Debt

by David Graeber

  34. Tu Mu, cited in Gernet 1956 (1995:245).

  35. This might come as something of a surprise, since the phrase is used so often in contemporary Western popular usage, “karmic debt” becoming something of a New Age cliché. But it seems to strike a much more intuitive chord with Euro-Americans than it ever did in India. Despite the close association of debt and sin in the Indian tradition, most early Buddhist schools avoided the concept—largely because it implied a continuity of the self, which they saw as ephemeral and ultimately illusory. The exception were the Sammitiya, called “personalists” as they did believe in an enduring self, who developed the notion of aviprĀāśa, whereby the results of good or bad actions—karma—“endure like a sheet of paper on which a debt is inscribed” as an unconscious element of the self that passes from one life to another (Lamotte 1997:22–24, 86–90; Lusthaus 2002:209–10). The idea might have died with that sect had it not been taken up by the famous Mahayana philosopher NĀgĀrjuna, who compared it to an “imperishable promissory note” (Kalupahana 1991:54–55, 249; Pasadika 1997). His MĀdhyamaka school in turn became the Sanlun or “Three Treatise” school in China; the notion of karmic debt was taken up in particular by the “Three Stages” or “Three Levels” school created the monk Hsin-Hsing (540–94 ad) (Hubbard 2001).

  36. Commentary on the Dharma of the Inexhaustible Storehouse of the Mahayana Universe, as translated by Hubbard (2001:265), with a few changes based on Gernet (1956 [1995:246]).

  37. In Hubbord 2001:266.

  38. Dao Shi, in Cole 1998:117. Cole’s book provides an excellent summary of this literature (see also Ahern 1973, Teiser 1988, Knapp 2004, Oxfeld 2005). Some Medieval texts focus exclusively on the mother, others on parents generally. Interestingly, the same notion of an infinite and unpayable “milk-debt” to one’s mother also appears in Turkey (White 2004:75–76).

  39. Sutra for the Recompense of Gratitude cited in Baskind 2007:166. My “four billion years” translates “kalpa,” which is technically 4.32 billion years. I also changed “them” for parents to “her” for mother since the context refers to a man who cut his own flesh specifically for his mother’s sake.

  40. Chinese Buddhists did not invent the pawnshop, but they appear to have been the first to sponsor them on a large scale. On the origins of pawnbroking in general, see Hardaker 1892, Kuznets 1933. On China specifically: Gernet 1956 [1995:170–73], Yang 1971:71–73, Whelan 1979. In a remarkable parallel, the first “formal” pawnshops in Europe also emerged from monasteries for similar purposes: the monti di pieta or “banks that take pity” created by the Franciscans in Italy in the fifteenth century. (Peng 1994:245, also makes note of the parallel.)

  41. Gernet 1956 [1995:142–86], Ch’en 1964:262–65; Collins 1986:66–71; Peng 1994:243–45. It would seem that Taoist monasteries, which also multiplied in this period, banned making loans (Kohn 2002:76), perhaps in part to mark a distinction.

  42. Gernet 1956 [1995:228], where he famously wrote, “the donors to the Inexhaustible Treasuries were shareholders, not in the economic domain but that of religion.” As far as I know, the only contemporary scholar who has fully embraced the premise that this was indeed an early form of capitalism is Randall Collins (1986) who sees similar monastic capitalism in later Medieval Europe as well. The accepted Chinese historiography has tended to see the first “shoots of capitalism” developing later, in the Song, which was much less hostile to merchants than other dynasties, followed by a full embrace of the market—but firm rejection of capitalism—in the Ming and Qing. The key question is the organization of labor, and in Tang times this remains somewhat opaque, since even if statistics were available, which they’re not, it’s difficult to know what terms like “serf,” “slave,” and “wage-laborer” actually meant in practice.

  43. Gernet 1956 [1995:116–39], Ch’en 1964:269–71, on land reclamation and monastic slaves.

  44. “It is claimed that the purpose of this generosity is to relieve the poor and orphans. But in fact there is nothing to it but excess and fraud. This is not a legitimate business” Gernet 1956 (1995:104–5, 211).

  45. Gernet 1956 [1995:22].

  46. See Adamek 2005, Walsh 2007.

  47. This is probably why abstractions like Truth, Justice, and Freedom are so often represented as women.

  48. Marco Polo observed the practice in the southern province of Yunnan in the thirteenth century: “But when they have any business with one another, they take a round or square piece of stick, and split it in two; and one takes one half and the other takes the other half. But before they split it, they make two or three notches in it, or as many as they wish. So, when one of them comes to pay another, he gives him the money or whatever it is, and gets back the piece of stick the other had” (Benedetto 1931:193). See also Yang 1971:92, Kan 1978, Peng 1994:320, 330, 508, Trombert 1995:12–15. Tallies of this sort seem, according to Kan, to have preceded writing; and one legend claims that the same man, a minister to the Yellow Emperor, invented both writing and tally contracts simultaneously (Trombert 1995:13).

  49. Graham 1960:179.

  50. Actually the similarity was noticed in antiquity as well: Laozi (Daodejing 27) speaks of those who can “count without a tally, secure a door without a lock.” Most famously, he also insisted “when wise men hold the left tally pledge, they do not press their debtors for their debts. Men of virtue hold on to the tally; men lacking virtue pursue their claims” (stanza 79).

  51. Or one might better say, turning them at one snap from monetary debts to moral ones, since the very fact that we know the story implies he was eventually rewarded (Peng 1994:100). It is probably significant that the word fu, meaning “tally,” also could mean “an auspicious omen granted to a prince as a token of his appointment by Heaven” (Mathews 1931:283). Similarly, Peng notes a passage from Strategems of the Warring States, about a lord attempting to win popular support: “Feng hurried to Bi, where he had the clerks assemble all those people who owed debts, so that his tallies might be matched against theirs. When the tallies had been matched, Feng brought forth a false order to forgive these debts, and he burned the tallies. The people all cheered” (ibid:100n9). For Tibetan parallels, see Uebach 2008.

  52. Similar things happened in England, where early contracts were also broken in half in imitation of tally sticks: the phrase “indentured servant” derives from this practice, since these were contract laborers; the word actually derives from the “indentations” or notches on the tally stick used as a contract (Blackstone 1827 I:218).

  53. L. Yang 1971:52; Peng 1994:329–31. Peng perceptively notes “this method of matching tallies to withdraw cash was actually an outgrowth of the process used in borrowing money, except that the movement over time of loans was transformed into a movement over space” (1994:330).

  54. They were called “deposit shops”—and L. Yang (1971:78–80) calls them “proto-banks.” Peng (1994:323–27) notes something along these lines was already operating, at least for merchants and travelers, under the Tang, but the government had strict controls preventing bankers from reinvesting the money.

  55. The practice began in Sichuan, which had its own peculiar form of cash, in iron, not bronze, and therefore much more unwieldy.

  56. Peng 1994:508, also 515, 833. All this is very much like the token money that circulated in much of Europe in the Middle Ages.

  57. The most important scholarly exponent of this view is von Glahn (1994, though Peng [1994] holds to something close), and it seems the prevailing one among economists, popular and otherwise.

  58. Diagram from MacDonald 2003:65.

  59. One of the favorite images employed when remembering the rule of the Legalists, under the much-hated First Dynasty, was that they constructed great brass cauldrons, in which each law was openly and explicitly spelled out—then used them to boil criminals alive.

  60. See Bulliet 1979 (also Lapidus 2003:141–46) on the process of conversion. Bulliet also emphasizes (ibid:129) that the main effect of mass convers
ion was to make the ostensible justification of government, as protector and expander of the faith, seem increasingly hollow. Mass popular support for caliphs and political leaders only reemerged in periods, like the Crusades or during the reconquista in Spain, when Islam itself seemed under attack; as of course, for similar reasons, it has in much of the Islamic world today.

  61. “Most of the time the lower circles paid their taxes through their heads, and looked after themselves. Similarly the government received the taxes and provided some sort of security, and apart from this, occupied itself with matters of concern to itself: external war, patronage of learning and the arts, a life of luxurious ostentation” (Pearson 1982:54).

  62. The proverb appears, attributed to the Prophet himself, in al-Ghazali’s Ihya’, kitab al-’Ilm, 284, followed by a long list of similar statements: “Sa’id Bin Musaiyab said, ‘When you see a religious scholar visiting a prince, avoid him, for he is a thief.’ Al-Auza’i said, ‘There is nothing more detestable to Allah than a religious scholar who visits an official’ …” etc. This attitude has by no means disappeared. A strong majority of Iranian ayatollahs, for example, oppose the idea of an Islamic state, on the grounds that it would necessarily corrupt religion.

  63. Lombard 1947, Grierson 1960. This is often represented as a wise policy of refusal to “debase” the coinage, but it might equally be read as meaning that the caliph’s signature added no additional value. An experiment with Chinese-style paper money in Basra in 1294 failed, as no one was willing to accept money backed only by state trust (Ashtor 1976:257).

  64. MacDonald 2003:64. Gradually this became unsupportable and Muslim empires adopted the more typically Medieval iqta’ system, whereby soldiers were granted the tax revenues from specific territories.

  65. Neither have slaves been employed as soldiers since, except in temporary and anomalous circumstance (e.g., by the Manchus, or in Barbados).

  66. It seems significant that (1) the “inquisition” of 832, the failed Abbasid attempt to take control of the ulema; (2) the most important mass conversion of the Caliphate’s subjects to Islam, peaking around 825–850; and (3) the definitive ascent of Turkish slave soldiers in Abbasid armies, often dated to 838, all roughly corresponded in time.

  67. Elwahed 1931:111–35. As he puts it (ibid:127), “the inalienability of liberty is one of the fundamental and uncontested principles of Islam.” Fathers do not have the right to sell their children, and individuals do not have the right to sell themselves—or at least, if they do, no courts will recognize any resultant ownership claims. I note that this is the diametrical opposite of the “natural law” approach that later developed in Europe.

  68. There is a certain controversy here: some scholars, including some contemporary Muslim scholars opposed to the Islamic economics movement, insist that riba, which is unequivocally condemned in the Koran, did not originally refer to “interest” in general, but to a pre-Islamic Arabian practice of fining late payment by doubling the money owed, and that the blanket condemnation of interest is a misinterpretation (e.g., Rahman 1964, Kuran 1995). I am in no position to weigh in but, if true, this would suggest that the ban on usury really emerged in Iraq itself as part of the process of the creation of grassroots Islam, which would actually reinforce my general argument.

  69. The best records we have are actually from a community of Jewish merchants in Geniza, in twelfth-century Egypt, who observed the ban on interest even in dealings with one another. The one area where we regularly hear of interest being charged is the one area where coercion was also regularly employed: that is, in dealings with kings, viziers, and officials, who often borrowed large sums of money at interest—especially, but not exclusively, from Jewish or Christian bankers—to pay their troops. Obliging a request for such an illegal loan was a dangerous business, but refusing even more so (for Abbasid examples, see Ray 1997:68–70, mainly drawing from Fischel 1937).

  70. There were also a whole host of legal subterfuges (called hiyal) that one might undertake if one were absolutely determined to charge interest: for instance, buying one’s debtor’s house for the amount of the loan, charging them rent for it, and then allowing them to buy it back for the same sum; having one’s debtor agree to buy a certain product monthly and sell it to one at a discount, and so forth. Some schools of Islamic law banned these outright; others merely disapproved. It used to be assumed that these methods were widely employed, since most economic historians assumed interest to be a necessary element of credit, but recent research provides no evidence that they were especially common (for the older view: Khan 1929, for the new: Ray 1997:58–59).

  71. Mez 1922:448, quoted in Labib 1969:89. Note that Basra, the city where everyone in the market paid by check, was also the city where, a century later, Mongol attempts to introduce government-issue paper money were so doggedly resisted. The word sakk is incidentally the origin of the English “check.” The ultimate origins of sakk are contested: Ashtor (1972:555) suggests they were Byzantine; Chosky (1988), Persian.

  72. Goitein (1966, 1967, 1973) provides a detailed summary of financial practices among Jewish merchants in twelfth-century Egypt. Almost every transaction involved credit to some degree. Checks, remarkably similar even in appearance to the kind used today, were in common usage—though sealed bags of metal coins were even more common in everyday transactions.

  73. Though apparently governments sometimes paid wages by check (Tag El-Din 2007:69.) I am no doubt underplaying the government role in all this: there were, for instance, attempts to set up central government banks, and certainly usually a commitment in principle that the government should enforce commercial standards and regulations. It seems, however, that this rarely came to much in practice.

  74. Udovitch 1970:71–74.

  75. Sarakhsi in Udovitch 1975:11, who has a good discussion of the issues involved. Likewise Ray 1997:59–60.

  76. This should surely also be of interest to students of Pierre Bourdieu, who made a famous argument, based on his study of Kabyle society in Algeria, that a man’s honor in such a society is a form of “symbolic capital,” analogous to but more important than economic capital, since it is possible to turn honor into money but not the other way around (Bourdieu 1977, 1990). True, the text above does not quite say this, but one does wonder how much this is Bourdieu’s own insight, and how much simply reflects the common sense of his informants.

  77. Following K.N. Chaudhuri (1985:197). The expansion of Islam was spearheaded by both Sufi brotherhoods and legal scholars; many merchants doubled as either or both. The scholarly literature here is unusually rich. See, for instance: Chaudhuri 1985, 1990; Risso 1995; Subrahmanyam 1996; Barendtse 2002; Beaujard 2005.

  78. In Goody 1996:91.

  79. M. Lombard 2003:177–79.

  80. Burton’s translation; 1934 IV:2013.

  81. And what’s more, officials employed their own person bankers, and themselves made extensive use of credit instruments such as suftaja both for transfer of tax payments, and the secreting away of ill-gotten gains (Hodgson 1974 I:301, Udovitch 1975:8, Ray 1994:69–71.)

  82. “For Mohammed this natural regulation of the market corresponds to a cosmic regulation. Prices rise and fall as night follows day, as low tides follow high, and price imposition is not only an injustice to the merchant, but a disordering of the natural order of things” (Essid 1995:153).

  83. Only very limited exceptions were made, for instance in times of disaster, and then most scholars insisted it was always better to provide direct relief to the needy than to interfere with market forces. See Ghazanfar & Islahi 2003, Islahi 2004:31–32; for a fuller discussion of Mohammed’s views on price formation, see Tuma 1965, Essid 1988, 1995.

  84. Hosseini 1998:672, 2003:37: “Both indicate that animals, such as dogs, do not exchange one bone for another.”

  85. Hosseini 1998, 2003. Smith says he visited such a factory himself, which may well be true, but the example of the eighteen steps originally appears in the entry “Épingle
” in Volume 5 of the French Encyclopedie, published in 1755, twenty years earlier. Hosseini also notes that “Smith’s personal library contained the Latin translations of some of the works of Persian (and Arab) scholars of the medieval period” (Hosseini 1998:679), suggesting that he might have lifted them from the originals directly. Other important sources for Islamic precedents for later economic theory include: Rodison 1978, Islahi 1985, Essid 1988, Hosseini 1995, Ghazanfar 1991, 2000, 2003, Ghazanfar & Islahi 1997, 2003. It is becoming more and more clear that a great deal of Enlightenment thought traces back to Islamic philosophy: Decartes’ cogito, for example, seems to derive from Ibn Sina (a.k.a. Avicenna), Hume’s famous point that the observance of constant conjunctions does not itself prove causality appears in Ghazali, and I have myself noticed Immanuel Kant’s definition of enlightenment in the mouth of a magic bird in the fourteenth-century Persian poet Rumi.

  86. Tusi’s Nasirean Ethics, in Sun 2008:409.

  87. Ghazanfar & Islahi 2003:58; Ghazanfar 2003:32–33.

  88. So for example among Ghazali’s ethical principles, we find “the buyer should be lenient when bargaining with a poor seller and strict when transacting with a rich seller,” and “a person should be willing to sell to the poor who do not have the means and should extend credit to them without the expectation of repayment” (Ghazali Ihya Ulum al Din II:79–82, cited in Ghazanfar & Islahi 1997:22)—the latter of course recalling Luke 6:35.

  89. Ghazali in Ghazanfar & Islahi 1997:27.

  90. Ibid:32.

  91. Ibid:32.

  92. Ibid:35. On postmen in Medieval Islam: Goitein 1964. Ghazali’s position here recalls and is no doubt influenced by Aristotle’s Nicomachean Ethics (1121b): that since money is a social convention meant to facilitate exchange, diverting it into usury defies its purpose; but its ultimate thrust is quite different, closer to Thomas Aquinas’ argument that money is basically a measure and that usury distorts it, and Henry of Ghent’s argument that “money is a medium in exchange and not a terminus”—unsurprisingly, since Aquinas was likely directly influenced by him (Ghazanfar 2000).