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David Graeber (1961-2020): The Relevance of his Thought and his Struggle
by Eric Toussaint
16 October 2020

The generally accepted idea that a debt must be repaid, with interest – which supposedly covers the risks taken by the bank, must be radically challenged. David Graeber did that through a historical analysis that takes into account humanity’s evolution over a period of 5,000 years. [1] His research arrives at the conclusion that banks are prepared to take any risk so long as they have the guarantee that the State will bail them out. And so they encourage private individuals to contract loans far in excess of their ability to repay them and massively purchase debt securities from major corporations and States that are already indebted. They also create toxic structured “products” that only further promote speculation. This was demonstrated by the crisis of 2007–2008 and the ensuing years. It can be verified currently with the 2020 crisis in the context of the Coronavirus pandemic. So why should bankers be repaid? Shouldn’t their major shareholders take responsibility for the risks they took?

Since 5,000 years ago and the invention of writing, debt has played a central role in social relations. For thousands of years, the struggle between rich and poor has taken the form of a conflict between creditors and debtors. Over that long period, with remarkable regularity, popular insurrections have begun in the same way – with the ritual destruction of debt documents (tablets, papyrus, parchments, etc.)

For thousands of years, the struggle between rich and poor has taken the form of a conflict between creditors and debtors

With the crisis in 2007 and the evictions that followed in the USA, ordinary citizens have begun to question debt, and more and more people are calling debt into question in a country where not repaying a loan is considered unthinkable.

But these challenges are insufficient. David Graeber underlines the fact that in 2009–2010 in the USA, the number of incarcerations for payment default increased greatly. [2] Between 2008 and 2015, 12 million families unable to repay their mortgage debts were evicted from their homes in the USA, and 400,000 in Spain. In Asia, Africa, and Latin America–Caribbean, the “debt system” is tightening its grip just as it is in the most industrialized countries.

David Graeber underlines the fact that in 2009–2010 in the USA, the number of incarcerations for payment default increased greatly

Since ancient times, debt has been used to subjugate, despoil, dominate and dispossess the working classes (among whom women are in the first rank of victims) – small peasants, artisans, fishermen, etc., up to and including modern salaried workers, and the members of their households. The process is simple: the lender requires the borrower to surrender what she or he owns as security. This collateral can be the land owned and worked by a farmer, the tools of an artisan’s trade, or the house a family lives in. The loan is repaid in kind or in currency. Since the interest rate is high, to repay the loan the borrower is forced to transfer to the lender a large part of the product of her or his labour, and as a result is impoverished. If the borrower is unable to repay the loan, the lender takes possession of whatever was put up as collateral. Today, most of the students who go into debt in order to pursue university studies in the USA, Great Britain and Japan will labour under the burden of repayment for decades. In South Asia the situation of the victims of microcredit scam is tremendous

According to prevailing notions the first form of exchange in human history was barter; money appeared later as a medium for facilitating such exchanges, and then credit emerged in the wake of money.

Graeber demonstrates that credit in fact came first and not third. Barter, according to Graeber, was not a type of economy in itself but rather an occasional practice, and credit as used in Mesopotamia 5,000 years ago preceded the stamping of money by more than 2,000 years.

Barter, according to Graeber, was not a type of economy in itself but rather an occasional practice

In that region, around 2,400 BCE, merchants and government leaders began to grant loans to peasants. When borrowers were unable to repay, the lenders confiscated their assets and were entitled to enslave the members of their family. To respond to popular discontent, the power in place periodically cancelled private debt and restored peasants’ rights. The cancellations were occasions for large celebrations during which the clay tablets on which debts were recorded were destroyed. There were some thirty general cancellations of private debt in Mesopotamia between -2400 and -1400. [3] One of the cancellation decrees specifies that official creditors and tax collectors who have evicted peasants must compensate them.

After that period, there is no record of debt cancellations in Mesopotamia. Inequalities, meanwhile, became much greater. Land was taken over by large private owners, and slavery due to debt became common. During the following centuries, nevertheless, there is evidence of violent social struggles between creditors and indebted persons.

In -432, certainly under the influence of the old Mesopotamian tradition, Nehemiah [4] proclaimed the cancellation of the debts of Jews who were indebted to their rich compatriots. It is at that time that the Torah was completed. [5] The tradition of general debt cancellations is part of the Jewish religion and is found in the earliest Christian texts via Deuteronomy, which proclaims the obligation to cancel debts every seven years, and Leviticus, which requires it at each jubilee, or every 50 years.

In the “Our Father,” the best known of all Christian prayers, the phrase most often translated as “Forgive us our trespasses as we forgive those who trespass against us,” in Matthew’s original Greek text (Ch. 6, verse 12) reads: “Forgive us our debts, as we also have forgiven our debtors.” [6]As a matter of fact, in German and Dutch, the word Schuld designates both sin and debt. Alleluia, the expression of joy used in the Jewish and Christian religions, come from the language spoken in Babylon in the second millennium BCE and referred to the liberation of those in debt slavery. [7]

“Forgive us our debts, as we also have forgiven our debtors.”, in the “Our Father”

In Greece, beginning in the sixth century BCE, major struggles arose against debt slavery and for cancellation of the private debts of the people. Aristotle writes in the Constitution of the Athenians: “The poor were enslaved to the rich – themselves and their children and their wives.” Social and political struggles increased and ultimately led to legal provisions prohibiting debt slavery, the best example being Solon’s reforms in Athens. At Megara, a city near Athens, a radical faction came to power. Loans for interest were prohibited and the measure was applied retroactively, forcing creditors to reimburse the interest they had collected. [8]

Public debt can also serve as a mechanism for subjugation

In parallel with David Graeber’s research and writing covering the period from the earliest antiquity through the end of the 18th century, I focused my attention particularly on the period between the North American and French revolutions of the late 18th century up to the present time. That work resulted in several books, including The Debt System, first published in 2017, and The World Bank, a Never Ending Coup d’Etat, first published in 2006, which provide a partial systematization of the conflicts surrounding the question of sovereign public debt. That work led me to develop ideas that are not touched on in David Graeber’s work.

Greece in the years from 2010 is a demonstration of how a country and a people can be deprived of their freedom by being forced to repay a debt that is clearly illegitimate. Since the 19th century, from Latin America to China and including Haiti, Greece, Tunisia, Egypt and the Ottoman Empire, public debt has been used a weapon of domination and spoliation [9] Creditors – whether powerful States, the multilateral entities that serve them, or banks – have perfected the manœuvres by which they impose their will on debtors. Before the end of the first half of the 19th century, Haiti served as a laboratory. Haiti was the first independent Black republic; the island freed itself of France’s yoke in 1804. But that did not mean that Paris was prepared to give up its hold on Haiti. French slave owners were given royal compensation for their “losses.” The accords signed in 1825 with Haiti’s new leaders created a monumental debt weighing on the independent State, which Haiti had difficulty in repaying as early as 1828 and which in fact took a century to repay, making any real development impossible in the meantime.

Over the last two centuries, several countries have successfully repudiated or unilaterally restructured debts

Debt was also used to subjugate Tunisia to France in 1881, and Egypt to the UK in 1882; the creditor powers used unpaid debt to subjugate what until then had been two sovereign nations. Similarly, Greece came into being in the 1830s already shackled to a debt held by the UK, France and Russia. In 1934, the island of Newfoundland, which until then had been a Dominion of the Crown, with its own Parliament, was facing bankruptcy – more than 63% of the budget was devoted to debt service. The United Kingdom handed over management to a commission of civil servants and ceded the province to Canada in 1949. [10]

Over the last two centuries, several countries have successfully repudiated or unilaterally restructured debts by arguing that they were either illegitimate or odious. Portugal (1837), Mexico (1861, 1867, 1883, 1914, 1943), the USA (1837, 1865, 1898), Russia (1917–1918), Costa Rica (1919), Brazil (1931, 1946), Cuba (1909, 1934, 1959), China (1949), Indonesia (1956), Iran (1979), Paraguay (2005), Ecuador (2007-2009), Iceland (2008-2009) have all done [11].

According to the odious debt doctrine theorized by Alexander Sack in 1927 a debt may be considered odious if it fulfils two conditions:

1) The population does not enjoy the benefits: the debt was incurred not in the interests of the people or the state but against their interest and/or in the personal interest of the leaders or persons holding power.

2) Lenders’ complicity: the lenders had foreknowledge, or could have had foreknowledge, that the funds concerned would not benefit the population.

The democratic or despotic nature of a regime does not influence this general rule.

The father of the odious debt doctrine clearly states that regular governments (may) incur debts that are incontestably odious.” Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with”. [12]

Sack says that a debt may be considered odious if:

a) the purpose which the former government wanted to cover by the debt in question was odious and clearly against the interests of the population of the whole or part of the territory, and

b) the creditors, at the moment of the issuance of the loan, were aware of its odious purpose.”

He continues: “Once these two points are established, the burden of proof that the funds were used for the general or special needs of the state and were not of an odious character would be upon the creditors.” (see 14223)

The notion of odious and illegitimate debt has been invoked and applied several times in history.

Current economic conditions make cancellation of debts more imperative than ever, beginning with debts of countries of the South that have the effect of perpetuating neocolonial domination.

Translated by Snake Arbusto and Christine Pagnoulle.

Footnotes :

[1David Graeber, Debt: The First 5000 Years, Melville House, 2011

[2David Graeber, op.cit., p. 17.

[3Michael Hudson, The Lost Tradition of Biblical Debt Cancellations, 1993, 87 pages; “The Archaeology of Money in Light of Mesopotamian Records” in Credit and State Theories of Money: The Contributions of A. Mitchell Innes, L. Randall Wray, ed., Edward Elgar, 2004. See also Éric Toussaint, The Long Tradition of Debt Cancellation in Mesopotamia and Egypt from 3000 to 1000 BC,

[4“A Jewish civil servant of the Persian administration at Suse, under the reign of Artaxerxes I ( 465- 424). The source of information concerning Nehemiah is an autobiographical text resembling those of high Egyptian civil servants, found in the Bible in the Book of Nehemiah (i to vii). Though born in exile, Nehemiah was highly attached to Jerusalem. His brother Hanani arrived in Suse leading a delegation of Judeans. Nehemiah was overwhelmed by the distress of Jerusalem’s people. He obtained permission from the king, whom he saw regularly in his capacity as cupbearer, to leave for Jerusalem.” (Source: Encyclopédie Universalis: )

The social situation of Judea was terrible: “Now the men and their wives raised a great outcry against their fellow Jews. Some were saying, ‘We and our sons and daughters are numerous; in order for us to eat and stay alive, we must get grain.’ Others were saying, ‘We are mortgaging our fields, our vineyards and our homes to get grain during the famine.’ Still others were saying, ‘We have had to borrow money to pay the king’s tax on our fields and vineyards. Although we are of the same flesh and blood as our fellow Jews and though our children are as good as theirs, yet we have to subject our sons and daughters to slavery. Some of our daughters have already been enslaved, but we are powerless, because our fields and our vineyards belong to others.’” (Nehemiah 5:1-5)

Nehemiah would use the same method to return cohesion to the Kingdom of Judah, a mix of the notables, returned from exile, and the common people who had remained on the land. Convinced that the country would be weaker in terms of its military, economy and spirituality if its governors no longer served as guarantors of social justice, he inscribed the debt acquittal law within a religious framework: the alliance with Yahweh. From then on it was God himself who ordered debts to be written off and slaves and their land, which was the property of God and none other, to be liberated. “When I heard their complaints, I grew angry (…), I denounced the leaders and officials. (…) ‘Cancel all the debts they owe you - money or grain or wine or olive oil. And give them back their fields, vineyards, olive groves, and houses right now. (…)This is how God will shake any of you who don’t keep your promise,’ I said. ‘God will take away your houses and everything you own’” (Neh. 5: 6-13)

In this way, Nehemiah sided resolutely with the landless peasants when confronting a class rooted in power by way of its financial clout. However, what is also of interest in this passage is how popular revolt is channelled against the arrogant violence of the rich, and that the peasants demand that the old Israeli debt acquittal law be used in their favour.

Extract from Isabelle Ponet, “Debt cancellation in the land of Canaan in the first millennium BC”

[5The Torah (Jewish religious law) is the compilation of the texts that make up the first five books of the Bible: Genesis, Exodus, Leviticus, Numbers and Deuteronomy.

[6Graeber, Chapter 4, note 25, p. 403. See the prayer in Latin: “et dimitte nobis debita nostra, sicut et nos demittimus debitoribus nostris.

[7Michael Hudson, op. cit., p. 27.

[8See David Graeber, op.cit.

[9Toussaint, Éric, The Debt System: A History of Sovereign Debts and their Repudiation, Haymarket, 2019

[10Carmen Reinhardt and Kenneth Rogoff, This time it’s different: eight centuries of financial folly, Princeton University Press, 2010

[11See Toussaint, Éric, The Debt System, pp. 209-217

[12Alexander Sack Les effets des transformations des États sur leurs dettes publiques et autres obligations financières (The effects of the transformation of States on their public debt and other financial obligations), Recueil Sirey, Paris, 1927. Abridged document freely available on the CADTM Web site (in French)

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.