[DFHippie]

I don't think your explanations are really in conflict. His point is that cowardice keeps third parties from intervening and then ego defense in the face of their own cowardice gets them to denigrate the victim. Yours is that it's just sociopathic indifference. But people do feel guilt at their inaction and they do blame the victims. And most likely David Graeber would have agreed that people are more likely to step in to defend people closer to them -- kin, friends, members of their religion or ethnic group. So apathy does have a role to play in his model as well. If you have a lot of apathy you need little cowardice + projection to preserve bullying. If you don't, you need more.

Another neglected factor is how convincingly one can tell oneself preventing the bullying is somebody else's responsibility. If the crowd of witnesses is large or there is someone else nominally in charge, you can have empathy and inaction without any recourse to victim blaming or other self-deceptions.