How the poor debtors still sell their daughters, How in the drought men still grow fat

December 29, 2011 at 8:01 am 21 comments

| Gabriel |

[Update 12/18/2012: Struck through the bit about Apple because I think people make way too big of a deal about this. It's an isolated mistake in a very long book, big deal. I used strike-through rather than out-right deleting it to preserve the record. On the other hand I stand by my criticism of the "tribute" thesis of chapter 12 as this is not nitpicking but a substantive disagreement with a sustained argument. In retrospect I might have changed a word here or there in my take on "tribute," but overall I think my argument holds up.] 

I recently read Graeber’s Debt: The First Five Thousand Years and found it to be very impressive and thought-provoking. As an indication of how impressed I was, I’ll just say that: I’ve recommended it to several people, I’m citing it in one of my next papers, I’m very seriously considering assigning it as a text when I prep econ soc sometime in the next couple years, and it inspired me to go back and read The Gift by Mauss and several journal articles. I’d long been vaguely aware of the anthropology of exchange through my exposure to Zelizer and Fiske, but had never read very deeply in it and so I learned a lot. Debt is written as “big history” (not unlike JLM’s Social Structures and Fukuyama’s OoPO) and this gives it a different character than the more cross-sectional approaches taken by Mauss, Zelizer, or Fiske.

Large parts of the book could better be called Commerce: The First 5,000 Years or Exchange: The First 5,000 Years. However there are a few places where Graeber explicitly tackles debt. The most widely known of these (in part because Graeber opened a can of whup-ass on some guy at Mises who tenaciously stuck to the discredited view) is the origins of money. The received view from Adam Smith which still persists in econ textbooks is that primordial exchange takes the form of barter but that barter suffers from the “double coincidence of wants” problem wherein A can only trade with B if A has something B desires and vice versa. In this model, money lubricates exchange by creating a universal medium of exchange. As Graeber shows, this model of pre-monetized exchange assumes arms-length transactions whereas almost all documented exchange in primitive cultures is thoroughly embedded and takes one form or another of communal sharing or gift exchange. That is, delayed reciprocity is typical and this avoids the problem of coincidence of wants. From the economist’s perspective delayed reciprocity introduces further issues of trust, time preference, etc and thus is a more complex form of exchange than barter, but this is because (at least on this issue) economists are acting as arm chair philosophers of the social contract and it is the anthropologists who are (at least on this issue) being good empiricists.

The important exception to the “barter is a myth” point is that Graeber argues that arms-length exchange does occur in primitive cultures, but only between and not within meaningful social units and that such arms-length exchange is somewhat sketchy and dangerous. More broadly, one of the central points of the book is that arms length exchange in general and market economies in particular require the disembedding of people and commodities from their social context. Graeber sees this process as often violent and he makes a powerful argument that this originates with slavery, both in antiquity and in early modern Africa.

Other interesting points he makes on debt are various ways that it becomes a moral obligation such that debtors are seen as sinners and religious salvation is seen as a spiritual analog to redemption. This helps explain something I never completely understood when watching The Sopranos, which is why gangsters first go to the trouble of getting someone to incur an illegal debt before shaking them down? It turns out that the point of loan-sharking instead of mere naked extortion is the victim feels a certain moral obligation to repay the debt and so loan sharks exploiting gambling addicts has the same logic as how many grifts (e.g., 419 advanced-fee fraud, the fiddle game, etc.) first involve the victim as co-conspirator in a crime against a real or imagined third party. Moreover, Graeber makes the bold point towards the end of the book that debt can drive people to do things that they otherwise would be morally averse to, with his example being the conquistadores.

This is all fascinating but it depends a lot on how much you trust Graeber’s empirical claims. For instance, was it really true that everyday economic life in early modern Britain was largely cashless and instead used a combination of token currencies, informal credit, and asynchronous barter? Maybe, I really don’t know. I’d like to trust Graeber on this but I don’t know if I can since he gets some things pretty wrong, or at least dubious. At Unfogged there’s a review (and a very funny comments thread) pointing out that the following sentence contains six factual claims all of which are incorrect:

Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other’s garages.

This is not exactly stuff written in the cuneiform of Mesopotamian diplomacy, the barbarian law codes of mediaeval Ireland, or the field notes of Victorian anthropologists, but something that occurred in suburban California around the time I was born and concerns the extremely well documented origins of one of the world’s biggest firms. If Graeber gets this wrong, how can we trust him about the stuff that’s harder to check, like all that business about barbarian law codes.

The thing that really bothers me though (because it’s more than an isolated sentence) is the last few chapters, which argue that America’s current account deficit constitutes military tribute. He means this literally. For instance, he suggests that the Iraq War was punishment for Iraq switching to the euro — meanwhile back in reality the euro area itself overlaps pretty closely with NATO and several eurozone countries invaded Iraq together with the United States. I guess we’ve just been too busy punishing Iraq for using euros to get around to dropping a few bombs on the European Central Bank which actually issues those euros. (This is pretty strange since the ECB is just a few minutes of flight time from a massive USAF base, so bombing it would be a very convenient way to ensure the continued flow of tribute).

When I first read this military tribute argument in the early 1990s (in Chomsky’s Deterring Democracy) it made a lot of sense to me, but two things were different then:

  1. I was a lot younger, less informed about economics, and more paranoid in my political thinking.
  2. In the early 1990s the US government’s major foreign debt holders were countries that could plausibly be described as military protectorates (Japan, South Korea, Saudi Arabia, etc.). Now the single largest holder of US government debt is the People’s Republic of China. For those of you following at home, China is most certainly not a US military protectorate but our major geostrategic rival against whom a post-GWOT DOD is orienting its strategic doctrine.

Graeber addresses problem #2 head on and tries to explain this away by some convoluted argument that I can’t even reproduce but I find his argument much less plausible than the more parsimonious explanation that the Chinese are buying t-bills (a) as a store of value (b) as a medium of exchange and (c) as a tacit export subsidy that suits their domestic politics. That is, they buy t-bills for basically the same reasons as everybody else, including those countries where we have Air Force or Navy bases. This deliberate obtuseness about how a reserve currency works and the paranoid understanding that it is provincial tribute is by far the worst part of the book. I’m trying to draw a fact/value distinction between my lack of sympathy for his political positions and his empirical claims as I’d like to think that when reading someone with whom I disagree I can distinguish between their empirical claims that are well-supported, debatable, and downright nuts. That is to say I don’t think these chapters upset me because they are normatively “anti-American” but because as an empirical matter they badly fail to understand how (for better or worse) American power works.

This business about tribute is at the end so I’d like to say that I recommend the book but that you stop on page 365, right before he gets his Chomsky on, but I honestly worry whether I can trust the parts of the book I’m not as informed about. This is the 13th chime of the clock, the brown M&Ms in the Van Halen dressing room; pick your metaphor, but this business about Apple computer and especially about Chinese t-bill holdings ultimately makes me take a “trust but verify” attitude towards a book that I found both extremely enjoyable and intellectually inspirational as I was reading it. My recommendation is that people interested in exchange read the book, but do so with an appropriate degree of skepticism and look to see reactions from historians and anthropologists who are qualified to assess the empirical claims. Also see other reviews at Understanding Society and OrgTheory. [Update 2/23/12, also see the Crooked Timber symposium. Like all of their book clubs it's truly excellent]

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21 Comments

  • 1. Jenn Lena  |  December 30, 2011 at 8:12 am

    I am so grateful for all of this sensible, comprehensive commentary on the book, because I frankly don’t have time to read it.

    • 2. gabrielrossman  |  December 30, 2011 at 7:20 pm

      yegads, that’s not what i was hoping for. i meant that you should read it and if you don’t have time now at least put it in your queue.

    • 3. Maynard Handley  |  February 23, 2012 at 5:19 pm

      You should search for David Graeber in iTunes. He has given a few talks and interviews (for example there is a lecture he gives to the Oxford Anthropology seminar about the book). He’s a good speaker and it’s an easy way to get a quick summary of his thoughts.

  • 4. wolfgang  |  January 1, 2012 at 3:13 am

    >> Now the single largest holder of US government debt is the People’s Republic of China.

    The single largest holder of US gov. debt is the US Federal Reserve.

    • 5. gabrielrossman  |  January 1, 2012 at 10:02 am

      Ok, correct that to read “largest foreign holder”. Point still stands.

  • 6. Jeffrey  |  January 5, 2012 at 7:29 am

    Thanks for posting this. I was hoping that others would see what I saw in the book. The thing is, I’m certainly open to criticisms of American “imperialist” foreign policy (as such), but when they are presented in such a paranoid style, with such naked contempt, it indeed makes me distrust the other statements from the author. But, like you, I do recommend the book. There is a lot there that is interesting.

    One correction, he does mention the “tribute” theory near the beginning of the book, before revisiting it again near the end. So, stopping early won’t help a reader avoid the crazy.

    • 7. slackersrus  |  February 22, 2012 at 8:07 am

      What’s wrong with “naked contempt” when it is deserved?

  • 8. Charles Reinhardt  |  February 22, 2012 at 7:49 am

    I don’t see what’s wrong with being contemptuous of Americans. Most educated people in the world are. I say the more contemptuous you are, probably the more clear-eyed you are about their foreign policy.

    And since when has Chomsky been discredited? To my knowledge, he’s bested all of his detractors.

    • 9. Corey Spaley  |  February 22, 2012 at 9:52 pm

      “And since when has Chomsky been discredited? To my knowledge, he’s bested all of his detractors.”

      If you’re speaking of linguistics, that may well be. Foreign policy, not so much. That doesn’t mean that American foreign policy is some kind of benevolent hegemony, nobly applied to help the least among us across the globe. But there are a lot of IR scholars (not working for AEI) who think Chomsky has it quite wrong, while simultaneously criticizing American foreign policy.

      • 10. Dan  |  July 13, 2012 at 5:54 pm

        Lots of IR scholars have refuted Chomsky’s critical stances, without ever demonstrating him to have been factually wrong about a single verifiable claim in his meticulously researched works. Indeed, in large part they are American/European scholars who avoid addressing any of his specific claims and usually resort to the same kind of obscurantist delegitimation strategies one can observe in the above piece by Rossman, often without the kind of ‘worth a read anyway’ sugarcoating offered here.

  • [...] How the poor debtors still sell their daughters, How in the drought men still grow fat « Code and C…: [...]

  • 12. Collective Conscious » Indebted: A Graeber Bonanza  |  February 22, 2012 at 9:48 am

    [...] Gabriel Ross­man: How the poor debtors still sell their daugh­ters, How in the drought men still grow fat « Code and Cul­ture: At Unfogged there’s a review (and a very funny com­ments thread) point­ing out that the fol­low­ing sen­tence con­tains six fac­tual claims all of which are incorrect: [...]

  • 13. gabrielrossman  |  February 23, 2012 at 1:03 pm

    To commenter “b,” use a real e-mail address if you want to comment. I promise not to e-mail you, make public the address, or otherwise abuse the information. This is purely a defense against sock-puppeting and other misbehavior.

    If you don’t want to retype your comment, e-mail me and I’ll send it to you.

  • [...] in it would not preclude giving a book to undergraduates to read, but as other bloggers (see here, here,  and here) have pointed out, Graeber’s book contains a sentence with no less than six [...]

  • 15. LS  |  March 3, 2012 at 2:42 pm

    Thanks for an interesting review. I was following Graeber for a while, but I haven´t read anything from him yet. It is always intriguing to read some interesting economic analysis from somebody, who is (or at least pretends to be) an anarchist.
    But your point about inaccuracy in his thoughts makes me rethink it again. We all know that each one of us perceives the reality in a bit different way, but those errors he committed were just astounding.
    Maybe I will just get back to my favorite economic scientist prof. Stiglitz, who with his careful analysis and more insider approach names the current problems of the system (like for example Privatizing Profits, Socializing Losses). Or I will just listen to some mp3 with Noam Chomsky giving speech at Catholic University of Chile (yeah the same one famous for having and agreement with Chicago university back in times of Milton Friedman).

  • [...] the seignorage afforded by the $US role as global reserve currency represents a form of tribute. Here’s someone who disagrees. Here’s someone else who [...]

  • 17. Anand  |  January 3, 2013 at 2:59 am

    I stumbled across this through CT symposium (Farrell linked to you). Nice post.

    I have one question though. Could you point me to where Chomsky claims the “military tribute” thesis as you call it? I haven’t read Deterring Democracy in a while, but I don’t recall it. A section would be sufficient.

    Of course, as you said, it is quite possible when Chomsky made this argument in the early 90s that it was true (or at least more plausible).

    This is mainly for my own intellectual satisfaction in finding a few of the errors (I have found very few) in Chomsky’s work.

    • 18. gabrielrossman  |  January 3, 2013 at 6:58 am

      I haven’t read it in 20 years but to the best of my memory he makes this argument towards the beginning, maybe the preface. I remember being struck that there was a certain disconnection between the argument in this part and the rest of the book. The book I’m thinking of was definitely “Deterring.”

      • 19. Anand  |  January 4, 2013 at 11:26 am

        Thanks.

  • 20. DeLong and the economists on Debt, Chapter 12 | Savage Minds  |  February 9, 2013 at 12:02 pm

    [...] clear that his argument is actually based primarily in two reviews written about Debt a while back: One by Gabriel Rossman and the other by Henry Farrell at Crooked Timber.  Both have a lot of good things to say about [...]

  • 21. Graham Peterson  |  April 28, 2013 at 8:32 pm

    I think Graeber’s anthropological evidence is inarguable. But. It stands to reason that neighbor tribes, who mitigated the terms of external-barter more peacefully than others, would have realized the positive-sum gains from continuing to trade voluntarily. Recognizing these gains, these people would have had plenty of incentive to continue. And they would have suffered from the dual coincidence of wants problem, and invented money to do their trading.

    So here’s a proposition. There is astounding variation in language among indigenous people. But this is a situation we are left with today — a bunch of outlier languages and groups in the New Guinea Highlands whose languages are completely mutually incomprehensible. What if, in mesopotamia where groups’ languages would not have suffered the isolation and “genetic drift” of the evolution of their languages, groups who occasionally traded with one another had an easier time of it because their languages were closer to one another. Lower transactions costs. More trust. More trade. It stands to reason that early city states evolved out of the peaceful cooperation and co-evolution of tribes who increasingly traded with one another further and further, and specialized and divided labor internally (as firms now do).

    Of course, enforcement becomes an issue, as do public goods, and the usual rent seeking — so we see States come along for this ride. But it’s not clear that the early emergence of states was built exclusively on enslaving and conquering. Nor especially markets.

    I think Graeber’s story is extremely important to economic sociology. The same situation he describes for tribes thousands of years ago still exists today. Letting a tribe = an organization or firm, we see that even down to the present, a majority of social exchange takes place *within* organizations by way of delayed reciprocity and social scripts — and that priced, market transactions take place *between* them.


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