Michael Hudson: “Moral Hazard” vs Mutual Aid – How the Bronze Age Saved Itself from Debt Serfdom

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 “and forgive them their debts”: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year<   Jointly posted with Hudson’s website

The Naked Capitalism discussion of John Siman’s review of my new book “and forgive them their debts”: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Years quickly slipped into a discourse about modern economies and whether it was moral to cancel the debts of people who are in arrears, when some people have struggled to keep current on their payments.

Bankers and bondholders love this argument, because it says, “Don’t cancel debts. Make everyone pay, or someone will get a free ride.”

Suppose Solon would have thought this in Athens in 594 BC. No banning of debt bondage. No Greek takeoff. More oligarchy Draco-style.

Suppose Hammurabi, the Sumerians and other Near Eastern rulers would have thought this. Most of the population would have fallen into bondage and remained there instead of being liberated and had their self-support land restored. The Dark Age would have come two thousand years earlier.

My book is about the origins of economic organization ad enterprise in the Bronze Age, and how it shaped the Bible. It’s not about modern economies. But the problem is – as the reviewer mentioned – that the Bronze Age and early Western civilization was shaped so differently from what we think of as logical and normal, that one almost has to rewire one’s brain to see how differently the archaic view of economic survival and enterprise was.

Credit economies existed long before money and coinage. These economies were agricultural. Grain was the main means of payment – but it was only paid once a year, at harvest time. You can imagine how awkward it would be to carry around grain in your pocket and measure it out every time you had a beer.

We know how Sumerians and Babylonians paid for their beer (which they drank through straws, and which was cleaner than the local water). The ale-woman marked it up on the tab she kept. The tab had to be paid at harvest time, on the threshing floor, when the grain was nice and fresh. The ale-woman then paid the palace or temple for its advance of wholesale beer for her to retail during the year.

If the crops failed, or if there was a flood or drought, or a military battle, the cultivators couldn’t pay. So what was the ruler to do? If he said, “You owe the tax collector, and can’t pay. Now you have to become his slave and let him foreclose on your land.”

Suddenly, you would have had a slave society. The cultivators couldn’t serve in the army, and couldn’t perform their corvée duties to build local infrastructure.

To avoid this, the ruler simply cancelled the debts (most of which were owed ultimately to the palace and its collectors). The cultivators didn’t have to pay the ale-women. And the ale women didn’t have to pay the palace.

All this was spelled out in the Clean Slate proclamations by rulers of Hammurabi’s dynasty in Babylonia (2000-1600 BC), and neighboring Near Eastern realms. They recognized that there was a cycle of buildup of debt, reaching an unpayably high overhead, followed by a cancellation to restore the status quo ante in balance.

This concept is very hard for Westerners to understand. Yet it was at the center of the Old and New Testaments, in the form of the Jubilee Year – taken out of the hands of kings and placed at the center of Judaic religion. My book documents how this occurred.

When debts were cancelled in Babylonia and other Bronze Age Near Eastern realms, it would have been against their way of thinking to complain that some debtors were benefiting from being freed from debts that other people had paid. In the first place, all cultivators became debtors during the growing season, with payments for everything from agricultural inputs to beer at the local ale-house to be paid on the threshing floor at harvest time. So annulling such debts benefited the population at large.

With regard to individuals who had borrowed out of need, it was recognized that if some could not keep up, it was because they were poor or unable to do so. Mutual aid became the principle of helping people who were sick, widows who lost their husbands or other factors that obliged them to run up debts. Not to have helped such people would have deprived the community of their productive labor.

Conspicuously absent from ancient moral values is the modern “moral hazard” theory to play solvent individuals against debtors. The point of reference was what would happen if people were notforgiven their debts. How would this have affected the community as a whole?

The answer is that debtors unable to pay would have fallen into bondage to their creditor, working on his land, and ultimately have lost their own land. They therefore would not be available to work on their own land to grow crops to pay taxes and other obligations to the palace, or to provide corvée labor on public works, or serve in the military. Clean Slate proclamations were part of the community’s self-preservation.

At the same time, the moral opprobrium was felt toward creditors. They were blamed for impoverishing society at large by their selfishness. The Greeks called his hubris, money-love and wealth addiction. And rulers saw an independent creditor class turning its wealth into large landholdings of creating a rival power to the palace. In addition to cancelling debts owed to the palace, rulers thus restored widespread independence from large wealthy families whose economic interest lay in resisting royal Clean Slates. Large fortunes thus seem to have disappeared in Larsa and Babylonia around the 18thand 17thcenturies BC. They didn’t have any President Obama to defend them from the “mob with pitchforks.” Hammurabi said that he was serving Shamash, the sun-god of justice. And Nanshe was a prototype for Greek Nemesis, punishing hubris and abusive wealth, protecting the poor and needy (already in 3rd-millennium Sumer).

The context for today’s debt overhead is one in which most debts are owed to private-sector banks, bondholders and other creditors. Also, not everyone is in debt – and society is rich enough to afford imposing a loss of status and self-reliance on large classes of debtors. Still, there is a logic in forgiving debts owed by the needy (but not by the wealthy).

Creditors argue, for instance, that if you forgive debts for a class of debtors – say, student loans – that there will be some “free riders.” Students freed from debt will benefit, while students who were able to carry and pay off their debts had to “meet their obligations.” It is further argued that if student debts are forgiven (or “junk mortgage” loans written down to fair real estate valuations), people will expect to have bad loans written off. This is called a “moral hazard,” as if debt writedowns are a hazard to the economy, and hence, immoral.

This is a typical example of Orwellian doublespeak engineered by public relations factotums for bondholders and banks. The real hazard to every economy is the tendency for debts to grow beyond the ability of debtors to pay. If large numbers of students remain liable to pay student loans withouthaving obtained well enough jobs to pay, this will prevent them from being able to qualify for mortgage to buy a home and start a family. Many students today are obliged to keep living with their parents, and are unable to marry. The result is deepening economic austerity as a result of the debt overhead.

Meanwhile, defaults on student loans to for-profit colleges are projected as rising toward 40%. Is it worth it to say that to prevent giving these impecunious students a “free lunch,” it is worth keeping a large swath of the population poor and unmarried?

The first defaulters are victims of junk mortgages and student debtors, but by far the largest victims are countries borrowing from the IMF in currency “stabilization” (that is economic destabilization) programs.

It is moral for creditors to have to bear the risk (“hazard”) of making bad loans, defined as those that the debtor cannot pay without losing property, status or becoming insolvent. A bad international loan to a government is one that the government cannot pay except by imposing austerity on the economy to a degree that output falls, labor is obliged to emigrate to find employment, capital investment declines, and governments are forced to pay creditors by privatizing and selling off the public domain to monopolists.

The analogy in Bronze Age Babylonia was a flight of debtors from the land. Today from Greece to Ukraine, it is a flight of skilled labor and young labor to find work abroad.

No debtor – whether a class of debtors such as students or victims of predatory junk mortgages, or an entire government and national economy – should be obliged to go on the road to and economic suicide and self-destruction in order to pay creditors. The definition of statehood – and hence, international law – should be to put one’s national solvency and self-determination above foreign financial attacks. Ceding financial control should be viewed as a form of warfare, which countries have a legal right to resist as “odious debt” under moral international law.

The basic moral financial principal should be that creditors should bear the hazard for making bad loans that the debtor couldn’t pay — like the IMF loans to Argentina and Greece. The moral hazard is their putting creditor demands over the economy’s survival.

I wrote “And forgive them their debts” as Volume One of an economic history of how societies have handled debt and finance through the ages, and what the logic was behind the Bronze Age and early Iron Age structuring of economies.

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  1. John Siman

    John Siman here. As a first step towards “rewiring our brains,” as Michael recommends, I would like to suggest a rereading of the Parable of the Workers in the Vineyard; or, Did the Latecomers Get a Free Ride? (in Matthew 20):

    “For the kingdom of heaven is like a landowner who went out early in the morning to hire workers for his vineyard. 2 He agreed to pay them a denarius for the day and sent them into his vineyard.

    3 “About nine in the morning he went out and saw others standing in the marketplace doing nothing. 4 He told them, ‘You also go and work in my vineyard, and I will pay you whatever is right.’ 5 So they went.

    “He went out again about noon and about three in the afternoon and did the same thing. 6 About five in the afternoon he went out and found still others standing around. He asked them, ‘Why have you been standing here all day long doing nothing?’

    7 “‘Because no one has hired us,’ they answered.

    “He said to them, ‘You also go and work in my vineyard.’

    8 “When evening came, the owner of the vineyard said to his foreman, ‘Call the workers and pay them their wages, beginning with the last ones hired and going on to the first.’

    9 “The workers who were hired about five in the afternoon came and each received a denarius. 10 So when those came who were hired first, they expected to receive more. But each one of them also received a denarius. 11 When they received it, they began to grumble against the landowner. 12 ‘These who were hired last worked only one hour,’ they said, ‘and you have made them equal to us who have borne the burden of the work and the heat of the day.’

    13 “But he answered one of them, ‘I am not being unfair to you, friend. Didn’t you agree to work for a denarius? 14 Take your pay and go. I want to give the one who was hired last the same as I gave you. 15 Don’t I have the right to do what I want with my own money? Or are you envious because I am generous?’

    16 “So the last will be first, and the first will be last.”

    1. Watt4Bob


      My thoughts exactly.

      How has it come to be that America’s ‘christians‘ can only tout the stern and wrathful side of the bible, and ignore completely the obvious focus on loving one’s neighbor?

      One of my favorite theories of late is that we are not the most highly evolved humans to have inhabited this poor over-heated planet, but are, in reality the degenerate remnants of a culture we’re starting to understand, was much more ‘civilized’.

      1. Synoia

        Because the US “Christianistas” only follow the OT.

        The Beatitudes are considered left wing nonsense. No a real Christian in the mix.

        I’d include the Parable of the Good Samaritan and the treatment of African Americans.

        1. Mr. Grumpy

          How nice to see an anti-Semitic canard about the Hebrew Bible show up even here. The Jubilee year is a prominent feature of the OT and shows up repeatedly in the Prophets books. The same can be said about all the concepts in the “Beatitudes.” Love thy neighbor as yourself, welcome the stranger, the golden rule, etc., etc., etc. are all emphasized in the OT, the Prophets (especially), and the ancient Rabbinic literature. The Christian Bible does a good job of paraphrasing ideas already in the culture.

    2. Carolinian

      So the health of the state (or in Christianity’s terms belief in Christ) takes precedence over the belief by individuals in their own perceived rights? I believe this has been stated another way: from each according to their ability–to each according to their needs. The problem of course is that humans don’t think that way. Self-preservation is job one and our social instincts–which are there without a doubt–somewhere down the list. When people see their self-preservation (and that of their kin) under threat they become more social. Doubtless those Babylonian kings or the Greeks found warfare and physical threats from outside useful for keeping their social arrangements intact and rivals for power–aka those creditors–under their control.

      Whether we will ever get individualistic Americans to think socially (and to trust our own version of centralized power) may come down to self-preservation. One suspects the day is coming.

      1. In the Land of Farmers

        Are you comparing Christ to the state? =^/

        Christ teaches how to surrender the the self to the Self. By dying of the cross Jesus was teaching the exact opposite of self preservation. Right? Being unafraid to die he was at his most powerful, giving him the ability to protest and spread the word.

        To get “individualistic Americans” to think socially we need to examine our own individualistic actions because if you are in America you are American. Then maybe you will see that you are not even American, but rather, you are God, flowing in the Trinity.

        God needs nothing from Amazon because he has everything. He needs no car or car loan because he is everywhere. God does not need to use Facebook because he is never alone. God does not need the internet because he knows information is limitless and that makes it worthless. As a result, these companies and practices vanish.

        1. Carolinian

          It is Hudson who, I believe, is saying that Christianity grew out of a political movement. Indeed one can say that Christianity has always been politically contentious with major and lengthy European wars fought over it. The ancient Romans saw the Christians’ deference to their religion over the state as a political threat. And if Christianity is at base socialistic then this obviously can threaten ruling elites.

          1. juliania

            I think it’s best to say that the political essence of the Jubilee Year was one of the founding tenets of Jewish society, and Christ used that founding idea to exemplify his teachings on spiritual matters, much as he used farming analogies in his parables. I am so grateful to Professor Hudson for enlarging our understanding of these references. They would assuredly be familiar concepts to the people of Jesus’ time – it is we who have lost this important link.

          2. vidimi

            i can’t think of a single war in europe fought over christianity. just the usual fighting over heredity with religion as a pretext to conscript troops.

            1. Carolinian


              It may not have been only about religion but the Protestant/Catholic rivalry greatly contributed to the savagery. If the religious conflict was being used as a proxy for political rivalries then that is just making my point–that a monotheistic religion that claims exclusive revealed truth encourages the suppression of heretics.

      2. Left in Wisconsin

        I’m sure you realize that all that individualism is socialized in. Unless those kids are raising themselves.

        1. Carolinian

          Social attitudes are nurture. Instincts–what I’m talking about–are nature. My contention is that the latter are more powerful than the former.

          And yes the glorification of “individualism” is an American thing and always has been. This just feeds into those self-preservation instincts…IM as always humble O.

          1. In the Land of Farmers

            Nurture is not less powerful than nature. It is just that Nature, or that selfish instinct, holds more profitable right now.

            And the nature nurture division is a fallacy, as are all dualistic notions. That is the teaching of Jesus.

            1. Carolinian

              Well I did say in my opinion. But I believe that if you look at history–as opposed to what spiritual teachings want us to be like–this particular opinion gains a lot of support. In fact one could argue that the concept of Original Sin is just a metaphor for our nature beginnings. By this reading Christianity is saying that for society to succeed we must struggle against our inner nature. That seems to be what Hudson’s book is saying too.

              1. In the Land of Farmers

                Of course. All opinions.

                To me, we need to join our inner and outer. We cannot live with only one or the other, the Yin/Yang, Alpha/Omega. In their unification is where we find God, the end of all duality.

                As I proclaimed before, our original sin was was eating from the tree of duality which gave us the knowledge of good and evil. There was no dualism in the Garden of Eden, and so there was no morality and we could walk around naked without fear of being committed.

                Richard Rohr explains this well:

              2. knowbuddhau

                One could argue that, but it’s idiosyncratic.

                The Fall that gave us OS, was from non-duality to duality: the mistaking of the mutually arising pair of opposites “good” and “evil” for absolutes, like seeing only the poles of a battery, identifying with one vs. the other, and maybe even going to war with your indispensable opponent.

                Pelagius differed.

                Pelagius (c. AD 360 – 418) was a theologian of British origin who advocated free will and asceticism.[1] He was accused by Augustine of Hippo and others of denying the need for divine aid in performing good works. They understood him to have said that the only grace necessary was the declaration of the law; humans were not wounded by Adam’s sin and were perfectly able to fulfill the law without divine aid. Pelagius denied Augustine’s theory of original sin. His adherents cited Deuteronomy 24:16 in support of their position. Pelagius was declared a heretic by the Council of Carthage (418). His interpretation of a doctrine of free will became known as Pelagianism.

              3. knowbuddhau

                Dang, sometimes they show up, sometimes they don’t. It’s not you, it’s not me, it’s the li of Skynet.

                The point Pelagius made is succinct: what Fall? Seeing poles of pairs as apart from the background from which they both arise is a trick of the mind. The state we’re in, the state of nature, is the state of Grace.

                No Fall, no Original Sin. No OS, no Church authority. It’s said Jesus said, in the gnostic gospel of Thomas, “Split the stick, and there I am.” Of what need has any child of God of whatever it is the Church is selling?

                The Church says we’re born in debt, and only they can lead us to Redemption. Pelagius said, and here I’m paraphrasing, buck off.

                The Church’s trick is to get us to cellf-imprison our selves in celves of our own *mistaken making. That’s our sin. Then they want us to believe only they can release us from our own imprisonment.

                What imprisonment? What Fall? What debt?

                And what if I like it in here? It’s nowhere I want to get attached to, to be sure. The maintenance is killing me. Almighty useful at times, tho.

                More to the point: Better a “hell” of my own making, than serving any “lord” in their idea of heaven. Besides, I don’t think they play fair.

            2. False Solace

              Humans are not motivated by self interest alone. The brain has several drives, self interest is merely one of many and has been glorified by economists and libertarians into more than it is. In addition to self interest the drives include fear, anger, lust, and in mammals caretaking and play. These all have a biological basis. Without the caretaking drive, human children would not survive to adulthood and human society would fundamentally not exist.

      1. Newton Finn

        Spot on, as far as this ordained minister and retired public interest attorney is concerned. I would, however, add one additional thought. The final and ultimate debt jubilee is only the last step into entering the better, more beautiful world that Jesus prayed for 2000 years ago, and that Edward Bellamy compellingly (but imperfectly) described in the late 19th Century.


    3. coboarts

      My Belief and Faith in God doesn’t require me to accept the Bible or Christianity. Just because you recite lines from that book, doesn’t answer what is a just argument, and “So the last will be first, and the first will be last” how does this inversion settle the argument for fairness? I worked for 12 hours and you worked 1 – we didn’t do equal work. I paid off my student loans. I pay all my taxes and all my debts before I count money left for me. I think that a debt jubilee is a great idea, and I support it. But, my opinion has everything to do with benefiting my society and nothing to do with the convoluted logic of what you reference.

      1. a different chris

        Dude stood in the hot market for probably 11 hours worrying about how he was going to put food on his family whist you kept yourself busy doing something interesting.

        Amazing how everybody just normally thinks “not working” is something easy to do. If you are 15, yeah. If you are wealthy, yeah. Otherwise…

        Did you see what you did? You created some whole world in your head where somebody was sitting in a shady bar avoiding work until the last minute. Where is that in the story, pray (pun intended) tell?

      2. boz

        Re fairness?

        A couple of observations:

        1) working in “the vineyard” is also a metaphor for faith. Latecomers being paid the same as old timers means that it is never too late to tread the path to salvation.

        2) it’s also warning against envy at the generosity of others. So what if the boss pays the “latecomer” (or were they ignorant, and invited late?) a full days wage?

        In a society where we have been indoctrinated to desire/lust/envy after both 1) others (as objects of desire, not subjects) and 2) material possessions, this parable still feels very relevant.

      3. clarky90

        The dichotomy is Materialistic Vs Spiritualistic. Materialists (Marxists, Capitalists, atheists ….) believe that all they have and are, has become manifest, in their vaults, portfolios and accounts. This is their totality (with a side dish of sentimental BS for decoration).

        Anybody alive, must be “richer” than a deceased Stephen Jobs or Paul Allen. So the materialist is compelled to frenetically hoard, and fiercely expand their pile of “stuff” while they still live.

        Imagine a “Monopoly Board Game” that could never end? Rather than one person leaping with joy at winning and then, the board being wiped clean, so that everyone gets to play again……

        The Monopoly Game extends out into real life and the “losers” fall deeper in “debt”, becoming slaves; losing everything… possessions, dignity, sanity, family…..

        IMO, it comes down to Joy vs Joylessness. The joyless take Monopoly very seriously! (seriously?). And the joyful take Monopoly as a fun game for enjoyment with others, iteration after iteration, after iteration……

        This is why the Joyless MSM NEVER have a good word to say about the Joyful Jesus. He is an existential threat to their precious, self-defining, misery.

        Crucify Him!

        1. In the Land of Farmers

          I love to play Monopoly like I am Jesus! It’s great fun! I never buy property and give my money to any play who needs it. People get so mad at me! If we all played that way no one would ever lose! We would not even need the money!

        2. False Solace

          Your definition of a materialist is a strawman. Plenty of atheists believe in more than their bank accounts. You don’t need to believe in God or Jesus to value human dignity and reject debt immiseration. There are plenty of Prosperity “Christians” who pray for God to give them money and nothing else.

          1. clarky90

            Stalin, inspiring modern Economists for at least, 100 years.

            “One death is a tragedy. A million deaths are just a statistic.”

            We tirelessly search for Madeleine McCann.

            Yet with Yemen, our attention continually wanders.

            The very Christian doctrine, that we were made by God, in God’s Image, as God’s children, is the heart of the Declaration of Independence and of the USAian Constitution. The Abolition of Slavery movement was also “Christian”. Christian all the way down.

            AFAIK, there were no Atheists, Hindus, Jews, Muslims, Buddhists…involved in these momentous movements. Just observant Christians……

            Prove me wrong, history buffs!

            1. Todde

              Revolutionary france abolished slavery at a time the official state religion was some crazy ass religion they made up.
              Not christian and they freed evey slave in ths french colonies.

              Napoleon reinstated it. He professed to be Catholic i believe.

              1. clarky90

                Appropriation of identity is the scourge of our time. The world is full of people, claiming to be something that they are not, in order to gain some advantage. A NZ woman in England was just busted. She had been practicing as a Psychiatrist MD, without qualifications, for 20 years. There are plenty of fake Christians in this murky world! Thanks for the info about the French Revolution. I had no idea! “The Cult of the Supreme Being”.

            2. Plenue

              First of all: screw you.

              Secondly: I’m one of those materialist atheists who ‘only cares about his bank account’ and I’m continually drawing attention to Yemen, and the complete lack of MSM coverage. Just because I don’t believe in anything supernatural doesn’t mean I don’t care about life or justice. In fact, it means I care about them far more, because I don’t think there’s another one in store, or any kind of divine balancing of scales in the long-term.

              Take your smug Christian arrogance and go pound sand.

      4. Unna

        My understanding of the essence of the message of Jesus is that he was what people would have once described as “other worldly.” The Render unto Caesar statement is that the material things of this world do not matter. Caesar rules over the same world that was once offered to Jesus by Satan in the third temptation. Which temptation Jesus rejected. The face on the coin of tribute is Caesar’s. So why would you care about giving this coin, “what is Caesar’s” back to Caesar who issued it originally.

        Besides, Heavenly Father will provide for you just like he provides for the birds who neither sow nor reap. The token of tribute is only a piece of metal formed from the matter of the material world when what is important are the things of the spirit.

        The vineyard parable the same: you received the denarius which is your daily bread, more or less the standard daily wage of a worker to feed his family for a day, which is the total sum of material wealth that Jesus taught you to pray for, and nothing more. Beyond your daily bread, you only pray for the coming of the Heavenly Kingdom, being delivered from evil, and that your debts-sins be forgiven. A total spiritual reading of the parable is that the denarius represents salvation and that salvation is the greatest “amount” “God” can give to anyone for working in his “Vineyard” by working to accomplish “God’s will on earth – “thy will be done on earth” – no matter how long your life of service on earth to “God” may have been.

        So I see Jesus in the temple as his ridding the “House of God” from materialist corruption and of the sin to the spirit of a preoccupation with materialistic acquisition. Having said that, I think that the mind of Jesus is a very hard thing for us “Moderns” to understand or even fathom. So we run the danger of stamping our own contemporary preoccupations on his words – assuming in fact the reporting of those words to us after two millennia from a culture vastly different from our own is correct.

        1. Carolinian

          Assuming a lot of things. We don’t talk much about religion around here since this is a social science blog. But I do think there is ethical merit in Christianity depending on the practitioner. And it may indeed take an irrational, faith based belief to get some people to let go of a bit of that “rational self interest.”

          Unfortunately once you open the door to irrational beliefs then all bets are off. But the truth is that many of our secular, scoffing elites have plenty of their own irrational beliefs. They just don’t call it religion.

          1. In the Land of Farmers

            If I had visited a town you have never seen or heard of and told you about it, would that be my belief or my knowledge? You would have to have faith in me to go look for the town yourself.

            Many people have faith in God, fewer have the knowledge of God, but everyone of us have God with us.

      5. juliania

        Actually, though, coboarts, you are using the same logic that the rich use when they say “We got where we are by our own hard work!” Previously on this forum that idea has been thoroughly debunked by those who point out that without the social structure and perks of roads, family stability, opportunities through better education, and all other social amenities, that person would not have achieved his success. It is the same, to a lesser degree, for you. You accomplished what you did with the help of the society you claim to benefit, which society is crumbling before your very eyes! Why is it crumbling? Because those who came after you are just waiting around to be hired, as that parable says. They are waiting to be able to help build society!

    4. Harvey

      Animals, including us, understand what is fair and what is not fair. This story actually shows that the vineyard owner, through his power over his workers, can arbitrarily choose to ride roughshod over the principles of fairness.
      Which is what you see everywhere – those who have gained great wealth at the expense of their staff and customers, becoming “philanthropists” who then dispense some of their wealth on private whims and fancies.

      Better a system that is fair to all. Leads to equality of opportunity and strong communities, and dare I say it, the foundation of democracy. Which we no longer enjoy.

    5. Tom Bradford

      So early the next morning did the vineyard owner go out and still find people waiting to be hired to work in his vineyard all day under the hot sun?

    6. Jeremy Grimm

      I thought this post was about interest bearing debts … not employment practices.

      Worse, I think your translation of Matthew 20 makes a bad analogy between wages paid to labor and the ‘wages’ — I would instead say the rewards coming to those who ‘work’ to bring about the kingdom of heaven. The rewards in the kingdom are not quantifiable as so many units of ‘grace’ or some other divine currency. Suggesting that the rewards in the kingdom are somehow analogous to payment for labor … to money … that sort of thinking leads to all sorts of heresies.

      As for the idea of equal pay for equal work I side with monkey in the video Yves linked to in a past links page: [https://www.youtube.com/watch?v=-KSryJXDpZo]

  2. Off The Street

    Dr. Hudson,

    The discussion of your book addresses a topic about which I feel deeply, and I look forward reading it in detail. This modern age provides many examples of a need for your thoughtful approach, although I fear that there will not be a political will to help countries and individuals overcome the asymmetries that are built into our current structures. That points toward less graceful transitions for those impacted the most, with dislocations, revolts, ruination and other expressions of pain.

    Many would suspect that the notion and understanding of moral hazard has changed for the worse in this era. Your writings provide steps toward greater awareness and clarity. Thank you!

  3. Charles Parselle

    Superb article, and yes, hard to wrap one’s wits around. I had the benefit of first reading David Graeber’s ‘Debt,’ which one might describe as Hudson-lite (though Graeber is a genius is his own right and his latest work ‘Bullshit Jobs’ is highly original). Professor Hudson’s work also put me in mind, tangentially, of Zechariah Sitchin. It is very hard to shed oneself of the notion of moral hazard as applying to debtors but not creditors, nor to figure out how our society as constituted would continue to function after a Debt Jubilee, but it is vile to see the tightening of bankruptcy laws in the US so as to hold debtors in non-cancelable debt. But it is one thing to imagine failure of the grain harvest in ancient Mesopotamia, quite another to figure out debt cancelation in a modern economy, but that is not to say I don’t agree with Hudson. I definitely agree with him and would love to see cancelation of student debt in the US and UK; in Germany students don’t go into debt, nor did I when I attended university back in the 60s; the experience of nearly-free education didn’t ruin me. I agree the concept of moral hazard should be applied to creditors not debtors; every week I receive mendacious offers from credit card companies, designed to trap victims into paying huge interest on consumer loans. The system is rotten and the growing levels of poverty in the US and UK prove it.

      1. JEHR

        What are your reservations? If you think of college as a means to make an individual a thoughtful member of society who learns to think and then acts for the good of society, how could you have any reservations? College isn’t just a means to make money (or shouldn’t be, though banksters would disagree).

        1. coboarts

          We live in a complex, highly technological society. For it to function it requires more highly educated workers. In light of this, we should consider burdening society for education TK-16 to replace the current TK-12. I also advocate trade schools and full employment. For those that see a personal benefit in reaching for higher levels of education, and the chance for greater prestige and earnings, they are free to bind themselves to the debt required to pay for it.

        2. Another Scott

          One reservation I have is the lack of attention to the cost inputs for the colleges, like administrative bloat and excessive construction. Unless these problems are address, then higher education will be a drain on value resources, focused on building mini-empires rather than educating people. These isn’t a reason to oppose free college but is certainly a cause for concern.

      2. Ger

        How do you feel about ‘free’ wall street bankers or fat cat bankruptcies that are jubilees for the ultra rich?

        1. JTMcPhee

          And the trillions of dollars to bale out the Banksters, “forgiving their debts, and trespasses too,” that’s a Jubilee that is still running, ten years running and not likely to end, short of maybe some bit of what is described in the Revelation of St. John the Divine…

  4. Summer

    “With regard to individuals who had borrowed out of need, it was recognized that if some could not keep up, it was because they were poor or unable to do so. Mutual aid became the principle of helping people who were sick, widows who lost their husbands or other factors that obliged them to run up debts. Not to have helped such people would have deprived the community of their productive labor.”

    With that and the comment about the parable, the moral questions are as much about the relationship to labor as it is to debt.
    “Not to have helped such people would have deprived the community of their productive labor.”
    Can we be so sure that was at the forefront of the minds of the people offering help “productive labor”? The term “productive labor” reminds me more of the Industrial Age and concepts like Taylorism than the Bronze Age. While they may have had terms for production, I wouldn’t be sure they had the same value system about labor.

    1. Harold

      “God doth not need
      Either man’s work or his own gifts; who best
      Bear his mild yoke, they serve him best. His state
      Is Kingly. Thousands at his bidding speed
      And post o’er Land and Ocean without rest:
      They also serve who only stand and wait.” — Milton, “On his blindness”

  5. Paul O

    I will get to this book in time; I have a backlog to clear but it is of definite interest (I am currently revisiting Graeber in audio format) . In the mean time, thank you to all for the excellent posts and discussion. This feels like an important topic.

  6. Phil in KC

    Upon reflection, first thought was that personal bankruptcy might be considered as modernity’s version of the Jubilee, made personal instead of society-wide, and timed for the benefit of the individual.

    Joe Biden led the charge to make it extremely difficult to discharge student loan debt by championing legislation to that end in 2005. That’s one of the main reasons he was called the Senator from the state of Mastercard. I doubt that this is an episode of his career that he would want to highlight should he run for President. A perfect example of the perfidy of our elected officials in service to the economic barons instead of the people who elected them.

    I don’t mean to beat up on Joe Biden exclusively, as I’d guess many members of both team Red and Blue voted to enact this odious legislation. I cite this to show that both parties have conspired with the banksters to oppress the citizenry. Most people I know who admire the former Veep do not realize this aspect of his career in Washington. But that’s how this plays out, in ignorance and deliberate obscurity.

    Do we who have IRA’s and 401K’s (that likely have banking stocks folded into mutual funds) have any moral responsibilities to our fellow citizens who labor in debt slavery? Just askin’, as they say.

  7. JTMcPhee

    Speaking of moral hazard, it’s worth recalling another episode in the reported life of Jesus or Nazareth — his driving the merchants and “money changers” from the Temple. Here’s one description of what those folks did, with features of modern Bankstering and rentier opportunism mixed in: https://www.jewishvirtuallibrary.org/money-changers

    Note that, as in Sharia finance and banking, as it is claimed to operate, the collection of “interest” (“Ribit“ in Hebrew, “Riba “ in Arabic) was not only verboten, it was a sin, because not only did the Recieved Word of Almighty God bar it, it led to the kind of slavery via compounding and crop failure and other misfortunes that Mr. Hudson, and of course David Graeber, notes.

    Of course we can bet that there were then, as there are now for the Shylocks among us, lots of ways of evading that proscription.

    So Jesus came to the Temple, and unlike Obama and Holder, undid the rope that belted his robe and beat the crap out of the “money changers/Banksters,” tipped over their “tables” (analogous to TBTF systems?) and drove them out of the Temple:

    Mark 11:15-18 New International Version (NIV)

    15 On reaching Jerusalem, Jesus entered the temple courts and began driving out those who were buying and selling there. He overturned the tables of the money changers and the benches of those selling doves, 16 and would not allow anyone to carry merchandise through the temple courts. 17 And as he taught them, he said, “Is it not written: ‘My house will be called a house of prayer for all nations’[a]? But you have made it ‘a den of robbers.’[b]”

    18 The chief priests and the teachers of the law heard this and began looking for a way to kill him, for they feared him, because the whole crowd was amazed at his teaching.

    Not sure what the analog of the Temple might be in “modern” political economy — maybe what’s left of the Commons? Jesus was maybe not a fan of “the market”?

    So another reported instance where the Son of God punched out as massively hypocritical, and not God-centered, one of those behaviors that is enriching the very Few, so they can have their Perfect Lives of Luxury, at the cost of huge immiseration and enserfment of the Many, and the demolition of the planet. Because the interests of the Looter Few only extend to their life spans and their small sphere of personal pleasure and advantage. Mayb edifferent fro m the mopes who might care about their children and the continuation of their communities, not to mention that life is better for them when their space is resilient and sustainable.

    Was Jesus “progressive?” “Render not Caesar,” and all that… Of course, the Jesus story has been worked over and revised pretty thoroughly by the Pharisees/paternalists and their successors…

    1. lyman alpha blob

      My favorite parable – too bad so many Xtians can’t be bothered to remember it.

      Case in point – the new megachurch in my area that inhabits an old big box store with a wrap franchise firmly embedded in what used to be the storefront , and arguably still is. I’m guessing they are just handing out sandwiches for free to any godforsaken poor who walk by.

      They better hope Jesus doesn’t come back – if he does, this profanity deserves the full fire and brimstone treatment, not just a few broken tables.

  8. BlueMoose

    After reading this I recalled the description of the Jubilee (every 50 years, details in Leviticus) and went back to reread it. Does someone recall when this practice ceased to be observed in Israel?

      1. BlueMoose

        Thanks for that. I found it interesting as you noted below that the practice wasn’t reinstituted because of a ‘technicality’. Sounds familiar. As in: gee, we’d really like to help you but there is an ordinance that prevents us from doing so. Sorry.

      1. JTMcPhee

        And there won’t be another Jubilee year in Israel, as extended and expanded, until all the Twelve Tribes are back on home turf. Interesting that both the Israelites and the Mohammedans had a proscription on collecting interest on loans and debts — the first group called it “ribit”, the second called it “riba.” Both practices were considered “outside the pale.” I wonder how Dimon and Blankfein and MbS feel about those proscribed notions, not to mention the Rothschilds.

  9. pebird

    “Not to have helped such people would have deprived the community of their productive labor.”

    Now that we have the reserve army of the unemployed, we can mark that problem solved.

  10. The Rev Kev

    Maybe the long and the short of it, debt that is, is that people in debt are easier to control. Free men and women have their own opinions and the latitude to act on them but when they go into debt, a lot of that freedom of action is lost to them. If a government is bent on keeping its population under control, then having them beholden to debt keeps them fairly quiet and docile unless the debt is too onerous in which case they have nothing left to lose – and rebel.

  11. todde

    I’m reminded of the Grachi brothers of Rome, who tried economic reforms and failed.

    I believe that is the time period most like our own.

    1. Unna

      Agree with that. My understanding is that the Grachi were concerned that the Roman State and army would weaken for lack of soldiers and citizens with the economic destruction of small farming by the elites’ debt collection and land confiscation schemes. To be a Roman soldier you had to be a citizen plus own a certain amount of wealth, ie land. But those same elites were determined to hold on to their wealth in land regardless. That dispossessed farming population streamed into the City forming the so called “Roman Mob” and creating the social conditions which resulted in the political crisis ending the Republic.

      This landless citizen “mob” also provided the means for the rise of Roman military leaders (Marius, Sulla, Pompey, Caesar): The military reforms of Roman general Marius, 157-86 BCE from Wikipedia:

      “Until this time (Marius), the standard requirements to become a Roman soldier were very strict. To be considered a soldier in the service of the republic, an individual was required to provide his own arms and uniform for combat. Marius relaxed the recruitment policies by removing the necessity to own land, and allowed all Roman citizens entry, regardless of social class.[11] The benefits to the army were numerous, with the unemployed masses enlisting for military service alongside the more fortunate citizens. Poorer citizens were drawn to lifelong service, as they were rewarded with the prospect of settlement in conquered land.”

      The reforms of Marius permitted the raising of armies composed of soldiers whose loyalty was to the success of “their” general and not to the State and this enabled the massive civil wars of the First Century BCE which eventually destroyed the Republic. But the Roman Opitmates party of the conservative Roman oligarchs, the creditors, opposed and murdered any reformer. But they themselves were eventually consumed by the violence and tit for tat proscriptions – mass wealth confiscations, murders, banishments of the participants, their families, and associates of the losing side. If ever there was an oligarch-public intellectual who deserved what he got, it was Cicero at the hands of Mark Antony. “Family Blog” or I’d enjoy telling the tale.

      A lesson to elites who insist that all debts must be paid.

      1. todde

        Yes, the Optimates and Populares are equivalent to the Establishment and Populist (whether left or right).

        The income inequality that led to land reform mirrors our income inequality that will led to monetary reform.

        Gaius ‘citizenship reform’ is reflected in our ‘immigration reform’ battles.

        The ‘rejection of norms’ when Gaius turned his back to the Senate and gave his speeches directly to the masses.

      2. juliania

        I will bring up Chaco Canyon once again here, as an ancient American example. I really recommend “Anasazi America” by David E. Stuart. That place is worth visiting – the structures are extremely well developed, but it was mysteriously abandoned at the height of its glory. I quote:

        “The Chacoans did not fail because they ran short of turquoise, imported shell, cacao (chocolate), and macaws, which they prized. They failed because they ran out of essentials and their growth could not be sustained. At the end, they did not have enough water, corn, meat, or fuel, in their heartland to sustain it. If modern societies fail, ours included…it will be either because, besotted by the idea of growth, they ran out of irreplaceable resources — fossil fuel, water, farmland — or because they so flamboyantly increased the disparity in wealth that the moderating middle class vanished, smart efficient labor went unrewarded, and cities burned in an orgy of rage and desperation. Both scenarios are preventable.”

        1. Unna

          I spent some time awhile back around 4 Corners Region and Mesa Verde. Those people didn’t disperse because of no chocolate to drink or no more iphones to eat, it was no water. Up in the ruins the guide would point out how neighbor turned against neighbor: if one had water trickling in to their rooms they would barricade themselves off from the others that didn’t.

          Never got to Chaco but really wish I had. Jared Diamond explained a lot in Collapse: How Societies Choose to Fail or Survive and he goes into detail about Chaco as I remember. Another case of elite mentality and their being able to protect themselves from the consequences of their own decisions to ignore environmental decline until it was too late.

      3. The Rev Kev

        An excellent summary that Unna. Couldn’t have done a better job myself. The Senatorial class tried to grab everything for themselves, the cost to the Republic be damned, and as a result they lost the lot.

  12. todde

    During the Babylon captivity if I recall.

    Here is the thing about the Bible, it says many things, none of them clearly.

    Leviticus 25:14-17:

    14 “‘If you sell land to any of your own people or buy land from them, do not take advantage of each other. 15 You are to buy from your own people on the basis of the number of years since the Jubilee. And they are to sell to you on the basis of the number of years left for harvesting crops. 16 When the years are many, you are to increase the price, and when the years are few, you are to decrease the price, because what is really being sold to you is the number of crops. 17 Do not take advantage of each other, but fear your God. I am the Lord your God.

    So you could get a sum of money and pay it off with future crops. However, you could never sell the land. The sum of money you received was directly proportional to how many years before the Jubilee.

    This is simply a lease of land, which ends with the Jubilee.

    Later in vs 25-28 we read:

    25 “‘If one of your fellow Israelites becomes poor and sells some of their property, their nearest relative is to come and redeem what they have sold. 26 If, however, there is no one to redeem it for them but later on they prosper and acquire sufficient means to redeem it themselves, 27 they are to determine the value for the years since they sold it and refund the balance to the one to whom they sold it; they can then go back to their own property. 28 But if they do not acquire the means to repay, what was sold will remain in the possession of the buyer until the Year of Jubilee. It will be returned in the Jubilee, and they can then go back to their property.

    This appears to be more debt forgiveness then a leasing arrangement.

    Of course. god is not a capitalist:

    35 “‘If any of your fellow Israelites become poor and are unable to support themselves among you, help them as you would a foreigner and stranger, so they can continue to live among you. 36 Do not take interest or any profit from them, but fear your God, so that they may continue to live among you. 37 You must not lend them money at interest or sell them food at a profit. 38 I am the Lord your God, who brought you out of Egypt to give you the land of Canaan and to be your God.

    39 “‘If any of your fellow Israelites become poor and sell themselves to you, do not make them work as slaves. 40 They are to be treated as hired workers or temporary residents among you; they are to work for you until the Year of Jubilee. 41 Then they and their children are to be released, and they will go back to their own clans and to the property of their ancestors. 42 Because the Israelites are my servants, whom I brought out of Egypt, they must not be sold as slaves. 43 Do not rule over them ruthlessly, but fear your God.

  13. Ignacio

    I find here reasons against current practices of debt commercialization through MBS, CDOs etc. Particularly when debt is sold abroad the link between Mutual aid and debt forgiveness is lost.

    Debt forgiveness or debt writedows occur frequently in corporate loans but it is moral hazard when individuals are the debtors. I have seen that in SMEs, banks ask entepreneurs to mortgage their house instead of using corporate debt… NEVER DO THAT!!! Banks love collateral to enslave their debtors

  14. Anarcissie

    One problem with construing creditors and debt as undesirable or even evil is that then it may become difficult to find creditors, whose money or other stuff may be thought desirable. Clearly, the problem can be avoided by organizing one’s community communistically, or practicing some kind of gift economy, but now those whose productive talents might be encouraged by the prospect of interest or investment* will tend to knock off their labors when they have done their share or become sufficiently popular with their neighbors, so that surpluses of the kind needed to supply substantial goods on credit will not accumulate. But people want stuff and more stuff, hence the attraction to the debt machinery.

    * Some Muslim communities avoid interest (usury) by allowing the creditor to obtain only a share of the production invested in, rather than a fixed amount of money or goods plus an interest charge. If the crop fails or the store burns down, too bad for both the proprietor and the creditor. Something similar has been proposed in our times for student debt — the student debtors would be required to pay (probably through an income tax surcharge) only if their income is sufficiently enhanced.

    1. a different chris

      >will tend to knock off their labors when they have done their share

      Yeah that’s why Bill Gates, who you never heard of, knocked off after his first million. I mean first 10 million. I mean…. oh wait.

      This mechanical supposed insight onto how people, well work always makes me crazy. Nobody quite knows what goes on in any, let alone all all our different weird-(family blog)ing heads.

      Like the rest of your post, though.

      1. Anarcissie

        I’m trying to get at the question of how you get creditors — the creation of debt — if the practices of lending at interest, or making investments for a share of the product, is held to be evil. In my experience, communism and the gift economy function well enough if the people involved are like me — I live frugally so as to reduce the need to seek employment at work I do not wish to do, and increase the time, energy and other resources I have for things I do wish to do. I produce some surplus, but not a whole lot. Thus, while someone might be able to get a free lunch from me pretty easily — about 70 people did last Saturday — any of them would have to wait quite a long time to get the money for a new SUV. But some people definitely want a new SUV right away, so they support debt-based institutions and relations and all that they imply. What do you do with those people and their desires?

        1. Todde

          Give them a loan with the knowledge that it can be easily discharged in bankruptcy.

          Its going to put a dent in our consumerist culture and economy for sure.

          Although ive been thinking the.goverment could make consumer loans at 0% interest rate and.collect thru taxes.

          But that too neoliberal and assuming youre an anarchist too statist also

        2. Jeremy Grimm

          If the sovereign coins the money the sovereign can create the credit and cancel the debts that cannot be repaid. The sovereign can also take care to whom credit might be given to assure the smooth workings of the realm. The smooth workings of the realm do not depend on the banks, financiers, or the surplus resources of the wealthy. Indeed the wise sovereign should top the tall daisies through taxation to avoid any future need to top the tall daisies more completely later.

          1. Anarcissie

            But then it would become unwise to produce a surplus, so few surpluses would be produced until the sovereign instituted slavery or at least taxation. I believe an example of this procedure is mentioned by Graeber: in Madigascar, the French wished to force the subsistence farmers into commerce, so they instituted a head tax payable only in money. Then the inhabitants had to go to work for the French, or for someone who worked for the French, to get money. Now commerce could replace the subsistence economy, and surpluses could be produced. The key to producing a surplus turns out to be force.

            1. Jeremy Grimm

              With such understandings of the way of all things I hope you’re not in a position of management. Compulsion as practiced in the French colonies can could produce some most unfortunate surpluses. Do you believe the head tax in Madagascar was more or less effective at producing surpluses than the methods applied in Hati? But I thought this post was discussing debt forgiveness and you wondered how that would affect the creation of credit. How did it become a search for the key to producing surpluses?

              Do you have a problem with my hint at the need for progressive taxation in the Good Society? It seemed to work somewhat well until the time of late Carter and the Age of Reagan — our Neoliberal Era of the present. How do you equate “smooth workings of the realm” with “producing a surplus”?

  15. Haralambos

    As a longtime reader of your books and writings, I thank you once again, Professor Hudson. I find this history of the concept and phenomenon coupled with the IMF austerity being witnessed in Greece, and the attitudes toward it highly relevant for Greece as you often note.

    For my fellow commenters, Professor Yianis Varoufakis’ parable from Aesop (https://tinyurl.com/y799urgp) as it applied a few years ago is also relevant in his discussion of German attitudes (and those of many other countries). The Greeks have been blamed for their profligacy of both individual and governmental actions.The work on odious debt by Jason Manoulakis (https://tinyurl.com/ybt3sx9b) is also very helpful.

    I would add the relevance of Ibsen’s A Doll’s House to the differing attitudes to debt and guilt. In Germanic languages (e.g.,Old English), the original term signified both guilt and debt, and, for those who have not read Professor Hudson’s analysis of the translations of the Lord’s Prayer over “debts” or “trespasses,” this explains my curiosity over the different English translations and explanations I was given in my childhood by my elders depending on the translation they used (https://tinyurl.com/yaeqa2gd).

  16. flora

    I read the first post and wondered what changed in elite Greek/Roman thinking that caused them to accept debt bondage, unlike earlier near east kingdoms.

    If the crops failed, or if there was a flood or drought, or a military battle, the cultivators couldn’t pay. So what was the ruler to do? If he said, “You owe the tax collector, and can’t pay. Now you have to become his slave and let him foreclose on your land.”

    Suddenly, you would have had a slave society. The cultivators couldn’t serve in the army, and couldn’t perform their corvée duties to build local infrastructure.

    “Couldn’t serve in the army,…”

    Ancient Greeks and certainly Romans solved that problem by employing mercenaries. From wikipedia:

    “Through the 4th century BC, mercenaries were widely employed as is shown by the careers of such as Iphicrates, Chares and Charidemus. Many fought for the Persians when they reconquered Egypt. The majority of the Phocian army in the Third Sacred War were mercenaries. Philip II of Macedon was heavily reliant upon mercenaries until he had built up the Macedonian army which became his legacy to Alexander the Great. Alexander in his turn was confronted by Greek mercenaries when he invaded the Persian Empire. Mercenary service continued to flourish through the Hellenistic period.[1]


    It seems the elite had to pay for protection one way or the other; either pay by debt forgiveness and restoring citizenry to their place in community allowing their use as soldiers when necessary, or pay for mercenaries to fight. Was refusing debt forgiveness about elites making and keeping the most money, or about elites keeping the greatest control over local people? That is, if they could pay to outsource the army they would not have to forgive debts.

    1. flora


      At the same time, the moral opprobrium was felt toward creditors. They were blamed for impoverishing society at large by their selfishness.

      In 1946 Frank Capra made a movie on this point: “It’s a Wonderful Life”. Mean old Mr. Potter was the creditor who would destroy Bedford Falls if given free rein.

  17. Blue Pilgrim

    What of those who are born in poverty or nearly so as opposed to those with well off parents who can afford to feed their children well, provide them with things to enrich their experience and good health and safety growing up, get books or computers for them, pay for good schools, stake them to starting a business, and so forth? Is there not a ‘moral hazard’ involved? Do not the children of the rich get a ‘free ride’?

  18. EoH

    There is a “there but for the grace of god” vulnerability in societies built or dependent on the peasant farmer. Debts not repaid owing to death, disability, or bad luck were distributed by chance, making everyone as potentially vulnerable as everyone else.

    The village idiot, the lame, the ne’er do well were persistent figures in every society, and every society makes do with them. So, too, with the persistent slacker, who was subject to rough music in medieval days, and probably so in ancient ones. In a close society where everyone knows or knows about everyone else, peer pressure and rough music are enough to persuade the would be free rider to go along and get along.

    That changes in larger societies, where personal knowledge of others, and associated mutual obligations and mutual dependence begin to disappear. That tends to give the cuckoo free run of the nest, it begets the “business is business” attitude that justifies mistreatment of others in search of unrestrained profits.

    1. Blue Pilgrim

      Part of US culture and society, with its, immense competition is for those with some success to keep others down, including keeping people ignorant and without productive capability. It’s like medieval guilds where no one else was allowed to have tools, to keep their monopolies in the crafts — so it’s found in other times and places too.

      Such competition keeps others down as well as improving oneself, so of course many people are cut off at the knees wherever possible, not just by random ill fortune. Persistent slackers are often those who have just given up trying or are convinced that they can’t get ahead no matter what efforts they make, seeing how the system is stacked against them — or any who share their talents which are underpaid or underappreciated, or represent a threat to the established powers. This is a system where even highly qualified and willing workers fall by the wayside because of excessive, cutthroat, competition, and where even excellent companies (and workers) are driven out of business by unfair practices, undercutting, laws, and corruption.

      1. EoH

        It’s market power and the lack of competition that represent greater danger, not “competition.” How many local cable companies, health insurers, and booksellers do you have?

        Secondary issues include tax policies that reward outsourcing of jobs, technology and know-how, and deferring to private corporations when devising de facto American industrial and economic policies – the ones politicians claim do not exist.

        National planners are just fine, it seems when they work by for-profit corporations; state planners working for the government give neoliberals the heebee jeebees. That’s an argument about power, not economic planning.

  19. EoH

    There are parallels in North American Native American societies. Not everyone in a tribe was, for example, a great or successful hunter. But those who were did not keep the meat, hides, sinews, hooves, bones, antlers for themselves or to enhance their personal worth or marriage prospects. They did not erect McTeepees of immense proportions, as indicators of the size of their, um, horde of treasure, or fence off pasture so that only their horses could graze on it.

    Had they done so, they would have been ostracized. Instead, they shared their kill with anyone who needed food, clothing, shelter. They taught others their skills, they relieved others of the need to hunt so that they could raise the young, cook, build and maintain shelters, learn to heal the sick and appease the gods.

    In turn, they were well-regarded socially, relied upon for their skills, their leadership, their reliability, which became a resource the tribe depended upon for its health and survival.

  20. MyLessThanPrimeBeef

    I would like to know if debt serfdom is a feature of the system that can be done away with if money creation is through the people, alone, spending it into existence.

    That has never been done, from the Bronze Age to the Digital Age today, as far as I know.

    Why should the people, the sovereigns of the nation, be on the receiving end of charity, when we the people could be on the giving end – to give debt relief to government entities, for example?

    Instead, the people are, from time to time, and unfortunately more often than not, in need of beseeching their public servants for relief, for forgiveness.

    It doesn’t seem to have to be this way.

  21. Sound of the Suburbs

    The false belief that makes policymakers not worry about debt.

    Banks are financial intermediaries.

    Ben Bernanke is famous for his study of the Great Depression and here it is discussed in the Wall Street Journal.


    “Theoretically, neither deflation nor inflation ought to affect long-run growth or employment. After a while, people and businesses get used to changing prices. If prices fall, eventually so will wages, and the impact on profits, employment and purchasing power will be neutral. Borrowers suffer during deflation because their debts are fixed in value, but creditors benefit because the dollars they get back will buy more. For the economy as a whole, deflation ought to be a wash.”

    Ben Bernanke thought banks were financial intermediaries and this makes debt look much less harmless than it really is.

    What was really happening in the Great Depression?
    Debt deflation – the money supply was shrinking due to repayment of debts

    This is what happened to Greece recently.

    The BoE were the first to announce how banks really work in 2014.

    They create money with loans and the repayments destroy money.


    1920s – debt fuelled boom
    It feels like there is lots of money about because there is, money is being created from all the new loans.

    1929 – Minsky Moment
    Wall Street Crash

    1930s – debt deflation of the Great Depression.
    It feels like there isn’t much money about because there isn’t, money is being destroyed by all the repayments.

    The micro constrained economists of today can’t see how debt repayments drag the whole economy down through the aggregates of the monetary system.

    When debt deflations starts, it’s like a death spiral that is very hard to get out of.

  22. Code Name D

    Something else worth considering is a proper perspective. When crops failed, the true sakes ment posible strvation for the community. Thus the inability of the cultivators to pay back there debts becomes the least of the comunitie’s problems.

    Of far greator inportance would be the management of scares resorces and keeping them properly alicated to maxamise the communities ability to survive the scarcity.

  23. Jonathan Holland Becnel

    Doc Hudson smashing my paradigms to pieces regarding Greece!!!!!

    Can you tell me how Herodotus and Thucydides fit into all this please?

    From the beginning, being a true Conan the Barbarian fan, the concept of Barbaros ‘Foreigner’ never really jibed with me when describing the Persians.

  24. soloblue

    I have a question arising from a thought that popped into my head while reading today’s post. The following paragraphs in particular prompted this.

    “At the same time, the moral opprobrium was felt toward creditors. They were blamed for impoverishing society at large by their selfishness. The Greeks called his hubris, money-love and wealth addiction. And rulers saw an independent creditor class turning its wealth into large landholdings of creating a rival power to the palace. In addition to cancelling debts owed to the palace, rulers thus restored widespread independence from large wealthy families whose economic interest lay in resisting royal Clean Slates. Large fortunes thus seem to have disappeared in Larsa and Babylonia around the 18thand 17thcenturies BC. They didn’t have any President Obama to defend them from the “mob with pitchforks.” Hammurabi said that he was serving Shamash, the sun-god of justice. And Nanshe was a prototype for Greek Nemesis, punishing hubris and abusive wealth, protecting the poor and needy (already in 3rd-millennium Sumer).

    The context for today’s debt overhead is one in which most debts are owed to private-sector banks, bondholders and other creditors. Also, not everyone is in debt – and society is rich enough to afford imposing a loss of status and self-reliance on large classes of debtors. Still, there is a logic in forgiving debts owed by the needy (but not by the wealthy).”

    So my question is this: Could another reason for the ruler to issue a clean slate to shift some relative power and influence from the creditor class back to the labor class? I would think that in general, the creditor class tended to have more power, and therefore be more threatening to the ruler than the labor class. When the creditor class continues to amass wealth, they get to a point of holding more and more of the society in servitude or bondage, and hence increaseing control of the debtors. If a single creditor or a cartel of creditors gains enough control over a significant enough portion of the society, it could threaten the incumbent ruler.

    Of course my line of thinking here assumes that the ruler accurately represents the society, who is concerned with advancing the society as efficiently as possible, and that the creditor class has different motives (whether good or bad). There are probably plenty of historical examples of where the creditor class took over from the incumbent ruler for good reasons and make a positive correction to the society.

    I understand the complexity of this topic, and that it warrants more than me just trying to understand it based on a few nc posts and discussion threads.

    1. eg

      Correct — the ruler has an incentive to side with the labourers over the creditor class because the latter pose a potential threat to his power, and the former are necessary to defend the realm and erect public works via corvee labour.

  25. anarcheops

    I have been doing a fair amount of reading on this topic. Capitalism and current Western philosophy tends to brainwash you into thinking there are no other options. Because (we are told) time is linear and continually progresses upwards towards enlightenment, what we have now is the best we have ever had. Even if it’s pretty shitty. Therefore there is no point in debating e.g. capitalism because we’ve “tried everything else” and it “failed”.

    I include myself here in those who believed this to be true. But reading about how indigenous peoples ran their societies before colonialism (certainly not utopias, but on a completely different mentality from Westerners), or how ancient people lived outside of what’s conventionally considered “history” (monuments, cities, written text on stone) really gives me hope that our current society won’t just completely collapse itself and there are other options out there. We could do things differently. Just like rewiring your brain to appreciate Dr Hudson’s perspective on debt.

    Some from my recent reading list:
    Scott, J. C. (2017). Against the Grain: A Deep History of the Earliest States
    McAnany, P.A. & N. Yoffee eds. (2009). Questioning Collapse: Human Resiliance, Ecological Vulnerability, and the Aftermath of Empire.
    Roy, A. (2014). Capitalism: A ghost story.

    Happy to receive recommendations of further reading (and yes, I’ve actually read Piketty’s Capital, which started me on this whole journey along with The Dispossessed by LeGuin).

      1. MyLessThanPrimeBeef

        Interesting you should mention Chuang Tzu, In the Land of Farmers.

        For he was once a keeper of a lacquer garden (not mentioned in his Wikipedia article, but googling, one finds it in page 37 of Keightley’s The Origins of Chinese Civilization).

  26. Pft

    Many probably have not read the book due to price, unavailability (out of stock) and no kindle.

    Having read only reviews and comments, I would say debt relief is unavoidable. As for moral hazard, companies walk away from their debts in bankruptcy all the time while the shareholders keep their personal wealth intact (say hey Trump)

    Going forward, restructuring the global economy so its not debt dependent is essential. Its not so hard if you make government create the money they spend without taxes or debt, and limit credit to those who can afford debt while guaranteeing universal income, health and education.

  27. RBHoughton

    What a delightful vision of simplicity in those times and so eloquently expressed. Many thanks NC and Michael Hudson.

    The article has reminded me of something from Ancient Egypt. When the river was in flood and the whole valley inundated, I was told the Pharaoh transferred his farming populace to civil works, usually pyramid building, until the waters receded and they could again work their fields.

    Those ancient economies have a stable and hopeful outlook imo.

    I wonder if insurance and banking industry financiers crying ‘moral hazard’ today have thought through their opinion. Do they relish obtaining the submission of debtors to their will, requiring them to do things they would not normally chose to do in restitution. Is that what its about?

  28. Altandmain

    If you read about the religious texts, they tend to take an extremely, extremely strong view against usury.

    The issue right now is that we have a small number of very greedy people on top that are profiting from the status quo. They have control over the media, the political system, and own a large chunk of the world’s capital. The narrative is in their control.

    They are however losing legitimacy, which comes from delivering a higher standard of living to one’s citizens than any other competing ideology.

    Another big issue with so much debt is that a big cause is that wages have not gone up. Why are people so indebted? Wages have stagnated or declined relative to the costs of housing, transportation, and basic living costs.


    Another big issue becomes redistribution or simply wiping out the wealth of the top 95%. Eamonn Fingleton in particular has argued that at the end of WW2, the wealthiest Japanese lost the majority of their wealth and that this played a role in the spectacular growth of post WW2 Japan.

    It forces us to ask the question, contrary to the conservative claims of “egalitarianism or growth”, might not a massive redistribution lead to much faster economic growth?


    Certainly, economic growth is hurt by inequality and a good chunk of the wealth of our current rich is the product of rent seeking.

    At the root of our problem is a very predatory economic system that transfers all gains to the top. The idea of forgiving debts is so out of mainstream that it is tragically, not being discussed.

  29. knowbuddhau

    A Kindle version in a month? I can hardly wait.

    Thank you so much for this invaluable work. For the last few decades, I’ve been trying to figure out what went wrong in Western society, that we could do so much damage in such a relatively short time. Just the other day I’d said, we’re disembodied (to use the term from epidemiology that Lambert featured a while back) because we’re denatured, that our whole problem follows from long ago thinking we had removed ourselves from nature.

    But I didn’t know exactly how it happened. And now, here it is:

    So let us reconsider Hudson’s fundamental insight in more vivid terms. In ancient Mesopotamian societies it was understood that freedom was preserved by protecting debtors. In what we call Western Civilization, that is, in the plethora of societies that have followed the flowering of the Greek poleis beginning in the eighth century B.C., just the opposite, with only one major exception (Hudson describes the tenth-century A.D. Byzantine Empire of Romanos Lecapenus), has been the case: For us freedom has been understood to sanction the ability of creditors to demand payment from debtors without restraint or oversight. This is the freedom to cannibalize society. This is the freedom to enslave. This is, in the end, the freedom proclaimed by the Chicago School and the mainstream of American economists. And so Hudson emphasizes that our Western notion of freedom has been, for some twenty-eight centuries now, Orwellian in the most literal sense of the word: War is Peace • Freedom is Slavery • Ignorance is Strength. He writes:

    “A constant dynamic of history has been the drive by financial elites to centralize control in their own hands and manage the economy in predatory, extractive ways. Their ostensible freedom is at the expense of the governing authority and the economy at large. As such, it is the opposite of liberty as conceived in Sumerian times” (p. 266).

    And our Orwellian, our neoliberal notion of unrestricted freedom for the creditor dooms us at the very outset of any quest we undertake for a just economic order. Any and every revolution that we wage, no matter how righteous in its conception, is destined to fail.

    And we are so doomed, Hudson says, because we have been morally blinded by twenty-eight centuries of deracinated, or as he says, decontextualized history. The true roots of Western Civilization lie not in the Greek poleis that lacked royal oversight to cancel debts, but in the Bronze Age Mesopotamian societies that understood how life, liberty and land would be cyclically restored to debtors again and again. But, in the eighth century B.C., along with the alphabet coming from the Near East to the Greeks, so came the concept of calculating interest on loans. This concept of exponentially-increasing interest was adopted by the Greeks — and subsequently by the Romans — without the balancing concept of Clean Slate amnesty.

    Because Hudson brings into focus the big picture, the pulsing sweep of Western history over millennia, he is able to describe the economic chasm between ancient Mesopotamian civilization and the later Western societies that begins with Greece and Rome: “Early in this century [i.e. the scholarly consensus until the 1970s] Mesopotamia’s debt cancellations were understood to be like Solon’s seisachtheia of 594 B.C. freeing the Athenian citizens from debt bondage. But Near Eastern royal proclamations were grounded in a different social-philosophical context from Greek reforms aiming to replace landed creditor aristocracies with democracy. The demands of the Greek and Roman populace for debt cancellation can rightly be called revolutionary [italics mine], but Sumerian and Babylonian demands were based on a conservative tradition grounded in rituals of renewing the calendrical cosmos and its periodicities in good order. The Mesopotamian idea of reform had ‘no notion [Hudson is quoting Dominique Charpin’s book Hammurabi of Babylon here] of what we would call social progress. Instead, the measures the king instituted under his mīšarum were measures to bring back the original order [italics mine]. The rules of the game had not been changed, but everyone had been dealt a new hand of cards’” (p. 133).

    Contrast the Greeks and Romans: “Classical Antiquity,” Hudson writes, “replaced the cyclical idea of time and social renewal with that of linear time. Economic polarization became irreversible, not merely temporary” (p. xxv). In other words: “The idea of linear progress, in the form of irreversible debt and property transfers, has replaced the Bronze Age tradition of cyclical renewal” (p. 7).

    Thank you!

    We decoupled our selves from nature’s cyclical time. Hudson focuses on on the politico-economic implications. Look at the scientific and engineering implications.

    As if finding what I’ve spent decades looking for wasn’t enough, there’s more. As Alan Watts once said, “You know the gospel, the ‘good news,’ never got out?”

    It’s a Bronze Age thing. Our relation to the divine is not political; we don’t have to go through a chain of command to arrive where we already are. Or as JC is said to have said, “I and the Father are One.”

    He’s also said to have said, “Split the stick, and there I am.” Well, in that case, access to divinity is every where and freely available to any one, any time. And no one has any more claim on the blessings of heaven than any one else. (Some reports indicate he was he a time-travelling quantum physicist, as well, but that’s just fan fic IMO.)

    Support can be found for Hudson’s thesis, that Jesus was all about debt forgiveness, in the 5th century heretic, Pelagius, who differed from Augustine’s theory of Original Sin. Pelagius’s “What Fall?” is the modern, “Show me the note.” ISTM Pelagius got Jesus right, Jesus and Michael Hudson got the Bronze Age right, and the Church got rich.

    The Fall is just a trick of the mind. The state we’re in, the state of nature, is the state of Grace. What Fall? What Original Sin? What debt?

    Returning to regular Jubilees is just what we need to address climate change, too. By resetting our internal and social clocks to natural, cyclical time, we’ll renature our denatured, disembodied, psychotic selves and societies, hopefully in time to do enough so that the impending Dark Ages won’t be the last.

    Thanks again, author, reviewer, commenters, and our gracious hosts. Like it or not, I’m in all y’all’s debt.

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