I recently started listening to a book that was recommended by Seth Godin called Debt: The First 5000 Years by anthropologist David Graeber. I haven’t yet completed the book, but already the first four chapters have been worth the entire purchase.

Everybody who has studied economic theory has stumbled upon the conventional wisdom that barter was a precursor to money. It seems like we have the 18th century Scottish philosopher Adam Smith to thank for the prevailing idea that quid-pro-quo exchange systems (e.g. trading nails for potatoes) preceded economies based on currency, and that credit and debt are concepts that came only after we had invented money.

Graeber argues quite convincingly that there’s no evidence whatsoever that Smith was right. Instead, he presents a mindblowing reversal of this conventional wisdom showing that before there was money, there was debt. Going back 5000 years to the first agrarian empires, we can see from preserved records that people have used elaborate credit systems to buy and sell goods.

When you think of it, it’s actually quite logical that these systems would have emerged early, because otherwise people would have frequently ended up in the imaginary (and apparently incorrect) scenario described by Adam Smith in The Wealth of Nations. In Smith’s scenario, a baker who (before the invention of money) wanted a butcher’s meat, but had nothing the butcher wanted, simply could not get the meat because “no exchange could be made between them”.

The idea that debt might have come much before coins, and that we therefore might not have had that many (if any) pure barter economies, is something I find truly amazing. Graeber does a very good job persuading us that this is the order it happened, and that money was actually invented to keep track of debt.

There are also other anthropologists who doubt the historical existence of pure barter economies. In 2016, The Atlantic published an article titled The Myth of the Barter Economy, in which they write that this supposed barter economy has never been witnessed as researchers have traveled to undeveloped parts of the globe. The article points to research by Cambridge anthropology professor Caroline Humphrey, which concludes that “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money [and] all available ethnography suggests that there never has been such a thing.”

I can’t wait to hear what Graeber has to tell in the following chapters of his book. If it’s true that we’ve had societies, already thousands of years ago, divided into debtors and creditors, then the historical, political, and philosophical questions that arise are very interesting. I presume those are exactly the questions Graeber is going to deal with in the rest of his book.

Because essentially Graber’s book is, as Seth Godin aptly described it, “a book about simple debt, debt that leads to prostitution, debt that leads to marriage debt, and finally debt that leads to developing nations being billions of dollars in debt to the rich world merely because a dictator stole a lot of money”.

Debt truly is a fascinating concept.