Left Out, a podcast produced by Paul Sliker, Michael Palmieri, and Dante Dallavalle, creates in-depth conversations with the most interesting political thinkers, heterodox economists, and organizers on the Left.
The Hudson Report is a new weekly series produced by Left Out with the legendary economist Michael Hudson. Every episode we cover an economic or political issue that is either being ignored—or hotly debated—that week in the press.
In this episode we discuss the ancient history of debt cancellation, the untold life of Jesus as an economic justice activist, and more largely Professor Hudson’s forthcoming book, “…and forgive them their debts,” out in summer 2018.
Michael Palmieri: Professor Michael Hudson welcome back to another episode of The Hudson Report.
Michael Hudson: It’s good to be back here.
Michael Palmieri: I know we usually cover topical or current event that’s been either ignored or hotly debated in the weekly news cycle. But I thought it would be much more interesting this week to talk about your forthcoming book “…and forgive them their debts credit and redemption through the Bronze Age to the Jubilee Year” scheduled to be released early summer 2018. And I thought it was interesting in two ways, one–Easter’s three weeks passed and yet a lot of your work is centered around Christianity and the life and activism of Jesus. The second reason is that you’ll be leaving for the next few weeks to teach at Peking University in China.
But can you explain or maybe give a little bit of a summary as to what the book looks at and describe it. I know it’s focused on the origins of debt and debt forgiveness. But can you elaborate a bit more?
Michael Hudson: It’s a history of the origins of interest bearing debt – the origins of interest and Sumer in the third millennium BC, in an epoch when most debts were owed to the palace, either for taxes or for fees for services. Periodically for a thousand years, from Sumer, Babylonia, and other Near Eastern countries, when new rulers took the throne, they would begin their reign with a debt amnesty.
We’re familiar since medieval times for European rulers often freeing the prisoners when they came to power. But the amnesties in Sumer and Babylonia extended to everything that was owed to the palace. They were general cancellations of personal debts, mainly agrarian debts by cultivators – citizens who also manned the military.
The idea was to restore the economy to the stability that existed before widespread debts ran up during the preceding ruler’s reign. What was “restored” was an idealized “original” or “normal” state in which nobody owed debts to the palace.
These debt remissions extended in due course to debts owed to palace collectors – and, by Babylonian times (from about 2000 to 1600 BC), to debts owed to individual creditors. Most agrarian and personal debts were cancelled, but not debts among businessmen that were owed to each other. They were left in place.
The guiding logic of these debt cancellations was spelled out by Egyptians. If rulers had not cancelled these debts, they would have faced a situation in which indebted cultivators were falling into permanent bondage. Their labor would have been pledged to their creditors, and thus would not be available to perform the corvée labor that had to be mobilized each year to build basic infrastructure – walls, temples, palaces and other basic construction that was public or communal in character.
Also if the debtors on the land had to pay private creditors, they wouldn’t be able to pay their stipulated fees or taxes run up to the palace. So for two thousand years throughout the Bronze Age (circa 3200 to 1200 BC), there was a tension between the rulers and the emergence of a private wealthy class of creditors who used their money to try to become landowners. By about 1800 BC you had cultivators pledging their land to creditors and losing it. You begin to find large aggregations of landholdings, all at the expense of palace authority and its ability to levy taxes on labor, crops or money.
The big picture therefore is that for thousands of years you have a tension between centralized authority, which needed to preserve economic balance and wanted the population (and hence, the army) to keep growing, and wealthy creditors, traders and land buyers who made gains by impoverishing the rest of the population. That was the same dynamic found in early Greece and Rome. In fact, it’s a dynamic that you still have today.
The difference is that today’s governments have been taken over and captured by creditor interests. The result is that today’s ethic is the opposite of the first few thousand years of debt. Today’s ethic, ever since Rome, is a sanctity of debt, not of its cancellation. All debts have to be paid – regardless of how this may impoverish and polarize society.
But in Sumer, Babylonia, Egypt and the Biblical lands there was a royal understanding that if poor cultivators – the 99 percent – had to pay the debts that they ran up, they would fall into bondage to the 1 percent, and forfeit their land to their creditors. Rulers sought to prevent this from happening, because if they had not intervened, they would have a citizenry available to serve in the army. They wouldn’t have taxes. They would have had a kind of Margaret Thatcher type economy – and quickly been conquered by outsiders or overthrown from within.
Michael Palmieri: This gets us to where we began in the first episode of The Hudson Report. We spoke about the ACLU report called ‘A Pound of Flesh,’ about the “modern-day debtors’ prisons” that are beginning to pop up throughout society.
Michael Hudson: Shakespeare’s famous “pound of flesh” owed by the Merchant of Venice actually was a zero interest loan. So debt problems arose even before interest came to be charged. But obviously, once you begin to charge interest, debt expands exponentially at a geometric rate. Babylonian scribes were taught to calculate these doubling times. So one of the aims of my book is to explain how interest began.
There’s no question that when it began, the objective was not to find a way to impoverish society, polarize it and impose austerity. But that’s how matters ended up. Interest was innovated in the Sumerian temples and palaces, basically in the form of trade credit. The palace consigned export and import trade to entrepreneurs. Sumer – present-day Iraq – had very rich soil, deposited by rivers over the millennia. But it didn’t have hard stone, metal or gems. So Sumer had to trade in order to get the copper and tin that gave their name to the Bronze Age.
This trade had to be financed on credit. The palace and the temples employed war widows, children, the blind and other people who couldn’t make a go of things on the land. They were set to work to weave textiles or make other handicrafts, which were turned over to traders. These traders exported these handicrafts northwest to Turkey and eastward across the Iranian plateau. That’s how the Sumerians obtained the tin, copper and other raw materials, like stone and silver.
There was a transmutation of this practice of charging interest to creditors to merchants who could pay. Interest began to be charged on debts in general, including advances of fees owed to the palace by cultivators on the land. That’s where problems arose, especially when there was a crop failure or when members of a family got sick.
Most of these debtors didn’t actually borrow money. They simply ran up debts and arrears. Most debts thus did not result from loans, but were unpaid bills, headed by those that were owed to the palace or its collectors.
It was this debt that led to the designation of some basic commodities as “money,” assigned fixed prices so as to pay the palace. (My website has a recent dictionary entry on early money stemming from these debts owed to the palace, not from barter.) So you had debt and credit before you had money.
Here’s how the system worked. Archaic economies were credit economies. The palace advanced land to sharecroppers, as well as draught animals and various services. These rural deaths were supposed to be paid at the end of the harvesting season. We have tens of thousands of contracts outlining this. The debts had to be paid on the threshing floor.
Let’s say you were a cultivator and wanted to go out to the local alehouse for a beer. The ale lady would mark up the amount of money that you owed. Your bill (the tab) would be paid on the threshing floor. Everything was done by credit. Payment was once a season, on the threshing floor – unless there was a flood or crop failure. In such cases rulers cancelled debts that were owed. (In that case, the ale women would not owe the palace for the beer that had been advanced during the crop year.) So cancelling such debts was the way to preserve economic balance and stability.
Most of the earliest monetized transactions were public in character. So my book also is about the balance between the public sector and the private sector, although these terms are rather anachronistic. It was really the palace and the temples vis-a-vis the communally family-based economy at large.
Michael Palmieri: It seems like there’s a lot covered in the book and we’re looking forward to its release this summer.
I wanted talk a bit about the Biblical dynamics in your forthcoming book. I thought it would be interesting to talk about the life of Jesus and the way he’s portrayed today. But before we go into that, there’s a key point that you’ve brought up: the linguistic origins of the words “debt” and “sin,” and how understanding the connection can bring a different view to Christianity and Jesus’s teachings.
Michael Hudson: In almost ancient society – not only Indo-European speakers, but also Semitic-speaking and other ancient Near Eastern societies – the basic kind of debt that had be paid was wergild: a fine for injuring other people, paid to the victims. The largest fine was for manslaughter. Punching them in the nose, or cutting off their beard or insulting them was subject to such wergild debts.
The logic was explicit, and I cite it in my book. In order to prevent fights among families – feuds and feud justice based on physical retaliation – you would pay reparation. That was the primordial archaic debt. The word for these payments or “debt” in many languages (in German it’s Schuld for obligation) also became the word for “sin.” The debt was owed to atone for the offense or “sin” – atonement or redemption. You would redeem the injury you did to another person by paying money. So the paramount idea was a debt was a payment for offence and the offence later became thought of sin. Redemption meant literally to redeem this debt oo to pay it. That is why Jesus was called the Redeemer – annulling the debts and also the sins of mankind in a vast Clean Slate.
So it’s not that running into debt was sinful. It’s just the reverse: When you commit an offence or a sin, you have to pay the injured party to make them whole, so that there won’t be resentment and fighting between the families of the offender (the “sinner-debtor”) and the victim (who in this case is in the position of “creditor”).
The original semantics of sin and debt linguistically is therefore just the opposite of what most people believe.
Michael Palmieri: That being said, could you walk us through a text that if no one’s read, at least they are familiar with: The Ten Commandments. Some of those commandments can be understood very differently from the perspective of ancient society as you describe it.
Michael Hudson: They were formulated in a society where debt was the main disruptive economic feature. For instance, the commandment “Thou shalt not covet my neighbor’s wife.” At that time, creditors would make loans to debtors, who would have to put up collateral. The most typical collateral they would put up would be their household slave girl, or otherwise their daughter or wife. The woman would have to go live in the house of the creditor, and usually had to have have sex with them. That’s how employer/employee relations were back from the Bronze Age through the Iron Age.
Already in 2350 BC, the laws of Urukagina in Sumer had a special sanction saying that a wife can’t have two husbands. The idea against coveting someone’s wife meant that you can’t take another person’s wife as a debt servant to have sex with.
The commandment “Thou shalt not steal” referred to making a loan and foreclosing on land or seizing property and not returning it. That was looked at socially as a form of theft.
The commandment “Thou shalt not take the Lord’s name in vain” referred to taking an oath. Creditors were notorious for lying. The books of Plutarch and other authors are rife with examples of creditors lying. In Babylonia everything had to be written down. In Egypt the same thing – every creditor claim had to be written down and witnessed.
The idea was to enforce behavior in keeping with the Ten Commandments and the laws of Leviticus, which said that every fifty years there has to be a clean slate – a deror, a jubilee year. The Hebrew word for the Jubilee year was cognate to the word for the Babylonian clean slate, andurarum. These debt cancellations also freed bond servants and returned land to debtors who had forfeited it. You could go right down through the Ten Commandments and see that theor aim was to prevent the corrosive effects of debt tearing society apart.
Michael Palmieri: This is eye-opening. I can’t help but think about the contrast between the way that we’re speaking about Jesus and biblical teachings when you look at the current evangelical fundamentalist movements in the U.S., which focus much more on piety and political questions or economic questions of taxation, abortion, and even support for war. There’s such a contradiction there. I don’t know how you understand how the two connect, or if you want to speak more about how the transition occurred.
Michael Hudson: Christianity began as a protest movement, but it was a protest movement that was very conservative. We know from the Dead Sea Scrolls – essentially the library of the Temple of Jerusalem hidden to protect it from the Romans – that what Jesus wanted to do was just what he announced in the first sermon that he gave. It is reported in Luke, Chapter 4. He said “I’ve come to proclaim the year of the Lord,” meaning the Jubilee Year. He unrolled the scroll of the Prophet Isaiah that described the Jubilee Year.
He said that the rabbis who opposed to be cancelling debts – the Pharisees, a conservative group of rabbis led most notably by Hillel – had developed a special clause that was similar to what the Babylonians creditors had tried to do. It was called the prosbul clause. A debtor who needed money would have to sign a waiver saying, “I agree not to avail myself of the rights that the Bible promises me in the Jubilee Year. So if the debts are cancelled, I waive my rights and the creditor can foreclose anyway.”
Jesus explained in his sermon that this was against the Mosaic Law – the law of Leviticus, chapter 25. It was in fact against everything the Old Testament talks about. (My book has the relevant Dead Sea scrolls.) But rabbinical Judaism was being taken over by pro-creditor Pharisees. Luke quotes Jesus as describing them as being avid for money, and working for the creditor class.
At that time the great social fight not only in Judea but also in Greece and Rome was between debtors and creditors. There was a region-wide civil war. There were assassinations of Roman pro-debtor advocates such as the Gracchi brothers in 133 BC. A century of civil war followed, in which even Julius Caesar, who enacted a modest debt reform, was killed. Sparta’s King’s Agis and Cleomenes were killed for cancelling the debts. There were armed uprisings throughout Greece and Asia Minor over this.
This was a universal fight. But somehow, the economic message of Jesus has been taken out of context. It is as if what he was talking about was otherworldly. But he was talking about something very worldly – the debt issue. Jesus wanted to restore the debt cancellation as it was supposed to be according to Leviticus 25.
Later rabbinical scholars in medieval Spain, most notably Maimonides, urged the observance of the Jubilee Year. So Hillel’s prosbul was not universal among the rabbis. But for the last 2000 years there’s been a rabbinical argument over this.
Until my Harvard group began to publish its findings about 20 years ago, you had a general prejudice among Biblical historians that the Jubilee year couldn’t really have been enforced because it would have caused economic disaster. My book shows that when you look at 2000 years of Sumerian, Babylonian and Egyptian practice, the moral was that if rulers didn’t cancel the debts, there would be an economic and fiscal disaster.
The idea of debt amnesties was to prevent debt from tearing society apart – to prevent the kind of crisis that the United States has been in since 2008, when President Obama didn’t cancel the junk-bond debts, or the debts that tore the Greek economy apart Greece when the IMF and Europe imposed them on Greece instead of letting it default on debts owed to French and German bondholders.
The great struggle of antiquity is being repeated today. Whether society is going to insist on the sanctity of debt being imposed to a degree that impoverishes most of the population – or that economic stability should be restored by subordinating the debts to the ability to pay, and the ability of society to keep operating on a viable basis.
Michael Palmieri: Well Professor Hudson, thank you so much for laying that out there for me and for the audience that will hear this interview. It’s always eye opening and engaging. We can’t wait until this book releases early this summer 2018. Thanks again for joining another episode of The Hudson Report.
Michael Hudson: It’s really good to be here, as always. I’m glad we had a chance to discuss it.