Debt: The First 5,000 Years

Graeber, an anthropologist, argues that the standard economic story of money's origin is empirically false. Textbooks describe barter giving way to money and money to credit. Graeber marshals the anthropological and historical record to argue the sequence ran the other way: credit systems and accounting units came first, coinage appeared much later and mainly to pay soldiers, and no society has ever been found that ran on barter as economists describe it.

From that starting point he builds a history in which debt is primarily a moral and political relationship rather than an economic one. He examines Mesopotamian debt jubilees, the ancient categories of honour and slavery, medieval Eurasian credit networks, the role of violence and coinage in what he calls the military-coinage-slavery complex, and the return of virtual credit money after 1971. He argues that debts between equals are negotiable while debts backed by state violence are not, and that periodic debt cancellation was a normal feature of ancient states which modern states have abandoned.

The book is enormously influential and heavily contested. Economists and historians have documented specific factual errors, including the treatment of Apple's founding, claims about the IMF and Madagascar, and several ancient sources. Graeber's political conclusions, which favour a modern jubilee, do not follow tightly from the historical material. The book is still worth reading for investors because it makes the strongest available case that credit is a social arrangement whose enforcement is political, and because it reframes what a sovereign default or a debt restructuring actually is. Read it with a critical eye and check specific claims before repeating them.