Full disclosure: I have not, as of writing this Patreon essay, read Debt: The First 5000 Years, by David Graeber. (It’s on my list, but it’s also a giant brick. What I know about his points, I’ve absorbed through works responding to his.)
I mention this because Graeber’s book tends to leap to mind for people whenever the subject of debt comes up these days. As his title suggests, the concept goes back a very long way — and whether he’s right or not about the sociopolitical effects of debt on a truly long time scale (scholars have been debating that), I don’t think anyone would dispute the overall importance of the concept.
So let’s talk for a moment about what it means to owe someone . . . and why debt can be not just necessary but useful.
Debt can exist before money — and indeed, I believe Graeber argues for exactly that sequencing. We talked last week about the sense of mutuality that underpins a pre-monetary economy; that is, in generalized terms, a sense of debt, that you owe other people for what you’ve received, even if you don’t repay them directly. But when we speak of debt in the economic sense, we usually mean owing a defined amount of some commodity, whether that’s silver or wheat or lambs.
Going into debt allows you the chance to do something you otherwise couldn’t afford, or at least couldn’t afford now. This can be a frivolous bid for immediate gratification, like a decision to upgrade to a slightly larger TV when the old one works perfectly fine, but it can also be a way of keeping money flowing through an economy: rather than someone taking a pile of cash out of circulation until they have enough to pay for a house outright, they pay in smaller installments over a period of decades.
It can also — at least in theory — be an incredible engine for bootstrapping oneself up to greater prosperity. An ancient farmer might take out a loan of barley seeds so he’ll have something to plant; if the crop is good, then at harvest-time he’s able to pay that loan back, while still having enough to eat, and seeds left over for next year’s planting. A modern student goes into debt for college because with a degree in hand, she’ll be able to get higher-paying jobs after graduation . . . she hopes. The theory doesn’t always hold up in practice.
The modern world relies heavily on debt to function. We buy countless things with credit cards, which allow us to defer paying for something until the end of the month, the next month, a year down the road. We take out loans for our houses, our cars, our college educations; we use them to start up new businesses. Debts exist at every scale from the individual to the nation — but the way we view that debt has changed radically over time.
One significant manifestation of this is the shift in how we define “usury.” Nowadays we mostly use that term in the subjective sense of charging an unfair amount of interest on a loan, though in some situations there may be a legally-defined cap on interest rates, and usury is anything exceeding that cap. But those two approaches have in common the notion that some interest is okay; only when it becomes too much is it a problem.
That’s a radical departure from a substantial body of past opinion. Some ancient societies, e.g. in the Near East, saw interest as perfectly natural — in part because what they were loaning was often actual food, and so of course one should expect it to grow over time. But in Christianity, Judaism, Islam, Buddhism, and Hinduism, you find tirades against or even outright prohibition of the sinful practice of charging any interest at all. Loans were fine — but they had to be repaid in exactly the amount given, with no additional obligation. (Whether that was a blanket ban depended on the society, though. The Indian prohibition only applied to certain castes, while Jews were allowed to charge interest on loans to Gentiles.)
It sounds nice, doesn’t it? Loans between friends nowadays are often interest-free, because charging a fee for the use of your money is a great way to destroy a friendship. On a societal scale, though, reasonable rates of interest are again an engine for economic growth, because they create incentive for those with wealth to loan it to those (currently) without. Sans incentive, they often didn’t want to risk not getting their money back. That was why Jews were commonly moneylenders in European history: it was considered an inferior profession, ergo the sort of thing practiced by outsiders to the community, and it was one place where the religious prohibitions worked out in somewhat their favor, since they could charge interest and Christians could not. But since moneylenders were hated, in the long run it was a mixed bag at best.
The other thing that has (mostly) changed over time is what we do to people who incur debts they can’t repay. In many societies that practiced some form of slavery, debtors were either driven to sell themselves and/or their children to pay off their creditors, or else the legal system sentenced them to it. In England, debtors were imprisoned — which didn’t do a lot for their ability to pay anyone back, especially since their families were obliged to pay for the prisoners’ food and upkeep. We still have ways of squeezing blood out of stones, but they aren’t quite as bad as they were in the past.
Before we pat ourselves on the back for being better than history, though, we should remember the Biblical practice known as Jubilee, which has parallels in a number of ancient Near Eastern societies. Every fifty years (under Jewish law) or at the coronation of a new king (in other places), slaves and/or prisoners would be freed . . . and all debts would be forgiven.
That’s incomprehensible to us nowadays not only because it would probably bring the global economy crashing down in a pile of confusion, but because in the West, debt has come to carry a significant, and negative, moral weight. Even when the debt is incurred through no fault of the debtor, as with a medical emergency or a natural disaster, we feel that it is only morally right that they should repay it — that it would be unfair to the creditor not to get what they’re owed. Even when the interest is arguably usurious, even when the circumstances of the loan are sketchy (as with the sub-prime mortgages actively pushed on minority families in the U.S.), being in debt is shameful. Despite the fact that it is also practically universal: very few people owe no debt of any kind at all.
I have no answers for the pathological mentality around this that has developed in my country. But in fiction, you can play a fair bit with how debt is incurred, managed, and dealt with when it can’t be repaid — whether the answers to those questions are good or bad.