We were taught that money came to solve the inefficiencies of the barter system. Anthropologists proves early human economies were built not on barter but on trust and credit.
Money in the earlier form is a promise, not a coin.
Over the time, the informal systems of trust were formalised and then weaponised by state.
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Formation of state:
The state arises after human developed agriculture and it produced something called surplus.
It’s the foundation force behind development of state, money, inequality, organised religion and technological and military dominance.
Agricultural surplus led to the need for accounting systems, which in turn gave rise to debt and money. Also, surplus means not everyone need to farm, enabling specializations.
Credit came first: Early economies ran on informal IOUs ("You owe me a favor").
Money was imposed: States and temples created standardized currencies (e.g., Mesopotamian silver shekels) to tax, pay soldiers, and control populations.
The Role of state:
The Surplus enabled the state by supporting bureaucrats, armies, and rulers who didn’t work the fields.
Organized religion emerged to legitimize inequality, convincing people that the rulers’ authority was divinely ordained.
Military power depended on surplus, allowing states to expand and defend their wealth.
The invention of writing and accounting arose primarily to track debt and resource flow—turning social relationships into formalized obligations.
As Agricultural societies developed advanced technologies (e.g., irrigation, pyramids) but also became breeding grounds for deadly diseases due to dense populations and poor sanitation.
Why inequality among nations?
Geography played a crucial role,
Eurasia’s east-west axis allowed crops (like wheat) to spread easily across similar climates, facilitating expansion and empire-building.
Eurasia’s temperate zones (with seasonal variability) favoured cereal crops (wheat, barley) that could be stored long-term, unlike tropical crops like yams or bananas.
Storable surplus required systems to manage it (granaries, accounting), which spurred writing, bureaucracy, and centralized authority.
Cold winters demanded food preservation, leading to planning and technology like plows and irrigation.
In contrast:
Africa’s north-south axis made agricultural expansion difficult due to varying climates (jungles, deserts).
Australia’s wild food abundance reduced the need for agriculture, leaving Indigenous peoples vulnerable to colonization.
Military and technological superiority (guns, ships, germs) came from surplus-based economies, not racial or genetic superiority.
The Myth of Barter
The common story goes: barter was inefficient due to the “double coincidence of wants.”
But in small communities, this wasn’t an issue.
People relied on informal credit systems—“Henry owes Joshua one.”
Exchanges were delayed, not simultaneous.
In gift economies, reciprocity was flexible and governed by rough equivalences, not exact trade.
The Feudal System
In medieval Europe (and similar systems elsewhere), economic life was local, hierarchical, and non-monetized:
Land was owned by lords, worked by serfs who owed labor in exchange for protection and subsistence.
Labor was tied to the land—serfs didn’t "sell" their work; they were bound to their lord’s estate.
Goods were produced for use, not profit (e.g., food for the village, not for international trade).
Markets existed, but they were peripheral—most people lived outside a cash economy.
How Markets Were created?
Global Trade and the Merchant Class
European maritime expansion (compasses, shipbuilding) created global exchange networks, enabled long-distance trade.
Merchants traded — wool, spices, silk, and metals across continents, creating global prices.
Wealth shifted from landed aristocracy to merchants, disrupting feudal power.
The Enclosures: Turning Land into Capital
Landlords, envious of merchant profits, replaced serfs with sheep (wool had higher exchange value).
Landlords realized wool was more profitable than feudal crops (e.g., wheat, onions).
They fenced off common lands (enclosures), evicting serfs to raise sheep.
Result:
Serfs became landless laborers, forced to sell their work for wages.
Land became a commodity, rented for profit rather than worked for subsistence.
Key Quote:
"The enclosures turned Britain from a society with markets into a market society."
The Birth of Labor Markets
Dispossessed peasants wandered, begging for work:
"We’ll do anything for bread and shelter." → First wage laborers.
Factories later absorbed this labor, but initially, unemployment led to mass poverty.
How Markets Commodified Everything
The shift to a market society required three factors of production to were commodified:
Labor: Serfs were evicted from land (via enclosures), forcing them to sell their work for wages.
Land: Lords rented fields for wool production, pricing land based on global market value.
Tools & Goods: Artisans (blacksmiths, weavers) once made goods for local use. Now, tools and goods were made for sale—specialization increased, workshops became factories.
The Industrial Revolution: Markets Take Full Control
With land, labour, and tools now commodities, industrialisation exploded:
Steam engines (Watt) mechanised production, requiring wage labourers.
Colonialism supplied raw materials (cotton, sugar) and enslaved labour.
Profit motive replaced feudal obligations—money became the ultimate measure of value.
Result: The birth of labour markets, real estate, and industrial production.
The Great Contradiction
Market societies brought both progress and misery:
Freedom: Ended serfdom, but replaced it with wage slavery (workers dependent on volatile markets).
Wealth: Generated unprecedented production, but also extreme inequality (child labour, colonial slavery).
Values: Shifted from experiential values (land as heritage) to exchange values (land as rent-generating asset).
Pre-market societies: Wealth was tied to power/status (castles, art), not abstract profit.
Market societies: Profit became an end in itself. The profit motive grew alongside debt systems, incentivizing perpetual growth.
Feudal Economics: Production First, Debt Later
In medieval feudal societies, the economic sequence was straightforward:
Production: Serfs worked the land, growing crops or raising livestock.
Distribution: The feudal lord took a share (often by force).
Debt/Credit: Lords waited until serfs finished the harvest. After taking their share, they lent out any surplus grain or coin. These loans created debt, repaid later through labor or interest.
Key Point: Debt was a byproduct of surplus, not a driver of production.
Debt as the New Engine of Capitalism
In feudalism:
Wealth came through land, war, or royal favors.
Profit wasn’t a motivation; status was.
In capitalism:
Anyone could be an entrepreneur (in theory).
But to compete, they had to take on debt, innovate, and cut costs (especially labor).
Result:
Rapid technological growth + rising inequality + growing debt and anxiety.
New tech like the steam engine helped some win, but raised the stakes for all.
Productivity = survival, but only if you could repay your debts.
How Debt Fueled the Industrial Revolution
Entrepreneurs borrowed from thin air, to buy machines (like steam engines), competing fiercely to undercut rivals.
Workers suffered: Wages were slashed, child labor exploded, and bankrupt farmers became factory slaves.
Wealth inequality soared: A few got rich; many sank into debt peonage.
Metaphor: Debt was the real "coal" powering industrialization—not just technology.
Why This Matters Today
Debt is still the "hell" of capitalism: Student loans, mortgages, and corporate leverage trap people just like Faustus.
Profit motive rules: Unlike feudal lords, modern elites grow wealth not by force but by financial engineering.
Moral dilemma: Is debt a tool for growth or a form of control?
From Moral Debt to Financial Debt
Pre-Capitalist Debt: Informal, reciprocal ("I owe you a favor").
Capitalist Debt:
Legal contracts enforce repayment + interest (profit for lenders).
Solidarity dies: Help is no longer about "warm inner glow" but exchange value.
The Debt Paradox
Stability Breeds Instability: When governments create stable conditions, banks lend recklessly ("exuberance"), causing future crises.
Banks in Good Times vs. Bad Times
In Good Times (Boom):
Risk-Taking Galore
Banks lend aggressively (mortgages, credit cards, corporate loans).
They create money out of thin air (via loans) to fuel speculation.
Profits Soar
Interest income and fees pile up.
Bankers pocket huge bonuses for "growth."
Regulators Look Away
Politicians and central banks cheer the "strong economy."
Oversight loosens ("Don’t ruin the party!").
Public Debt Grows
Governments borrow more (since taxes stay low for the rich).
Bankers love this—they earn interest on safe government bonds.
In Bad Times (Bust):
Defaults Spike
Borrowers can’t repay (jobs lost, asset prices crash).
Banks suddenly realize their "assets" (loans) are worthless.
Panic & Bailouts
Depositors rush to withdraw money → Bank runs.
Banks scream: "Save us or the economy dies!"
Governments print money or borrow more to bail them out.
Austerity for the Public
"We must cut spending to pay for the crisis!" (Schools, healthcare suffer).
But banks keep bonuses and avoid prosecution.
The Cycle Restarts
After bailouts, banks soon resume risky lending (because why not?).
Inequality worsens (rich recover faster; workers stay stuck).
The Crisis of Debt in Ancient Societies
Mesopotamian "Clean Slates":
Peasants, crushed by debt (often due to bad harvests or taxes), fled or became debt-peons, fracturing society.
Kings periodically declared debt amnesties (e.g., freeing debt-slaves, restoring land) to prevent collapse. The Sumerian word for freedom, amargi ("return to mother"), symbolized liberation from debt bondage.
Key Point: These were political interventions, not cosmic obligations. Debt was a tool of control, not a natural law.
Primordial Debt Theory’s Flaw:
The idea that humans owe an infinite debt to "society" or the cosmos assumes a fixed, bounded "society"—a modern nationalist construct.
The Hypocrisy of the Rich
In good times: "The state is a parasite! Lower taxes!"
In bad times: "Save us, government!"
Reality: The rich depend on the state for:
Policies, Police (to protect their wealth), Infrastructure (roads, internet, R&D).
Bailouts (when their bets fail).
Public Debt: The Ghost in the Machine
Governments borrow (via bonds) because the rich avoid taxes.
Banks love public debt—it’s safe, earns interest, and can be sold fast in a crisis.
Without public debt, the economy would collapse (no money for schools, roads, hospitals).
Final Truth:
Bankers amplify inequality but aren’t the root problem.
The real instability comes from labor and money itself.
Moral Manipulation:
Religions framed sin as debt (e.g., Christianity’s "forgive us our debts").
Modern governments treat taxes as a "social debt" owed to the nation.
Money Was Invented to Enforce Hierarchy
Not trade, but taxes: Ancient rulers (Mesopotamian temples, Roman emperors) imposed money to extract wealth from populations.
Debt as discipline: If you couldn’t pay taxes, you fell into debt—and debt meant slavery, imprisonment, or loss of land.
Example: British colonialism forced Africans into cash economies via hut taxes, destroying self-sufficient communities.
Commodification = Control
Everything has a price: Money turns land, labor, even relationships into tradable commodities.
Freedom? No—dependency: The illusion of "free markets" hides how money forces people into wage labor, rent, and debt just to survive.
Example: Student loans don’t "liberate" education—they chain graduates to decades of payments.
Debt is violence: A "contract" between a starving peasant and a wealthy lender isn’t freedom—it’s coercion with numbers.
Solution: Reclaim the Commons, Build Non-Market systems
Barter never existed: Pre-money societies relied on gift economies and mutual aid, not quid-pro-quo deals.
Shift from private ownership to collective stewardship of:
Land
Housing
Natural resources
Build Non-Market Economies
Promote systems based on:
Gift economies (circulating goods without accounting)
Mutual aid (solidarity networks)
Time banking (labor exchange without cash)
Reframe the narrative:
Personal debt is systemic violence, not moral failure
Housing/healthcare/education should be rights, not commodities
References & Further Reading
Graeber, David. Debt: The First 5,000 Years. Melville House, 2011.
Varoufakis, Yanis. Talking to My Daughter About the Economy. Vintage, 2017.
Diamond, Jared. Guns, Germs, and Steel. W.W. Norton, 1997.
Polanyi, Karl. The Great Transformation. Beacon Press, 1944.
Ostrom, Elinor. Governing the Commons. Cambridge University Press, 1990.