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1-Page Summary of Debt
Overview
The Rosetta stone is often overlooked by people who are interested in Egyptian hieroglyphics. In fact, it’s a legal document that grants amnesty to debtors and prisoners.
Debt has been around for a long time. Ancient Egypt is one example, but it’s even older than that; the concept of debt goes back to ancient societies where people needed goods and services from each other.
The author uses historical data to show how the use of money has changed over time. He goes back as far as ancient times, when people used cattle and other livestock for bartering services instead of using currency. As civilization evolved, so did the way we deal with money and debt.
This book is full of interesting facts and anecdotes about the history of business. It’s a must-read for anyone who wants to learn about how people have done business throughout the ages. You’ll learn why credit came before money, why soldiers paid cash during wartime but bought things on credit from family friends when they were at home, and how religion influenced people’s spending habits.
Big Idea #1: Systems of debt and credit have existed since the beginning of recorded human history.
Economic history textbooks tell us that the earliest human exchanges were based on bartering, with money being invented later. However, there’s no evidence of this happening in most modern societies. For example, the Pukhtun people of northern Pakistan use a form of barter called adal-badal to trade with strangers only. This is somewhat intuitive because when you ask for something from someone who’s close to you—a family member or friend—you don’t think about how it might benefit you; but in classical economics’ view otherwise.
Economic theory is actually wrong. Anthropology teaches us that people were using virtual money, credit, before coinage and bartering were invented.
Money has been around since ancient times. The silver shekel was used as a currency in Mesopotamia, but most of the silver that supported this early monetary system was kept in temple and palace treasuries. Society also had an exchange rate between shekels and barley, the staple crop. Debts were usually paid with shekels, but barley was used for taxes.
Even though there is evidence that people have been exchanging goods and services since the beginning of time, the barter myth persists. The reason for this is because it’s a central tenet to economics. It goes hand in hand with the assumption that all individuals are interested in maximizing profit and assigning abstract value to things.
It’s natural to see the world in terms of exchange value, but it is a product of history.
Big Idea #2: Market economies rely on violence and the decontextualization of goods and people to function.
Money has a social value as well as an economic one. Unlike the industrialized economies we have today, many pre-industrial societies functioned like human economies. In such societies, every person is unique and can’t be reduced to a mathematical value. People are tangled in a complex web of social connections that can’t be replicated, so each person has a particular value that can’t be quantified. In those cultures, money was given to the bride’s family by her suitor not because it equaled her worth but because it acknowledged his debt to them for allowing him to marry their daughter and become part of their family.
You can only treat people as if they’re identical and exchangeable if you rip them out of their social web.
Slavery was a way of life in the past. People were used as slaves because they were prisoners of war and their lives depended on it. In this case, slavery meant that all previous obligations would be forgotten or ignored.
