Debt is a bad cooperative structure

NOTE HXA7241 2013-01-20T10:53Z

When you look at debt as an abstract informational/cooperative structure you find it is a dysfunctional one. And a quick check for any rational moral basis turns up nothing either. Debt is unwise and we should stop doing it.

Graeber writes of debt as a system that severs people from their normal social relations. That seems a good and stimulating diagnosis, but it is difficult to really understand: the moral, psychological, practical, economic aspects are all mixed together. Which is doing what? Which are more important? How does one orient oneself?

A way out is to look at debt as simply one possible form of behaviour – as one kind of abstact structure of cooperation. When it is just about information and interaction it is clearer.

In that light debt appears to be illogical and ineffective. It is a dysfunctional mechanism in a cooperative system.


A loan represents a surplus. You cannot loan if you have none, or have only what you need; you can only loan if you have more than you need. (The myth of debt instills a vague but potent sense of negative: a debt is like a hole that must eventually be filled. But this is sheer illusion. There is no negative.)

In that case, transfer of that excess to somewhere else is most likely a sensible operation in a cooperative system. That is, since we can assume there might well be some shortage elsewhere.

But how can repayment make sense? (Prima facie, it already seems counter-optimal to give back more resources to part of the network that already has plenty.)

The more closely the payment and repayment resources match and the more closely the two transfers are in time, the less sense it all makes. For the same resource at the same time it is trivially pointless: the operation immediately cancels out.

Repayment in the usual way with money does seem to make some sense though: it does so by transferring something to be used in a different way at a different time. We can understand it like this: the lender, with their surplus, has shown they are capable producers, and their receiving of payments will help them get resources for further such production. That is a reasonable use of information for cooperation.

Yet debt by definition is always trying not to do that. It drives the useful forwardness of the interaction on backward information: it demands (re)payment according to the original terms – that is, its basic rule deliberately excludes consideration of present or future need. Where debt does work it really only works by accident.

This refutes the basic idea of debt. The more it is thought of and works in its real identity of a single operation – a unit of payment and symmetrical/reciprocal repayment – the less it makes sense. It only makes sense as far as it happens to be an approximation of a different operation – separate transfers of resources guided by differing information.

The true basic general rule of cooperative systems is something like: the resources of a system should be directed to the needs of a system. Which is to say: supply should go to demand. There is no paying back, only movement of resources to where they are needed or best used.


And morally: does paying-back, just deserts, reward, even make any sense? They are taken for granted as such, unquestioned, but where is their morality?

To be brief, rational morality can be taken as twofold: a code of cooperation, and allowance of individual liberty otherwise.

Since lending and paying-back is very deliberately an interaction it cannot be about liberty.

And, as explained above, there seems nothing essentially positively cooperative about repayment. Paying-back, just deserts, reward, are all symmetrical, reciprocal interactions/structures, and they just do not make sense as cooperative operations. They only make sense accidentally.

We have all been fooled. We have gone about with the background sense that paying-back is moral, yet that seems quite wrong. There is no rational moral grounding for debt.