourgeoisie. But this isn’t a distinguishing characteristic. What Graeber thinks is that everyone is wrong, not just economists in the grip of the myth of the double-coincidence. Folk thinking and econ thinking are the same. And wrong, according to Graeber (and Plato before him).



Neville Morley 03.03.12 at 11:17 am

I didn’t read him quite in those terms; rather, the development of such ideas and their establishment as ‘common sense’ (followed by the emergence of economic theory as an abstract and sometimes counter-intuitive interpretation of that common sense) is presented as a historical process. Folk thinking and economic thinking are (often but not always) similar; they have been wrong for a long time, but are not instrinsically or inevitably wrong (or at any rate folk thinking isn’t) – rather, they started going wrong at a particular point in history (granted, much earlier than the usual culprit of the birth of capitalism and modernity). Richard Seaford, a classicist whom Graeber uses a lot in this section, argues that conceptions like Anaximander’s are the direct product of the invention of coinage and hence social relations based on monetary exchange – i.e. this is the moment when the whole universe suddenly looks like a market.


Neville Morley 03.03.12 at 11:18 am

Blockquote went wrong… I was responding to your “Graeber appreciates that you find this sort of thinking everywhere, at all times” line.


Adam Roberts 03.03.12 at 1:08 pm

” If someone asks you how society works, and you haven’t really thought about it much, you will say it’s a debt system.”

Debt as lack. I’ve been reading these posts (and Graeber’s book) with enormous interest, but I have been reminded of Deleuze-Guattari (I originally typed ‘Deleuzeguattari’, but that struck a strangely dated chord when I looked at it), or more precisely of the grounds on which they intervened so playfully in 1970s psychoanalytic discourse — reconceptualising the ‘psychic economy’ metaphor about which Freud has so much to say. In a nutshell, that was about replacing bad-old “lack” as the ground for understanding human desires with a revolutionary spurting plenitude. Isn’t Graeber doing something similar, if in less wayward a manner?


Henri Vieuxtemps 03.03.12 at 1:31 pm

human beings (not just economists), when called upon to explain how society works, have a strange tendency to reach first for efficient market hypotheses, and to hold on like grim death.

Not all human beings; probably only a minority. Others believe it’s driven by competition between races, ethnicities, clans, states, religions, or some other group identities. With more or less fraternalistic relationships inside the groups, group solidarity. And that isn’t always a very good model either, depending on the particulars.


marcel 03.03.12 at 1:35 pm

Pedantry alert!

Everything isn’t debt, human relations-wise. More generally, everything isn’t exchange… but not everything is debt.
… Everyone says it’s all debt. But it isn’t all debt.

It seems to me that if “everything isn’t debt” then Graeber has nothing to write about, and this symposium could have been much smaller.

(Of course, if “everything isn’t debt”, “not everything is debt”, or “it isn’t all debt”.)


John Holbo 03.03.12 at 1:59 pm

“It seems to me that if “everything isn’t debt” then Graeber has nothing to write about, and this symposium could have been much smaller.”

Well, SOME things can still be debt. And the book is rather large-ish …


John Holbo 03.03.12 at 2:04 pm

It’s true that ‘everyone says it’s debt’ is an exaggeration. Better: an interestingly large number of people immediately find this answer intuitively obvious, and this result is cross-culturally and historically robust. Several years ago, when I was reading “Eye For An Eye” a colleague asked me why I picked the three Plato dialogues I did for my intro module and I said I was interested in the cosmic theory of debt and how you could solve everything with money. Which sounded very un-Platonic, of course. But I was seeing many of the things that Graeber sees.


William Timberman 03.03.12 at 2:28 pm

If everything is a debt, then nothing can be a gift. This is a bad place to be. Most of us avoid this reductio in our daily lives, but not, unfortunately, in our ideologies, with predictably nasty consequences for everyone. Someone — the three ghosts of Christmas, perhaps — should explain this again to the world’s self-righteous conservatives, before we all wind up shooting one another.


marcel 03.03.12 at 3:19 pm

Pedantry continued:

This should not need explaining, but my point was that if “everything isn’t debt” then “nothing is debt”: quite different from not “everything is debt”, which includes “everything isn’t debt”, but is much more capacious.


marcel 03.03.12 at 3:23 pm

Also, where’s Belle been? I think I speak for many readers of this site that we await her take on the current state of US political discourse, in particular, recent events in GOP-land (I think of her as the discriminating and tasteful reader’s Maureen Dowd, and no, that is not an oxymoron, viz. Belle Waring).


Billikin 03.03.12 at 4:04 pm

When asked how society works, I think most people think about how civilization works, not about how the family or tribe works. (Besides, as we know, all families are dysfunctional. ;)) And reciprocity springs to mind. But I do not think that everybody goes as far as a market metaphor. Why?

One challenge of civilization is collaboration or cooperation with strangers. At one level, trade is one way to do that. But the first rule is to be nice, to be courteous, to offer cooperation. If the other person does not reciprocate, then retaliate. If you interact with the other person over time, then you form a relationship. Best to get it off on a good footing. Even casual relationships, or fleeting ones, should ideally be mutually beneficial.

This idea of reciprocity in relationship is antithetical to modern economics teaching. Homo economicus is out for Number One, he does not form relationships. Economics students are trained to be uncooperative. MBAs are trained to think that their duty (!) is to be unethical towards those who are not their clients. In this view reciprocity is one way to keep from being screwed. Its aim is loss avoidance, not win-win.


kent 03.03.12 at 4:18 pm

William Timberman @ #8: “If everything is a debt, then nothing can be a gift.”

Hardly an expert but I seem to recall a longish anthropological discussion of gifts and how they put the giftee in your debt. Or am I two decades out of date?


William Timberman 03.03.12 at 4:40 pm

kent @ 12

Yes, that’s the conventional interpretation, but it seems to rely on a semantic confusion, one which Graeber takes some pains to disentangle. The kind of debt, or perhaps better, obligation of reciprocity, implied by a gift is one which is a) non-specific compared to debts expressed in monetary terms, and b) is intended to bind a community together. In other words, it’s an expression of relationship, rather than an explicit denial of any relationship. Money debts are categorically different.

Graeber’s example of the father who presents his son an accounting of what he owes for his upbringing is the key to that difference. What that monetary debt expresses is not a relationship, but rather a denial that any relationship exists apart from the total in the bottom line. Once that is paid, no further relationship exists, which is in fact the point of the transaction.

Oppression can result from either form of debt, but as dsquared has pointed out in his posts, the rationalization of our relationships to one another through accounting identities has its advantages, especially if we want to free ourselves from the evils of tribalism and intellectual dependence on a moronic status quo. The evils of debt peonage are the downside, and we’re still arguing about which was the better deal. (We love our freedom, but bemoan our loss of community, etc.)

Even after reading Graeber, I’m not sure that a mixed system is possible, but if we can concoct one, it does seem the only way to make the best of what we’ve inherited.


jim 03.03.12 at 5:03 pm

At SCSECS last weekend, there was a very good paper (by Joanne Cordòn) on George Anne Bellamy’s benefits. Bellamy was an actress and her benefit performances were a major part of her income. One piece out of the paper struck me. Bellamy wore many costumes in performance and there was a network of aristocratic ladies who looked to her for advice when they needed to dress for e.g. a masquerade. She would go to them and spend an afternoon going over what they might wear. As a friend. But as her next benefit performance approached, she would ask them to buy tickets from her (at exorbitant prices) and to ask their friends to do the same.

Gift exchange. Just as we see in the Iliad and Odyssey, alive and well in eighteenth century London.


Jim Harrison 03.03.12 at 5:21 pm

John Holbo quotes Anaximander. Reading Graeber and the comments on these threads, I’ve wondered for some time why nobody quotes Heraclitus:

All things are an equal exchange for fire and fire for all things as wares for gold and gold for wares.

Many of Ionian Presocratics, who lived in or near Lydia, whose kings invented coinage, were looking for the common measure of all things (water, air, fire, the unlimited, etc.) much as generations of economists sought the basis of economic value. It’s ironic that the physicist’s quest eventually succeeded—there are conservation laws in nature, after all—while the economists haven’t done so well.


WaryTale 03.03.12 at 5:59 pm

I find this topic and the seminar fascinating. I haven’t read any of the book; I just visit this website each day at work during my lunch hour. I’ve read the posts, and most of the comments. It is remarkable how this topic (the concept of “debt”) reaches into so many areas: economics (obviously), accounting, philosophy, religion, sociology, anthropology, semantics, psychology, politics, history, civics. It is all very thought provoking.
I find myself wondering whether there is something underlying, intrinsic, in the human idea of “debt” that plays out in all of these realms, or is it more that once the financial elements (money and financial debt) became so prevalent in civilations that the “debt” pattern of thought became a driving part of all those other realms. Maybe that is the question that Graeber is getting at?


merian 03.03.12 at 6:15 pm

@marcel: Pedantry can be amusing and instructive, preferably both, but when it’s just a wilful repetition of a refusal to acknowledge that pragmatic and semantic dimensions are part of language, and that merely mapping basic set theoretical concepts won’t suffice, then I’m probably not the only one to find it grating.


Meredith 03.03.12 at 10:18 pm

William Timberman@13 summarizes well, from what I understand of Graeber (whose bright red book still sits unread on my bookshelf, alas — since being given it for Christmas, I’ve been too busy, not ungrateful). Feeling under a general obligation to contribute to some collective enterprise, to give even with some diffuse notion of “return,” is not the same as “being in debt” in the sense we most often use that phrase today, especially in monetary transactions.
This semester I’m teaching Homer and Sophocles’ Ajax. Clear from Homer: pre-monetary societies do not avoid all the issues associated with monetary debt (think especially Agamemnon’s aggressive offer of gifts for Achilles — Achilles accuses Agamemnon of greed for good reason; think more generally the questions about fair distribution that are the root of the conflict between Agamemnon and Achilles and, initially, between Agamemnon and Apollo; of women as the fetishized standard of value that is beyond evaluation — Chryseis, Briseis, Helen).
But still, things are different in Homer’s world. Take Sarpedon in Iliad 12: first he cites the quid pro quo exchange between those who provide the warriors with the best food, drink… and the warriors who risk their lives on behalf of those who provide life’s basics. So yes, quid pro quo exchange is at work here, though of a diffuse sort that plays out over a long period of time. But then Sarpedon goes on to aver that, were he immortal, he wouldn’t fight at all. He risks his life in battle only because he is mortal. The “gift” of his life is rooted in a mortality that hopes for immortality in kleos, the fame that only a continuing community will provide (even if only the community created by future audiences of the Iliad). But the hoped for “return” in the form of kleos (or perhaps hero-cult) is not something Sarpedon can demand as a debt, just as no one can demand that he give his life — it his his and his alone, to offer as a gift. (Interesting, I think, the existential autonomy an individual retains in this world of gifts — one of the main attractions of this “heroic” world, and of the gift.)
Important here is the element of time, the sense of future, the role of memory which is sustained only through creating/imagining a connection to unknown people in the future: the modern monetary debt tends to occlude that capacious sense of future. (I say “tends” because I’m not always sure that it must. When we argue for going into debt in order to “invest in the future” through education, for instance — well, maybe that’s an example of equivocating in our use of the word “debt”? — I’m not sure.)
One of my favorite lines in all of Greek tragedy. Tecmessa to Ajax: “For charis is (the thing) always giving birth to/begetting [this verb is used of mother or father] charis” [Charis charin gar estin he tiktous’ aei]. Charis is an amazing word. Like “grace” in Christian tradition, it suggests beauty, charm, favor, but something that can only be given, never owed. And yet, charis has a way of prompting the recipient’s desire to give, almost as if in return but not quite. “Giving birth/begetting”: even if Greek use of tikto is rooted historically in a pastoral notion of wealth in herds and flocks (think pecunia, too), its use here suggests the parent-child, past-present-future momentum of charis, of giving that, while it may expect some returns (like “old-age nurturance” of parents by their children), mostly “invests” as a gift without expectation of return.
Btw, before we idealize the pre-monetary in archaic and classical Greece: let me recommend Leslie Kurke, Coins, Bodies, Games and Gold.


JamesH 03.04.12 at 1:59 am

Given that the emergence of numerical and writing systems, which were first used IIRC to keep records of debts in the temples and long-distance babylonian trades, is bound up with debt, would it be more accurate to say “we find this thinking everywhere and in all times for which we have written records“, because the literate society is one in which precise recording and quantification of debts is possible.


Peter T 03.04.12 at 9:59 am

I think that here you need to look behind the word. “Owe” or “debt” or “gift” are large words – like ‘good” or “bad” they are not specific enough to be useful analytically in the absence of a great deal of context. It seems to me that when, for instance, in old Iceland Gunnar feels in debt to Njal for his advice that this debt is comparable to the debts in money that Gunnar is owed by others. It was a lord’s duty to give gifts (“ring-scatterer” is one poetic epithet for a lord or king), it was the recipient’s duty to be loyal. This is an exchange but again, not one that can be compared to a formal monetary exchange – for one thing, the exchange is a token of a relationship. People seem to feel, generally, that a condition of rough equivalence is the best foundation for friendship and that, where there are marked differences in status, exchanges should be appropriate to the difference. If these feelings are sometimes expressed in the same language we use for money, this is using old words and feelings for new forms of exchange, not feeling differently because the words have stretched.


Phil 03.04.12 at 12:45 pm

rooted historically in a pastoral notion of wealth in herds and flocks (think pecunia, too)

Associated with pecus, pecoris? That had never occurred to me – interesting!

would it be more accurate to say “we find this thinking everywhere and in all times for which we have written records“, because the literate society is one in which precise recording and quantification of debts is possible.

This connects up with one criticism of Graeber’s ‘genealogical’ method: if we take it that the whole concept of debt is tainted by its origins in kingly oppression, conscription etc, what’s to stop us extending the same criticism to the calendar, number systems, writing etc? Perhaps the question should be rephrased – if that criticism does implicitly extend to all the other legacies of Sumeria*, what sense can we make of it that would be useful or at least tolerable? (I’m reluctant to say ‘none’.)

*A depressing possibility which had already occurred to me while I was listening to early stretches of A History of the World in 100 Objects.


Anders 03.04.12 at 9:12 pm

Reading Graeber encouraged me to see a paradox in asset bubbles.

A scenario as the result of asset price inflation where (A) a homeowner sells a house formerly worth 100 to a buyer for 200, with the increase in purchase price funded by extra mortgage debt taken on by the buyer, seems formally identical to (B) the homeowner selling the house to the buyer for 100, and then coercively imposing a debt of100 ex nihilo on the buyer (with a bank standing as an intermediary).

I’m not sure what to make of this. I don’t see coercion in individual behaviour (we have willing buyers and sellers – for example). Anyone else gripped by this?


Kaleberg 03.04.12 at 11:45 pm

I think the idea of owing and reciprocity are deep and anthropological. Debt, in the sense of this discussion, is an economic construct. Economics is built on top of anthropological constructs, so I think there is some confusion in layers and categories here.

I remember one article on the peoples of the Kalahari and how they respond to times of famine. They manufacture trade goods and seek out kin groups in less stricken areas and barter for food. An economist would see only the barter. An anthropologist would mark the kinship claim. A sociologist would recognize the cross claims of insurance.

Debt is a very broad term. I’d like to see some more careful definition.


Gene O'Grady 03.05.12 at 12:54 am

I’m curious whether the association of pecunia with pecus mentioned above, or the association of salary with sal, really tells us very much about the concepts or the society that developed them, or is simply a historical coincidence. Anyone have any ideas?


Neville Morley 03.05.12 at 9:04 am

As far as pecus and pecunia are concerned, scholarly consensus is that there is not in fact an etymological connection, but the Romans thought there was (see Pliny, Natural History 33.42) and explained it by the idea that fines had originally been levied in head of cattle and then converted to coinage once that had been invented. So it’s a Roman myth about the economic practices of their own distant past, based on the coincidental resemblance of the two words.


Z 03.05.12 at 3:01 pm

I started because it occurred to me the Plato I was teaching was, to a surprising extent, about debt, reciprocity and, generally, the convertability of moral into monetary categories, and vice versa.

This reminds me of a most amusing part in Xenophon’s Symposium, in which Callias professes to be spending his time making people more just. When ask how he manages this by Socrates, he answers that he does so by handing out money, after which his proposition that this makes people more just is cross-examined by Antisthenes, who forces Callias to confess that “of course” the recipients of his largesse are not well-disposed towards their very benefactor.

On the general topic, my first reflex, when confronted to modern incarnations of perennial institutions, is to reach out to my Bourdieu. To him, the crucial distinction between ancient (pre-economic) debts and modern (economic) debts is that the latter do not require-in fact actively deny the existence of-the ambiguity (“how could I ever thank you enough for such a favor?”) that imposes such a high transaction cost to other modes of exchange. This denial has the practical virtue of allowing precise computations (cue obligatory reference to the etymology of the term) and thus the possibility of an increased control over the future. It also obscures the very real symbolic violence hidden beneath bipartite accounting.

Or, in short, what economists know and that folks don’t know, is that if you forget the transaction cost of ambiguity, you can predict the future; but what folks do know, or feel, that economists don’t is that he status of being in perpetual debt to the society inscribes in the very sinew of the individual a set of beliefs, dispositions and affects that precludes the possibility of real autonomy and reciprocity, itself a precondition to the authentic participation of the citizen in the affairs of his society.

I don’t know if that is what Graeber’s point of view, but in that sense, there is a very real difference between modern and pre-modern conceptions of exchange.


More Dogs, Less Crime 03.05.12 at 5:29 pm

“And yet: human beings (not just economists), when called upon to explain how society works, have a strange tendency to reach first for efficient market hypotheses”
It doesn’t sound like you’re talking about the EMH. Does it make much sense to talk about the EMH in the absence of publicly listed exchanges?


Anders 03.05.12 at 10:30 pm

Z – do you expand on your perspective in more detail anywhere else?


Sebastian 03.06.12 at 5:15 pm

“Feeling under a general obligation to contribute to some collective enterprise, to give even with some diffuse notion of “return,” is not the same as “being in debt” in the sense we most often use that phrase today, especially in monetary transactions.”

But in the accounts of gifting societies you see that they often aren’t ‘some collective enterprise’, they become something akin to debts of honor to the person giving the gift. And if the giftor is very wealthy, they can often give a gift *that you cannot honorably refuse* which will be big enough that you will always be reminded of it, and likely never able to get past it in an honorable way. In fact, I think we should probably resist the idea that ‘communal’ and ‘gifting economy’ are deeply similar concepts. Communal structures and concepts can exist in both money economies and gifting economies.


mdc 03.07.12 at 2:03 am

@ 15: the Heraclitus fragment was cited in the Quiggin thread, I believe. But I don’t think the idea is that fire measures all things; rather that the distinction between fire and things is epiphenomenal, so to speak. The economic thought, maybe, is that value passes in and out of its apparent coin-form, not that coins measure value. Could be a fragment that would contradict this, but Heraclitus seems to me very much an anti-cosmic debt sort of thinker.


Z 03.07.12 at 9:26 am

Anders-I am flattered that you would consider this my perspective. I was channeling Bourdieu as in, e.g, Le Sens pratique or, in this specific case, Méditations Pascaliennes (section La doube vérité du don). Both are certainly available in English, if need be.


ragweed 03.07.12 at 5:54 pm

@MDLC (27) –
It doesn’t sound like you’re talking about the EMH. Does it make much sense to talk about the EMH in the absence of publicly listed exchanges?

Maybe not the EMH specificially (which does require public exchange) but the deeper ideology behind the EMH is that success is automatically deserved by the fact that it is success. Historically this ideology has been usually mediated by the supernatural – being wealthy or victorious in war is proof that God/the gods are on your side and that your way is the correct one ordained by God. Likewise, the EMH (strong form) holds that market prices automatically reflect all relevant information, and that information must be correct – the outcome proves the correctness of the information. Winners are always assumed to be deserved winners, because the power of the marketplace would not allow an inefficient outcome (and no, there are not many that hold to strict strong-form EMH, but it comes up).

You see this kind of thing at work all the time in popular thinking – “If your so smart, how come you ain’t rich?”

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