Moral obligation of repayment of debt trumps other moral and humanitarian concerns:
The moral idea that “one has to pay one’s debt” is currently firmly entrenched. Is this really so, even when enforced repayments lead to Third World poverty, looting of public resources, collapse of societies, endemic violence, malnutrition, hopelessness and broken lives? For example, to ensure repayment of Citibank debt, IMF imposed austerity programs in Madagascar led to ten thousands children dying as immunization was cut short.
Why? Debt is flexible: Conquer a country and declare that they are indebted to the victors for their liberation.
What makes the moral obligations of debt so powerful as to allow it to supersede all humanitarian considerations? An important basis of the power of this concept is the flexibility of the concept. Relations based on violence are justified, made moral, by reframing them in the language of debt. Example of Madagascar invaded by France and heavily taxed to finance the invasion and related “development”, but in conception of the “international community” it is a moral idea when Malagasy government is slow to back their debts to France. Then Haiti is an example of punishing winners who were not supposed to win. A nation of plantation slaves who dared to rebelled and win their freedom by defeating Napoleon’s army, was declared to owe France 18 billion dollars an embargo enforced by all nations, making Haiti “synonym for debt, poverty, and human misery” (p.6) since then.
Not all debts are the same – rich debtors treated well, poor debtors treated poorly.
On the other hand the US debt is more than all Third World debt is in the form of treasury bonds fuelled by military spending. The question arises: Is this money received by US a loan or “tribute” which in past empires received for maintain military bases abroad? Throughout history there is a difference in treatment between certain sorts of debts and debtors. 1720’s British prisons had opposite prisons luxurious versus pits for aristocratic inmates versus “common side”. Similarly today’s world we have the US as the “Cadillac debtor” and Madagascar as the “pauper starving in the next cell” (p.7). A man with a gun asking for money or loan is primarily the same, as in the case of US forcing Korea or Japan to provide that loan.
Debt symbolizes age old struggle between rich and powerful and the poor and powerless. Dramatic difference in moral perspective of borrower and lender, creates widespread moral confusion.
Historically arguments over debt have been going on for five thousand years, and struggle between rich and poor has taken form of conflict between creditors and debtors. All revolutionary movements according to classicist Moses Finley wanted to “cancel the debts and redistribute the land”(p.8). Our contemporary moral and religious language originally emerged directly from these conflicts e.g. “reckoning”, “redemption” “guilt” “freedom” “forgiveness” “sin” who owes what plays central role in our basic vocabulary of right and wrong. In history of debt there is profound moral confusion on the one hand most people believe that paying back money one owes is morality issue and also that anyone who lends money is evil. Example of the former: French anthropologist Jean-Claude Galey found in eastern Himalayas that 1970’s a low caste lived in permanent rent dependency to a current landlords due to centuries old population once conquered by the former’s ancestor. Everyone shockingly accepts the debt and doesn't question it even if a poor man’s daughter becomes the landlord’s concubine for her marriage debt! In this case the usurers are the ultimate moral authorities. Incase of medieval France Catholic church had forbidden money lending, and looking over world literature too there is not a single sympathetic representation of a money lender or a “professional money lender” i.e.one who charges interest.
Strategies of Lenders to avoid being considered evil.
Historically two ways a lender could wriggle out of this opprobrium, either by shifting responsibility to a third party, or insist that the borrower is worse. Medieval France lords used “Jew” as surrogates for the first strategy. Later case makes more parties guilty. Hindu Law codes offers different perspective by allowing interest-bearing loans and belief that debtor who didn't pay would be reborn as slave in creditor’s household. Some strands of Buddhism also tolerant of creditor, but also stories appear against those who went too far.
Central Concern of BOOK: Conversion of moral obligations into financial debt. Changing a qualitative moral principle to a quantifiable impersonal obligation leads a violence, slavery, wars. These relations are no longer visible to us because they are buried too deeply in history.
The question “who owes what to whom” in itself adopts the creditor’s language. Central question of the book is “what does it mean when we reduce moral obligations to debts?” What changes when moral obligations turn debt and vice verse? The difference between a debt and moral obligation is that creditor has means to specify numerically exactly how much the debtor owes. A crucial point that is discussed here is “Money’s capacity to turn morality into a matter of impersonal arithmetic”, and violence that may be inflicted in the process becomes secondary. So violence and the quantification are intimately linked, and how the former turns human relations into mathematics is a theme discussed throughout this book. This relation is the ultimate sources of the moral confusion that seems to float around everything surrounding the topic of debt. From beginning of Civilization (ancient Mesopotamia) and continuing to date underneath essential fabrics of our institutions (state and market), our basic concepts of nature of freedom, morality, sociality---all are shaped by history of war, conquest, slavery which we cannot see because we no longer imagine things differently (p.14).
GFC 2008 is latest episode in history of war between creditors and debtors. The nature of debt and moral obligation to pay needed examination, since crisis centered on un-repayable debts. HOWEVER, this was bypassed, and creditors were bailed out to the tune of trillions, while debtors met with harsh treatment.
This moment in history requires reexamination of history of debt due to the financial crisis of September 2008 that halted entire world economy. At the time everyone assumed that with the very defining institutions of capitalism crumbling, a conversation about the nature of debt, of money, of financial institutions that have come to hold the fate of nations in their grip would happen. But this conversation never happened. Polls showed most Americans were ready for a radical solution that banks should not be bailed out and people with mad mortgage should instead. This is unlike America’s history where America has been least sympathetic to debtors. (Last country to adopt the law of bankruptcy.1787 Constitution charged new government with creating one but it was rejected on “moral grounds” until more than a century later in 1898.) Now US government put a Band-Aid over the problem leading to backlash against ordinary citizens in financial trouble to the extend that missing debt payment leads to incarceration. So we are moving back to restoration of debtor’s prisons. Similarly virtual money is also not a “new thing” actually it was the original form of money and to take lessons from history ages of virtual credit money involved creation of checking institutions for debtors. But again we are moving backwards as IMF created first to protect creditors interests and not debtors.
This book will set the stage for a fresh approach to the last five hundred year dominated by capitalist empires by using history, to puncture series of myths forming basis of our commonsense assumptions about nature of economy and society and to allow us to begin to ask great questions.