Wall Street executives are taking advantage of the pandemic to enrich themselves while plundering companies in their portfolios and putting workers' jobs at greater risk.
Today, the wealthy depict inequality in glowing colors as a byproduct of economies pulling ahead, “creating wealth” by innovations that add to prosperity. This view is unprecedented in history.
From antiquity to quite recently, personal accumulation of large amounts of wealth was frowned upon, because it usually was achieved at the expense of others. One party’s gain often tended to be at the expense of others, polarizing communities by pushing many below poverty levels.
The most corrosive method of gaining personal wealth, from the ancient world to today, is interest-bearing debt that mounts up with compound interest. The inability to pay has led small farmers and the poor to lose their property, homes, and ultimately their liberty as they become bond servants to pay their debts.
And since medieval times, the inability of governments to pay foreign bankers has forced them to privatize public infrastructure and other community assets, creating monopolies that enrich a creditor-investor overclass whose wealth was achieved by imposing austerity on the rest of society.
The overriding economic myth of today is that debts can and should be paid. But the reality is that the volume of debt tends to grow much more rapidly than an economy’s ability to pay. So in the end, debts that can’t be paid, won’t be.
The big question is, how won’t they be paid? Either the debts will be written down (as banks are often willing to do for corporations and commercial debt), or debtors will forfeit their property to foreclosing creditors. In the case of the latter, the creditors often use their expanded wealth to acquire yet more property, ultimately gaining control of government and dominion over the religious establishment as well.
Most of Jesus’s parables concerned debt, yet this has all but been written out of history today. It’s not what is taught in theological seminaries, and it has even been expunged from the Lord’s Prayer.
Historical documents from Sumer, Babylonia, Greece and Rome through Byzantium provide a solution. Rulers or civic authorities created countermeasures against this tendency in order to survive. Royal Clean Slate proclamations that canceled debts, liberated indebted bondservants, and returned land that had been forfeited to creditors or sold under duress (identical in wording to the Judaic Jubilee Year) saved societies from suffering population flight, defection to enemies, or domestic revolt.
Even though unequal, most archaic societies at least sought to keep their citizenry solvent so as to meet basic needs, enable citizens to pay taxes and serve in the military, and provide unpaid, corvée labor for public works. Clean Slates also prevented an independent oligarchy from emerging to rival the palace or rulers, and from blocking public rules to prevent or reverse predatory credit, land monopoly, and other corrosive behavior destabilizing economic balance.
But every society from Babylonia to Rome saw moneylending pass increasingly into private hands. As oligarchies emerged, their political aim was to unseat kings and prevent any public authority from proclaiming Clean Slates that would annul the debts their clients owed.
In the Bible, Luke 4 reports that in the very first sermon that Jesus gave when he returned to Nazareth, he went to the synagogue and unrolled the scroll of Isaiah to verse 61 and said that like Isaiah, he had been sent to preach the Year of the Lord (aka the Jubilee Year) to the poor. He proclaimed “freedom for the captives, release for the prisoners, and to proclaim the year of the Lord’s favor, deror (a Clean Slate).”
Most of Jesus’s parables concerned debt, yet this has all but been written out of history today. It’s not what is taught in theological seminaries, and it has even been expunged from the Lord’s Prayer (debt has been replaced with sin or trespasses).
The revolution that’s occurred in Assyriology today, however, shows how Babylonian Clean Slates were incorporated into the core of Judaism, and that Jesus fought to restore it against the Pharisees and other pro-creditor interests. Not surprisingly, almost everything about the contents of Bronze Age texts and the origins of Christianity is abhorrent to today’s vested creditor interests.
In 2018, most debts are owed to the richest 1 percent. They fight to block personal debt writedowns, as one can see in the case of student debt, junk mortgage debt, and personal bankruptcy. This is the cause of the economic austerity that is stifling new investment and consumption, which prevents economic growth instead of helping it.
My new book “…and forgive them their debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year,” describes how early societies dealt with such top-heavy debt overheads. The problem is universal in all eras, from antiquity to today’s world: debts tend to mount up faster than the ability to pay.
Debt was the great economic issue throughout antiquity, from Mosaic Law to Rome’s Struggle of the Orders between the indebted plebs vs. patrician creditors. From Babylonia through classical Greece, Rome, and Byzantium, and up until today, the tension between rulers (and governments) and creditor elites has caused a chronic political crisis.
The parallels today are obvious: The International Monetary Fund, European Central Bank, and emergency financial commissions are empowered to override elected democratic governments to transfer assets and income to bondholders and banks. In the wake of the 2008 financial crash, the U.S. Congress bailed out the banks, while millions of families lost their homes to foreclosure.
As history has amply demonstrated, all societies tend to polarize between creditors and debtors. But while this tendency is universal, it can and must be reversed for the sake of economic balance and indeed, our very survival.
Prof. Michael Hudson is a veteran of Wall Street and Distinguished Research Professor of Economics at the University of Missouri at Kansas City. His latest book is “…and forgive them their debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year.”