Debt is a reality, even though it has turned out to be one of the most enduring problems plaguing our world. Your home, your consumer goods, your degree and, if you live in the United States, your medical care – more than likely, it was all made possible by debt. Periodic economic crises have been among the results. Whenever such crises arise, calls for debt cancellation have been made. But the powers that be and an army of commentators are warning us that such efforts must be limited and measured, lest they lead to chaos and disorder.
Michael Hudson takes a different point of view. A former Chase Manhattan Bank economist and adviser to various governments, including Washington, Hudson wrote the influential Super imperialism, explaining how the emergence of a dollar-based international monetary system in the postwar era ended up helping the United States finance unlimited military spending.
Now a professor of economics at the University of Missouri-Kansas City, Hudson delved into archeology to try to find the origins of debt and private property. He spoke to Jacobins Branko Marcetic on the results of this research, the book 2018…and forgive them their debts: loan, foreclosure and redemption of funding from the Bronze Age until the jubilee year. The book covers everything from debt cancellation in ancient societies to what we know about Christianity to be wrong. The conversation has been edited for length and clarity.
BM: You argue that our modern relationship and understanding of debt is unique when you look at all of human history. What was the relationship of ancient societies to debt and how did they control it?
MH: Almost all debt in really old society was interpersonal, what the Europeans called werewolf-debt type. If you hurt someone, if you break an arm or if you kill them, there are two possible choices in the old society: either you have a quarrel, and your family will fight against their family, the conflict. Gradually, the payment of the werewolfwhether in money – or if it was really bad, it would be in slave girls or cattle – became the word for debt, and for offense, or the word for “sin.” Thus, the original meaning of the Lord’s Prayer in Hebrew and Greek was: “Forgive us our debts.
In Mesopotamia, an agrarian economy, most of the debts began to be owed to palaces or temples. The bonds were paid throughout the year. In the third millennium of Sumer, or the second millennium in Babylon, if you went to a bar during the agricultural campaign, you would go up a bill to the tavern and the palace for the advances of animals, water or agricultural inputs, and all. was made on credit. The debts would all be paid on the threshing floor, in grain, and one unit of grain was equal to one unit of money.
But sometimes you would have a bad harvest, a war, or a drought, and you couldn’t pay. And at that point, like in the laws of Hammurabi, you would say, “If the storm god, Hadad, comes to ruin the crops, then the debts don’t have to be paid. This is how society functioned, fundamentally, in the third, second and even the first millennium. When a new ruler came to the throne, or when there were other reasons – a war was over, or there was a reason for a debt forgiveness – you canceled the debts, you released the debt servants so that they go back to their families, you would give them back the promises they made. Because what would happen if you had not written off the debts? Suddenly all these people who had debts became servants of the person to whom they owed it, a rich person.
BM: You also argue that this question is central to the Bible stories that we think are familiar.
MH: It was the subject of Jesus’ first sermon. When he went to the synagogue and unrolled the scroll of Isaiah the prophet and said, “I have come to proclaim the year of the Lord,” which was the forgiveness of the debt – the year of Jubilee – which has was brought from Babylon to Judaism, as it was done throughout the Near East. The people who translated the Bible did not really know what these words meant. What does it mean, “the year of the Lord?” ” What does it mean, “desolation? Which was the cancellation of the debt.
It was only after Assyriologists began to find out how all of Near Eastern society canceled their debts, just as anthropologists discovered that from Native Americans to European kingdoms, you would have this practice of restoring balance
Year-end statement of a company’s assets (what the business owns) and liabilities (what it owes). In other words, assets provide information on the use of funds collected by the company; and liabilities, on the origin of these funds.
. The idea was, how do you prevent society from becoming destabilized and polarizing? You write off debts.
BM: How has this attitude towards debt and debt cancellation changed?
MH: There was no concept of interest
Amount paid as remuneration for an investment or received by a lender. Interest is calculated on the amount of capital invested or borrowed, the duration of the transaction and the rate that has been set.
in the West, in all Linear B documents from Greece, from around 1600 to 1200 BC. Around the 8th century BC. AD, the idea of an interest-bearing debt appears for the first time, and local leaders suddenly become what many historians call mafia families. They found a way to just monopolize the land, until around the 7th and 6th centuries. There were revolutions everywhere by the reformers, all over Greece and Italy, and the reformers were later called “Tyrants”.
The whole struggle of all the first societies was: how to prevent the population from falling into slavery? The palaces had a reason to do so. If you had the small taxpaying farmers who owed their harvest to the creditor and had to go and work on the creditor’s land instead of chore labor, building palace walls and digging ditches for irrigation – if you wanted these people to s ‘indebted to the creditors, they would no longer be able to pay for this surplus harvest and this surplus labor at the palace. Creditors would take over.
Rulers across the Middle East, probably up to the early kings of Rome, have said, “The only thing we need to do is stop the creditors’ class from becoming an independent oligarchy. Because if he becomes independent from us, and he gets the economic surplus, they will use this work to hire an army, they will overthrow us, and they will become the state.
So you’ve always had a struggle between the state protecting society from the creditors’ class – the oligarchy – and the oligarchy wanting to be independent, not wanting to write off debt. And it was a fight that lasted four centuries before the time of Jesus. The early Christians were basically supporters of the Jubilee Year, trying to write off debt.
BM: How did debt and the rise of creditors figure in the tumult of Roman history?
MH: In Rome, the bad kings were overthrown around 509 BC by an oligarchy, which essentially wanted to reduce the rest of the Roman population to serfdom. The whole Republic has been one long series of uprisings after another, wanting debt cancellation and land redistribution. It was all called a democracy. An oligarchic democracy means that all creditors are equal, and therefore freedom is the freedom to enslave the rest of the population.
Democracy throughout antiquity meant serfdom for most of the population. Aristotle was very clear on this. He said: “Many cities have constitutions that appear to be democracies, but they are actually oligarchies. And in fact every democracy, Aristotle wrote, tends to turn into an oligarchy, as the rich get richer, and then the oligarchy turns into a hereditary aristocracy and dominates it over the rest of society.
You had all this context that led to the modern world, which ended the tradition of debt cancellation that freed people from debt bondage, and what became bondage. And it was on the idea that the law is inexorable.
Historians now say, “Well boy, the Roman Empire wasn’t that bad – look how rich it got. But the wealth was all concentrated in the 1% of the population and the 99% ended up being tied to the land. If you read the last books of the New Testament, up to the book of Revelation, it is “We are living at the end of time, it is terrible, Rome is the beast, there is no hope. here. We cannot reform the land. We can never write off debts because of the greed of the rich. There is nothing else to do but become a martyr and die hoping that in the world to come things will be better, and maybe Jesus will return. The whole idea was anti-Roman.
Every economy is going to be planned by someone. The question is, is this going to be planned by the creditors, as it happened today? Or are you going to have a government, a leader, that says, “My job is to keep society stable and prevent it from polarizing so that we can survive and be resilient and move forward? Creditors don’t care about resilience. Their deadline is quite short.
BM: What are the implications of this for post-pandemic recovery, given that we live in heavily indebted societies?
MH: The tendency of any economy that has interest-bearing debt is that the debt grows faster than the economy as a whole. You have exponential debt that is doubling every year and the savings have never been able to keep up. The debt trend for any family, any business, any economy, is to grow faster than the ability to pay, until there is a crash. And when you can’t pay, you either lose the property or somehow become your creditor’s servant, in terms of having to pay for labor, having to pay for everything you produce. You have a concentration of property in the hands of the creditors, if you don’t write off the debts, which the old society did and was the core of the old religion.
Every economy that has interest-bearing debt has to restructure at some point, otherwise the whole economy will end up in a very small group of people at the top, like you did in Rome. This is how the Roman Republic ended up in the Roman Empire. It becomes centralized. The tendency of any financialized economy is towards centralization. Not only wealth, but by centralizing wealth, you centralize political power, decision-making, and ultimately military might in the hands of the financial class.
The full recording of this interview is available here.