Debt: The First 5,000 Years

The title of the chapter, “On the Experience of Moral Confusion,” reveals its central claim: repaying debt is not an economic principle but a moral one. The basic assumption about debt is that it must be repaid. Graeber takes issue with this assumption.

To Graeber, the idea that “‘one has to pay one’s debt’” (3) is untrue even according to standard economic theory. In this theory, the lender (person, organization, or institution who lends the money) accepts a certain degree of risk that they will never fully get their money back. The purpose of lending money is to direct resources towards profitable investments. The notion of paying one’s debt is not an economic principle, but a moral statement since it is about “giving people what is due to them” (4).

Graeber also discusses several forms of debt in our modern global economy. First, debt can be what weaker countries owe stronger countries. France invaded Madagascar in 1895, disbanded the government, declared it a French colony, and imposed heavy taxes on the Malagasy population. The French used the taxes to pay for their invasion and to defray the costs of building infrastructure in the country. The French never asked the Malagasy how they would like the tax money spent.