A Review of Michael Hudson’s new book AND
FORGIVE THEM THEIR DEBTS
To say that Michael Hudson’s new book And Forgive Them Their Debts: Lending, Foreclosure, and Redemption from
Bronze Age Finance to the Jubilee Year (ISLET 2018) is profound is
an understatement on the order of saying that the Mariana Trench is deep. To
grasp his central argument is so alien to our modern way of thinking about
civilization and barbarism that Hudson quite matter-of-factly agreed with me
that the book is, to the extent that it will be understood, “earth-shattering”
in both intent and effect. Over the past three decades, gleaned (under the
auspices of Harvard’s Peabody Museum) and then synthesized the scholarship of
American and British and French and German and Soviet assyriologists (spelled
with a lower-case ato denote collectively all who study the various civilizations of ancient
Mesopotamia, which include Sumer, the Akkadian Empire, Ebla, Babylonia, et al.,
as well as Assyria with a capital A). Hudson demonstrates that we, twenty-first century globalists, have
been morally blinded by a dark legacy of some twenty-eight centuries of decontextualized history. This has left
us, for all practical purposes, utterly ignorant of the corrective
civilizational model that is needed to save ourselves from tottering into bleak
neo-feudal barbarism.
This corrective model actually
existed and flourished in the economic functioning of Mesopotamian societies
during the third and second millennia B.C. It can be termed Clean Slate
amnesty, a term Hudson uses to embrace the essential function of what was
called amargi and níg-si-sá in Sumerian, andurārum and mīšarum in Akkadian (the language
of Babylonia), šudūtu and kirenzi in Hurrian, para tarnumar in Hittite, and deror (דְּרוֹר) in Hebrew: It is the
necessary and periodic erasure of the debts of small farmers — necessary
because such farmers are, in any society in which interest on loans is
calculated, inevitably subject to being impoverished, then stripped of their
property, and finally reduced to servitude (including the sexual servitude of
daughters and wives) by their creditors, creditors. The latter inevitably seek
to effect the terminal polarization of society into an oligarchy of predatory
creditors cannibalizing a sinking underclass mired in irreversible debt
peonage. Hudson writes: “That is what creditors really wanted: Not merely the
interest as such, but the collateral — whatever economic assets debtors
possessed, from their labor to their property, ending up with their lives” (p.
50).
And such polarization is, by
Hudson’s definition, barbarism. For what is the most basic condition of civilization,
Hudson asks, other than societal organization that effects lasting “balance” by
keeping “everybody above the break-even level”?
“Mesopotamian societies were
not interested in equality,” he told me, “but they were civilized. And they
possessed the financial sophistication to understand that, since interest on
loans increases exponentially, while economic growth at best follows an
S-curve. This means that debtors will, if not protected by a central authority,
end up becoming permanent bondservants to their creditors. So Mesopotamian
kings regularly rescued debtors who were getting crushed by their debts. They
knew that they needed to do this. Again and again, century after century, they
proclaimed Clean Slate Amnesties.”
Hudson also writes: “By liberating
distressed individuals who had fallen into debt bondage, and returning to
cultivators the lands they had forfeited for debt or sold under economic
duress, these royal acts maintained a free peasantry willing to fight for its
land and work on public building projects and canals…. By clearing away the
buildup of personal debts, rulers saved society from the social chaos that
would have resulted from personal insolvency, debt bondage, and military
defection” (p. 3).
Marx and Engels never made such
an argument (nor did Adam Smith for that matter). Hudson points out that they
knew nothing of these ancient Mesopotamian societies. No one did back then.
Almost all of the various kinds of assyriologists completed their
archaeological excavations and philological analyses during the twentieth
century. In other words, this book could not have been written until someone
digested the relevant parts of the vast body of this recent scholarship. And
this someone is Michael Hudson.
So let us reconsider Hudson’s
fundamental insight in more vivid terms. In ancient Mesopotamian societies it
was understood that freedom was preserved by protecting debtors. In what we
call Western Civilization, that is, in the plethora of societies that have
followed the flowering of the Greek poleis beginning in the eighth century B.C.,
just the opposite, with only one major exception (Hudson describes the
tenth-century A.D. Byzantine Empire of Romanos Lecapenus), has been the case:
For us freedom has been understood to sanction the ability of creditors to
demand payment from debtors without restraint or oversight. This is the freedom
to cannibalize society. This is the freedom to enslave. This is, in the end,
the freedom proclaimed by the Chicago School and the mainstream of American
economists. And so Hudson emphasizes that our Western notion of freedom has
been, for some twenty-eight centuries now, Orwellianin the most literal sense of
the word: War
is Peace • Freedom is Slavery • Ignorance is Strength. He writes: “A constant
dynamic of history has been the drive by financial elites to centralize control
in their own hands and manage the economy in predatory, extractive ways. Their
ostensible freedom is at the expense of the governing authority and the economy
at large. As such, it is the opposite of liberty as conceived in Sumerian
times” (p. 266).
And our Orwellian, our neoliberal notion of unrestricted
freedom for the creditor dooms us at the very outset of any quest we undertake
for a just economic order. Any and every revolution that we wage, no matter how
righteous in its conception, is destined to fail.
And we are so doomed, Hudson
says, because we have been morally blinded by twenty-eight centuries of
deracinated, or as he says, decontextualized history. The true roots of Western Civilization lie not in
the Greek poleis that lacked royal
oversight to cancel debts, but in the Bronze Age Mesopotamian societies that
understood how life, liberty and land would be cyclically restored to debtors
again and again. But, in the eighth century B.C., along with the alphabet
coming from the Near East to the Greeks, so came the concept of calculating
interest on loans. This concept of exponentially-increasing interest was
adopted by the Greeks — and subsequently by the Romans — without the balancing
concept of Clean Slate amnesty.
So it was inevitable that, over
the centuries of Greek and Roman history, increasing numbers of small farmers
became irredeemably indebted and lost their land. It likewise was inevitable that
their creditors amassed huge land holdings and established themselves in
parasitic oligarchies. This innate tendency to social polarization arising from
debt unforgiveness is the original and incurable curse on our
post-eighth-century-B.C. Western Civilization, the lurid birthmark that cannot
be washed away or excised. In this context Hudson quotes the classicist Moses
Finley to great effect: “…. debt was a deliberate device on the part of the
creditor to obtain more dependent labor rather than a device for enrichment
through interest.” Likewise he quotes Tim Cornell: “The purpose of the ‘loan,’
which was secured on the person of the debtor, was precisely to create a state
of bondage”(p. 52 — Hudson earlier made this point in two colloquium volumes he
edited as part of his Harvard project: Debt and Economic Renewal in the Ancient Near
East,
and Labor
in the Ancient World).
Hudson is able to explain that
the long decline and fall of Rome begins not, as Gibbon had it, with the death
of Marcus Aurelius, the last of the five good emperors, in A.D. 180, but four
centuries earlier, following Hannibal’s devastation of the Italian countryside
during the Second Punic War (218-201 B.C.). After that war the small farmers of
Italy never recovered their land, which was systematically swallowed up by
the prædia (note the etymological
connection with predatory), the latifundia, the great oligarchic estates: latifundiaperdidere Italiam
(“the great estates destroyed Italy”), as Pliny the Elder observed. But among
modern scholars, as Hudson points out, “Arnold Toynbee is almost alone in
emphasizing the role of debt in concentrating Roman wealth and property
ownership” (p. xviii) — and thus in explaining the decline of the Roman Empire.
“Arnold Toynbee,” Hudson
writes, “described Rome’s patrician idea of ‘freedom’ or ‘liberty’ as limited
to oligarchic freedom from kings or civic bodies powerful enough to check
creditor power to indebt and impoverish the citizenry at large. ‘The patrician
aristocracy’s monopoly of office after the eclipse of the monarchy [Hudson
quotes from Toynbee’s book Hannibal’s Legacy] had been used by the patricians
as a weapon for maintaining their hold on the lion’s share of the country’s
economic assets; and the plebeian majority of the Roman citizen-body had
striven to gain access to public office as a means to securing more equitable
distribution of property and a restraint on the oppression of debtors by
creditors.’ The latter attempt failed,” Hudson observes, “and European and
Western civilization is still living with the aftermath” (p. 262).
Because Hudson brings into
focus the big picture, the pulsing sweep of Western history over millennia, he
is able to describe the economic chasm between ancient Mesopotamian
civilization and the later Western societies that begins with Greece and Rome:
“Early in this century [i.e. the scholarly consensus until the 1970s]
Mesopotamia’s debt cancellations were understood to be like Solon’s
seisachtheia of 594 B.C. freeing the Athenian citizens from debt bondage. But
Near Eastern royal proclamations were grounded in a different
social-philosophical context from Greek reforms aiming to replace landed
creditor aristocracies with democracy. The demands of the Greek and Roman
populace for debt cancellation can rightly be called revolutionary [italics
mine], but Sumerian and Babylonian demands were based on a conservative
tradition grounded in rituals of renewing the calendrical cosmos and its
periodicities in good order. The Mesopotamian idea of reform had ‘no notion
[Hudson is quoting Dominique Charpin’s book Hammurabi of Babylon here] of what
we would call social progress. Instead, the measures the king instituted under
his mīšarum were measures to bring back the original order [italics mine]. The
rules of the game had not been changed, but everyone had been dealt a new hand
of cards’” (p. 133). Contrast the Greeks and Romans: “Classical Antiquity,”
Hudson writes, “replaced the cyclical idea of time and social renewal with that
of linear time. Economic polarization became irreversible, not merely
temporary” (p. xxv). In other words: “The idea of linear progress, in the form
of irreversible debt and property transfers, has replaced the Bronze Age
tradition of cyclical renewal” (p. 7).
After all these centuries, we
remain ignorant of the fact that deep in the roots of our civilization is
contained the corrective model of cyclical return – what Dominique Charpin
calls the “restoration of order” (p. xix). We continue to inundate ourselves
with a billion variations of the sales pitch to borrow and borrow, the
exhortation to put more and more on credit, because, you know, the future’s so
bright I gotta wear shades.
Nowhere, Hudson shows, is it
more evident that we are blinded by a deracinated, by a decontextualized
understanding of our history than in our ignorance of the career of Jesus.
Hence the title of the book: And Forgive Them Their Debts and the cover
illustration of Jesus flogging the moneylenders — the creditors who do not
forgive debts — in the Temple. For centuries English-speakers have recited the
Lord’s Prayer with the assumption that they were merely asking for the
forgiveness of their trespasses, their theological sins: “… and forgive us our
trespasses, as we forgive those who trespass against us….” is the translation
presented in the Revised Standard Version of the Bible. What is lost in
translation is the fact that Jesus came “to preach the gospel to the poor … to
preach the acceptable Year of the Lord”: He came, that is, to proclaim a
Jubilee Year, a restoration of deror for debtors: He came to institute a Clean
Slate Amnesty (which is what Hebrew דְּרוֹר connotes in this context).
So consider the passage from
the Lord’s Prayer literally: … καὶ ἄφες ἡμῖν
τὰ ὀφειλήματα ἡμῶν:
“… and send away (ἄφες) for us our debts (ὀφειλήματα).”
The Latin translation is not only grammatically identical to the Greek, but
also shows the Greek word ὀφειλήματα revealingly translated as
debita: … et dimitte nobis debita nostra: “… and discharge (dimitte) for us our
debts (debita).” There was consequently, on the part of the creditor class, a
most pressing and practical reason to have Jesus put to death: He was demanding
that they restore the property they had rapaciously taken from their debtors.
And after His death there was likewise a most pressing and practical reason to
have His Jubilee proclamation of a Clean Slate Amnesty made toothless, that is
to say, made merely theological: So the rich could continue to oppress the
poor, forever and ever. Amen.
Just as this is a profound
book, it is so densely written that it is profoundly difficult to read. I took
six days, which included six or so hours of delightful and enlightening
conversation with the author himself, to get through it. I often availed myself
of David Graeber’s book Debt: The First 5,000 Years when I struggled to follow
some of Hudson’s arguments. (Graeber and Hudson have been friends, Hudson told
me, for ten years, and Graeber, when writing Debt; The First 5,000 Years,
relied on Hudson’s scholarship for his account of ancient Mesopotamian
economics, cf. p. xxiii). I have written this review as synopsis of the book in
order to provide some help to other readers: I cannot emphasize too much that
this book is indeed earth-shattering, but much intellectual labor is required
to digest it.
ADDENDUM: Moral Hazard
When I sent a draft of my
review to a friend last night, he emailed me back with this question:
— Wouldn’t debt cancellations
just take away any incentive for people to pay back loans and, thus, take away
the incentive to give loans? People who haven’t heard the argument before and
then read your review will probably be skeptical at first.
Here is Michael Hudson’s
response:
— Creditors argue that if you
forgive debts for a class of debtors – say, student loans – that there will be
some “free riders,” and that people will expect to have bad loans written off.
This is called a “moral hazard,” as if debt writedowns are a hazard to the
economy, and hence, immoral.
This is a typical example of
Orwellian doublespeak engineered by public relations factotums for bondholders
and banks. The real hazard to every economy is the tendency for debts to grow
beyond the ability of debtors to pay. The first defaulters are victims of junk
mortgages and student debtors, but by far the largest victims are countries
borrowing from the IMF in currency “stabilization” (that is economic
destabilization) programs.
It is moral for creditors to
have to bear the risk (“hazard”) of making bad loans, defined as those that the
debtor cannot pay without losing property, status or becoming insolvent. A bad
international loan to a government is one that the government cannot pay except
by imposing austerity on the economy to a degree that output falls, labor is
obliged to emigrate to find employment, capital investment declines, and
governments are forced to pay creditors by privatizing and selling off the
public domain to monopolists.
The analogy in Bronze Age
Babylonia was a flight of debtors from the land. Today from Greece to Ukraine,
it is a flight of skilled labor and young labor to find work abroad.
No debtor – whether a class of debtors such as students or victims of
predatory junk mortgages, or an entire government and national economy – should
be obliged to go on the road to and economic suicide and self-destruction in
order to pay creditors. The definition of statehood – and hence, international
law – should be to put one’s national solvency and self-determination above
foreign financial attacks. Ceding financial control should be viewed as a form
of warfare, which countries have a legal right to resist as “odious debt” under
moral international law.
The basic moral financial principal should be that creditors should
bear the hazard for making bad loans that the debtor couldn’t pay — like the
IMF loans to Argentina and Greece. The moral hazard is their putting creditor
demands over the economy’s survival.
