Michael Hudson: Modern (Mis)interpretations of Ancient Debt Cancellation

Posted on by

Yves here. Michael Hudson has regularly described how the shift to preferring creditor rights to debtor, actually, societal, needs, took place in Graeco-Roman times and produced oligarchies. Modern study of debt overhangs has found that excessive levels of private debt produce financial crises, and on top of that, personal debt is not economically productive. Yet despite the modern economic obsession with generating growth, our debt write-off regimes generally address the matter on a case by case basis, via bankruptcy, which is complex and costly to implement at the household level (and not cheap for companies either) or in the US, via complicated schemes that look designed to exclude participation. Hudson below reminds readers and putative scholars that ancient debt relief was to preserve social stability, specifically, to prevent bondage and maintain the state’s ability to raise armies.

By Michael Hudson, an American economist, a professor of economics at the University of Missouri–Kansas City, and a researcher at the Levy Economics Institute at Bard College. He is a former Wall Street analyst, political consultant, commentator, and journalist. You can read more of Hudson’s economic history on the Observatory. Produced by Human Bridges

Why were Clean Slates so important to Bronze Age societies? From the third millennium in Mesopotamia, people were aware that debt pressures, if left to accumulate unchecked, would distort normal fiscal and landholding patterns to the detriment of the community. They perceived that debts grow autonomously under their own dynamic by the exponential curves of compound interest rather than adjusting themselves to reflect the ability of debtors to pay. This idea never has been accepted by modern economic doctrine, which assumes that disturbances are cured by automatically self-correcting market mechanisms. That assumption blocks discussion of what governments can do to prevent the debt overhead from destabilizing economies.

The Cosmological Dimension of Clean Slates

Mesopotamia’s concept of divine kingship was key to the practice of declaring Clean Slates. The prefatory passages of Babylonian edicts cited the ruler’s commitment to serve his city-god by promoting equity in the land. Myth and ritual were integrated with economic relations and were viewed as forming the natural order that rulers were charged with overseeing; in this context, canceling debts helped fulfill their sacred obligation to their city-gods. Commemorated by their year-names and often by foundation deposits in temples, these amnesties appear to have been proclaimed at a major festival, replete with rituals such as Babylon’s ruler raising a sacred torch to signal the renewal of the social cosmos in good order—what the Romanian historian Mircea Eliade called “the eternal return,” the idea of circular time that formed the context in which rulers restored an idealized status quo ante. By integrating debt annulments with social cosmology, the image of rulers restoring economic order was central to the archaic idea of justice and equity.

(Mis)Interpreting the Meaning of ‘Freedom’

The Hebrew word used for the Jubilee Year in Leviticus 25 is dêror, but not until cuneiform texts could be read was it recognized as cognate to Akkadian andurarum. Before the early meaning was clarified, the King James Version translated the relevant phrase as: “Proclaim liberty throughout all the land, and to all the inhabitants thereof.” But the root meaning of andurarum is to move freely, as running water—or (for humans) as bondservants liberated to rejoin their families of origin.

The wide variety of modern interpretations of such key terms as Sumerian amargi, Akkadian andurarum and misharum, and Hurrian shudutu serve as an ideological Rorschach test reflecting the translator’s own beliefs. The earliest reading was by Francois Thureau-Dangin[1], who related the Sumerian term amargi to Akkadian andurarum and saw it as a debt cancellation. Ten years later Schorr (1915) related these acts to Solon’s seisachtheia, the “shedding of burdens” that annulled the debts of rural Athens in 594 BC. The Canadian scholar George Barton[2] translated Urukagina’s and Gudea’s use of the term amargi as “release,” although the Jesuit Anton Deimel[3] rendered it rather obscurely as “security.”

Maurice Lambert[4] initially interpreted Urukagina’s amargi act as an exemption from taxes, on the ground that most of the debts being annulled were owed to the palace. His subsequent 1972 discovery of Enmetena’s kindred proclamation dating some fifty years earlier led him to see amargi as signifying a debt cancellation. F. R. Kraus[5] had followed this view in 1954, and greatly elaborated his survey of Babylonian proclamations in his 1984 survey of rulers “raising the torch” to signal debt cancelations.[6]

In America, Samuel Kramer (History Begins at Sumer [New York, 1959]) interpreted these acts as tax reductions. In a letter to The New York Times the day President Reagan took office in 1981, he even urged the president-elect to emulate Urukagina and cut taxes! The term amargi became popular with U.S. libertarians seeking an archaic precedent for their tax protests.

Kramer[7] further belittled Urukagina’s reforms as soon “gone with the wind,” being “too little, too late,” as if they were failures for not solving the debt problem permanently. In a similar vein Stephen Lieberman[8], deemed Babylonian debt cancelations ineffective on the ground that they kept having to be repeated: “The need to repeat the enactment of identical provisions shows that the misharumprovided relief, but did not eliminate the difficulties which made it necessary.…What seems to have been needed was reform which would have eliminated all need for such adjustments.” He did not suggest just what could have created an economy free of credit cycles.

A Practical Solution

Mesopotamian rulers were not seeking a debt-free utopia but coped pragmatically with the most adverse consequences of rural debt when it became top-heavy. Usury was not banned, as it would be in Judaism’s Exodus Code, but its effects were reversed when the debt overhead exceeded the ability to pay on a widespread basis. These royal edicts retained the economy’s underlying structure The palace did not deter new debts from being run up, and kept leasing out land to sharecroppers, who owed the usual proportion of crops and were obliged to pay the usual interest penalties for non-delivery.

Igor Diakonoff[9] emphasized that “the word andurarum does not mean ‘political liberation.’ It is a translation of Sumerian amargi ‘returning to mother,’ that is, ‘to the original situation.’ It does not mean liberation from some supreme authority but the canceling of debts, duties, and the like.

The Assyrian term “washing the tablets” (hubullam masa’um;[10] may refer to dissolving them in water, akin to breaking or pulverizing them. Likening it to the Babylonian term meaning “to kill the tablet,” Kemal Balkan[11] explained that the idea was to cancel grain debts by physically destroying their records. Along more abstract lines, Raymond Westbrook[12] likens the idea of “washing” to a ritual cleansing of the population from inequities that would displease Sumerian and Babylonian patron deities. Urukagina’s edict thus was held to have cleansed Lagash from the moral blemish of inequity.

Some Anachronistic Creditor-Oriented Views of Clean Slates

Instead of enforcing debt contracts at the cost of social and military instability, Sumer and Babylonia preserved economic viability via Clean Slates. Today’s creditor-oriented ideology denies the success of Clean Slates overriding free-market relations. It depicts the archaic past as much like our own world, as if civilization was developed by individuals thinking in terms of modern orthodoxy, letting interest rates be determined simply by market supply and demand, duly adjusted for risk of non-payment.

Modern economic theory assumes that debts normally can be paid, with the interest rate reflecting the borrower’s profit. The implication is that the fall in interest rates from Mesopotamia to Greece and Rome resulted from falling profit rates and/or the greater security of investment. In this view, debt cancellations would only have aggravated debt problems, by increasing the creditor’s risk and hence the interest rate.

Modernist assumptions distract attention from what actually happened. No writer in antiquity is known to have related interest rates to profit rates or risk, or to the use of seeds or breeding cattle to produce offspring. We may well ask whether it was fortunate for the survival of Babylonian society that its rulers were not “advanced economic theoreticians” of the modern sort. If they had not proclaimed Clean Slates, creditors would have reduced debtors to bondage and taken their lands irreversibly. But in canceling crop debts, rulers acknowledged that the palace had taken all that it could without destroying the economy’s foundations. If they had demanded that debt arrears be made up by cultivators forfeiting their family members and land rights to royal collectors (who sought to keep debt charges on the crop yield for themselves), the palace would have lost the services of these debtors for corvée labor and in the armed forces to resist foreign attack.

Markets indeed became less stable as economies polarized in classical antiquity. Yet it was only at the end of antiquity that Diodorus of Sicily (I.79) explained the most practical rationale for Clean Slates. Describing how Egypt’s pharaoh Bakenranef (720-715) abolished debt bondage and canceled undocumented debts, Diodorus wrote that the pharaoh’s guiding logic was that:

“the bodies of citizens should belong to the state, to the end that it might avail itself of the services which its citizens owed it, in times of both war and peace. For he felt that it would be absurd for a soldier, perhaps at the moment when he was setting forth to fight for his fatherland, to be haled to prison by his creditor for an unpaid loan, and that the greed of private citizens should in this way endanger the safety of all.”

That would seem to be how early Mesopotamian rulers must have reasoned. Letting soldiers pledge their land to creditors and then lose this basic means of self-support through foreclosure would have expropriated the community’s fighting force—or led to their flight or defection. By the 4th century BC, the Greek military writer known as Tacticus recommended that a general attacking a town might promise to cancel the debts owed by its inhabitants if they defected to his side. Likewise, defenders of towns could strengthen the resistance of their citizens by agreeing to annul their debts.

This emergency military tactic no longer reflected a royal duty to restore economic self-reliance as a guiding principle of overall order. What disappeared was the relief of debtors from their obligations and reversal of their land sales or forfeitures when natural disasters blocked their ability to pay or after a new ruler took the throne. The oligarchic epoch had arrived, abolishing any public power able to cancel the society-wide debt overgrowth.


[1] Les inscriptions de Sumer et d’Akkad, 1905, pp. 86-87

[2] The Royal Inscriptions of Sumer and Akkad, 1929.

[3] Sumerische Tempelwirtschaft der Zeit Urukaginas und seiner Vorgänger, 1930, p. 9.

[4] “Les ‘Reformes’ d’Urukagina,” La Revue Archéologique 60, 1956, pp. 169-184.

[5] Ein Edikt des Königs Ammisaduqa von Babylon (SD 5, [Leiden]).

[6] Fritz Rudolph Kraus, Königliche Verfügungen in altbabylonischer Zeit, 1984.

[7] Samuel Noah Kramer History Begins at Sumer 1959, p. 49.

[8] Stephen J. Lieberman “Royal ‘Reforms’ of the Amurrite Dynasty,” Bibliotecha Orientalis 46, 1989, pp. 241-259.

[9] “The City-States of Sumer” and “Early Despotisms in Mesopotamia,” in Early Antiquity 1991, pp. 67-97, p. 234.

[10] A. Kirk Grayson Assyrian Royal Inscriptions: From the beginning to Ashur-resha-ishi I, Volume 1 of the Records of the Near East  Harrassowitz, 1972, p. 7.

[11]“Cancellation of Debts in Cappadocian Tablets from Kultepe,” Anatolian Studies Presented to Hans C. Guterbock, 1974, pp. 29-36, p. 33.

[12] Raymond Westbrook, “Social Justice in the Ancient Near East,” in Morris Silver and K. D. Irani, eds., Social Justice in the Ancient World, 1995, pp. 149-163.

Print Friendly, PDF & Email


  1. Trees&Trunks

    It would be great to hear Michael Hudson propose a few concrete ideas on how to work out a debt jubilee for today? Whose and which debt should be cleaned? How? Risks? Conditions?
    What is needed in order to make debt jubilee a part of a political program that can be implemented?

    1. Adam1

      I believe Henry Ford once said, “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

      In the grand scheme of things, a debt write-down requires the lender to write-off the loan and equally reduce his equity (in banking also known as capital). In ancient times those who held write the loans were also the ones who accumulated the capital, so while those who were the greediest might not have enjoyed the capital write-downs, they actually had them.

      In modern finance, and I’d suspect this goes back 100’s of years if not 1,000 or so, the “bank” does not retain very much capital. As its excess profits accumulate, they are paid out to its private owners who then hoard them. This also means any significant forced write-down of loans risks making the bank(s) insolvent and this must be prevented at all costs (some sarcasm implied here).

      While I believe Henry Fords quote was meant more for how a bank lends/creates money out of thin air, it is equally upsetting as to how elite have insolated themselves from loan write-offs while still accumulating the excess profits (capital) of the financial system. Some have suggested that banks should be public utilities, if they were it would be socially much more easy to write down loans in mass as either the bank would have all the accumulated assets on its books or if they had been transferred to the public it would socially be an equity hit to the community and an accounting adjustment between the community and the public bank.

      1. .Tom

        I recall Richard Wolf talking about North Dakota’s public bank. It’s a really interesting case that I, being cynical, assume few Americans know much about for the usual political reasons.

      2. digi_owl

        Yep. So much talk about banking and lending in public still cling to the image of pieces of metal in vaults and hand-waving comments about money-multipliers.

        This is also why after the great depression there were attempts to isolate savings banks from “commercial”, aka lending, banks.

        All of that got dismantled from the 80s onwards as the hippies turned yuppies and railed as the strictures they saw as obsolete.

        In the end paying interest is no different from paying rent from the POV of finance. Also why they freak if you suddenly try to pay down a loan faster than planned, as it messes with their revenue projections etc.

  2. diptherio

    Thanks for this. Slowly working my way through The Collapse of Antiquity now, after greatly enjoying “…and forgive them their debts.”

    Pretty funny how clueless some academics can be, and how unaware of their anachronistic ways of interpreting the past. The whole, “amargi didn’t work because they had to do it more than once,” take is kind of amazing.

  3. zagonostra

    By integrating debt annulments with social cosmology, the image of rulers restoring economic order was central to the archaic idea of justice and equity

    Unfortunately, today we have no “social cosmology” except that provided by corporate advertisements and state propaganda; the relationship between the “economic order” and justice has been null and void for a long time.

    1. Michael Hudson

      Yes, that’s exactly my point.
      The anti-government ideology (“free” markets immune from government power to regulate, tax or cancel the debts) has replaced religion as an organizing principle.
      All this and liner time instead of circular time, with an occasion (such as a new ruler) to “restore order.”

  4. Victor Sciamarelli

    There is such a variety of debt that I’m trying to understand where to begin and if debt should be forgiven and/or managed differently.
    For example, well off relatives use a credit card for purchases and pay their cc bill in full each month. Meanwhile, they accumulate points which they use for free first class travel and free hotel rooms.
    As nothing is free, it’s the less well off that bear the costs of my relatives vacation by paying extremely high interest rates when they don’t pay their cc debt in full. According to FindLaw, “Federal law doesn’t mandate interest rate limits for credit cards.” One exception said Bankrate is, “The Military Lending Act caps credit card interest rates at 36 percent (it’s not a typo) for active service members.” Americans pay $120 billion in credit card interest and fees each year according to the CFPB, https://www.consumerfinance.gov/about-us/blog/americans-pay-120-billion-in-credit-card-interest-and-fees-each-year/
    It’s my understanding student loans are amortized like a home mortgage. That is, young student graduates who work and begin to pay back their loans are making mostly interest only payments for many years before they begin to pay down the principle. Student loans are roughly $1.7 Trillion. Slate: https://slate.com/business/2021/03/student-loan-total-annual-government-payments.html
    In contrast, The US Small Business Administration provides, “PPP loan forgiveness”-“Borrowers may be eligible for Paycheck Protection Program (PPP) loan forgiveness” and instructions like, “How to apply for forgiveness.” I don’t want to get into the lack of oversight or possible fraud within this program but it appears the government can be quite willing to cancel some types debt.

    1. old ghost

      Victor wrote: “…. nothing is free, it’s the less well off that bear the costs of my relatives vacation by paying extremely high interest rates when they don’t pay their cc debt (when due)….”,

      It goes far beyond the PPP loan forgiveness and cash back on credit cards. The USA gov likes to subsidize the wealthy at every turn. Look at how the government will subsidize electric cars for those who can afford them:

      “People who buy new electric vehicles may be eligible for a tax credit of up to $7,500, and used electric car buyers may qualify for up to $4,000. New in 2024, consumers can also opt to transfer the credit to an eligible dealer instead for an immediate discount on the vehicle at the point of sale.May 1, 2024”

      …..and then there are all sorts of subsidies for real estate purchases. But I don’t want to use up all the bandwidth here.

  5. Michael Hudson

    Oh dear, major typo (not by me, but by the poster):
    IT was not the great French assyriologist Maurice Lambert who viewed andurarum and amargi as “free trade acts,” but the Englishman WILFRED Lambert — projecting his typically English praise of free trade.
    My “… and forgive them their debts” does not make this confusion. The summarizers usually do a very good job by stitching together my arguments, but they slipped up here. I’ll let them know.

    1. The Rev Kev

      Hopefully not too harshly-

      https://www.youtube.com/watch?v=arwZcw0Ejcc (47 secs)

      Not a guy that knows a helluva lot about finance so I appreciate your posts. At the back of my mind, I often wonder what would be the result if the entire economic system was redesigned from the ground up and without vested interests trying to warp it to their liking. How would debt figure into it? How would it be linked to – finite – resources? How could it be designed to be both robust and sustainable? One thing is for sure. The present system is not sustainable as it is determined to trash the planet and use up its finite resources to the point of destruction. Another economic system will follow on from this one but what will it look like?

      1. Adam1

        A fascinating topic to contemplate. I’d love to hear Michael’s thoughts too, but I also see you’re starting point is with a monetary economy. I think this is correct because a god-awful assumption of most economic theory is to just assume money is an efficiency invention for what is otherwise a barter economy. That is horse sh*t!

        If we no longer were pretending money was neutral and we knew debt and money creation were in essence the same thing, then how would you lay out an economic system? Along this same line of logic, I think it also become important to review, socially, why do people need to save? I phrased that as a question because for every dollar saved another dollar must be lent per the accounting gods. In America and I presume much of the west the mantra is to save for retirement, save for medical expense, save for your kids’ college, save for save for a down payment on a home, etc… That SHOULD beg the question of who is borrowing that money to offset that savings? AND it should beg the question do people in the society need to save for all those things or are they or some or parts of them just community expenses?

        I think part of the reason things remain so bad is that not only have we moved from the creditors demanding the government focus on making debtors pay, but we’ve created so much smoke and so many mirrors that it’s not even possible to have a conversation about how to reform they system. TINA is just built in to the starting point of any conversation – by design.

  6. Michael Hudson

    Oops, correction. I jumped to the conclusion that the Observatory was citing the “other’ Lambert (Wilfred), because I’d made a point of his projecting British free-trade views in seeing antiquity as if it were today’s world. We had a long discussion at one of the Rencontres, so that was in my mind (I just woke up. Sorry. I should have checked his reference #4.

  7. ciroc

    Since the existence of indebted citizens is not a security risk in modern states as it was in ancient times, there is no incentive for modern rulers to offer debt forgiveness.

    1. spud

      don’t be to sure of that. there comes a time when people get so depressed and stressed, that they no longer fear the bullets, and the army simply drops their guns, melts away, or joins the opposition. we are not there yet, but its getting close.

      that is why you see so many commercials on t.v. about supporting our hero’s. instead of the parasites(oligarchs), recognizing its the military personal that keeps them in power, they are sloughing off the support of the military personal onto the abused.

      many in the military can no longer afford to feed their families, let alone once they come back broken up or in body bags.

      of course this helps increase profits, purely parasitical in nature, and doomed to failure.

  8. Societal Illusions

    this is key and what has really changed?

    “…the bodies of citizens should belong to the state, to the end that it might avail itself of the services which its citizens owed it, in times of both war and peace.”

    this ruins the perception of “freedom” within a bondage oriented economic banking system.

    thank you Micheal!

    1. digi_owl

      In a sense things are flipped now.

      Back then the monarchs needed free citizens, as slaves could not serve in times of war.

      Now on the other hand people put on the uniform to avoid a life of crime and poverty.

      That said, the seed of all that may have been laid by the Romans. As a solider in the legions was promised land at the end of service, from what i recall.

  9. JonnyJames

    Thank you Yves and prof. Hudson. No debt cancellation, no countervailing sociopolitical forces to resist oligarchy, no means to select leaders who will alter the status-quo etc… Looks like we are headed for Techno-totalitarian neo-Feudalism, depending on how we define it. Perhaps we are already there. It would be interesting to have a conversation between Yanis Varoufakis, Steve Keen and Michael Hudson and others about these issues.

    History may not repeat, but the historical cycle sure does rhyme.

    Given the financial/economic scenario, plus the impending climate/environmental collapse, increasing chances of the use of nuclear weapons, increasing chances of domestic political violence, increasing institutional corruption, collapse of the so-called health care system, and all the rest it it – it does no good to worry. On the other hand, it is better to appreciate what we have left and appreciate the great people we do have. Reading articles and comments here helps with that. We still have some natural beauty and great wild animals, we are part of the animal kingdom, but many silly humans have got too “uppity” and forgot they are human, and what life is about. Some humans fancy themselves as gods, just like a few Roman emperors did.

  10. Gulag

    Michael Hudson: Comment 9:12 A.M.

    “All of this and linear time instead of circular time with an occasion, ( such as a new ruler) to “restore order.”

    It is great to hear a critique of the ideal of a single and unilinear development towards a market economy or a kind of one-way transition to a market economy which is often found with many academics with both Marxist or Neo-classical pedigrees.

    Many early thinkers such as Fourteenth century scholar Ibn Kalduhn and even Machiavelli, knowing the experience of Renaissance Italy, argued that after a period of florescence, social inequalities open the way for the wealthy to use their private economic power to dominate political and legal processes followed by corruption, neglect of the public good. and decline.

    Working with this more circular conception of time (Rise and Decline). the bigger question then becomes whether there is any mechanism (including the State) that has the capacity to stop a collapse or even relative decline once it is underway, taken the apparent historical fact that market economies in land and labor existed in many places in the distant past.

    1. NotThePilot

      As someone that’s largely convinced social cycle theories are closer to the truth, I agree it’s refreshing to hear. There are some human affairs that do genuinely seem to evolve, but that’s another story with its own subtleties. The ancients definitely weren’t dummies (and were arguably smarter in ways), and their ability to perceive time returning seems to have made them wiser in this context.

      That said, I think this article focuses on relatively tight economic cycles: once, maybe twice in every ruler’s reign. The ones I’ve seen proposed as social cycles (especially rise & decline ones) span at least a couple generations. It does raise a question though, are shorter economic cycles (like the typical business cycle) and longer socio-political ones really related rungs on a single ladder? Maybe we only sort them differently because the shorter ones don’t radically shift political structures on their own, while those political shifts are taken as the very indicators of longer cycles?

      Another thought: Prof. Hudson here (intentionally or not) seems to suggest a society’s worldview of cyclical time is intimately linked, as a habit of thought, to the institution of debt cancellation. Which is interesting because there’s an idea that the ancient Greeks, who largely rejected the institution, actually had a wildly different concept of time from modern Westerners, in some ways almost like in the novel Catch-22.

      Unless I was mistaught, ancient Greek technically doesn’t even have a past tense, but uses something called the “aorist” (literally “indefinite”). There’s also a clear fixation on timeless permanence in their philosophy and events can have a very loose order in their literature (which is partly why their mythology can get so confusing). It’s an interesting possibility, that maybe they rejected the institution not because they couldn’t see the benefits, but because its intuitive relationship to time made them deeply uncomfortable.

    2. Michael Hudson

      The state (esp. the US unipolar state) is PART of the collapse, because as in Rome, the State is the Oligarchy — the creditor One Percent with all the land and money.
      The change comes from within via the collapse of such an economy and its empire. The solution may not be from within at all. Today, there is a split in civilization between the US/NATO 15% and what is becoming the Global Majority under the leadership of BRICS+.

  11. Gulag

    If the state (especially the US unipolar state) is simply the creditor One Percent oligarchy, what are the Department of Defense, the Dept. of State and our 18 or 19 intelligence agencies up to–don’t they also have to be included and discussed in any late cycle analysis of our seeming inevitable decline?

    If cycles, of especially land and labor capitalism, generally introduced early, tend to go bad after 150 years of so, with the emergence of finance, economic stagnation, and heightened inequality– can it be argued persuasively that finance capital is the true causative culprit of our decline when elites may have acquired most of their initial money and wealth from land and labor commoditization.

    Or are you saying that what is primary now is not the nation state but the powers of two different types of globalizing elites?

  12. Susan the other

    Interesting that a soldier’s or a peasant’s debt forgiveness was sometimes termed a “security.” Puts a whole new light on the category of securities as sure investments. Bonds, And how that entwines its meaning to this day associated with social investments guaranteed by the government. There seems to be an eternal moral understanding than the security of the people is the most valuable thing. I can only avoid the thought of AI getting it straight. Because financial definitions are pretty confusing these days. Some economics concepts are based on pure nonsense even. Steve Keen is on a new crusade to redefine economics to include a recognition of the debt distortions that occur because we deny the enormous productive power of fossil energy, or all energy. Unfortunately when it comes to environmental debt forgiveness Mother Nature is tapped out. We are gonna hafta cough up all our hoarded wealth just to fix her up.

Comments are closed.