CapitalistImperialistPig

I have been mostly raving about David Graeber's new book, Debt: The First 5000 years recently. Business Week has a long, interesting article on the author and on his seminal role in the Occupy Wall Street Protests . I recommend all of it, but here is just one facet that summarizes one of the main arguments of his book. Graeber’s problem with debt is not just that having too much of it is bad. More fundamental, he writes in his book, is debt’s perversion of the natural instinct for humans to help each other. Economics textbooks tell a story in which money and markets arise out of the human tendency to “truck and barter,” as Adam Smith put it. Before there was money, Smith argued, people would trade seven chickens for a goat, or a bag of grain for a pair of sandals. Then some enterprising merchant realized it would be easier to just price all of them in a common medium of exchange, like silver or wampum. The problem with this story, anthropologists have been arguing for decades...

I continue to be fascinated with how debt has managed to repeatedly get us in trouble, ever since its invention 5000 or so years ago.  As usual, these ruminations are inspired mainly by David Graeber's Debt: The First 5000 Years. Great philosophers from Plato and Aristotle have weighed in, as have most of the world's major religions, but we keep on making the same mistakes.  Ultimately, I think, the blame must lie with human nature. We are incorrigible and unreasonable optimists.  Study after study shows that humans overestimate their skill and talent in almost every aspect (see, e.g., Daniel Kahneman's new  book: Thinking, Fast ans Slow).  Consequently, it is completely natural that for all of human history, optimistic borrowers have borrowed more than they can afford to pay and optimistic lenders have lent to those who can't repay. The fact that we have made it more difficult to sell the wives and children of defaulting debtors has made some of the more ...