By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is KILLING THE HOST: How Financial Parasites and Debt Bondage Destroy the Global Economy. Originally published at Dandelion Salad
Speech to Kairos group, Union, Columbia
[Edited version for clarification, January 23, 2017]
The focus of my talk today will be Jesus’ first sermon and the long background behind it that helps explain what he was talking about and what he sought to bring about. I’ve been associated with Harvard University’s Peabody Museum for over thirty years in Babylonian economic archeology. And for more than twenty years I’ve headed a group out of Harvard, the International Scholars Conference on Ancient Near Eastern Economies (ISCANEE), writing a new economic history of the ancient Near East.
The five colloquia volumes that we’ve published began in 1994. We decided we have to re-write the history to free it from the modern ideological preconceptions that have distorted much popular understanding.
When I began to study Sumer and Babylonia in the 1980s, there wasn’t any economic history of the ancient Near East. There were histories of the ancient Near East, but I had to go through every volume with general history, look in the index, and sometimes I would find debt, but more often there wasn’t. I had to go through the whole literature, and I realized that assyriologists didn’t want anything to do with economists. There was a very good reason for that. Since the 1920s there was an idea of what was called “Babylonianism”: The idea that everything came from Babylon. In practice this meant that everybody would project their own belief about how civilization began in the ancient Near East and the Neolithic. It was like a Rorschach test. The Vatican, who had Sumerian translators, thought that it was a temple state and temples ruled everything. Socialists thought that it was all communal. The free enterprise boys – the Austrians and other liberals –just ignored the palaces and the temples, and thought that markets and individuals traded, and that was that.
From the actual people who study cuneiform records, 90% of which are economic, what we have surviving from Sumer and Babylonia, from about 2500 BC to the time of Jesus, are mainly marriage contracts, dowries, legal contracts, economic contracts, and loan contracts. Above all, loans.
We decided at Harvard to do three volumes of colloquia. The first was on privatization in the ancient Near East: how did private property emerge. The second was on land tenure. And from the very beginning the main focus was going to be on the third volume. That was on debt and economic renewal, that is, debt cancellation. I didn’t read Babylonian or Sumerian. My degree is in Germanic philology, not in ancient languages. So I had to read all these royal proclamations of debt cancellations in translation. And that turned out to be a great benefit. Because the translations of the Sumerian and the Babylonian, in every language are completely different.
In America, it’s a tax reduction. Samuel Kramer, who wrote the most popular book on Sumer, wrote a letter in 1981 to The New York Times urging newly elected President Reagan to do what Urukagina did in Lagash in 2350 BC and lower taxes. That’s not what happened. The esteemed professor was projecting his own right-wing economic beliefs onto the ancient past.
The English thought – how English can you get – that these were free trade agreements. The Germans got much closer to the reality, and said they were debt cancellations. Finally came the French translations. They got it right: Dominique Charpin translated the Sumerian term as a restoration of order. The word for the clean slate in Sumerian was “amargi” and the root is “ma”: The “mother” of all situations.
The rulers had what we would call an economic model. They realized that every economy tended to become unstable as a result of compound interest. We have the training tablets that they trained scribal students with, around 1800 or 1900 BC. They had to calculate: How long does it take debt to double its size, at what we’d call 20% interest? The answer is 5 years. How does long it take to multiply four-fold? The answer is 10 years. How much to multiply 64 times? The answer is 30 years. Well you can imagine how fast the debts grew.
So they knew how the tendency of every society was that people would run up debts. Now when they ran up debts in Sumer and Babylonia, and even in in Judea in Jesus’ time, they didn’t borrow money from money lenders. People owed debts because they were in arrears: They couldn’t pay the fees owed to the palace. We might call them taxes, but they actually were fees for public services. And for beer, for instance. The palace would supply beer and you would run up a tab over the year, to be paid at harvest time on the threshing floor. You also would pay for the boatmen, if you needed to get your harvest delivered by boat. You would pay for draught cattle if you needed them. You’d pay for water. Cornelia Wunsch did one study and found that 75% of the debts, even in neo-Babylonian times around the 5th or 4th century BC, were arrears.
Sometimes the harvest failed. And when the harvest failed, obviously they couldn’t pay their fees and other debts. Hammurabi canceled debts four or five times during his reign. He did this because either the harvest failed or there was a war and people couldn’t pay.
What do you do if you’re a ruler and people can’t pay? One reason they would cancel debts is that most debts were owed to the palace or to the temples, which were under the control of the palace. So you’re canceling debts that are owed to yourself.
Rulers had a good reason for doing this. If they didn’t cancel the debts, then people who owed money would become bondservants to the tax collector or the wealthy creditors, or whoever they owed money to. If they were bondservants, they couldn’t serve in the army. They couldn’t provide the corvée labor duties – the kind of tax that people had to pay in the form of labor. Or they would defect. If you wanted to win a war you had to have a citizenry that had its own land, its own means of support.
Basically what you had in the Bronze Age and every ancient society was a different concept of time than you have today. You had the concept of time as circular. That meant economic renewal. The idea was that every new ruler, every new reign, began time all over again. It wasn’t really time, it was really the economy had to start from a new position of equilibrium. This equilibrium – basically freedom from debt, the ability to support yourself – had to start afresh.
Economists look at ancient Near Eastern history and think: “You couldn’t have had Clean Slates, you couldn’t have canceled the debts, because then you would have had anarchy.” The fact is that proclaiming a Clean Slate was the way to avoid anarchy. It was the way to restore people to self-sufficiency. So in Sumer and in Babylon, every major ruler would proclaim a Clean Slate. We have the records to detail this century after century.
People know Hammurabi’s Laws, that’s in all the textbooks. But those laws were never official: They are more a literary document. What actually had legal binding force – and we know this from the cuneiform court records – were the debt cancellations that Hammurabi proclaimed in the second year of his rule, and later when he went to war with Larsa, and proclaimed it on other occasions.
The word that they used was andurarum, a word that has the sense of “a river flowing.” You sort of restore the flow. It really meant that bond servants were free to go back to their families.
These Clean Slates had three elements: Number one, they would cancel the personal debts – not the business debts, not the debts denominated in silver among merchants and other rich people. These debts were business contracts, and they remained in place. It was the petty debts, the consumer debts, that were canceled. Number two, lands that had been forfeited were restored: the crop rights, if they’d been pledged to creditors. And three, all the human beings who had been pledged as bondservants would be free to return to their families.
This word andurarum reappears in the Bible as the word deror. The Hebrew word is deror, which is obviously a direct cognate. And the jubilee year that appears in Leviticus 25 is a direct translation of Babylonian practice.
There’s a question: What happened between writing the Bible, including the laws about deror, and Jesus? There are hardly any documents, there aren’t any that have come down to us. We don’t know about if there were any jubilee years in Judea.
We don’t know really what happened up until the time of Jesus, except that there was at that time the same war between creditors and debtors that there was in Rome. Every Roman historian of the time – Livy, Plutarch, Diodorus – they all blamed the fall of the Roman republic on the creditors behavior of assassinating the debtors’ leaders, the rule by violence and the takeover of the economy by creditors after centuries of debt war. We know that this was going on throughout the whole ancient world, including in the Near East.
We know that in the very first sermon that Jesus gave when he returned to Nazareth, he went out on the Sabbath to the synagogue, and unrolled the scroll to Isaiah 61 and read that Isaiah, had been sent to preach the good news to the poor. “Good news” translates literally to “Gospel.” And he said it was to proclaim freedom for the captives, and release for the prisoners, and to proclaim the year of the Lord’s favor, deror, which meant, basically, a Clean Slate.
What does this mean? There have been a lot of translations. As the time the King James Bible is translated, and at the time it was translated to other languages, people just thought the year of our Lord meant: “Obey God.” They’re not quite sure what it means. An even greater argument occurs over the Lord’s Prayer. What does it mean: Is he saying forgive us our sins, or forgive us the debts? Well, most of religion’s leaders, certainly the vested interests, say: “He’s talking about sins,” that religion and Christianity is all about sin, it’s not about debt.
Actually, the word for sin and debt is the same in almost every language. Schuld, in German, means the debt as well as the offense or the sin. It’s devoir in French. Basically you had exactly the same duality in meaning Akkadian, the Babylonian language. The reason goes back to an idea, called wergeld in parts of Europe, which is universal – we have it in Babylonia too. If you injure somebody: if you hurt him or you kill him, either you have to go into exile in the city of refuge, or the family gets to kill you, or you settle matters by paying. And the payment – the Schuld or the obligation – expiates you of the sin. So the word for the payment of the offense is the same as the offense, and you’d expect this similarity to occur in every language.
Some of the Qumran [Dead Sea] scrolls really proved that what was at issue was debt. The most important scroll is 11q melchizedek. “Q” is for the Qumran cave where they were found, cave number 11. And in this scroll collects everywhere in the Bible that talks about debt cancellation: deror.
Leviticus 25 is about the year of the jubilee: “Each of you will return to his possession.” In Deuteronomy 15: “Let every creditor release that which he’s lent to his neighbor.” In Isaiah 61: “Release the captives, release the bond servants.” In Psalm 82, the Psalms of David: “God stands in the divine assembly, he’s going to give his judgment. God will judge his people and punish the wicked.” There’s a whole collection and there’s no question that this is what is meant by the idea of debt and sin and obligation. Well, you can imagine how upset most religions were when they found these scrolls. They said they must be by this sectarian group, the Essenes. They must be a radical group, sort of like the Trotskyists. We can just sort of ignore them. But it turns out now that biblical scholars have found that the Qumran caves seem to be the library of the Temple of Jerusalem. During the wars with Rome they moved the library to the caves of Qumran in order to keep them from being destroyed when the Temple was sacked and burned down. So these scrolls were the very core of Judaic religion. The fight of Jesus against the Pharisees was about this. At first Jesus said: “Good to be back in Nazareth, let me read to you about Isaiah.” In Luke 4 says it that this was all very good, and they liked him. But then he began talking about debt cancellation, and they tried to push him off a cliff. So basically you have the whole origin of Christianity was a last gasp, a last fight, to try to reimpose this idea of the economic renewal – of a Clean Slate – that goes back at least to the 3rd millennium BC and probably all the way to the Neolithic.
So you have this last attempt to try to get a Clean Slate, and we know what happened to Jesus. His followers were not able to bring it about. So by the 1st and 2nd centuries of our era, what could the Christians do? You’re never going to get the Roman Empire to announce a Clean Slate. As a matter of fact, when the kings of Sparta, at the end of the 3rd millennium BC, tried to cancel the debts, the oligarchs of Greece called in Rome. Rome went to war against Agis, Cleomenes and then Nabis and destroyed Sparta. They were going to fight against anyone who wanted to cancel the debts. Mithridates in Asia Minor in the 1st millennium fought against Rome, canceled the debts, and also killed about 30,000 Romans in the ancient Near East. It was a long bloody fight, and they all lost.
So all the Christians could do was have charity. Well, the problem with charity is that you have to be rich in order to lend to somebody. It’s like what David Graeber did with Strike Debt. You can buy the debt and pay somebody else’s debt and give money away, but that doesn’t really fix the system. The result was, it really was the end times. The choice was: either you’re going to have economic renewal and restore people’s ability to support themselves; or you’re going to have feudalism.
That basically is how the Roman historians described Rome as falling. The debtors were enslaved, not only the debtors but just about everybody was enslaved, put in barracks on the land. Finally, you needed to have a population, so you let people marry and you gave them land rights – and you had slavery develop into serfdom. Well we’re going into a similar situation today, where I think we’re going into a kind of neo-feudalism. The strain of today’s society is as much a debt strain as it was back then.
It’s very funny: If you go into Congress – I was the economic advisor to Dennis Kucinich – you go into Congress and there’s a big mural with Moses in the center and Hammurabi on his right. Well, you know what Moses did? He gave the law. Leviticus, right in the center of Mosaic law, canceled the debt. What did Hammurabi do? Debt cancellation as well. You’re not going to see Congress canceling the debts like that.
If you look at the Liberty Bell, it is inscribed with a quotation from Leviticus 25: “Proclaim liberty throughout all the land.” Well now we have translation problems again. The word really isn’t liberty: The real word means Clean Slate. It means freeing society from debt, letting everybody have their own basic housing and means of self-support. And by striking coincidence, what does the Statue of Liberty do? She’s holding aloft a flame. And in the Babylonian historical records, when Hammurabi would cancel the debts they would say: “The ruler raised the sacred torch.” So here you have a wonderful parallelism. It’s been written out of history today. It’s not what you’re taught in Bible school, or in ancient studies, or in economic history. So you have this almost revolution that’s been occurring in Assyriology, in Biblical studies and Hebrew studies, and it’s all kept up among us specialists. It hasn’t become popular at all, because almost everything about the Bronze Age and about the origins of Christianity is abhorrent to the vested interests today.
Dr. Brigitte Kahl:
I want to start by just saying thank you. This kind of interdisciplinary work that you are doing between ancient Near Eastern studies, economics, and Biblical studies is very rare and very important. And I am really overjoyed because that happens very rarely that somebody, especially an economist, talks about Biblical matters so insightfully, and talks about something that through the imposition of the dominant power structure on the reading of the Bible, has been totally suppressed. We no longer know about aphesis, the core New Testament term for forgiveness, but that is indeed the term you have brought up: the term for deror, for shmita, for yobul, for all the kind of debt release, for release of people from captivity, for release of land from being given away. And that is very much present in the New Testament. We just have kind of suppressed it. It’s suppressed in the theology that most of us have learned somewhere, and not accidentally.
We pray the Lord’s Prayer: “Forgive us our debts.” But we think, “It’s not really debts, it’s sin.” If you listen to the stories from the New Testament you can see that debt and sin forgiveness are not apart. This separation only happens when Christianity was integrated into the whole system of Constantinian state theology: of an empire that lived on debt mechanisms. I do have a question for you. You say very well that the king in the Bible is in a very peculiar position. The King is not a very positive figure in the Bible. In fact, the king is the person who messes everything up. The whole story, the big story of the Bible from Genesis to 2 Kings – basically what we call the Deuteronomistic history – is a history very much focused on debt release: On restoration of what you called the good order, the sustainable economic and also ecological order. The kings could be good for that but they are much more the ones who actually lead to the core tragedy of exile. We see this in 2 Chronicles 36:21, where it says the Jews in the Temple are killed, everything goes up in flames, everybody is gone. And now finally the land can go back and have its Sabbath. So it seems to me that this comes very close to what you’re saying: that the Bible draws to conclusion because we went into a misguided economic system that really destroyed the people. That is the disaster that is coming. But again, the king is the one who produced it in the Bible.
And linked to that is another thing that belongs in this whole system: the Sabbath. The Sabbath year is every 7 years, and Jubilee years are every 49 years. The Sabbath is every 7 days. And the Sabbath is basically the Clean Slate day, to use your terminology. It’s a day when people are released. Not only I and my daughter and my son rest, but also my female slaves, my male slaves, and any debt-slaves. And my animals. And every seven years the Earth then, also rests. So the land rests, everybody rests, that means everybody goes back into that equilibrium of original goodness that is established in Genesis 1. So it’s a different social order that is celebrated every seven days, if we take the Sabbath seriously.
So really the movement in the New Testament, it’s not just charity. In the New Testament they have a movement that is more horizontal: that is the collection, where people support each other. And also you had the village economy in the Old Testament. So those are all sort of social movements. I would just like to know from you how you see the intervention from the bottom and how you see the movement from the ground then and its influence in these laws.
Dr. Hudson :
Society changed drastically from the 3rd and even the 2nd millennium to the 1st millennium, throughout the Near East. If you’re in Babylonia or Sumer and you’re a debt-servant, you’re only going to be free when a new King is inaugurated and proclaims a Clean Slate. Or you wait until there’s a war, or until there’s a crop failure. But by the 1st millennium, kings are overthrown in Rome by the aristocracy, which didn’t want any King to have power over them. The same happened in Greece, Rome and every other part of the ancient world. At the time, if you were living in Judea or Israel, you’re going to have a king just like all the other regions. They’re not the kind of kings that are going to cancel the debts. They’re the kind of kings that are going to want to get more and more power in their hands, or their family and their cronies. So what Judaic religion did was take it out of the hands of kings and put it right in the center of Mosaic law. No matter who’s the ruler, no matter what the king does – it doesn’t matter who’s the king – every 50 years you have to have a debt cancellation.
You bring up Deuteronomy, the seventh year. Unlike the case in Babylonia, where we have all of the records that they kept on cuneiform and clay records, the records in the Mediterranean lands haven’t survived. So we don’t know what happened. We just don’t know any details. We don’t know how much of this was actually applied. We do know how widely it was applied in the Near East because we have the lawsuits over it. Regarding what you said about communities at those stages and on: Yes, absolutely, you have to band together. That’s the only way you can survive. And yes, you need communalism at a point where everybody is ground down to near poverty, because if you don’t have mutual support, you’re going to succumb.
Rev. Claudia de la Cruz:
I want to thank you, Dr. Hudson for sharing. I think that there is a glimpse of hope in my mind right now in terms of how debt cancellation can be potentially one of the things that folks struggle for.
I want to share what a very important theologian in my life shared, my grandmother: She would say, in Spanish, “No one can possibly become wealthy unless they steal from someone.” And we know that those who are wealthy have stolen from the majority of the population throughout history. And so to be on this panel and be part of this conversation reminds me a lot of everything my grandmother’s taught me, so I’m grateful for that. I could speak from my experience as a minister. I could speak from my experience as an educator and an organizer. I’m not an economist, although I appreciate your type of economic analysis.
I just recently participated in a delegation that went to Rome to meet with the Pope, who called a gathering of social movements from around the world. And I was very troubled that I would be going into the Vatican. Because as someone who’s coming from Latin America, I know what imperialism looks like and I know what capitalism looks like. And I was not happy – Willie Baptist could attest to that. I was trying to expropriate the wealth, but that’s another sermon. As a Christian – as someone who follows Jesus the revolutionary, the historical figure – it was very troubling for me to go in there and see the amount of wealth that the Church has stolen from the people. And I say the Church with a capital ‘C,’ because there’s also church that’s made in communities that are doing that communal surviving that the Bible teaches us.
As someone who came to this institution, Union, Columbia, I want to ask: How many of you are students? God bless your hearts. Hopefully when you graduate you don’t have the same amount of debt that I do: $110,000 that I will never repay because I have no means to pay it. I was born poor, and I will die poor. And it’s not a condition that God created for me, it’s a condition a capitalist system created. And capitalism has taken its forms throughout history. We know now we have finance capitalism, we know global capitalism, and it continues, unfortunately, like the most brutal demon, to re-invent itself. So when I hear you talk about debt cancellation, in my mind I have a question: Is that something that we can strive for?
But if we do strive for it, there’s still a king. There’s still a system in place that will continue to enslave us, every so often. So what is the proposal that comes from us, from communities, from people that are thinking about political economy?
In church we’re taught charity, and from my experience as someone who comes from a church that embraced liberation theology, we always understood that religion does not live in a vacuum. There’s a social, economic, and political system in place that always influences what religion is. And so as folks who are, Christians, Jews, whatever our faith tradition is, if we are really on the side of the poor, those who are indebted, those who are made slaves by debt: What is our economic proposal? Because we cannot continue to build on social politics, because charity doesn’t cut it. I could have 10,000 questions, but I have that question: What is the proposal if we understand that even if we strive for debt cancellation, there’ll still be a king in place?
Dr. Michael Hudson:
Many people who oppose debt cancellation try to pooh-pooh the Babylonian and Sumerian cancellation. Samuel Kramer, the right-wing Sumerologist, said they were all failures because once they canceled the debts, they all grew back again. You have to realize that every society is going to run up debts, every society is going to run up bills, every society is going to polarize. So it has to be a permanent, ongoing revolution. You have to continually keep restoring it. Obviously, today, you’re not going to begin with a debt cancellation.
What has caused this basic shift away from debt cancellation is the privatization of credit. In Sumer and Babylonia the temples and the palace were the source of credit. In medieval Japan it also was the temples that were the creditors. Most people ran up debts, in Japan, to the temples for sake – the temples were also sake-makers. There were revolts against the sake-makers to cancel the debts, and they were successful.
The problem is the privatization of credit. The government today could cancel the student debts that are owed to the government. But they can’t cancel the debts that are owed, say, to David Rockefeller or to other banks – to somebody else.
The banks should be a public option, just like health care should be a public option. Even the University of Chicago right-wingers, in the 1930s, proposed a 100% reserve. The idea is that banks should not be able to create credit, meaning create debt. When you create credit, you’re creating somebody’s debt. That should be a government function, because the government can relieve the debts.
The bankruptcy law was re-written in 2005. It made it almost impossible to declare bankruptcy. It used to be you could declare bankruptcy and have a clean slate, on an individual basis, not a social basis, but now even that has been closed here. And for student loans you can’t have bankruptcy at all.
Obviously this has to be a big fight. Dennis Kucinich tried to fight for it and immediately the Democrats redesigned his district, gerrymandered the voting districts to get him out of Congress so that he wouldn’t talk about it anymore. So it’s obviously going to be a very hard fight.
Rev. Dr. Liz Theoharis:
After listening to Dr. Hudson, and my old advisor Dr. Kahl, and my dear friend Claudia de la Cruz, there isn’t much to add. And yet I want to talk a little bit about my favorite passage of the Bible and what this kind of analysis does to a reinterpretation of it. It seems to me that since I was a child I have heard almost every week of my life a quote from the Bible: “The poor you will always have with you.” This is in Matthew 26, with parallels in Mark 14 and John 12. And this passage has been used to argue that poverty is inevitable, that it can never be ended, and that my work – my vision – for ending poverty, alongside that of thousands of poor and dispossessed people in this country and across the world, is futile.
I have known since I was little, in the heart of my hearts, that the inevitability of poverty argument is incorrect. But it took me many many years as a scholar and as an activist to understand just why and how it is incorrect, which is why I’m so excited about this discussion. The Bible, a text replete with calls for economic justice and denunciations of the scourge of indifference to the poor, has been mis-used and cynically politicized to suggest that poverty is the result of the moral failures of poor people sinning against God. And I say sinning on purpose here. It has been used to say that ending poverty is impossible and that the poor themselves have no role to play in efforts to respond to their poverty. All these arguments are predicated on the idea that the cancellation of debts never happened and is completely impossible. And so to me what is so vitally important about the conversation we’re having today is that what I would call the biggest Biblical roadblock to the defining issue of our day – which is poverty, inequality, and the dispossession of the many for the wealth of the few – is upheld by this lack of historical and Biblical analysis.
I want to say a little bit about why this matters, and why particularly talking about debt cancellation really revolutionizes our understanding of the Bible.
I do not believe that we will be able to end poverty until we actually bring things like the cancellation of debts – a reality over thousands of years of history – into the public discussion of what has happened and therefore can happen again. The quotation echoes Deuteronomy 15:4-11, which is one of the most liberating sabbath year or Jubilee-connected prescriptions of the Bible. The Jewish Publication Service says that Matthew 26 is quoting Deuteronomy 15:4, but the NRSV says that Matthew 26 is quoting Deuteronomy 15:11. And why does this matter?
Deuteronomy 15:4 says: “You will have no needy person among you if you follow the commandments that I am giving to you today.” And then proceeds to explain what those commandments are. The forgiveness of debts is first. The release of slaves is connected. And the lending of money, even though you know you’ll never get paid back, is third. And what does Deuteronomy 15:11 say? First it says: “But you all are a greedy people that will be disobedient to me,” and then: “The poor will never cease to be in the land, so open your hand to the poor and needy neighbor.”
So what Christians have done with “the poor will be with your always,” even when they recognize that it’s a quote of Deuteronomy 15, is to make it a quote about charity. It’s about: “Okay we can’t do anything about it.”
And this is not just conservatives, this is not just reactionaries. This is liberal Christians who say: “We can’t end poverty, Jesus says so. Even when he quotes the Hebrew scriptures, they’re reminding us that we can’t end poverty, we can’t cancel debts, we can’t release slaves, but what we can do is give a little bit of the extra to folks.” Which should sound very familiar to us. This sounds like the solutions that we have on offer for addressing poverty and inequality and dispossession. But what’s so important and groundbreaking about the work that Dr. Hudson is doing is to see that you can’t actually read Matthew 26 and Deuteronomy 15:4 and 11 separately. So to me, what’s really helpful, even though there’s a whole history of debating whether this really happened, is the fact that these very radical economic verses are in our scriptures and are regularly referenced, including in this most famous passage about poverty. Jim Wallace says that this is the most famous passage, other people say that this is the most famous passage too, and it somehow trumps all the passages that talk about the release of slaves, the coming here to proclaim a year of God’s favor.
What I think is really important then about this work around debt cancellation in relationship to this really important passage, is to look both at Deuteronomy and the ancient Near East economies that existed beforehand, as well as to look at the Roman Empire and the ancient economy that Jesus was responding to. To look at Deuteronomy you have to look at terms like sin, which we were just talking about. Where sin is talked about in Deuteronomy, is that it will be considered a sin against God if your brother or sister has to call out against you because you’re robbing their wages or because you’re not releasing their debts or because you’re making them slaves. So this common notion, that people are poor because they’re sinners and not right with God, and that the rich are blessed by God, just does not hold. It does not work. And what’s also, to me, very important – and I learned this from the work that Dr. Hudson and Dr. Kahl and others have done – is that you can’t separate the economy from piety. So sin is an economic term and it’s a pietistic term. And so the way that you honor God is by how you care for yourself and your neighbor. And there’s no way of separating those two things.
There’s no way to be right with God if your neighbor is being oppressed. There’s no way for you to do what God requires of you if debts exist in your society. And to me this is one of the things that has been really separated, including from any interpretations of the poor. We somehow preach that Jesus was here to preach good news, but then somehow we separate that from what is the content of that good news: and that is release of slaves, remission of debts, and the year of the Jubilee. So to me it changes, radically, this idea that poverty is inevitable, and instead puts the onus on human beings and followers of the scriptures that if poverty exists it’s because you are failing the commandments of God. And it also says that if you continue to do what you’re doing, which is charity and economic repression, then you will always have poverty with you. But don’t put that on God, put that on you and put that on your society and how it’s organized.
And I want to pose the question: How do we bring this into the public consciousness? How do we popularize the very important work that Dr. Hudson and others are doing, to say that debt cancellation is possible, debt cancellation has happened before, and that it’s healthy for our economy to cancel debts.
Walter Brueggemann says that Deuteronomy 15 is one of the most radical parts of the Bible without people really knowing. Because what it says is that forgiving debts, releasing slaves, and lending out money knowing you’ll never get paid back, is what God says is how you will have community prosperity. And so when you say that to communities these days, the ways people have been told that you’re going to have community prosperity is if you save, if you take from somebody else, if you store up your treasure on earth. These kinds of concepts from Deuteronomy 15 are totally foreign, I would say. And so to me what’s so important about this work – and then I pose this question of how do we get this out there – says that this is not just an academic question, this isn’t just a theological and Biblical interpretation question, this is a question about life and death in our society today. And if we don’t actually start to see that you’re being disobedient to God and to the scriptures by letting debt play the role that it plays in killing people, then we’re screwed. So I would love to hear a little bit more about what has worked in terms of getting some of this out, and how we all can help with that.
Dr. Michael Hudson:
Well you’re right, that’s the problem: How do you popularize it all? What do you do today? The first thing is I think you have to frame it in the big picture.
The way you get to people is to say: We’re at a turning point in history. If we don’t solve the problem of economic polarization, which is caused mainly by debt, we’re going to go into another dark age. We’re going to have neo-feudalism. We’re going to have neo-serfdom, except that you’re not going to be tied to the land like serfs were. You can live wherever you want, but wherever you are, you’re going to have to pay about 40% of your income just for housing. And you’re going to have to pay for water, and you’re going to have to pay for the other needs. This is the new kind of serfdom. You have to re-frame what the economy is about in a way that people can understand.
And you need a multi-pronged approach to fight on four or five fronts. You need academics so that nobody can say you don’t know what you’re talking about. You need an organ, a periodical; you need books; you need to make use of the Internet; you need films; and you need a political group. You need to institutionalize this idea and give it a critical mass of coherence, and I think that’s what you folks are doing.
121 comments
Comments are closed.
Thank you for this beautiful discussion. This shines a whole new light on texts we thought we knew.
yes, great text, thank you
Since governance is based on dishonesty, why shouldn’t the people react with dishonesty. Taking on debt that one is unwilling or unable to pay back, is dishonest … whether government to government, or people to government. Self governance isn’t much of an improvement, since when it is working, we are at best being dishonest with ourselves. Dishonesty is universally corrupting, and corruption, in the long run, isn’t pain free.
You fail to recognize that usury is a corrupting of debt. The “magic” in “the magic of compounding interest” purports that debts can “exponentiate” into infinity and beyond, but 5k plus years has shown again and again that there is not enough of anything on earth that can keep up.
Without usury, there are no debts. A debt without at least a positive minimal interest, is a free lunch, if you can keep rolling it over. With ZIRP the Western world has gone into a terminal free lunch, as well as robbing every depositor. A deposit, by a company or citizen, that bears a negative interest rate … is another thing altogether. The bank is acting as a tax agency of the government. If a government or banking system is simple theft … then civilization is over. Anarchism and anarchy win.
There’s a lot to masticate, and in case you’re interested, this has been the seminal work on understanding debt, IMHO:
http://libcom.org/files/__Debt__The_First_5_000_Years.pdf
Oddly enough, Jesus didn’t focused much on debt “dishonesty”. He was, however, acutely interested in shaming those who benefited – however “properly” they did it – from grotesque imbalances of power and fortune. He had a keen sense of the distinction between the self-defeating sins of small time losers, and the all too self-rewarding sins of the powerful.
Constantine founded Christianity, as an emperor of Rome, he had no interest in chastising the powerful, particularly for any of their self-rewarding sins.
What if you have no choice but to borrow the money? For example, the alternative is to become homeless, or have your legs broken, or die without medical treatment, or lose the car you need for your job? There are many situations where people borrow through necessity and then struggle to keep up the payments. There is no dishonesty involved, just desperation or miscalculation.
The point about debt jubilee is that this prevents people from falling into a trap of continual debt which escalates beyond any possibility of pay back through compound interest. No society benefits in the long term from a massive build up of debt. Our last such led to the financial crash of 2008. This has had huge impact on all of us. Debt is building up to those levels again. What will happen this time? (NB I am talking about personal debt here).
Both encouraging and interesting. Many thanks.
Wow – so if I’m getting part of this right, then fractional reserve banking (and related privitization of debts) is anathema to the earliest foundational teachings of christianity. looking at today, could irony ever be so more rich than this?
I always had a curiosity about religion-based prohibitions against usury – this puts some welcome meat on the bones.
Very interesting indeed, but “devoir” doesn’t mean “debt” and “sin” in French. It just means “duty”.
And yet, the origin of “devoir” is the Latin word for “debt”….how odd…
https://www.merriam-webster.com/dictionary/devoir
Yeah, “devoir” is associated with debt. For instance: “Tu me dois 3000 Francs.” (You owe me 3000 Francs).
But contrary to what Hudson suggests, I can’t think of any relation to “sin”. The French word seems to equate debt to duty rather than sin.
It means free us from our obligations, no? The obligation is a kind of servitude. It is true that it does not directly connote “sin” in the sense of evil-doing, unless it is a sin to drink beer on credit. :)
In German “Schuld” means debt, blame, fault and guilt, not sin; “Sünde” is the German word for sin.
Devoir does mean duty. Duties are owed to another.
In the UK Death Duties are estate taxes, so in the UK, a Duty can be a monetary debt.
French devoir “to have to, to owe” and dette “debt” are from Latin dēbĕo “to owe; to be morally bound (to do something),” past participle dēbĭtum “debt.” The verb dēbĕo is an old derivative of hăbĕo “to have;” so the “literal” meaning of dēbĕo was “to have from (someone else).”
Summarizing, in Latin these words connect ideas of debt and moral duty, but without any connotation of sin.
Given the agreement of the comments in your thread, it is so. It would be interesting then to see if the meaning of devoir has changed over the centuries.
Wow! Thanks. And where else would we come across such a deep and insightful post?
I learned the Lord’s Prayer as “forgive us our trespasses, as we forgive those who trespass against us.”
How can we explain that wording?
The King James version indeed had “And forgive us our debts, as we forgive our debtors.”
You must have belonged to a bankruptcy-tolerant American Protestant church.
http://www.lords-prayer-words.com/king_james_version_kjv.html#ixzz4ZQTt6Etr
Unh, no, us Catholics learned it that way.
And the Episcopalians learned it the Catholic way.
Episcopalians are also Catholics. “Catholics”, as the nomenclature has it, are, strictly speaking, “Roman Catholics”. (If you have any doubts, refer to the Episcopalian creed which has it that “I believe in the holy Catholic church”.)
The Episcopal Church describes itself as “Protestant, yet Catholic”.[8]
The Episcopal Church ordains women and LGBT people to the priesthood, the diaconate, and the episcopate, despite opposition from a number of other member churches of the global Anglican Communion. In 2003, Gene Robinson was the first non-celibate openly gay person ordained as a bishop in documented Christian history.
Two items above courtesy of Wikipedia.
So did us Lutherans, recovering and otherwise.
The King James Bible and the Catholic Bible have slightly different wording and text. Close, but different. That may explain some differences in the translations from the Latin and Greek into the vernacular.
My KJV from mid-20th C says “debts”. Whereas the Catholic Bible from the same era says “trespasses”.
I learned the King James version of The Lord’s Prayer in the Methodist Church ages ago. “Forgive us our debts…” “Forgive us our Debts” always seemed to have a large moral directive since there can be many kinds of debts. Wonder if the liturgy was changed sometime in the 60’s after Vatican II or in the 70’s after another Ecumentical Council.
Enjoyed this post very much. Rome happily integrated many foreign religions from their satellite states to promote peace within the empire. Never could figure out why imperial Rome persecuted the early Christians. This post puts a new light on one of the possible reasons.
protestants too
the Vulgate Latin is “debita” — clearly “debt”
Jerry: As an interpretation that reflects a later time rather than a translation. “Trespasses” comes out of the interpretation that Jesus is referring to something wholly spiritual, sin. But the word in ancient translations, and in the Greek we think it was first recorded in, means “debt”.
The explanation for the wording comes in Matthew 6:14, where immediately after giving the words of the prayer, Christ gives the explanation of it:
“For if you forgive men their trespasses, your heavenly Father also will forgive you; but if you do not forgive men their trespasses, neither will your Father forgive your trespasses.”
The word in Greek for “trespasses’ is ‘paraptomata’, which in my classical dictionary means ‘false step, slip, blunder’. To reconcile this with the different word given in the prayer, I come up with, more generally ‘what is due’ for that different word. So, while I think Prof. Hudson’s remarkable scholarship is certainly applicable, and the reference Jesus is making to debt and the forgiveness of debtors is included within the prayer, the expanded meaning is also the greater meaning of the prayer itself and we should not feel disheartened if we choose to say ‘Forgive us our trespasses.’ It is a beautiful prayer either way.
Expanding on what others have said here:
The “debts”/”debtors” phraseology in Matthew 6:14 is traceable back through the KJV and Wycliffe (~ 1395) to the Latin Vulgate, which speaks of debitas, debitoribus.
The versions with “trespass” go back to the Book of Common Prayer and to Tyndale’s (~ 1526) English translation.
The oldest (Greek) text of verse 14 refers to the word Juliania mentioned, παραπτώματα, meaning something like “mistakes” (I have the same dictionary she has), from a root meaning “to fall.”
Complicating matters is that there is also a parallel version of the Lord’s Prayer in Luke 11:2-4. Here the relevant portion of the Latin text has
which could be rendered “And discharge us of our sins, as we discharge all who owe us.”
The Greek text of Luke 11:4 refers to ἁμαρτίας, ὀφείλοντι and so has the same juxtaposition between words often translated as “sin” and “owe,” as does the KJV translation of this verse.
“sin” vs “owe”
This is very interesting, since “to owe” could encompass owing a favor, owing a sum of money, owing a duty – filial duty to parents or obedience to the state. Owing a favor or owing filial duty to parents would not, I think, be considered a trespass or a sin, at least not in modern vernacular. It would, however, be considered an important debt in the larger social sphere.
What an interesting thread this is.
Very interesting article. I knew about the Jubilee year concept. I know NC has mentioned debt forgiveness several times in the last year or so. I am not a religious person. In fact I am an anti-theist. But Christianity is the flavor of the day and you constantly hear almost every politician talking about God and Jesus and doing God’s will. Particularly the conservatives. So if what Dr. Hudson says is true about what the Bible and Jesus really say about debt, what light does this Christian construct cast corporations and the wealthy in? I guess it means that they are truly evil and doing the devil’s work. I would say that the neoliberalism has already moved us into serfdom. The bankruptcy law changes coupled with the foreclosure crisis that is still ongoing pretty much has resulted in that. The government takes your social security now to pay student loans, all while the government makes a profit (borrow at near 0%, lend at 6.5%). Hundreds of thousands of foreclosed homes now are owned by banks and corporations that either leave them vacant or rent them at above market rental rates.
Back a couple of decades ago when I still practiced law, many of my bankruptcy clients were both deeply religious and slipping out of the middle class ( some were just plain poor from the beginning). A lot of them felt their financial failures were due to their own moral depravity, and agonized over the morality of having their debts discharged. While there was a lot of moral depravity going around (Clinton was still President, after all), most of the time it was pretty clear that my clients were there through no fault of their own. I remember going through the Jubilee verses with them to set things in context, and to give them hope that they weren’t utterly lost.
And yeah, we did a lot of pro bono back then — without regret.
You might want to rethink that in terms of the “Big Bang” and the Creation event.
Anti-theist opinions in my case are colored with a dislike of historical practices of an Organized Church.
Yes to the opposition of organized religion. Usually the definition of an anti-theist states “existence of a god or organized religion.” I pretty much agree with Christopher Hitchens statement, “I’m not even an atheist so much as I am an antitheist; I not only maintain that all religions are versions of the same untruth, but I hold that the influence of churches, and the effect of religious belief, is positively harmful.” That doesn’t mean I agree with everything Hitchens said.
Melania Trump Leads The Crowd in The Lords Prayer
https://www.youtube.com/watch?v=iOz3yD-wtwg
Feb 18, 2017- This was at the Melbourne. Florida rally.
President Trump said that this was a surprise to him. It was not scripted. Melania Trump has been discounted and ignored by the media. Just a mom/gold digger. Nobody speaks of her or about her. I wonder who she is and what she thinks? Perhaps she will be a “Dark Horse” in the USA Presidency? For The Good.
Just a reminder, Joe Biden, was instrumental in passing the 2005 bankruptcy “reform” Our dear liberal Papa Joe. At the time it was rationalized as too many people incurring credit card debt and copping out of it, not acknowledging that the majority of credit card debt is inevitably the result of compound interest and not the original consumption. Oh the decadence of consuming without paying! Just ask John Lewis.
How few Christians remember the parable “Behold the Birds of the air: for they sow not, neither do they reap, nor gather into barns; yet your heavenly Father feedeth them. ” or “And why take ye thought for raiment? Consider the lilies of the field, how they grow; they toil not, neither do they spin: And yet I say unto you, That even Solomon in all his glory was not arrayed like one of these.” But now “Behold the Rentiers, who gather all before them and parcel it out in dribs and drabs to their debt slaves”
I had forgotten about Papa Joe. Yes, compound interest certainly is a large part of the credit card debt, but even more damning is the fact that the majority of bankruptcies (62.1% American Journal of Medicine 2009) are for medical debt. And even worse, it is becoming apparent that the ACA has done little to ease that burden. I suppose you could call the Republican answer to a jubilee would be to paraphrase Alan Grayson’s comment about the the Republican’s answer for health care; “Don’t go into debt, if you do, die quickly”.
The key issue is the existence of poverty and inequality. This will be the dividing line of action -those that benefit form poverty and those that wish to end it. The radical message of Jesus was commandeered by the ruling elite. They took the radical message of love and forgiveness and turned it on its head. The radical message of rebirth was turned into an enduring salve of charity, deadening the senses to the brutality of exploitation. Then offered absolution to a guilty soul by proclaiming that poverty will be with us always due to inherent human weakness. What a tidy package indeed.
It is interesting that the same rational is projected on the role of Government. The Government does not function as the protector of inalienable rights of the people, but as the Nanny State, providing charity to the unwashed masses. Charity, to be given and taken away at will. The ultimate charity giver. This framing is what must be smashed if Democracy is to have a chance.
Hudson is absolutely right when he says a multi pronged approach is needed to change this situation. It is happening- which is hopeful.
“The key issue is the existence of poverty and inequality. This will be the dividing line of action -those that benefit form poverty and those that wish to end it.”
Here’s the dirty little secret: no one actually benefits from poverty. I think that’s what “the great religions” were supposed to, and have utterly failed to, teach.
The asset stripping which causes poverty does benefit some. The End result of asset stripping is a collapse, but the journey can be beneficial to about 1% of the populace.
Who benefits from poverty? The private prisons, for one. Payday loan companies, for another. You may have to rethink your stance.
Hmmm, this chorus sounds familiar… “Privatize the salvation, socialize the penance.”
There’s a reason the Fed Gov is the charity giver.
a) it’s the giver of last resort
b) it’s the conduit for recycling the surplus back into the economy
If we want the Fed Gov to get out of the charity giving biz, we need to stop the surplus from being hoovered up by the wealthy and the banks. The only way for that to happen is for there to be balanced trade between labor and employers, such that labor is paid enough salary to purchase the goods and services sold by employers. But this would mean employers make no profit – a non-starter for most if not all employers. So what this suggests is a model that doesn’t have an employer/labor relationship. Maybe after a nuclear war?
Really for the foreseeable future, all economies are stuck with surplus being hoovered up. In which case, there will always be a need for a Fed Gov to recycle that surplus back into the economy: as charity (welfare) or as engagement of labor.
Michael Hudson has previously pointed out that when the Fed Gov resorts to austerity instead, then the slack has to be taken up by private debt.
P.S. my own personal view is that the closest facsimile any one person can get to balanced trade with the world is to work for themselves. Which has all kinds of risks. But it also means not having to work for an employer. Which means not being subject to their propaganda. [And all employers engage in propaganda on their employees. A variant of what I think we should call Hopkins’s Law: http://www.counterpunch.org/2017/01/13/why-ridiculous-official-propaganda-still-works/ ]
And this I think is where Jesus was even more radical. That our value doesn’t come from how society measures us (e.g. how compliant we are to the propanda, how much we make, etc).
What a wonderful piece, and what timing!
Just last night I was talking with my son, a recent graduate, soon to go off to grad school, about the origins of the enlightenment, which I see as rooted in Jesus’ teachings.
I struggled to explain this notion even though I’ve done a lot of thinking about it, and have written about it in the past.
So I’m going to share a little piece that I wrote almost exactly ten years ago;
I hope that it’s clear that what I’m describing is a perennial tension between those who would hide behind ‘The Law’ and those who rightly insist that there is a higher authority.
The solution to this perennial tension is to understand that there is no justification for immoral behavior in the law, and that the law exists because men behave badly without limits.
It is clear to me at least, that Jesus would say that regardless of the law, it is immoral to charge young people tens of thousands of dollars at 8% interest for the privilege of getting an education, because it is, a form of enslavement.
But we live in a time when the Pharisees are in control, much like the time when Jesus lived, and I think it’s becoming more clear everyday, that this is an ‘unnatural’ situation which requires a ‘natural’ solution.
I think Jesus would say “Do the right thing, let my people go”.
Of course getting that message across will require overcoming a lot of spiritual entropy.
So your son is going off to grad school, huh? Best thing you can do for him, regardless of what field or profession he plans to go into, is buy him a copy of Disciplined Minds: A Critical Look at Salaried Professionals and the Soul-battering System That Shapes Their Lives by Jeff Schmidt. It’s basically about how professional and graduate schools try to brainwash you into unconsciously supporting the status quo, and how to survive while maintaining the sense of values you came in with.
Thanks for the right intent, but…
He’s a fine-arts major, and it’s not so much about credentials, it’s about being educated.
He’s got a full ride+ and it’s out of the country. (Yale wants an interview to find out why he didn’t pick them)
If you ask me the timing couldn’t be better.
BTW, I went to art school too, and I ended up working in IT.
I credit art school for teaching me respect for craftsmanship.
I hope people aren’t thinking that I’m pushing Christianity here.
What I’m pointing out is that once people could read the Bible in their own language, they could see how the church and state were twisting the message.
Within his lifetime, and pretty much ever since, the ‘real’ content of Jesus’ message has been much closer to what’s been called Liberation Theology, than to Prosperity Theology.
Jesus was a subversive, that’s why they hung him on a tree.
Correct … the true message is subversive. All real religion founders are heretic in their own times.
check out Eugen Rosenstock-Huessy, “out of revolution”.
very similar to what you’re pointing at, but fleshed out. “reformation”=”every man a priest”, democratic revolutions=”every man a king”, etc.
Thank you for this post. So often in modern public discourse we ignore the wealth of religious teachings from earlier societies. This reinterpretation here has so much to say about our current times and I appreciate your contributing this to the gyre.
I am so grateful read this, to see what I’ve always known in my heart and bones articulated by scholars. I am a farmer, formerly a remodeling contractor (25 years) displaced by Goldman Sachs and their schemes, searching for right livelihood. It’s a trick in this modern construct of capitalism run amok.
“Poverty is structural, it is a construct, it is a basic underpinning of capitalism. The suffering all around us is the result of capitalism run amok.
And our current crony-capitalism on steroids is the result of our collective failure to regulate. Because capitalism, and the inherent greed that comes with it, is seductive.”
The bit in quotes above is underscores my email signature. It tends to piss people off, so I use more benign quotes for business emails, and moderation in general.
How do we get the holders to realize it’s a zero sum game? They’ve been hoarding for so long and can be so indignant and entitled about their silly stash, it’s as if they’d rather die than change.
“it’s as if they’d rather die than change.”
No “as if” about it. I think you probably know what it’s going to take, but just don’t want to go there.
I am curiousto know what other readers think of this:
As I had to get disability, my credit went south a bit and I got high interest credit cards to get me through the first couple of years. I am slowly paying them off now on a three-year plan. I went to a credit counselor, banks, credit unions, etc, to get a debt consolidation loan to lower my interest payments and pay the debt off faster. I have been current for three years now, and my credit rating is slowly rising, but it is a hardship on my income to cover all of my expenses, and I am apparently too high a risk for the consolidation loan. A mortgage was suggested, but 15-30 years for $6000? But I have been advised to declare bankruptcy to wipe out the debt! This is ridiculous. However, I am stuck. Is there some catch 22 in rules that wipes out common sense these days?
Why not declare bankruptcy? You are way better off doing that once then repairing credit instead of attempting to pay off high interest credit cards in this economic climate (I’m assuming that – like me – you don’t have prospects (or any interest) for high-paying jobs in this corporatocracy?). There are also a lot of 0% APR credit card for 1-2 years, so you can transfer balances of your cards to a zero APR card, just make sure you find one that does not charge you for balance transfers.
bankruptcy is a last resort, as far as I am concerned. not a get out of debt mechanism. I find it very disappointing, and an indication of why America is so fucked up, that people use it “Donald Trump” style, just to dump their debt on others because they can, instead of giving people like myself an interest break, a much better solution all around that hurts no one actually.
Speaking from experience, after you declare bankruptcy (I went Ch 7), you’ll receive all kinds of credit card offers within a month or 2. It doesn’t really hurt your credit. They like to keep us in debt so they like to keep the credit flowing. Hey, it’s how the country is run, isn’t it?
Post-discharge, creditors will also hit you up for a “renovation,” they try to get you to sign up to “acknowledge” the discharged debt, and once you do so, the discharge is meaningless as to that debt. You are then on the hook for the whole amount, while having been asset-stripped in the bankruptcy proceeding.
I learned the renovation concept in first year law school, and saw it in action as a summer clinical intern for Vermont Legal Aid in 1977. Househole Finance was the most notorious “lender” in Vermont to pull this scam, telling people stuff like “this is just to show good faith on your part” and “it will help restore your credit worthiness sooner — just sign this paper.” HFC having been the party to sucker into balloon-payment outrageous debt so many unsophisticated people seeking the trappings of the Good Life that other parts of the Bezzle “manufactured the demand” for. Fokkers all.
We actually were able to get a bankruptcy judge to toss out a number of these over-reaching, fraudulent ‘renovations,” but it took a lot of work, the free legal advice we provided, some great technical support from people who knew the rottenness of the “bidness,” and the fortuity that the judge was an honest soul. Post-Biden, etc., I’m guessing the bankruptcy bench is stacked with creditor-friendly talent…
Thank you so much for this great article/speech.
O the irony that in The Atlantic I found an article the very same day titled : The Only Thing, Historically, That’s Curbed Inequality: Catastrophe. It tries to convince us that only war or revolution can produce the Clean Slate. And warns us, peasants, to stay off of our forks: it does not even really works and offsets the rich very few. Well, I’m so happy I got this post here by Dr Hudson to revitalize me!
Also, I could add that there was some sort of debt cancellation later in history, but not towards the people: in the 14th century the Templiers Order was destroyed in France because the French King (Philippe le Bel) owed them too much, and Louis XVI later did that with some of its creditors multiple times, enough for it to be given a name : La Saignée (the bleeding). Of course it does not directly relieve the people and certainly does not free the bond servants, so maybe it’s more akin to Argentina in 2002 who stopped paying its debt and devaluated.
Louis XVI never did any significant cancellation of public debt, and in fact, was driven to call the Estates-General by his refusal to contemplate that step. It was considered so unthinkable not to serve the public debt that even after feudalism had been destroyed and the state had expropriated the First Estate completely, the revolutionary government had to be driven to its knees before debts were not honored (at least in name, as they had been by the often depreciating and soon worthless assignats).
That Atlantic article isn’t wrong that those horrific events do reduce inequality. But what bugs me is “The Only Thing” and the section where they say But what of less murderous mechanisms of combating inequality? History offers little comfort. They then ignore all the history above. Which makes sense, as it is ancient, obscure, and reads as quaint instead of effective. The only nonviolent property revolutions they mention are 20th century in order to knock them as failures. Gone are mentions of freedom revolts like that in Haiti, the largest Marooned Society in the world, which then had to grapple with external debtors.
The article you posted reminds me that one thing they didn’t get into above was continuing on that phenomenon of cyclical history. Capitalism assumes an end point, as Graeber pointed out in Debt, meaning that it can’t conceive of infinite debts (it’s toward the end of the book, I don’t have it with me to cite). The idea was that all debts are paid somewhere down the line. The above writing in the Atlantic speaks to that same idea: you can’t just keep going on down the road, at some point it explodes. It’s a capital eschatology that Hudson, way smarter than I am, probably could link to fire and brimstone Millenarianism.
The holders / owners of the Student Debt are not the Pharisees in this temple.
The “real parasites” are the academics at various levels who exploit and enable a system of unlimited debt utilization (with federal government guarantees) to raise their compensation to multiples of what existed in 1960 only because the debt capacity exists to fund the Ponzi. Absent the debt, the compensation would be a fraction of what exists today. The Chancellor of NYU makes millions per year – why?
Education at the end of the day is an intangible value being exchanged for a tangible debt at an artificial arbitrary price for future value of a job which may or may not be there at a compensation to liquidate the debt.
The whole thing reminds me of the penny stocks of the 1960’s which were created from whole cloth. That is, artificial value being supported by the market maker (LuftMensch) in bucket shops. This old system now used as the education finance model – until the stock inevitably crashed after the letter stock was liquidated – on the back of the rubes. Same thing in this scheme will happen.
They are all Pharisees and money-lenders. All part of the Bezzle. Don’t be excusing the “debt owners” now…
Naked Capitalism is where I first found out about Hudson and I’ve been a fan ever since. One of the best articles I ever read on here was Graeber’s contribution to the discussion on debts. It followed similar lines. I like that this discussion delves deep into how the spiritual works with the economic.
I also had not heard that bit about Kucinich and redistricting. I’m a bigger fan of him than ever.
I think we have all the tools we need to bring about human flourishing, which is why Mark Zuckerberg’s latest manifesto, with its argument that what is needed now are new technological/artificial intelligence tools for managing our society, is so bogus.
Human imagination has been sorely tested. It’s up to those who can imagine their way through the adverse conditions to help guide others to the breathing room needed to ruminate on new modes of living.
The Fed holds a book of $4.7 Trillion. This could be erased by offsetting the need for the public to borrow anew to pay the Fed for maturing bonds/debts and ongoing service of the govt issued debt (only to remit excess back anyway). This is debt we owe to ourselves.
It can be erased by accounting via offset of one side to the other in the set of books already managed by the Fed now anyway.
You mean, like a $4.7 trillion dollar coin minted by the treasury to pay our debts? They’d never allow it, but I can certainly see the logic of it.
No need to make up this silly coin thing. In accounting it is simply that one set of books offsets the other, so both sides can simply agree to erase their side, no harm, no foul. Just like 3500 years ago. And since the money represented by the public debt held by the Fed was put into the economy years ago, the only thing affected by the offset is the arcane world of monetary theorists.
As for the coin idea, it is a sleight of hand, but if it gives a helpful illusion to society, well maybe it makes sense to think more about it. A few weeks back I threw out a notion just to be provocative about monetary theory and debt fearmongerings, and it dawned on me that the notion actually does make sense — the idea is for Congress to pass legislation directing the transfer of the social security trust fund assets (special debt instruments) to the Fed in exchange for them recording or entering money/cash (call it what you wish) into the Social Security accounts, directing a premium be paid even, so the Trust becomes instantly solvent for a long time. The Fed could do nothing with these special debt instruments or ledgers, though they can erase them, as we owe the debt to ourselves.
Remember, the Fed key enters monies into reserve accounts of banks now in order to buy bonds stemming from the public auctions, printing money out of whole cloth so to speak to do this; hardly an illusion though for the bond sellers to the Fed. No reason the very same mechanical practices could not be used to settle the social security issues, can we not have the Social Security trust fund treated as well as a bank? This key-stroking, big-coin solution, as directed by new public law demonstrates to me that what is surfaced now is propaganda, nothing but fearmongering and fearful reactionary intents (the financial community and those who fear any taxation want their solution), just as this article intimates about Deuteronomy’s calls and human history having been forgotten or misdirected.
this is just an excellent, excellent discussion. a possible bridge (another one) between fundamentalists and (real) progressives.
“Anthropological writers who seek to ground the idea of interest-bearing debt in gift exchange tend to overlook what Benjamin Nelson (1949) pointed out half a century ago: The essence of usury is “otherhood,” not brotherhood. Gifts typically are reciprocated among equals, often with degree of one-upmanship no doubt, but it traditionally has been deemed ungentlemanly to charge interest to one’s social peers. Greek aristocrats, for instance, extended interest-free loans to each other via eranos societies.”
So Greek aristocrats were like today’s bankers with their interbank lending at ZIRP?
Searching Eranos brought the 1933 Eranos group and few other references. There’s this: “The word
The word ‘Eranos’, in Greek language, applies to a banquet, both spiritual and material, which lasts thanks to the contributions each participant makes. The Hungarian mythologist K. Kerényi took the original meaning of the word, which appears for the first time in Greek literature in Homer’s Odyssey, in terms of a ‘spiritual nucleus’: this was to be developed by participants in an atmosphere of freedom and spontaneity, with songs, poems, improvised verse, or with a symbolical offering to the group.”
Interestingly, erano in Italian is derived thusly: https://en.wiktionary.org/wiki/erano https://en.wiktionary.org/wiki/essere sum – present active infinitive of sum (“I am”), from Proto-Italic *ezom, from Proto-Indo-European *h₁ésti (“I am, I exist”).
The Last Supper was an eranos gathering. Jibes with my father’s (a sometimes methodist minister) religious teachings which were largely and solely the parable of generosity (loaves and fishes)/The Story of Stone Soup (yes, he blasted right through brotherhood to embrace otherhood as well) and the golden rule.
Hudson’s been at this for a while now. The quoted passage above comes from: http://michael-hudson.com/2002/04/the-new-economic-archaeology-of-debt/
There is no political solution
To a troubled evolution
Michael Hudson does it again. What a treat. Thank you NC. This rewrites history for all pontificating purposes – what will the Koch Brothers do now? “The whole origin of Christianity was a last gasp, a last fight to reimpose the idea of economic renewal – a clean slate – that goes back…. all the way to the neolithic.” Actually, I remember it being said here c. 2009 that debt cancellation is not that big a deal because all debt holders are almost equal credit holders – i.e. everyone will wind up getting their own debt cancelled for cancelling debt owed to them. Which really sounds karmic. Interesting about Dennis Kucinich too. Hudson’s belief that since only governments can cancel debt, private banks should not be allowed to create credit and the best way to do that is require a 100% reserve sounds a lot like Ann Pettifor and others. This was a great post.
just thinking, as all things are so negotiable – if anyone is afraid all their wealth is tied up in owning debt and they have nothing to offset big losses … fer shure they’ll be able to buy some jubilee derivatives at the proper time in the whole forgiveness process, or get some tax write-off or stg. Goldman Sachs will be honored to write up some clever financial instruments because it is their calling to do god’s work, as we all know.
Hey now, no ‘options’ on The Jubilee, k?
There is also the idea about how credit is created. If done by the public itself we can be as wise as Hammurabi. But if credit creation is dominated by those who have claimed the privilege for themselves now, we cannot practice this very human/societal adjustment step as was done for millenia.
Think of the Sanders proposals for a postal service ‘bank’ to serve basic consumer credit services.
Think too about China. It greases the use of markets and pricing signaling, and temporal intermediations by having the public dominate the credit channels. They can erase these ‘debts’ at any time it makes sense to them, just like the millenia before oligarchic forces coopted things to transfer to private credit creation and its control over society (even using religion to accomplish this). China has this right and the decades of growth probably demonstrate this.
What a delightful article and thread!!!!
I agree that this discussion of debt and sin jubilee is interesting from the historical perspective, but it is of faint relevance to post-Enlightenment practice. Debtors’ prison has mostly been done away with. Indeed, debts to private creditors are being incessantly canceled by sanction of public authority, a process systematized under bankruptcy law. Individualizing the process under the rule of law is rightly thought to distribute its benefits and burdens more fairly.
Because this process does not work perfectly is not a reason to seek advice from the primitive soap-box sermons of civilization’s noisiest losers. Maybe instead we could look at what Solon or Alexander did, or Augustus, or Justinian; people who actually won, who made laws for empires that worked just fine for centuries? In sum, bankruptcy law policy is where the discussion rightly belongs, and the Bible, of all books, has nothing to add to that dialogue.
Incarceration has been done away with (mostly – there are still occasional cases).
Peonage, unfortunately, has not. Students graduating from our higher education system are incurring debts which will systemically retard participation in other areas of importance to society, from housing to population growth. Ownership disappears in that environment. We will all suffer for that. This can’t be pooh pooh’ed as a matter of winners and losers when a trillion dollars is outstanding and cannot be discharged in bankruptcy.
An amusing argument given that 40% of the American population appears to believe the Bible should be the primary source for everything.
Including the Vice President and our Secretaries of Education and Housing and Urban Development.
so, your statement of faith has little validity in 2017 America.
(As well as ignoring how badly current bankruptcy law is structured)
Michael Hudson’s speech adds enlightening detail to one of my favorite books ever, the late Sidney Homer’s A History of Interest Rates. Yields alone don’t tell the whole story of the social and legal backdrop in which they occurred.
What would happen today if a Jubilee year were expected in 2020? Presumably yields would escalate toward triple digits between now and 2020, before falling back to near zero as the ball dropped in Times Square. That wouldn’t have been an issue in ancient times, with official sources as the lenders, and probably no secondary securities market.
Dr Hudson:
All true, but curious that taxes are omitted. High progressive income taxes and redistribution reflect the charity-oriented, “poor will always be with you” model which Dr Hudson decries as a distortion of ancient texts. Escalating unfunded promises — e.g., the coming brutal tax hikes to bail out bankrupt public pensions — are burdens on the people, that eat out their substance.
When the slow-motion Ponzi scheme of unfunded gov’t promises finally unravels, we will have a Jubilee — but of an unscheduled, disorderly and probably violent variety. Bubble III is the last game in town, comrades. And it’s getting long in the tooth.
That sounds like a page turner! Does the book have pictures? Or is it all type? I hope it has pictures if it’s a fave.
Pictures are good. I think soembody in Englannd had a picture of interest rates for 3000 years last winter and British rates were then the lowest since the dinosaurs. If not before.
If the govermint boughtt the debt so single hard working Mom’s with kids at home and a little bit of conservatively structured portfolio holdinggs in a bond fund in their 401K donm’t get smoked like anchovies by any Jubilee it may be OK. (I don’t know if anchovies are smoked or not, but it sounded good when i typed it anyway).
then the govermint can put all the bonds into a rocket and shoot it into the sun. That destroys the debt for ever. Unless they miss. . . . & 6 months later when the earth is on the other side of the sun. .. . . Here comes that rockett! That’s why you need physicists on Wall Street who traffick profitably manipulating society’s fetish with the Newtonian Delusion, just for this moment, They can send up another rocket and blow up the first one. We’ll eventually get rid of that debt forevah.
I hate this post. It gave me a “Eureka” moment and my brain is overdrive and I’m stuck at work with racing thoughts.
Seriously, this is fascinating, and I wonder if you have a book list so I can do some delving on my own.
Makes, me wish I was at Nicaea all those centuries ago during ‘The Great Editing” session. What happened there regarding the monetary policy in the Bible?
Were all those heretical movements preaching poverty really talking about debt forgiveness? What was lost, in terms of what they said vs. the official record? Did the Church kill them off as if they went beyond charity, and back to debt forgiveness the monarchs would eradicate the Church to secure their power?
Could you imagine a rival sect coming forth today, preaching against Prosperity Doctrine, using the original ideas that were put forth by Jesus? Time seems ripe.
So many questions….
I don’t know if Hudson’s written a book of his own that goes into this, but if you haven’t read it, the best book that ties economics into the rest of social life bar none is Graeber’s Debt: The First 5000 years.
Here’s a short book by Hudson on clean slates and debt cancellations.
https://michael-hudson.com/wp-content/uploads/2010/03/HudsonLostTradition.pdf
Thanks!
Seconded. Pivotal book, imho. And readable for persons, like myself, not so smart.
The Sanskrit word for debt is rina meant ‘sin’….But about the Sumer cuneiforms, they were temple goods the arrival and departure of which were tracked by the accountants……Debt slavery in ancient India reduced many tribal castes to permanent serfdom, was primarily on account of non -payment of debts to the State e.g. Taxes hence resultant penal slavery.
This is very very good. I read it this a.m., very impressed. But only got around now to writing anything down. The narrative brings up a lof of deep thoughts, but I’m too lazy now to type them out. You don’t get credit (no pun intended) for deep thoughts that remain dormant in the mnd, but I don’t want credit for them. They belong to humanity!
OK, here’s one deep thought. Another fleck of light produced when my mind scraped up against Mr. Baldwin’s majestic extemporaneously virtuousistic essay in the 1965 Cambridge debate. He remarks that:
“A white South African or Mississippi sharecropper, or Mississippi sheriff, or a Frenchman driven out of Algeria, all have, at bottom, a system of reality which compels them to, for example, in the case of the French exile from Algeria, to [defend the?] French reasons [for?] having ruled Algeria. The Mississippi or Alabama sheriff, who really does believe, when he’s facing a Negro boy or girl, that this woman, this man, this child must be insane to attack the system to which he owes his entire identity.”
I think the same form of “psychic posession”, a similar “usurpation”, as it were, of the psychic faculties that define identity, in a hyper-monetized commercial culture, can’t conceive that a jubilee would not in some way unleash a murderous anarchy. Their personal identity, even more than their economic advantage, is so deposited (no pun intended) in the idea of themselvees as a participant in contracts and commercial relations that a repudiation of those ideas is almost a form of self annihilation. I suspect that’s part of the difficulty involved in granting debt relief, even where all rationality recommends it as salutary public policy that would create broad social benefit.
Imagine college administrators — many of them ex-politicians, but in any event well connected — reacting to a Jubilee student movement, massing in their thousands in the quadrangle to repudiate their college debt.
Fortunately the left-right culture wars on campuses divert both sides from going for the jugular on the real issue: their economic oppression by academic loan sharkers. Divide and conquer! #Jubilee2020
But college administrators and their institutions are not holders of much of the student debt.
The government (AKA US taxpayers) has insured much of it, and is in the same position of AIG as far as being the party that will suffer the loss with default.
The colleges have been paid and the money was banked/spent.
The administrators might be troubled by a future inability to sell their product at a high price with the disappearance of the credit market for college loans, but having students massing in the quadrangle might be a great opportunity for the administrators to save money by not paying adjunct faculty to teach empty classrooms.
Related topic is Confessions of an Economic Hit Man. Debt may be a weapon wielded against an unknowing population. How often has that encouragement of leverage been done through the centuries? Neither a borrower nor a lender be.
Trouble is debts in the modern era, taking the 70s Nixon Shock as an arguable starting point, have grown SO exponentially that it’s almost as though the point of no return has passed.
Not only are the debts so unimaginably huge for most of us to contemplate, are they simply now too big to forgive by their owners without a degree of coercion, as it’s increasingly clear few politicians have the taste for it?
Globalisation has essentially undermined the idea of the single symbiotic society, with broadly shared aims and common goals, in whose interests this microcosmic debt forgiveness not only made sense in the past, it was likely self-destructive not to….
The paradox of globalisation is that it clearly unifies some (primarily increasingly wealthy and influential) interests whilst simultaneously deliberately fracturing and insidiously undermining others, and now there is no longer any arbiter, absolute ruler or greater power or wisdom, on this Earth at least, left to appeal to.
Okay but the United States does not have “labor duties” nor does personal debt seem to interfere much with the maintenance of the Armed Forces, which are the two specific improvements that those rulers issuing cancellations obtained from this policy. Individuals have bankruptcy protection available to them should they decide that the relief thereby provided is valuable enough to go through the process. Further, not sure that there is any constitutional authority for a cancellation of private party debt by the Federal government or a State outside of bankruptcy law.
Whoosh!!
Oh well, I’m sure Jesus still loves you anyway.
;-)
The Fed creates money and buys debt in the open market now. If it buys public debt of the US national govt. then US Treasury uses its borrowing and other incoming revenues to redeem this debt at maturity and to pay the interest claims until that time.
This means the public is on both sides of this, we are paying ourselves.
Administrative offsets can erase the obligation to pay and the contractual asset represented by the bond; i.e., both sides erase what is on their books – these can be erased if Treasury and the Fed simply agree.
Look at the ECB in contrast, it is buying lots of private debt, this it can also erase, though it wont because this turns their actions into hand outs or grants of money, in this case to very wealthy interests who create the credit/debt amongst themselves before ‘selling’ it to the ECB. The european public needs to rise up and stop these private interests and the private-bond buying of the ECB and direct this central bank to only purchase public debt (so at some time it can haircut it or erase it in order to renew society). Well, at least if you understand this history and why this is wise.
Redemption and renewal (including the christian sense of these terms) awaits a pan-European public law that is informed by human history. It can use the ECB to effect some of this forgiveness then, a wiser instrument for society, though governed now by the public’s law (rather than being an instrument of the banking system, entshuldengen, bitte).
religious people have been given such a bad name that some times its easy to forget that some ideas within it are universally accepted and aspired to, even if you do not believe in “god”, and some believers in creation therory are…..i dont know…..retional.
the human mind is weird. Human history is weirder still.
I am a big fan of Michael Hudson but I think what happens first is the collapse of the system.
A consumer society needs consumption and the economy is geared up for it.
The IMF, Larry Summers and others and realising the problems with a lack of global aggregate demand, the system is failing already.
Larry Summers has really changed his tune:
“Former Treasury Secretary Summers Calls For End Of Fed Independence”
“Central bank independence “comes from an understanding of the macroeconomic policy problem that is not relevant to current times,” Summers said in a speech at the International Monetary Fund.
Central bank insulation was needed in the 1970s and 1980s to combat inflation, Summers said. That’s because the White House and Congress sometimes saw the short-run benefits of unexpected inflation, while the Fed kept its eyes on the long-run costs, he said.
But that was yesterday’s problem, Summers said. The economy now faces secular stagnation, or a chronic lack of demand.”
I love Hudson, he is so right in just about everything he says.
I think a revolution is more likely in many countries than a debt jubilee.
Yet, personal indebtedness is now becoming so acute for many that the debts are becoming unpayable. We need to keep in mind that political will can be changed if enough people clamor for it. So kudos for Hudson, NC, the commentariat and others for keeping the issue in front of our minds.
For the bottom 90% of us, we owe more than can be repaid, more than is reasonable and there are many drivers of this, but worth citing a couple of them:
1. House and land prices – in many countries and certainly here in Australia – governments have allowed the endless rise through allowing corporations and foreign nationals to purchase our land and property, bidding up prices. We have also provided incentives for individuals and corporations to invest in property. So, more and more of us are renters, priced out of buying a home for life and the lives of your children. Those that can take on more debt than they should to buy and the poorest pay more of their declining incomes on keeping a roof over.
2. Student loans – I read economics at ANU in the mid 80s, just before the Labor government introduced the Higher Education Contribution Scheme or HECS on the notion that higher education, going to university, was primarily a private good giving you a private benefit, in terms of better job and earnings prospects. Now, there is some evidence to support this, but the previous notion of university as a place of learning and research, where students studied the Arts because a more practical degree didn’t interest them, where gifted students could go on to academia and get a job for life, well that notion of education as a public good just vanished out of the public discourse. The idea that a well educated nation did better economically and lifted all lifestyles, this was all airbrushed out. And the universities changed and profit and growth, and the suppression of wages, seem to be the chief goals.
3. Bankruptcy – like the US, owed taxes or student debt, are never forgiven and cannot be discharged. Here they attract double digit interest, even though it is owed to the Government, and if you die owing money to the Government, well it comes out of your estate and your family.
4. Corporations. Allowing corporations to operate without impunity, without regard for their customers, employees and societies in which they operate, that has been our downfall. We have allowed them to make dollar donations to political parties and to politicians and they have been corrupted as a result. And, how often do we hear about how so and so company has ‘settled’ with the ATO or IRS on back taxes, or was able to go into bankruptcy protection
Its called limited liability, and we don’t have it.
Excellent article which will hopefully be very widely read. I studied a very little bit of ancient text like cuneiform and linear B and learned at the time that they were mostly dealing with economic transactions and inventory records, etc. which I found pretty boring. I was hoping that translators might find some lost epics instead. Now I realize that this was really the good stuff and still relevant today.
I did notice a couple things that may need to be fixed for wider publication.
Pedant alert!!
Actually I believe the correct answer is a little under 4 years if we’re talking about compound interest. Five is correct if it’s just simple interest.
Pedant alert #2!!
There wasn’t much of a Sparta in the 3rd millennium BC. There’s not a whole lot of Greek history that can be considered accurate prior to the 7th century BC so I’m assuming the correct time frame is sometime after that.
The first thing during ancient revolutions, was the burning of the debt and tax records kept in the pagan temple, were it was considered safe.
This didn’t just happen in ancient revolutions. During the Peasants’ Revolt in 1381 England, the Peasants’ War in 1525 Germany, the rural uprisings in the initial period of the French Revolution in 1789, etc etc the first thing the peasants did was sack and burn the manor houses where the tax rolls and other records were kept.
As Juliet Barker demonstrated in her recent book 1381, that uprising was not merely a haphazard orgy of widespread looting and destruction by rude serfs. It was an intelligently organized program aimed at particularly abusive individual overlords; the grievances were specifically proclaimed, the remedies (destruction of tax liens, fraudulent contracts and other such records, restitution of property, death of a few of the most notorious oppressors) were generally applied in a systematic order, and certain norms of justice and law applied, including direct appeals to the recently crowned young king.
I, for one, would certainly love to see George Soros and his fellow colon bacteria receive the same treatment that the Lord Chancellor and the Lord High Treasurer received in 1381….
These eureka moments of clarity and enlightenment are great and everything but they ultimately end up being nothing more than dopamine induced braingasms. In a few days or even hours the stuff will wear off and the article will be clipped or PDFd and referenced during debates or arguments with friends or family or just left to gather digital dust somewhere with the other saved eureka pieces.
Nothing will change and the powers that be will continue pursuing their eschatological program that ends with America dominating the world as sole Xtremesuperpower or, more likely, cataclysmic death and destruction that ends life on this planet as we know it.
I really don’t think people understand how serious the situation is. Mental masturbation ain’t gonna cut it. It will probably take an event that kicks swathes of well-off people a few rungs down the ladder and out of their comfort zones.
Agree with all. Trump’s coming crash and burn may be just that scenario.
Your answer is possibly in that which you are scorning. A lot of wisdom is buried in cemeteries.
The criminal banksters know we are headed for extinction, so they are running out the clock to extract everything they can. It is a race to oblivion.
@flora.
I was told that the Romans weren’t prosecuting just Christians but all Jews because they were Boshie bastards who wouldn’t recognise the Emperor as a God.
The Christians just co-opted them for their own purposes.
I am not a Christian. I made efforts to find faith but I heard no voices speak to me. After life — eternal life — resurrection from death — all these have attractions but little hold. I solace and rejoice in the after life implicit with knowing I have my two children and besides them … billions of children of my kind. These revelations dull any appeal the Christian Church might hold. I sorrow at not better husbanding my billions of children and sorrow greatly that all my children face a terrible future.
Michael Hudson and the groups he leads and inspires and their discoveries have elaborated a Gospel I can believe in — a revelation of Jesus and his teachings that moves my wayward faith.
Dr. Hudson has depths, interests, directions that I never would have expected. What a pleasure to read. His last three paragraphs seem to me a pretty good script for medicine for what ails human society today.
Well, debts that can’t be paid won’t be, etc, but I’m going to play Devil’s Advocate and say that debt cancellation effectively turns everyone into a serf, “only you won’t be attached to the land” etc. I don’t really see how anyone wins in this particular libertarian utopia.
Astonishing post!
Thank you for re-posting this excellent discussion. This is why I never go a day without visiting NC.
I find Dr. Hudson’s insights to be thrilling. Reading his book was a revelatory experience about the relation of debt and credit to the inequality and instability inherent in our current economic system—an area I previously thought I understood. How unsurprising that banks and credit have been conveniently omitted from mainstream academic economic models, given the political implications of accurately modeling our economies.
When considered along with the work of Minsky and Wray, it becomes clear how significant is the work being done at Univ. Missouri Kansas City. Thank you, Dr. Hudson!
I came back this morning to reread and enjoy later comments. A pet discovery of mine has always been the connection between ‘economy’ and the formation of Eve from Adam’s rib all the way back in Genesis. Both words in the Greek of the Septuagint have the root ‘oikos’ – house or home. God literally ‘home-builds’ Eve from Adam’s rib. (Sorry, I don’t know how the Hebrew links up, but the Septuagint writers, being Alexandrian Jews, hopefully made an appropriate connection.)
I guess the serpent knew what he was about, attacking Eve, right back there at the beginning.
“”The banks should be a public option, just like health care should be a public option. Even the University of Chicago right-wingers, in the 1930s, proposed a 100% reserve. The idea is that banks should not be able to create credit, meaning create debt. When you create credit, you’re creating somebody’s debt. That should be a government function, because the government can relieve the debts.””
Some people have trouble with this ‘100% reserve’ idea but it’s basically just a way of trying to keep the banks from creating an infinite amount of public money.
As Hudson said, this should be a government function. The government can hire people directly and directly fund various projects including single payer.
As was made very clear in the financial crisis, all of the money that private banks create by making loans (creating debt) turns out in the end to be public money, backed by the public. The public however, are not the recipients of the interest.
My first exposure to Dr. Hudson’s work was his Super Imperialism. I believe that work provides the basis for engineering the ‘clean slate’ for which he so persuasively argues now. Super Imperialism documents the use of the nation’s – and with the transition of the United States from a debtor to a creditor nation and the preeminent source of the global economy’s ‘reserve currency’ following WWI – the world’s money as an instrument of national power, i.e. ‘imperialism’.
The origin of Super Imperialism was a study – which almost immediately became a ‘how to loot’ handbook for US financial diplomats – of the unilateral US abrogation of the 1944 Bretton Woods International Monetary Agreement it imposed on the world at the end of WWII. But it was really a history of the use of credit (or from the 99%’s perspective debt) as an instrument of national power. Take a look at Nomi Prins’ All the Presidents’ Bankers) for an update. That abrogation was much more about removing for all time the limits imposed by the gold-backing requirement for the US dollars being sent abroad by US bankers – and the US government – than it was about preserving the viability of a gold-backed dollar at least for the purpose of settling US current account deficits.
If the US wanted to continue its wars of choice in its contest with the former Soviet Union, it would first have had to admit it was creating in Hudson’s words “debts that can’t be repaid (and) won’t be” – in other words that it was committing fraud on a global scale. And all the agents of the world’s 1% outside US borders, e.g. foreign central bankers and politicians, would have had to admit they’d been had. However, at stake was not just all that good as gold money the 1% of Old Europe had sucked down but the structure of a global economy based on US military Keynesianism and the ‘American lifestyle’.
The world’s 1%, it seems, has no problem with rock-raking, make-work programs as long as they can use them to realize out-sized profits protected from the ravages of capitalism’s “creative destruction”.
P.S. Hudson’s Super (i.e. monetary) imperialism also provides the accounting basis for a globalized, financialized – and for the US and its Western hangers-on ‘post-industrial’ economy in which pollution, brutal human exploitation and other behaviors once considered anathema to civilized societies are ‘off-shored’ (out of sight, out of mind) and the products so produced are paid for with yet more “debts that can’t be repaid (and) won’t be.”
Hmm. Posting comments on an article that is a few days old has a certain futility, but this one certainly made me think.
Many small European countries used to regularly devalue their currencies until the Eurozone. This acted in effect as a (very) limited, imperfect form of debt jubilee for personal debts in the countries’ own currencies?
Some of the devaluation excesses are used to promote the argument that this “addiction to devaluation” should be stopped -> eurozone and its policies based on a morality argument (of moral hazard, and of no relief for those considered feckless). At the same time, an important feedback loop of people making noise about the unintended consequences of policies is broken by the additional layers of bureaucracy involved and the inertia of big systems.
It turns out that (small) economies are not really set up to work without occasional debt cancellation. They start turning into debtors’ prisons one by one, starting from the initially weakest, until a few decades later everyone is a serf. Some kind of reset seems inevitable, but what will that be?
This genuinely interesting article really was a spark for a different viewpoint (different to me personally, not the world of course) about a somehow related subject…. Maybe the flush of innovation led me astray, though?
This was fascinating. I wonder what steps are required to walk our current private debt situation back so that we are in a position where we can cancel personal debt. In a discussion about reducing or canceling student debt, one person responded that it would be unfair; she had foregone college entirely so as to avoid debt. How were issues of fairness dealt with in ancient debt jubilees?
This is a late comment, since I only just picked up this post. But it is bubbling up and screaming to be released. So here it is, in two parts.
1. THERE SHOULD BE no more private commercial lending. Instead, the government should be the only lender, via a government-owned Central Bank and thousands of Central Bank local branches. The government would lend money to any business or individual for any productive or socially beneficial purpose — or even a personal purpose, such as a new house or new car — at little, or even at no, interest.
The government would obtain the money to lend by simply creating it out of thin air, that is, by making an electronic bookkeeping “deposit” into the bank account of the borrower. The government would almost never say no to a borrower. The only time the government would say no – that is, stop lending money – would be to curb inflation. However, a better way for the government to curb inflation would be – not to stop lending — but simply to use taxation. In fact, the only purpose of taxation would be to curb inflation, not to provide revenue, since the government could create its own revenue simply by printing money, or creating bookkeeping “deposits” in its own bank account to pay for its operating expenses, such as salaries, construction, an army, etc. – as well as loans to businesses and individuals. This would replace the current traditional but foolish practice of having the government go into debt by borrowing money from (i.e., selling bonds to) private banks or governments at compound interest, which has traditionally enriched the banking industry while impoverishing the nation.
Although the government could certainly charge a small interest fee for its loans, it need not charge any interest at all. In fact, it need not even require repayment of the loans, since it would not need the money. But that would raise other issues – moral and political – which I have not yet thought out.
2. NOTWITHSTANDING THE ABOVE, which may never come to pass, we are all forced to live in the economy that we have inherited. So until that economy is reformed or replaced, Michael Hudson’s advocacy of holding debt-cancelling Jubilees – on the example of such Jubilees that (allegedly) took place in ancient times – is not only impracticable and unfair; it would also grind the economy to a halt. That is because – since the economy runs on credit – no lender would lend to any person or business if he thought that, one day, the government might arbitrarily cancel all debts, losing him the money he had lent out – which, very possibly, he could not afford to lose. (Creditors have their own expenses – not to mention debts – to pay.)
There is an unfair, and uninformed, prejudice on the Left against the very concept of interest on a loan, as if interest were somehow immoral, instead of rational. No one thinks it immoral if a grocer buys milk or bread for $1 and sells it for $1.50. That 50 cents is his profit, without which he could not pay his rent or buy the other necessities that he and his family need to live. When the grocer sells milk and bread for more than it costs him, that becomes the retail price of his product, which no one complains about or views as immoral. So why, when a lender sells money for more than it costs him – i.e., charges interest — is there resentment? That is the retail price of his product, which happens to be – not milk or bread – but money. Why is this different from what the grocer does?
There is, of course, the fact that, unlike the grocer, who has to pay $1 for the milk and bread he sells for $1.50, the banker does not have to pay anything for the $1 he lends to a borrower for $1-plus-interest. He creates that $1 out of thin air by simply making a bookkeeping “deposit” of $1 into the borrower’s bank account. So the question is not whether money should have a retail price higher than its face amount (i.e., inclusive of interest), but whether the banker deserves to reap that interest, since he paid nothing for the original $1 face amount.