What does debt mean to you?
You might view “debt” as a dirty word, accompanied by the shackle of interest rates and missed payments. But you might view “credit” differently. Credit is seen as a financial tool, and a good credit score as something to be nurtured and coveted. We treat them as distinct financial products. However, as the late anthropologist David Graeber argues in his book “Debt: The First 5,000 Years,” credit and debt are not merely financial metrics; they are two sides of the same coin that has governed human civilization long before the first coin was ever circulated. Michel Aglietta, a respected economist and dedicated academic, makes similar observations in his work “Money: 5,000 Years of Debt and Power.”
Many economics textbooks suggest that money was invented to replace cumbersome barter systems, but Graeber and Aglietta’s research suggests otherwise. In many early societies, people didn’t trade a cow for a bag of grain on the spot. Instead, they relied on complex systems of credit. If you needed grain, your neighbor gave it to you because they knew you’d eventually give them something back. Debt, in its original form, was simply a good-faith promise that bound communities together through mutual obligation.
The Social Origin of Debt
Aglietta argues that money is the “supreme social bond.” It isn’t just a commodity (like gold) or a piece of paper; it is a representation of the debt that individuals owe to society and vice versa. To provide more historical context, debt was originally “credit” in its purest sense: credo, meaning “I believe.” It was a manifestation of fides, meaning “trust” or “reliability.” When a community operates on a credit system, individuals are perpetually in each other’s debt. This isn’t a burden but rather a relationship. If you owe nothing to anyone, and no one owes you anything, you are essentially a stranger.
The shift from “human economies” to “market economies” changed the nature of the relationship. When debt is quantified into a specific numerical value and backed by the threat of violence or legal recourse, it ceases to be a social bond and becomes a mechanism of control. This is the point where credit (the trust that you will fulfill your promise) hardens into debt (the mathematical obligation that must be extracted).
If a farmer had a bad harvest and couldn’t pay his debt, he didn’t just owe his neighbor a favor; he faced the prospect of losing his land or being sold into slavery. Here, the relationship between credit and debt became adversarial. Credit was no longer about mutual support; it was about the creditor’s power over the debtor.
The Moral Paradox
One of the most profound insights from Graeber’s work is the moral paradox of debt. Throughout history, the phrase “to pay one’s debts” has been treated as synonymous with “to be a good person.” Yet throughout history, one of the most common causes of popular insurrections has been the demand for debt cancellation.
When credit is plentiful, the economy feels expansive and inclusive. But when the “bubble” bursts and credit is called in, it reveals the cold reality of debt. We see this today: when a bank lends money, it is “extending credit” (an act of trust); when the borrower cannot pay, it is a “debt crisis” (a moral failing of the individual). The relationship is asymmetrical. The creditor’s “risk” is often socialized or bailed out, while the debtor’s obligation remains absolute and personal. With nearly all responsibility being placed on the debtor, we have seen situations where creditors lend money recklessly.
Who remembers the 2008 financial crisis?
Rediscovering the Human Connection
Today, we live in a digital version of the credit era. Our money is no longer backed by gold, but by “full faith and credit.” We are returning to a world where money is once again a system of bookkeeping and promises. However, unlike the communal credit of the past, our modern debts are managed by impersonal algorithms and global institutions.
The lesson from Graeber and Aglietta’s works is that the relationship between credit and debt is ultimately about how we value one another. If we view debt solely as a mathematical certainty, we allow it to justify exploitation. It creates tension, or what Aglietta calls, “monetary violence” – crises, hyperinflation, or debt deflation. But if we remember that credit is rooted in trust and social obligation, we can begin to imagine an economy that serves human needs rather than one that treats people as entries on a balance sheet. Aglietta is highly critical of the current monetary era. He argues that since the 1970s, we have allowed money to become a “purely private asset,” leading to uncontrolled debt, loss of sovereignty, and the need for reform.
In the end, credit and debt are the ways we keep track of what we owe each other. The question is whether those obligations will be used to build communities or to break them. Understanding the origins of credit can help contextualize many of our financial decisions and can help us appreciate how far we’ve come in terms of fair, responsible financing practices.
Our Responsibility
Financial advisories like ours are bound to a fiduciary responsibility, meaning we’re legally obligated to seek to act in your best interest. As a fiduciary, financial responsibility is a fundamental responsibility of our business, and with March being credit awareness month, this is the perfect opportunity to demonstrate our commitment to that responsibility. Retirement finance is really all about providing the communities we serve with tools and strategies that can help create financial stability to live by your values and support your loved ones. Do you have unmanaged debt or a less-than-ideal credit score? Schedule some time with our team and allow us to examine your situation so we can help you find strategies that support your financial goals.
