What has passed for "materialism" in traditional Marxism—the division between material "infrastructure" and ideal "superstructure," is itself a perverse form of idealism. Granted, those who practice law, or music, or religion, or finance, or social theory, always do tend to claim that they are dealing with something higher and more abstract than those who plant onions, blow glass, or operate sewing machines. But it's not really true. The actions involved in the production of law, poetry, etc., are just as material as any other. Once you acknowledge the simple dialectical point that what we take to be self-identical objects are really processes of action, then it becomes pretty obvious that such actions are (a) always motivated by meanings (ideas); and (b) always proceed through a concrete medium (material). Further, that while all systems of domination seem to propose that "no, this is not true, really there is some pure domain of law, or truth, or grace, or theory, or finance capital, that floats above it all," such claims are, to use an appropriately earthy metaphor, bullshit. As John Holloway (2003) has recently reminded us, it is in the nature of systems of domination to take what are really complex interwoven process of action and chop them up and redefine them as discrete, self-identical objects—a song, a school, a meal, etc. There's a simple reason for it. It's only by chopping and freezing them in this way that one can reduce them to property and be able to say one owns them.
A genuine materialism then would not simply privilege a "material" sphere over an ideal one. It would begin by acknowledging that no such ideal sphere actually exists. This, in turn, would make it possible to stop focusing so obsessively on the production of material objects—discrete, self-identical things that one can own—and start the more difficult work of trying to understand the (equally material) processes by which people create and shape one another.
This is a lucid passage, and also a very frustrating one. It is lucid about the fetishism of ruling class ideology, and frustrating in how it represents its supposed foil. To begin with, it is unclear what is meant by "traditional Marxism". Suffice to say that it wouldn't include E M Wood, E P Thompson, Alasdair Macintyre, or any number of anti-Stalinist marxists who have problematised the idea of a base-superstructure dichotomy, either rejecting the whole metaphor, or maintaining that conceiving it as a dichotomy is contrary to Marx's original intention. These arguments were often directed against a highly mechanical and scholastic interpretation of Marx that was popularised by the Soviet Union and its supporters, the purpose of which was to rationalise Stalinist accumulation methods. The logic of the Stalinists was that if the superstructure is determined by the economic base then we must only develop the means of production and the political superstructure of socialism is sure to follow. So it is possible that by "traditional Marxism", Graeber actually means Stalinist vulgarisation. Or it could just be another sock-puppet-as-protagonist, cf. "standard leftist", "typical PC liberal", etc.
That Marx himself does not intend the base-superstructure metaphor as a dichotomy is clear in the Preface to A Contribution to the Critique of Political Economy, the text which Graeber finds particularly problematic (as opposed to, eg, The German Ideology):
In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness. At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure.
This passage, in which the troublesome base/superstructure metaphor is advanced, is also the basis of many misleading formulations about "the contradiction between the forces and relations of production", which are certainly idealist and mechanical. But it is clear that what this passage does differs from what Graeber supposes "traditional Marxism" does. The superstructure is not posited as a sphere of pure ideality separate from a material base. Rather it is part of the same material process. To speak of "relations of production" and "property relations", Marx says, is to speak of different aspects of the same phenomenon. The economic and juridical are not opposed by Marx in the crass way that this "traditional Marxism" would apparently have us believe.
As importantly, nowhere does Marx suggest that the superstructure is ideal, or that there is actually an "ideal sphere" distinct from material activity. In fact, Marx's position on this is remarkably similar to that of Graeber. Marx, and I suspect most marxists, would not be scandalised by the assertion that the actions which produce law and poetry are themselves material. The thrust of the quoted passage from the 'Preface', as I read it, is not that material processes produce a separate, ideal superstructure. It is that what is referred to as superstructural is in fact a material process - more specifically, a process brought about by human activity. It is, in other words, precisely to reject the reification of social processes and their transformation into autonomous entities that dominate life in an almost god-like fashion. The upshot is that when categories such as property, democracy, law, wages, nations, etc., are discussed, one should look not for some corresponding 'economic base' that determined them, but for the forms of activity which instantiate them, and which produce them, and which are in turn produced by them.