September 21, 2011

One has to pay One’s Debts

The Creditors’ View

One has to pay one’s debts – a dictum so thoroughly ingrained

in our minds through millennia of repetition and enforcement

by creditors, that it now seems a sacred, immutable obligation,

so fundamental a part of our moral code as never to be questioned.

Credit Systems

Credit systems long pre-date writing. By 3,500 B.C.E., that is,

400 years before the invention of writing, in Sumer, the most

ancient Mesopotamian civilization, most transactions are based

on credit. Records are kept by means of bullae – clay tablets

inscribed with the obligation of future payment, placed in a clay

wrapping, sealed and imprinted with the borrower’s stamp. The

creditor keeps the bulla as surety, and it is broken upon repayment.

Although silver shekels do exist, they are used only as units of

account to keep track of resources, not for commercial transactions.

Interest-bearing Loans

Charging interest on loans also pre-dates writing. In Sumer,

Temple administrators first use interest-bearing loans to

assure themselves of a profit when they advance goods to

merchants going overseas – many of whom are likely to return

with tales of disaster testing believability. The practice is significant

because it implies a fundamental lack of trust. Once established,

the principle of lending at interest, and even compound interest,

spreads quickly, and within a few hundred years, it is applied

not only to all commercial loans, but also to consumer loans.

Usury

By 2,400 B.C.E., the time of Sumerian King Enmetena of Lagash, usury,

in the sense of interest-bearing consumer loans, is well-established.

Local officials and wealthy merchants make loans to peasants in

financial trouble, on collateral, and expropriate their possessions

in case of non-payment. Grain, sheep, goats, and furniture are

taken first, then fields and houses, and eventually servants,

children, wives, and the borrower himself, all of whom are reduced

to debt-peons, forced into perpetual service in the lender’s household –

each step, of course, diminishing the possibility of repayment.

Debts in Systems of Credit

Debt crises are a permanent part of our history. In Sumer, the very

earliest written records (around 3,100 B.C.E.) describe how debt payment

enforced by violence, or the threat of violence (such as seizing the debtor’s

possessions), turns all human relationships into potential commodities.

In Babylon, around 1,765 B.C.E., the reign of King Hammurabi is marked

by a series of debt crises. In India, the Vedas, written around 1,500 B.C.E.,

contain the first philosophical reflections on the nature of debt. Around

700 B.C.E., as Egypt is having its first debt crisis, a decree issued by

Pharaoh Bakenranef contains one of the earliest mentions of debt prisons.

Coinage

The severing of relationships is worsened by the invention of coinage, as

now debts can be quantified exactly. Morality becomes a scale of impersonal

arithmetic. Coinage appears independently in Lydia (now Turkey), India, and

China, between 600 and 500 B.C.E. At first local social currencies, coins are

quickly appropriated by States faced with the problem of provisioning the new,

standing professional armies they are assembling. States mint coins on a

large scale and use them to pay soldiers. By also requiring that taxes be

paid in these same coins, States immediately turn their population into avid

providers of soldiers’ needs. The State no longer has to provision its soldiers.

Debts in Systems of Coinage

Athens has its first debt crisis around 600 B.C.E. Beginning in 508 B.C.E., the

history of the Roman Republic (508-44 B.C.E.) is one of continual political

struggle between creditors and debtors (patricians and plebeians). Creditors

have the right to enslave and execute insolvent debtors. Around 425 B.C.E.,

in Judah, then a province of the Achaemenid (Persian) Empire, the Prophet

Nehemiah writes explicitly about the damage wrought by debt bondage.

In China, during the “Warring States Period” (475-221 B.C.E.), the State of

Qin allows merchants, craftsmen, and the “poor and idle” to be “confiscated

as slaves,” and allocates slaves to its army officers on the basis of rank.

From Peonage to Serfdom

Until 16 C.E., in the Roman Empire (44 B.C.E.-1453 C.E.), a paterfamilas (the father

of a family unit), has the right to have a slave publically torn apart by wild beasts

for no official reason. The works of the early Christian Fathers (50-800 C.E.)

resound with endless descriptions of the misery and desperation of those

caught in the web of rich lenders. By the end of the Empire, the free peasantry

has been largely eliminated, and, in the countryside, most inhabitants are either

slaves or debt peons to a rich landlord, a situation legally formalized by a series

of imperial decrees. The first of these decrees, issued in 332 C.E., by Emperor

Constantine, greatly restricts the rights of peasants, and binds them to the land.

Reacting to Indebtedness – Patriarchy

The reaction to indebtedness molds civilizations. The fear of loosing not

only one’s sheep, goats and slaves, but also one’s wife and children, gradually

transforms domestic relations of care and protection into relations of

authority. Family members become commodities which can be rented

(as debt pawns) or sold (as slaves). The reassertion of paternal control is

particularly strong among indebted farmers who have fled cities, such as

Uruk, Lagash and Babylon, to the deserts and steppes at the edge of civilization.

The origin of patriarchy is in the protest of displaced indebted farmers

against the commoditization of people in the cities from which they have fled.

In Assyria, the Law Code of around 1,250 B.C.E. is the most dramatic known

attempt to distinguish between “respectable” and “non-respectable” women.

The former are those whose bodies cannot be bought or sold, under any condition.

The Code contains the first known reference to veiling in the history of the

Middle East. Respectable women (married women or concubines), widows,

and daughters of free Assyrian men “must veil themselves” when on the street.

Prostitutes (including unmarried Temple servants) and slaves may not wear veils.

During the next millennia, sexuality is demoded from being a divine gift and

embodiment of civilized refinement, to echoing degradation, corruption and guilt.

Reacting to Indebtedness – The Caste System

In India, between 200 B.C.E. and 400 C.E., the Brahmins convert the old customs of

debt peonage and chattel slavery into a system of castes – an over-arching hierarchical

system in which debt completely vanishes. The Dharmasastra Law Codes specify

that the Brahmins stand in for all humanity before the forces which control the universe.

They have no debt to other humans. The Sudras, the lowest caste, were created to

serve the other castes, and may not ever either be emancipated or educated. If they

so much as listen in on learning, they will have molten lead poured into their ears.

For Brahmins, the maximum annual interest on loans is 24 percent, for a Sudra,

it is 60 percent. Debt has been converted to a rigid inequality accepted by all.

Reacting to Indebtedness – Morality pre-empted

In the West, indebtedness leads to a splitting of roles which pre-empts any

considerations of morality. A dual structure, already present during the Fourth Crusade

(1202-1204 C.E.), becomes fully apparent during the colonization of the “New World.”

On the one hand, the daring adventurer, the gambler, willing to take any risk, and on the

other, the careful financier, whose entire operations are organized around obtaining a

steady, mathematical, inexorable growth of income. The conquistadors, most of whom are indebted, feel no responsibility for the morality of their venture. King Charles V (reigned

over Spain 1516-1556), himself deeply in debt to firms in Florence, Genoa and Naples,

does not particularly care to know the details. Financial exigencies trump moral qualms.

Debt Imperialism

After the announcement, in 1971, of United States President Richard Nixon that

foreign-held U.S. dollars would no longer be convertible into gold, the value of gold

rises from its then $35 an ounce to reach $600 an ounce, in 1980. Poor countries

(those without gold reserves) are thereby severely impoverished, while rich countries

(those with gold reserves) are enriched. Since then, U.S. dollars have become the world’s

reserve currency, meaning that U.S. treasury bonds – that is, “IOU’s” on the part of

the U.S. – are held by all nations as their ultimate store of wealth. If the United States

paid off its debt, we would have no money. The bonds, therefore, are to be rolled

over indefinitely, never paid. All other countries, of course, must pay their debts.

In 1980, the United States Congress eliminates all federal usury laws. In 2005, it

passes a new, unprecedentedly exacting bankruptcy law. The period leading up to

2008 sees a series of increasingly reckless speculative bubbles, the last of which,

the subprime bubble, collapses in 2008, bringing down with it the country’s whole

economic apparatus. In 2009, the Government bails out the “too big to fail” corporations

with taxpayers’ money, thus replacing the imaginary money of financiers (money

based on speculation, detached from any relation to production) with money

representing production. Most mortgage holders are left to the mercies of the courts.

The number living in poverty rises from 25 million, in 1978, to 44 million, in 2009.

The two Sides of Debt

Debt is an expression of how we view our relationship to each other.

Putting the other in debt, is an effective weapon in the millennia-old class war.

Debt can also be interpreted as an extension of cooperation and mutual aid.

The choice is ours.

References

Graeber, David. 2011. Debt – the first 5,000 years. New York, N.Y.: Melvillehouse.

Wikipedia.

http://www.en.wikipedia.org/wiki. Accessed 08/04/11-09/26/11.

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