This is a response to some brief comments David Graeber made
on my review of his book, Debt: the First 5000 Years, published on this
blog on 27 August. I cover two points: the issue of an idealist conception of
history and the debt the US owes to China and Asia.
Firstly, my criticism that the book is based on an
‘idealist’ conception of history. History, as Marx and Engels noted, has been a
‘history of class struggles’, but in their examination of history they showed,
as Marx put it, that ‘the existence of classes is only bound up with the
particular, historical phases in the development of production’.
Your analysis does look at class struggles through the ages, but pays little
attention to their economic foundation, and it is on this basis that you can
elevate concepts such as debt to an ahistorical level. Hence, in the conclusion
of your chapter on ‘The age of the great capitalist empires’ you argue that the
notion that capitalism would be around forever was the reason behind the credit
bubble: ‘Presented with the prospect of its own eternity, capitalism – or
anyway, financial capitalism – simply explodes’ (p360). Your analysis puts the
evolution of the crisis down to psychology and fails to examine the underlying
causes of the credit bubble, which resulted from problems of capital
accumulation and profitability.
I am not criticising the book for failing to explain the
universe and everything in it, and, of course, I accept that the book aims to
cover the issue of debt. However, it is a legitimate criticism to point out
mistakes in the analysis. Another example on this topic is where you cover the
setting up of the Bank of England in 1694, when a consortium of English bankers
loaned £1.2m to the King and in return received a monopoly of banknote issuance
and other privileges. You make the absurd claim that if the loan were ever paid
back, ‘the entire monetary system of Great Britain would cease to exist’ (p49).
This is just ridiculous, not least because the Bank of England is a nationalised
entity. It is not a private corporation that could be wound up if the privileges
establishing its position were annulled with the repayment of the loan. In any event, a country’s monetary system is not dependent on a
particular institution staying in place.
Secondly, on debts the US owes to China and Asia. I did not
claim that ‘most money owed in the world today is owed to China or other Asian
creditors’. My point was that you argued in your book for a debt
‘Jubilee’ that ‘would affect both international debt and consumer debt’. You
raised the issue of cancelling international debt, and I do claim that a
large chunk of the US international debt is owed to China and other Asian
countries. The total of US debt, including that owed to other US
citizens/companies, is far bigger than the international, so that any other
country’s proportion of that total is bound to be relatively small. But, if we
focus on the international debt, the numbers are far from negligible.
The following figures, which I calculate from the US
Treasury website, leave out Japan, an imperialist power, in order to focus on
the debt to poor Asian countries. Total US Treasury and government agency
(including Fannie Mae and Freddie Mac) debt owned by all foreign countries in June 2011 was $5,781bn, of which China (including Hong Kong)
owned $1,785bn and the rest of poor Asia another $529bn. The total Asia figure
of $2,315bn is 40% of the Treasury and agency debt owned by other countries.
China may not own any student loan debt, but the book did
not specify only cancelling this type of debt. China and other poor Asian
countries would certainly get hit pretty badly on any broad debt cancellation.
The US owns less than $100bn of debt securities in Asian countries outside
There are many ways to measure debt, and the comments above
refer only to official debt securities. They do not include corporate debt, nor
equity holdings, nor the assets and liabilities represented by direct
investment. If ‘everything’ is included, at least as measured in published statistics,
then the data for 2011 show that the US economy has a net debt position with the
rest of the world amounting to $4,157bn. In other words, foreign investors own
this amount more of all kinds of assets in the US than the US owns in other
Nevertheless, because of its privileged imperial position, with the role of the
US dollar in particular, it was still able to earn a net revenue on this debt
position of $235bn in 2011!
Tony Norfield, 3 September 2012
Here is a copy of David
Just a couple notes:
I do not actually say that changes in the nature of money
are the driving force of history; you just seem to conclude this because I do
not provide a theory of the "motor of history" at all, but mainly
describe what happened, and since the book is about money and debt, money and
debt are what I focus on. However when I do suggest specific you will find, if
look carefully, that it's always based in class struggle of some sort or
another. Coinage comes about through the rise of professional armies and slave
systems. The ban on usury in Islam comes from a shift in class alliances. Etc.
Sometimes I note ironic results, such as the disaster that certain forms of
debt resistance in the ancient Middle East had on the status of women, or the
way that successful popular resistance in Ming China set the stage for the
elite counter-offensive in 16-17C Europe. But it's always class struggle ultimately.
Skim the book again with that in mind and you'll see it.
The idea that most money owed in the world today is owed to
China or other Asian creditors is simply untrue. They just hold a lot of US
treasury bonds, which are losing propositions economically anyway. About 74% of
the US public for instance, are in debt, and 1 in 7 are currently being pursued
by collection agencies, and the amount of student loan debt at all is over a
trillion dollars. Close to none of that is owed to China.