"The authors point out that while private debt has more than 5,000 years of recorded history, the emergence of public debt was in 12th century Venice, secured through a state monopoly on salt. The modern government debt market took off only after the English Consolidating Act of 1751, creating "consuls" and later "gilts" and other government bonds. Central banks began with Sweden's Riksbank in 1668. The Bank of England, founded in 1688, was granted a monopoly over issuing paper money. In the USA, after many conflicts over the role of its earlier national banks, the Federal Reserve Act was passed in 1913, as a private corporation owned by its twelve regional banking groups, with its Federal Reserve Board as its governing façade with members appointed by the President and approved by the Senate. Only in 2011 did a majority in Congress join with media in demanding the first ever audit of the Fed and the over $13 trillion it supplied to the large banks following the 2008 crises (www.sigtarp.gov)." (http://seekingalpha.com/article/860851-book-reviews-economics-after-the-crisis-and-money-and-sustainability)
Source: excerpted from the book by Bernard Lietaer et al. on Money and Sustainability
Debt precedes Money
Debt, rooted in the violence of conquest, precedes the creation of money, argues anthropologist David Graeber:
"First of all, as we all know, it is another typical – perhaps defining – feature of slavery that slaves can be bought or sold. In this case, absolute debt becomes (in another context, that of the market) no longer absolute – in fact, it can be precisely quantified. There is good reason to believe that it was precisely this operation that made it possible to create something like our contemporary form of money to begin with, since what anthropologists used to refer to as ‘primitive money’, the kind that one finds in stateless societies (Solomon Island feather money, Iroquois wampum), was mostly used to arrange marriages, resolve blood-feuds, and fiddle with other sorts of relations between people rather than to buy and sell commodities. For instance, if slavery is debt, then debt can lead to slavery. A Babylonian peasant might have paid a handy sum in silver to his wife’s parents to officialise the marriage, but he in no sense owned her. He certainly couldn’t buy or sell the mother of his children. But all that would change if he took out a loan. Were he to default, his creditors could first remove his sheep and furniture, then his house, fields and orchards, and, finally, take his wife, children, and even himself as debt peons until the matter was settled (which, as his resources vanished, of course became increasingly difficult to do.) Debt was the hinge that made it possible to imagine money in anything like the modern sense, and therefore, too, to produce what we like to call the market: an arena where anything can be bought and sold, because all objects are (like slaves) disembedded from their former social relations and exist only in relation to money.
But at the same time the logic of debt as conquest can, as I mentioned, pull another way. Kings, throughout history, tend to be profoundly ambivalent towards allowing the logic of debt to get completely out of hand. This is not because they are hostile to markets. On the contrary, they normally encourage them, for the simple reason that governments find it inconvenient to levy everything they need (silks, chariot wheels, flamingo tongues, lapis lazuli) directly from their subject population; it’s much easier to encourage markets and then buy them. Early markets often followed armies or royal entourages, or formed near palaces or on the fringes of military posts. This actually helps explain more, rather puzzling behavior on the part of royal courts: after all, since kings usually controlled the gold and silver mines, what exactly was the point of stamping bits of the stuff with your face on it, dumping it on the civilian population, and then demanding they give it back to you again as taxes? It only makes sense if levying taxes was really a way to force everyone to acquire coins, so as to facilitate the rise of markets, since markets were convenient to have around. However, for our present purposes, the critical question is: how were these taxes justified? Why did subjects owe them, what debt were they discharging when they were paid? Here we return again to right of conquest. (Actually, in the ancient world, free citizens – whether in Mesopotamia, Greece, or Rome – often did not have to pay direct taxes for this very reason, but for obvious reasons I’m simplifying here.) If kings claimed to hold the power of life and death over their subjects by right of conquest, then their subjects’ debts were, also, ultimately infinite; and also, at least in that context, their relations to one another, what they owed to one another, was unimportant; all that really existed was their relation to the king. This in turn explains why kings and emperors invariably tried to regulate the powers that masters had over slaves, and creditors over debtors. At the very least they would always insist, if they had the power, that the lives of war prisoners having once been spared, their masters could no longer kill them; that, in fact, only rulers could have arbitrary power over life and death. One’s ultimate debt was to the state; it was the only one that was truly unlimited, that could make absolute, cosmic, claims.
The reason I stress this is because this logic is still with us. When we speak of a ‘society’ (French society, Jamaican society) we are really speaking of people organised by a single nation state. That is the tacit model, anyway. ‘Societies’ are really states, the logic of states is that of conquest, the logic of conquest is ultimately identical to that of slavery. True, in the hands of state apologists, this becomes transformed into a notion of a more benevolent ‘social debt’. Here there is a little story told, a kind of myth. We are all born with an infinite debt to the society that raised, nurtured, fed and clothed us, to those long dead who invented our language and traditions, to all those who made it possible for us to exist. In ancient times we thought we owed this to the gods (it was repaid in sacrifice – or, sacrifice was really just the payment of interest – ultimately, it was repaid by death). Later the debt was adopted by the state – itself a divine institution – with taxes substituted for sacrifice, and military service for one’s debt of life. Money is simply the concrete form of this social debt, the way that it is managed. Keynesians like this sort of logic. So do various strains of socialist, social democrats, even crypto-fascists like Auguste Comte (the first, as far as I am aware, to actually coin the phrase ‘social debt’). But the logic also runs through much of our common sense: consider for instance, the phrase, ‘to pay one’s debt to society’, or, ‘I felt I owed something to my country’, or, ‘I wanted to give something back.’ Always, in such cases, mutual rights and obligations, mutual commitments – the kind of relations that genuinely free people could make with one another – tend to be subsumed into a conception of ‘society’ where we are all equal only as absolute debtors before the (now invisible) figure of the King, who stands in for your mother, and by extension, humanity.
What I am suggesting then is that while the claims of the impersonal market, and the claims of ‘society’, are often juxtaposed – and certainly have had a tendency to jockey back and forth in all sorts of practical ways – they are both ultimately founded on a very similar logic of violence. Neither is this a mere matter of historical origins that can be brushed away as inconsequential: neither states nor markets can exist without the constant threat of force." (http://www.metamute.org/en/content/debt_the_first_five_thousand_years)
Expanding the notion of debt to ecological/embodied debt
Becky Clausen on Ariel Salleh:
"Eco-Sufficiency and Global Justice offers an expanded understanding of ecological/embodied debt, the social relations of subsistence, and a Marxist conception of metabolism. Salleh’s introductory chapter begins with a model of debt that integrates socialist, feminist, and ecological perspectives.
(1) the social debt owed by capitalist employers for surplus value extracted from the workers,
(2) the ecological debt owed by the global North to the South for direct extraction of the natural means of production, and
(3) the embodied debt owed by both the North and South to unpaid reproductive workers who produce use values and regenerate the conditions of production.
Understanding these interlocking forms of debt provides leverage for academic debate as well as reflection for people’s struggles within a worldwide system of capital accumulation.
Salleh focuses her analysis on the embodied debt of workers who perform “meta-industrial labour,” (see: Meta-industrial Class) which goes beyond the wage-dependent work of industrial society to encompass the labor of women and men who work off the land, raising children, caring for family members, and generally engaging in social relations of subsistence. Meta-industrial laborers include householders, mothers, peasants, indigenes, and others whose daily work is directly connected to biological growth and regeneration.
Salleh suggests that the meta-industrial labor of both women and men achieves a “metabolic fit” between human needs and natural cycles, thereby offering a model of eco-sufficiency.
Salleh presents a clear and consistent materialist argument, stating that the day-to-day experience of negotiating humanity-nature relations is a “standpoint grounded in labor—not for instance, an ideological or sociobiological argument about women being closer to nature or better than men.” This materialist foundation allows her to circumvent such essentialist ecofeminist arguments and offer an extension of Marx’s concept of metabolism. Salleh successfully describes how the social relations of subsistence can provide an alternative to Metabolic Rift." (http://arielsalleh.info/published-work/books/Clausen_MR.pdf)