David Graeber on jubilee

David Johnson: At the end of the book, you suggest one policy proposal of a sort, namely a jubilee, or a cancellation of all debts.

David Graeber: Well, it’s not really a policy proposal—I don’t believe in policy. I’m an anarchist, right? Policy means other people making decisions for you.

DJ: Right. Have you thought about how a jubilee would work right now, in terms of all the underwater mortgages in this country or on the sovereign debt crisis in Europe?

DG: I haven’t worked it out; I’m not an economist. But there are people who have. Boston Consulting Group, I believe, ran a model recently and came to the conclusion that, while having a debt jubilee would cause great economic disruption, not having one would create even more. The situation we have basically isn’t viable. Some kind of radical solution is going to be required at some point; the question is what form it’s going to take.

This time around, they might consider doing it in a form that actually helps ordinary people. It would have been perfectly feasible to take the trillions of dollars that they essentially printed to bail out the banks and give it to mortgage holders, because what the banks had were mortgage-based securities that were no good anymore. If they just paid the mortgages using the same money, that in effect would have bailed out the banks.

DJ: That wouldn’t have been a debt cancellation.

DG: Well, I’m just giving an example. It would have had the same effect as a debt cancellation, because they would have printed money to pay the debts. The irony is that they chose instead to give the money directly to the banks and not bail out the mortgage-holders. Which is a pattern that you see over and over again in world history—one of the more dramatic consistencies I’ve noticed in the history of debt: debts between equals are not the same as debts between people who are not equals.

Debts between either poor people or rich people, that they have with each other, can be renegotiated or forgiven. People can be extraordinarily generous, understanding, forgiving when dealing with others like themselves. But debts between social classes, between the rich and the poor, suddenly become a matter of absolute morality. And that’s what we saw; it’s a very, very old pattern.