Debt

by David Graeber

  All this came to seem almost commonsensical in the thirteenth century of Thomas Aquinas, when rulers could change the value of currency simply by issuing a decree. Still, Medieval theories of symbols derived less from Aristotle than from the Mystery Religions of Antiquity, where “symbolon” came to refer to certain cryptic formulae or talismans that only initiates could understand.153 It thus came to mean a concrete token, perceptible to the senses, that could only be understood in reference to some hidden reality entirely beyond the domain of sensory experience.154

  The theorist of the symbol whose work was most widely read and respected in the Middle Ages was a sixth-century Greek Christian mystic whose real name has been lost to history, but who is known by his pseudonym Dionysius the Areopagite.155 Dionysius took up the notion in this latter sense to confront what was to become the great intellectual problem of the age: How is it possible for humans to have knowledge of God? How can we, whose knowledge is confined to what our senses can perceive of the material universe, have knowledge of a being whose nature is absolutely alien to that material universe—“that infinity beyond being,” as he puts it, “that oneness that is beyond intelligence”?156 It would be impossible were it not for the fact that God, being all-powerful, can do anything, and therefore, just as he places his own body in the Eucharist, so can he reveal himself to our minds through an endless variety of material shapes. Intriguingly, Dionysius warns us that we cannot begin to understand how symbols work until we rid ourselves of the notion that divine things are likely to be beautiful. Images of luminous angels and celestial chariots are only likely to confuse us, since we will be tempted to imagine that that’s what heaven is actually like, and in fact we cannot possibly conceive of what heaven is like. Instead, effective symbols are, like the original symbolon, homely objects selected apparently at random; often, ugly, ridiculous things, whose very incongruity reminds us that they are not God; of the fact that God “transcends all materiality,” even as, in another sense, they are God.157 But the notion that they are in any sense tokens of agreement between equals is gone entirely. Symbols are gifts, absolute, free, hierarchical gifts, presented by a being so far above us that any thought of reciprocity, debt, or mutual obligation is simply inconceivable.158

  Compare the Greek dictionary above to the following, from a Chinese dictionary:

  FU. To agree with, to tally. The two halves of a tally.

  • evidence; proof of identity, credentials

  • to fulfill a promise, to keep one’s word

  • to reconcile

  • the mutual agreement between Heaven’s appointment and human affairs

  • a tally, a check

  • an imperial seal or stamp

  • a warrant, a commission, credentials

  • like fitting the two halves of a tally, in exact agreement

  • a symbol, a sign …159

  The evolution is almost exactly the same. Like symbola, fu can be tallies, contracts, official seals, warrants, passports, or credentials. As promises, they can embody an agreement, a debt contract, or even a relation of feudal vassalage—since a minor lord agreeing to become another man’s vassal would split a tally just as he would if borrowing grain or money. The common feature seems to be a contract between two parties that begin as equal, in which one agrees to become subordinate. Later, as the state became more centralized, we mainly hear about fu presented to officials as a means of conveying order: the official would take the left half with him when posted to the provinces, and when the emperor wished to send an important command, he would send the right half with the messenger to make sure that the official knew it was actually the imperial will.160

  We’ve already seen how paper money seems to have developed from paper versions of such debt contracts, ripped in half and reunited. For Chinese theorists, of course, Aristotle’s argument that money was simply a social convention was hardly radical; it was simply assumed. Money was whatever the emperor established it to be. Though even here there was a slight proviso, as evidenced in the entry above, that “fu” could also refer to “the mutual agreement between heaven’s appointment and human affairs.” Just as officials were appointed by the emperor, the emperor was ultimately appointed by a higher power, and he could only rule effectively as long as he kept its mandate, which is why propitious omens were called “fu,” signs that heaven approved of the ruler, just as natural disasters were a sign that he had strayed.161

  Here Chinese ideas did grow a bit closer to the Christian ones. But Chinese conceptions of the cosmos had one crucial difference: since there was no emphasis on the absolute gulf between our world and the one beyond it, contractual relations with the gods were by no means out of the question. This was particularly true in Medieval Taoism, where monks were ordained through a ceremony called “rending the tally,” ripping apart a piece of paper that represented a contract with heaven.162 It was the same with the magical talismans, also called “fu,” which an adept might receive from his master. These were literally tallies: the adept kept one; the other half was said to be retained by the gods. Such talismanic fu took the form of diagrams, said to represent a form of celestial writing, comprehensible only to the gods, which committed them to assist the bearer, often giving the adept the right to call on armies of divine protectors with whose help he could slay demons, cure the sick, or otherwise attain miraculous powers. But they could also become, like Dionysius’ symbola, objects of contemplation, by which one’s mind can ultimately attain some knowledge of the invisible world beyond our own.163

  Many of the most compelling visual symbols to emerge from Medieval China trace back to such talismans: the River Symbol, or, for that matter, the yin-yang symbol that seems to have developed out of it.164 Just looking at a yin-yang symbol, it is easy enough to imagine the left and right (sometimes, too, called “male” and “female”) halves of a tally.

  A tally does away with the need for witnesses; if the two surfaces agree, then everyone knows that the agreement between the contracting parties exists as well. This is why Aristotle saw it as a fit metaphor for words: word A corresponds to concept B because there is a tacit agreement that we shall act as if it does. The striking thing about tallies is that even though they might begin as simple tokens of friendship and solidarity, in almost all the later examples, what the two parties actually agree to create is a relation of inequality: of debt, obligation, subordination to another’s orders. This is in turn what makes it possible to use the metaphor for the relation between the material world and that more powerful world that ultimately gives it meaning. The two sides are the same. Yet what they create is absolute difference. Hence for a Medieval Christian mystic, as for Medieval Chinese magicians, symbols could be literal fragments of heaven—even if for the first, they provided a language whereby one could have some understanding of beings one could not possibly interact with; while for the second, they provided a way of interacting, even making practical arrangements, with beings whose language one could not possibly understand.

  On one level, this is just another version of the dilemmas that always arise when we try to reimagine the world through debt—that peculiar agreement between two equals that they shall no longer be equals, until such time as they become equals once again. Still, the problem took on a peculiar piquancy in the Middle Ages, when the economy became, as it were, spiritualized. As gold and silver migrated to holy places, ordinary transactions everywhere came to be carried out primarily through credit. Inevitably, arguments about wealth and markets became arguments about debt and morality, and arguments about debt and morality became arguments about the nature of our place in the universe. As we’ve seen, the solutions varied considerably. Europe and India saw a return to hierarchy: society became a ranked order of Priests, Warriors, Merchants, and Farmers (or in Christendom, just Priests, Warriors, and Farmers). Debts between the orders were considered threatening because they implied the potential of equality, and they often led to outright violence. In China, in contrast, the p
rinciple of debt often became the governing principle of the cosmos: karmic debts, milk-debts, debt contracts between human beings and celestial powers. From the point of view of the authorities, all these led to excess, and potentially to vast concentrations of capital that might throw the entire social order out of balance. It was the responsibility of government to intervene constantly to keep markets running smoothly and equitably, thus avoiding new outbreaks of popular unrest. In the world of Islam, where theologians held that God recreated the entire universe at every instant, market fluctuations were instead seen as merely another manifestation of divine will.

  The striking thing is that the Confucian condemnation of the merchant, and the Islamic celebration of the merchant, ultimately led to the same thing: prosperous societies with flourishing markets, but where the elements never came together to create the great merchant banks and industrial firms that were to become the hallmark of modern capitalism. It’s especially striking in the case of Islam. Certainly, the Islamic world produced figures who would be hard to describe as anything but capitalists. Large-scale merchants were referred to as sĀhib al-mĀl, “owners of capital,” and legal theorists spoke freely about the creation and expansion of capital funds. At the height of the Caliphate, some of these merchants were in possession of millions of dinars and seeking profitable investment. Why did nothing like modern capitalism emerge? I would highlight two factors. First, Islamic merchants appear to have taken their free-market ideology seriously. The marketplace did not fall under the direct supervision of the government; contracts were made between individuals—ideally, “with a handshake and a glance at heaven”—and thus honor and credit became largely indistinguishable. This is inevitable: you can’t have cutthroat competition where there is no one stopping people from literally cutting one another’s throats. Second, Islam also took seriously the principle, later enshrined in classical economic theory but only unevenly observed in practice, that profits are the reward for risk. Trading enterprises were assumed to be, quite literally, adventures, in which traders exposed themselves to the dangers of storm and shipwreck, savage nomads, forests, steppes, and deserts, exotic and unpredictable foreign customs, and arbitrary governments. Financial mechanisms designed to avoid these risks were considered impious. This was one of the objections to usury: if one demands a fixed rate of interest, the profits are guaranteed. Similarly, commercial investors were expected to share the risk. This made most of the forms of finance and insurance that were to later develop in Europe impossible.165

  In this sense the Buddhist monasteries of early Medieval China represent the opposite extreme. The Inexhaustible Treasuries were inexhaustible because, by continually lending their money out at interest and never otherwise touching their capital, they could guarantee effectively risk-free investments. That was the entire point. By doing so, Buddhism, unlike Islam, produced something very much like what we now call “corporations”—entities that, through a charming legal fiction, we imagine to be persons, just like human beings, but immortal, never having to go through all the human untidiness of marriage, reproduction, infirmity, and death. To put it in properly Medieval terms, they are very much like angels.

  Legally, our notion of the corporation is very much a product of the European High Middle Ages. The legal idea of a corporation as a “fictive person” (persona ficta)—a person who, as Maitland, the great British legal historian, put it, “is immortal, who sues and is sued, who holds lands, has a seal of his own, who makes regulations for those natural persons of whom he is composed”166—was first established in canon law by Pope Innocent IV in 1250 ad, and one of the first kinds of entities it applied to were monasteries—as also to universities, churches, municipalities, and guilds.167

  The idea of the corporation as an angelic being is not mine, incidentally. I borrowed it from the great Medievalist Ernst Kantorowicz, who pointed out that all this was happening right around the same time that Thomas Aquinas was developing the notion that angels were really just the personification of Platonic Ideas.168 “According to the teachings of Aquinas,” he notes, “every angel represented a species.”

  Little wonder then that finally the personified collectives of the jurists, which were juristically immortal species, displayed all the features otherwise attributed to angels … The jurists themselves recognized that there was some similarity between their abstractions and the angelic beings. In this respect, it may be said that the political and legal world of thought of the later Middle Ages began to be populated by immaterial angelic bodies, large and small: they were invisible, ageless, sempiternal, immortal, and sometimes even ubiquitous; and they were endowed with a corpus intellectuale or mysticum [an intellectual or mystical body] which could stand any comparison with the “spiritual bodies” of the celestial beings.169

  All this is worth emphasizing because while we are used to assuming that there’s something natural or inevitable about the existence of corporations, in historical terms, they are actually strange, exotic creatures. No other great tradition came up with anything like it.170 They are the most peculiarly European addition to that endless proliferation of metaphysical entities so characteristic of the Middle Ages—as well as the most enduring.

  They have, of course, changed a great deal over time. Medieval corporations owned property, and they often engaged in complex financial arrangements, but in no case were they profit-seeking enterprises in the modern sense. The ones that came closest were, perhaps unsurprisingly, monastic orders—above all, the Cistercians—whose monasteries became something like the Chinese Buddhist ones, surrounded by mills and smithies, practicing rationalized commercial agriculture with a workforce of “lay brothers” who were effectively wage laborers, spinning and exporting wool. Some even talk about “monastic capitalism.”171 Still, the ground was only really prepared for capitalism in the familiar sense of the term when the merchants began to organize themselves into eternal bodies as a way to win monopolies, legal or de facto, and avoid the ordinary risks of trade. An excellent case in point was the Society of Merchant Adventurers, charted by King Henry IV in London in 1407, who, despite the romantic-sounding name, were mainly in the business of buying up British woolens and selling them in the Flanders fairs. They were not a modern joint-stock company, but a rather old-fashioned Medieval merchant guild, but they provided a structure whereby older, more substantial merchants could simply provide loans to younger ones, and they managed to secure enough of an exclusive control over the woolen trade that substantial profits were pretty much guaranteed.172 When such companies began to engage in armed ventures overseas, though, a new era of human history might be said to have begun.

  Chapter Eleven

  AGE OF THE GREAT CAPITALIST EMPIRES

  (1450–1971 AD)

  “Eleven pesos, then; and as you can’t pay me the eleven pesos, that makes another eleven pesos—twenty-two in all: eleven for the serape and the petate and eleven because you can’t pay. Is that right, Crisiero?”

  Crisiero had no knowledge of figures, so it was very natural that he said, “That is right, patrón.”

  Don Arnulfo was a decent, honorable man. Other landowners were a good deal less softhearted with their peons.

  “The shirt is five pesos. Right? Very well. And as you can’t pay for it, that’s five pesos. And as you remain in my debt for the five pesos, that’s five pesos. And as I shall never have the money from you, that’s five pesos. So that makes five and five and five and five. That’s twenty pesos. Agreed?”

  “Yes, patrón, agreed.”

  The peon can get the shirt nowhere else when he needs one. He can get credit nowhere but from his master, for whom he works and from whom he can never get away as long as he owes him a centavo.

  —B. Traven, The Carreta

  THE EPOCH THAT BEGAN with what we’re used to calling the “Age of Exploration” was marked by so many things that were genuinely new—the rise of modern science, capitalism, humanism, the nation-state—that it may seem odd to frame it
as just another turn of an historical cycle. Still, from the perspective I’ve been developing in this book, that is what it was.

  The era begins around 1450 with a turn away from virtual currencies and credit economies and back to gold and silver. The subsequent flow of bullion from the Americas sped the process immensely, sparking a “price revolution” in Western Europe that turned traditional society upside-down. What’s more, the return to bullion was accompanied by the return of a whole host of other conditions that, during the Middle Ages, had been largely suppressed or kept at bay: vast empires and professional armies, massive predatory warfare, untrammeled usury and debt peonage, but also materialist philosophies, a new burst of scientific and philosophical creativity—even the return of chattel slavery. It was in no way a simple repeat performance. All the Axial Age pieces reappeared, but they came together in an entirely different way.

  The 1400s are a peculiar period in European history. It was a century of endless catastrophe: large cities were regularly decimated by the Black Death; the commercial economy sagged and in some regions collapsed entirely; whole cities went bankrupt, defaulting on their bonds; the knightly classes squabbled over the remnants, leaving much of the countryside devastated by endemic warfare. Even in geopolitical terms Christendom was staggering, with the Ottoman Empire not only scooping up what remained of Byzantium but pushing steadily into central Europe, its forces expanding on land and sea.

  At the same time, from the perspective of many ordinary farmers and urban laborers, times couldn’t have been much better. One of the perverse effects of the bubonic plague, which killed off about one-third of the European workforce, was that wages increased dramatically. It didn’t happen immediately, but this was largely because the first reaction of the authorities was to enact legislation freezing wages, or even attempting to tie free peasants back to the land again. Such efforts were met with powerful resistance, culminating in a series of popular uprisings across Europe. These were squelched, but the authorities were also forced to compromise. Before long, so much wealth was flowing into the hands of ordinary people that governments had to start introducing new laws forbidding the lowborn to wear silks and ermine, and to limit the number of feast days, which, in many towns and parishes, began eating up one-third or even half of the year. The fifteenth century is, in fact, considered the heyday of Medieval festive life, with its floats and dragons, maypoles and church ales, its Abbots of Unreason and Lords of Misrule.1