path: root/saved_articles/to have is to owe.txt

---
title: To Have Is to Owe
Triple Canopy
date: 2010-12-09T23:17:44Z
source: http://canopycanopycanopy.com/10/to_have_is_to_owe
tags: finance, money

---

Mesopotamian usury, Vedic accounting, American Jubilee: excavating the
history of fiscal debt. Illustrations by [Joanna
Neborsky](/contributors#neborsky_joanna).

“To Have Is to Owe” contains excerpts from David Graeber’s forthcoming
book [*Debt: The First 5,000
Years*](http://www.amazon.com/Debt-First-5-000-Years/dp/1933633867/ref=sr_1_1?ie=UTF8&s=books&qid=1291747069&sr=8-1),
to be published by Melville House in January 2011. It was produced by
Triple Canopy as part of its [Research
Work](/projectareas#project_areas) project area, supported in part by
the New York Council for the Humanities and the Brown Foundation, Inc.
of Houston.

Payment Due
-----------

For thousands of years, the struggle between rich and poor has largely
taken the form of conflicts between creditors and debtors—of arguments
about the rights and wrongs of interest payments, debt peonage, amnesty,
repossession, restitution, the sequestering of sheep, the seizing of
vineyards, and the selling of debtors’ children into slavery. By the
same token, for the past five thousand years, with remarkable
regularity, popular insurrections have begun the same way: with the
ritual destruction of debt records—tablets, papyri, ledgers; whatever
form they might have taken in any particular time and place. In the
throes of the recent economic crisis, with the very defining
institutions of capitalism crumbling, surveys showed that an
overwhelming majority of Americans felt that the country’s banks should
not be rescued—*whatever the economic consequences*—but that ordinary
citizens stuck with bad mortgages should be bailed out. This is quite
extraordinary, as Americans have, since colonial days, been the
population least sympathetic to debtors. (Back then, the ears of an
insolvent debtor would often be nailed to a post.) The notion of
morality as a matter of paying one’s debts runs deeper in the United
States than in almost any other country, which is odd, since America was
settled largely by absconding debtors. Despite the

fact that the Constitution specifically charged the new government with
creating a bankruptcy law in 1787, all attempts to do so were rejected
on “moral grounds” until 1898, by which time almost all other Western
states had adopted one. The change was epochal.[1](#)

Those charged with moderating political debate in our media and
legislatures have decided that this is not the time for another such
change. The US government effectively put a three-trillion-dollar
band-aid over the problem, changing nothing. Financiers were “bailed out
with taxpayer money”—in other words, their imaginary money was treated
as if it were real—while mortgage holders were mostly left to the tender
mercy of the courts, subjected to a bankruptcy law that, the previous
year, Congress had made far more exacting against debtors. We have even
seen a backlash against small-scale debtors, one driven by financial
corporations that have now turned to the same government that bailed
them out to apply the full force of the law against ordinary citizens in
financial trouble. “It’s not a crime to owe money,” reports the
*Minneapolis Star-Tribune*. “But people are routinely being thrown in
jail for failing to pay debts.” In Minnesota, “the use of arrest
warrants against

1 The nature of money has always been particularly contentious in the
US, as evidenced by the endless battles between goldbugs, greenbackers,
free bankers, bimetallists, and silverites in the nineteenth century.
American voters were so suspicious of the very idea of central banks
that the Federal Reserve system was created only on the eve of World War
I, three centuries after the Bank of England was founded. Even the
monetization of the national debt was seen by Thomas Jefferson as a
pernicious alliance between warriors and financiers, though it opened
the way to government assuming the role of moral debtor, and of freedom
being perceived as something literally owed to the nation.

Aristocratic debtors were wined and dined by liveried servants and
allowed to receive prostitutes. Impoverished inmates were shackled
together in tiny cells, where they “suffered to die, without pity, of
hunger and jail fever.”

debtors has jumped 60 percent over the past four years, with 845 cases
in 2009. In Illinois and southwest Indiana, some judges jail debtors for
missing court-ordered debt payments. In extreme cases, people stay in
jail until they raise a minimum payment. In January [2010], a judge
sentenced a Kenney, Ill., man ‘to indefinite incarceration’ until he
came up with \$300 toward a lumber yard debt.”[2](#)

Despite all this, we hardly know what debt is. The very flexibility of
the concept is the basis of its power, and of the moral confusion
associated with it. Looking at the history of debt worldwide, one

2 Throughout history, certain sorts of debts, and certain sorts of
debtors, have been treated differently from others. The British public
was scandalized in the 1720s when the popular press exposed the fact
that debtors’ prisons were regularly divided into two sections.
Aristocratic inmates, who often thought of a brief stay in Fleet or
Marshelsea as something of a fashion statement, were wined and dined by
liveried servants and allowed to receive regular visits from
prostitutes. On the “common side,” impoverished debtors were shackled
together in tiny cells, “covered with filth and vermin,” as one report
put it, “and suffered to die, without pity, of hunger and jail fever.”

finds that most people have held that paying back money one has borrowed
is a simple matter of morality and, contradictorily, that anyone in the
habit of lending money is evil. Recently, the former position seems to
have trumped the latter, owing to a persistent refusal to question our
slavish devotion to creditors. But if the welfare state must be
destroyed in order, ostensibly, to settle our debts, we should ask
ourselves: To whom, exactly, are those debts owed? And where did our
creditors get the money that was loaned to us? (The answer, of course:
We owe the very financial institutions we recently bailed out for making
fraudulent and idiotic loans; they didn’t *get* the money anywhere, they
just

made it up.) Whenever such questions have been openly asked in Europe,
riots have tended to ensue.

Such eruptions make it clear that debt must be removed from that
rarefied sphere of morality arbitrated by transnational institutions
(whose representatives are also its main beneficiaries), where it has
become ensconced, and returned to the sphere of open political debate.
In the ancient world, it was not debt that was considered sacred, but
rather the power to make it disappear. We are, it seems, long overdue
for a contemporary Jubilee, one that would affect consumer debt as well
as international debt, and that would not only relieve a great amount of
human suffering but also remind us that money is not ineffable, that
paying one’s debt is not the essence of morality, that borrowing and
lending are human arrangements, and that if

democracy is to mean anything, it is the ability to all agree to arrange
things differently.

It is significant that, since Hammurabi, great imperial states have
invariably resisted this kind of

politics. Athens and Rome established the paradigm: Even when confronted
with continual debt crises, they insisted on legislating around the
edges, softening the impact; they eliminated obvious abuses like debt
slavery and used the spoils of empire to throw all sorts of extra
benefits at their poorer citizens (who, after all, provided the rank and
file of their armies) so as to keep them afloat. They did all this in
such a way as to fend off any challenge to the principle of debt itself.
The US has taken a remarkably similar approach: eliminating the worst
abuses (e.g., debtors’ prisons), using the fruits of empire to provide
subsidies, visible and otherwise, and, recently, manipulating currency
rates to flood the country with cheap goods from China. Never has the
governing class allowed anyone to question the sacred principle that we
all must pay our debts. That principle has recently been exposed to be a
flagrant lie. As it turns out, we *all* don’t have to pay our debts.
Only some of us do.

**Mesopotamia, 2400 BCE**\
 Usury was common practice by 2400 BCE. Officials or merchants advanced
loans to peasants and, if they were unable to pay, began to appropriate
their possessions, starting with grain, goats, and

furniture, then moving on to fields and houses, then family members.
First went the servants, followed by children, wives, and even the
borrower himself, all of whom were reduced to debt peons until the money
was repaid. This threatened to rip society apart: If for any reason
there was a bad harvest, large proportions of the peasantry fell into
debt peonage. Indebted farmers in fear of repossession abandoned their
fields.

Faced with the potential for complete social breakdown, Sumerian and
Babylonian kings periodically announced general amnesties. All
outstanding consumer debt was declared null and void (commercial debts
were not affected), all land was returned to its original owners, and
debt peons were returned to their families. Before long, kings made a
habit of declaring such amnesties upon assuming power. (The sovereign
saw himself as literally re-creating human society, so he was in a fine
position to relieve all previous moral obligations.) In Sumerian, these
were called declarations of freedom. The Sumerian word *amargi* is the
first recorded use of “freedom” in any language; it literally means
“return to mother,” since this is what freed debt peons were allowed to
do.

The Fabled Land of Barter 
-------------------------

When economists speak of the origins of money, debt is always something
of an afterthought. First comes barter, then money; credit develops only
later. Even if one consults books on the history of money in, say,
France, India, or China, what one generally gets is a history of
coinage, with barely any discussion of credit arrangements at all. For
almost a century, anthropologists like myself have been pointing out
that there is something very wrong with this picture. Credit system,
tabs, and even expense accounts existed long before cash. These things
are as old as civilization itself. History tends to move back and forth
between periods dominated by bullion, when it’s assumed that gold and
silver *are* money, and periods in which money is assumed to be an
abstraction, a virtual unit of account. The standard version of this
history has little to do with how economic life is actually conducted in
real communities and marketplaces, where everyone is likely in debt to
everyone else in a dozen different ways, and most transactions take
place without the use of currency.

Some of it is just the nature of the evidence: Coins are preserved in
the archaeological record, credit arrangements usually are not. Still,
the problem runs

Missionaries, adventurers, and colonial administrators fanned out across
the world, carrying copies of *The Wealth of Nations*, expecting to find
the land of barter. None ever did.

deeper. The existence of credit and debt has always been something of a
scandal for economists, since it’s almost impossible to pretend that
those lending and borrowing money are acting on purely “economic”
motivations (for instance, that a loan to a stranger is the same as a
loan to one’s cousin). Therefore, they begin the story of money in an
imaginary world from which credit and debt have been entirely erased:
“Once upon a time, there was barter. It was difficult. So people
invented money. Then came the development of banking and credit.” The
logical, inexorable progression of humanity

from Stone Age barterers of mastodon tusks to wielders of complex
financial instruments has become common sense.

We now know from ancient Egyptian and Mesopotamian records—discovered
after Adam Smith, for whom economic history began with Homer—that credit
systems (what is today called virtual money) preceded the invention of
coinage by thousands of years. Money was actually created by bureaucrats
to track state resources and spread unevenly, never completely replacing
credit systems. Barter, in turn, is largely an accidental byproduct of
the use of coinage or paper money, a refuge for people operating in cash
economies where currency has for some reason become inaccessible.
Nevertheless, nearly every introductory economics textbook in use today
takes the same approach: “To see that society benefits

from a medium of exchange, imagine a barter economy,” write Begg,
Fischer, and Dornbuch in *Economics* (2005). “Imagine the difficulty you
would have today if you had to exchange your labor directly for the
fruits of someone else’s labor,” write Maunder, Myers, Wall, and Miller
in *Economics Explained* (1991). “Imagine you have roosters, but you
want roses,” write Parkin and King in *Economics* (1995). “One can
imagine an old-style farmer bartering with the blacksmith, the tailor,
the grocer, and the doctor in his small town,” write Stiglitz and
Driffill in *Economics* (2000).

There is a simple reason why everyone who writes an economics textbook
feels the need to tell us the same story. For economists, it is in a
very real sense the most important story ever told. It was by telling it
in 1776 that Adam Smith, professor of moral philosophy at the University
of Edinburgh,

effectively brought the discipline of economics into being. He objected
to the notion that money was a creation of government, and insisted that
property, currency, and markets not only existed before political
institutions but also were the very foundation of human society. It
followed that insofar as government should play any role in monetary
affairs, it should limit itself to guaranteeing the soundness of
currency. It was only by making such an argument that he could insist
that economics was itself a field of human inquiry with its own
principles and laws—as distinct from, say, ethics or politics. The
economy, in his formulation, operates

by rules of its own that are separate from moral and political life; it
is where we indulge in our natural propensity to truck and barter. We
are still trucking and bartering, and always will be. Money is simply
the most efficient means.

For centuries, economists have searched for the fabled land of barter.
Smith set his story in aboriginal North America, and its lack of realism
reflects the dearth of reliable information on Native American economic
systems in Scottish libraries. But by the middle of the nineteenth
century, Lewis Henry Morgan’s descriptions of the Six Nations of the
Iroquois had been published and read widely; they made clear that the
Iroquois’s goods were stockpiled in longhouses, then allocated by
women’s councils, without anyone ever trading arrowheads for slabs of
meat. Economists ignored this information. Stanley Jevons, for example,
wrote *The Principles of Political Economy*, his classic study of the
origins of money, in 1871. He took his examples straight from Smith,
describing Indians swapping venison for elk and beaver hides. Around the
same time, missionaries, adventurers, and colonial administrators were
fanning out across the world, many carrying copies of Smith’s *The
Wealth of Nations*, expecting to find the land of barter.

None ever did. They discovered an almost endless variety of economic
systems. But to this day, no one has been able to locate a place where
the ordinary mode of economic transaction between neighbors takes the
form of “I’ll give you twenty chickens for that cow.”[3](#)

**Madagascar, 1990** \
 In the town of Arivonimamo, Madagascar, I had the privilege of
interviewing a Kalanoro, a tiny, ghostly creature that a local spirit
medium claimed to keep hidden away in a chest in his home. The spirit
belonged to the brother of a notorious loan shark, a horrible woman
named Nordine. I was a bit reluctant to have anything to do with the
family, but some of my friends insisted; this was, after all, a creature
from ancient times. The creature spoke from behind a screen, in an
eerie, otherworldly quaver. But all it was really interested in talking
about was money. Finally, slightly exasperated by the whole charade, I
asked, “What did you use for money back in ancient times, when you were
still alive?”

The mysterious voice immediately replied, “We didn’t use money. In
ancient times we used to

3 This hardly means that barter does not exist—or even that it’s never
practiced by the sort of people that Smith referred to as savages. It
just means that it’s almost never employed between fellow villagers, as
Smith imagined it to be.

barter commodities directly, one for the other.”

We all owe an infinite debt to humanity, nature, or the cosmos (however
one prefers to frame it), but no one else can possibly tell us how to
pay it.

IOU All
-------

What gave early nation-states the right to levy taxes? Nowadays, we all
think we know the answer to this question. We pay our taxes so that the
government can provide us with services, starting with military
protection. The arrangement is said to go back to an original social
contract, though no one really knows when it was made or by whom, or why
we should be bound by the decisions of distant ancestors on this one
matter when we aren’t by their decisions otherwise.

An alternative explanation is primordial-debt theory, a school of
thought developed largely in France by economists, anthropologists,
historians, and classicists; its foundational text is Michel Aglietta
and André Orléan’s *La Violence de la Monnaie* (1992). Adherents insist
that monetary policy cannot be separated from social policy, that the
two have always been intertwined. Governments use taxes to create money,
which they are able to do because

they have become the guardians of the debt that all citizens have to one
another. This debt is the essence of society itself.

At first, the argument goes, this sense of debt was expressed not
through the state, but through religion. The hymns, prayers, and poetry
collected in the Vedas and the Brahmanas, the foundations of Hindu
thought, constitute the earliest-known reflections on the nature of
debt, which they treat as synonymous with guilt and sin. According to
the commentators of the Brahmanas, human existence is itself a form of
debt: A man, being born, is a debt; he is born to death, and only by way
of sacrifice does he redeem himself from death. Two famous passages in
the Brahmanas insist that we are born as a debt not just to the gods (to
be repaid in sacrifice) but also to the sages who created the Vedic
learning (to be repaid through study), to our ancestors (to be repaid by
having children), and, finally, to the whole of humanity (to be repaid
with

hospitality to strangers).

The first explicit theory of the debt owed by each living person to the
society that makes his or her existence possible was formulated by
Auguste Comte in his last work, *The Catechism of Positive Religion*
(1852), in the form of a lecture on what came to be known as primordial,
existential, or social debt, delivered by the priest of an imaginary
Religion of Society. Asked for his view on human rights, the priest
scoffs at the very notion. It is nonsense, he says, an error born of
individualism. Positivism understands only duties. After all,

> We are born under a load of obligations of every kind, to our
> predecessors, to our successors, to our contemporaries. After our
> birth these obligations increase or accumulate before the point where
> we are capable of rendering anyone any service. On what human
> foundation, then, could one seat the idea of “rights”?

Comte doesn’t use the word *debt*, but it is clear what he means: We
have already accumulated endless debts before we get to the age at which
we can even think of paying them. And by that time there’s no way even
to calculate to whom we owe them. The only way to redeem ourselves is to
be dedicated to the service of humanity.

Comte’s notion of an unlimited obligation to society

crystallized in the notion of social debt, which was taken up among
social reformers and, eventually, socialist politicians in many parts of
Europe and abroad. In France the notion of a social debt soon became
something of a catchphrase, a slogan—and, eventually, a cliché: “We are
all born as debtors to society.” The state, according to this

view, was merely the administrator of the existential debt that everyone
owes to everyone.

Theories of existential debt always end up justifying—or laying claim
to—structures of authority. What we really have in the idea of
primordial debt is the ultimate nationalist myth. Once we owed our lives
to

the gods who created us, paid them interest in the form of animal
sacrifice, and, ultimately, paid back the principal with our lives. Now
we owe our lives to the nation that formed us, pay interest in the form
of taxes, and, when it comes time to defend the nation against its
enemies, pay back the principal with our lives. This is a great trap of
the twentieth century: On the one side is the logic of the market, which
insists that we don’t owe one another anything. On the other is the
logic of the state, which insists that we are born with a debt we can
never truly pay. In fact, the dichotomy is false. States created
markets, markets require states, and neither could continue without the
other.

The true ethos of our individualistic society may be found in this
equation: We all owe an infinite debt to humanity, nature, or the cosmos
(however one prefers to frame it), but no one else can possibly tell us
how to pay it. All systems of established authority—religion, morality,
politics, economics, the criminal-justice system—are revealed to be
fraudulent ways of calculating what cannot be calculated. Freedom, then,
is the ability to decide for ourselves how to pay our debts.

\
\
****

**England, twelfth century CE**\
 One of the most important forms of currency during the reign of King
Henry I was the notched “tally stick” used to record debts. Each party
to a transaction would take a twig, notch it to indicate the amount
owed, then split it in half. The creditor would keep one half, called
the “stock” (hence the origin of the term “stock holder”) and the debtor
would keep the other, called the “stub” (hence “ticket stub”). Tax
assessors used such twigs to calculate amounts owed by local sheriffs.
Often, though, rather than wait for the taxes to come due, Henry’s
exchequer would sell the tallies at a discount, and they would circulate
as tokens of debt owed to the government. The king also issued tallies
in lieu of payment to soldiers, farmers, and others owed money by the
state; these, too, were sold at a discount and circulated among stock
holders.

There is one puzzling aspect of this equation: The IOU can operate as
money only as long as Henry never pays his debt. This is precisely the
logic on which the Bank of England—the first modern central bank—was
founded. In 1694, with public finances weak and the state's monetary and
credit systems precarious, a consortium of English

bankers made a loan of £1.2 million to King William III. In return they
received a royal monopoly on the issuance of banknotes. Practically,
this meant the bankers had the right to advance IOUs representing a
portion of the king’s debt to any inhabitant of the kingdom willing to
borrow from them, or willing to deposit his own money in the bank. The
effect was to monetize the royal debt. This was a great deal for the
bankers, who charged the king 8 percent annual interest on the original
loan and, simultaneously, charged clients who borrowed money interest on
that same debt. But the arrangement could only work for as long as the
original loan remained outstanding. Which is why, to this day, the loan
has never been paid back. It cannot be. If it ever were, the entire
monetary system of the United Kingdom would cease to exist.

God’s Money
-----------

In today’s world, paying one’s debts can seem the very definition of
morality, if only because so many fail to do it. When faced with a debt,
large corporations and even some small businesses will almost
automatically wait and see what happens if they do not pay, complying
only if goaded or presented with a legal writ. The principle of honor
having been almost completely removed from the marketplace, debt
acquires the halo of religion. (One might speak of a double theology,
one for creditors and another for debtors.) It is no coincidence that
the current phase of American debt imperialism has also been accompanied
by the rise of the evangelical right, which has bucked the past two
millennia of Christian thinking on the subject and enthusiastically
embraced supply-side economics, taking the position that creating money
and giving it to the rich is the most biblically appropriate way to
bring about national prosperity. Perhaps the most ambitious theologian
of the new creed was George Gilder, whose book *Wealth and Poverty*
became a best seller in 1981, at the dawn of the Reagan revolution.
Those who felt that money could not simply be created were mired in an
old-fashioned, godless materialism, Gilder

argued; they didn’t realize that just as God could create something out
of nothing, his greatest gift to humanity was the ability to do so in
the same fashion. And to do so was not hubristic, but in keeping with
God’s intentions: The creation of money was a gift, a blessing, a
channeling of grace; a promise, yes, but not one that can be fulfilled,
even if the bonds are continually rolled over, because through faith
(“in God we trust”) their value becomes real. “The United States,”
Gilder writes, “must overcome the materialist fallacy: the illusion that
resources and capital are essentially things, which can run out, rather
than products of human will and imagination which in freedom are
inexhaustible.” Such effusions inspired evangelists like Pat Robertson
to declare supply-side economics “the first truly divine theory of
money-creation.”

This new breed of capitalist evangelicals failed to acknowledge that the
vast majority of the money being “created” was in fact a product of
deficit spending to fund the mushrooming US military, a practice that
was avidly pursued by Reagan and that reached its pinnacle under George
W. Bush. Furthermore, until China became our chief creditor, money was
“borrowed” almost exclusively from

West Germany, Japan, South Korea, and Saudi Arabia—all nations that were
under US military protection. The “products of human will and
imagination” were backed by material forces after all: not so much
fields, factories, or even oil wells, but aircraft carriers and
laser-guided missiles. All

the more curious is Christian fundamentalists’ obsession with waging war
on Iraq—which they often referred to, among themselves, as “Babylon”—the
birthplace of the debt-forgiveness decree and the interest-free
commercial economy.

**Islamic world, Middle Ages**\
 From the beginning, Islam had a positive view of commerce. (Muhammad
himself had been begun his life as a merchant.) The prohibitions against
usury did not mitigate the growth of commerce, or even the development
of complex credit instruments. To the contrary, the early centuries of
the caliphate saw an efflorescence of both. Credit instruments were so
essential that traders tended to keep their wealth on deposit and make
everyday transactions using checks (*sakk*) instead of coins. Checks
were countersigned and transferred, and letters of credit (*suftaja*)
traveled across the Indian Ocean and the Sahara. These promissory notes
operated independently of the state (and the deals made with them were
beyond the purview of government enforcement): They never became paper
money, could not be used to pay taxes, and their value remained based
almost entirely on trust and reputation. If a trader was wronged, he
could appeal to the Islamic courts, but commissioning a

poet to compose verses deriding the debtor would have a much greater
effect.

Networks of trust were largely responsible for the spread of Islam over
the caravan routes of central Asia and the Sahara and across the Indian
Ocean, which became the main conduit of world trade. Islam gained a
toehold in trade emporia from Aden to the Spice Islands, largely because
Islamic courts were perfectly suited to provide those ports with legal
infrastructure: the means of establishing contracts, recovering debts,
and creating a banking sector capable of redeeming or transferring
letters of credit. The resultant level of trust between merchants in the
great Malay entrepôt Malacca was legendary. The city had Swahili, Arab,
Egyptian, Ethiopian, and Armenian quarters, as well as quarters for
merchants from regions of India, China, and Southeast Asia. Yet it was
said that its merchants shunned enforceable contracts, preferring to
seal transactions with, as the saying went, “a handshake and a glance at
heaven.”

Money Bags
----------

How many times have we been told that the advent of virtual money, the
dematerialization of cash into plastic and dollars into blips of
electronic information, has brought us into an unprecedented financial
world, completely uncharted territory? That very assumption made it easy
for Goldman Sachs, AIG, and their cohorts to convince people that any
effort to understand, much less regulate, their dazzling new financial
instruments was futile. But the moment one casts matters on a broad
historical scale, it becomes clear that there’s nothing fundamentally
new about the reign of virtual money, which would be recognizable to
ancient Mesopotamian bureaucrats and Islamic traders alike.

The new global currency—the free-floating dollar—is rooted in military
power even more firmly than before. Debt peonage continues to be the
main principle of recruiting labor globally—either in the literal sense,
in much of East Asia and Latin America, or in the subjective sense,
whereby most of those working for wages or even salaries feel that they
are doing so primarily to pay off interest-bearing loans. New
transportation and communications technologies have made things

easier for creditors: They can charge domestic laborers and factory
workers thousands of dollars to be transported to distant countries
where they are forced to work off their debt, lacking legal protections.
The overarching institutions that have been created to regulate these
activities—those whose cosmic scale echoes the divinely inspired
authority of kings of the ancient Middle East and the church of the
Middle Ages—do not protect debtors, but rather enforce the rights of
creditors. They all operate on the principle that one has to pay one’s

debts (unless one is the United States Treasury), since the prospect of
default by any country is assumed to imperil the entire world monetary
system. Joseph Addison described that fear of collapse, which acts to
buttress the system, in his 1711 essay “Public Credit,” recounting a
nightmare in which Britain’s national wealth has disappeared. “There was
as great a change in the hill of money-bags, and the heaps of money, the
former shrinking, and falling into so many empty bags, that I now found
not above a tenth part of them had been filled with money,” he writes.

> The rest that took up the same space, and made the same figure as the
> bags that were really filled with money, had been blown up with air,
> and called into my memory the bags full of wind, which Homer tells us
> his Hero received as a present from Æolus. The great heaps of gold on
> either side of the throne now appeared to be only heaps of paper, or
> little piles of notched sticks, bound up together in bundles, like
> Bath faggots.

We need to understand what philosophers in the Middle Ages, from Italy
to India to China, already understood perfectly well: Money is not a
thing, and is certainly not a scarce resource. Money is a promise. And
it is a promise we keep to those we value and break to those we do not.
In Greece, Ireland, Portugal, and Spain, sovereign-debt default

seems ever more likely. If it occurs, then what will happen? Certain
promises will be kept, and others will be broken. As we learn from
politicians every day, it is rarely possible to keep all promises
exactly as one has made them. Today, in the United Kingdom, many
politicians are saying, “I know I was elected on a solemn pledge not to
raise tuition fees, but now that I’m in power I realize that was
unrealistic. We will have to triple them.” What they in fact mean is, “I
have decided that promises made by this government to repay bankers, at
an agreed-upon interest rate, for money they fabricated, are more
important than promises made to my own constituents.” And if promises
made to legal abstractions are always to be given priority over promises
made to what we still occasionally, whether fondly or cynically, call
the people, we might well ask ourselves why our system of government is
still deemed democracy.