'We Just Assume Monetary Debts Always Win'

What lead you to this book? When did the idea strike you, and how?
To be honest, it came out of activist projects more than anything else. I was fascinated by the moral power the idea of debt seemed to hold over people. That's why I start the book with a story about a garden party in Westminster Abbey where I am telling a very nice liberal lawyer about our campaigns against the IMF around 2000 and 2001, describing all the terrible things that happened as a result. How I myself had witnessed in Madagascar a place where probably 10,000 children died after the government had been forced to cut a mosquito eradication project — but the moment I mentioned our solution was to cancel the debts, they'd been startled. "But they borrowed the money! Surely people have to pay their debts!" and I asked myself.
 
How difficult was it to put the book together?
Well, it was quite a lot of work. I spent a couple years sneaking off every moment of my spare time and working on it obsessively. It's especially difficult because the research facilities available in London have really been allowed to decline over the years. To be honest, I suspect it's only that I was writing during a brief window of time when Google books was still making most of the texts of their books available that allowed me to write something that richly documented! It would take twice as long to write now.
 
Reading the book, one feels debtors are more sinned against when asked to repay their loans. Is that so? Do you really think it is right considering that borrowers would generally be from the weaker sections/countries and forgiving debt creates a moral hazard?
Well, moral hazard cuts both ways. Making all debts collectable no matter how irresponsible the loan makes a moral hazard too, as does backstopping lenders as we now do. But somehow no one ever talks about that one. But that's pretty consistent throughout history. All I am saying is that a loan is just a promise and it should be treated no differently than any other promise. Of course, if you make a promise you should try to keep it. Our whole society is made up of promises we make to one another. But we are in the habit of treating promises made it monetary terms to be somehow more sacred than any other — so if you have different conflicting ones, we just assume that the monetary debts always win.
 
That's why if politicians promise to provide free education, to make an obvious example, and then get elected and realise they can't do that and also repay the countries' loans at their specific terms and rates, well, so much for free education, it's the promise to the banks that cannot ever be renegotiated.
 
One point I make in the book though is that debts aren't always treated in this way. Debts between poor people are renegotiated all the time. Same is true of debts between the wealthy and powerful — in 2008, they made trillions of dollars of debt disappear when it was AIG or Citibank in trouble. It's just when the poor owe to the rich that debts have always tended to be treated as an absolute, sacred obligation. That tells you something.
 
Click to read a review of Debt: The First 5,000 Years

 

It is quite interesting that you have raised the issue of how slavery originated based on debt repayment. If we blow it up to say the conditionality clauses put by organisations such as IMF when giving loans, we are going back to similar economic slavery?
Absolutely, it's a form of debt peonage. And it follows lines of military power. You don't see a lot of creditor countries with small armies pushing around debtor countries with big ones.
 
I have always said that debt is the cleverest means ever invented to take a sheer inequality of power, of violent extraction, and not only make it seem moral, but, to make it seem like it's the victim who's to blame. Mafiosi understand this. So do the heads of conquering armies. And often the debt becomes a way of sealing in the power relation, as with most formerly colonised countries, that somehow always seems to remain in the debt of the countries that once conquered them.
 
Your take on religion and its ambivalent view of debt is quite novel. Could you explain a little more on how this really works across communities?
Well, the fascinating thing to me is the way so many of the great world religions start by saying that debt and sin are the same thing, that paying your debts is indeed the very basis of morality... and then end up saying "but actually, that isn't true." Hence in the Brahmanas, "debt" and "sin" are the same word, and your life is a debt you owe to the gods, all obligations are debts — but by the time you are done with it, you realise, you can only pay the debt by realising it doesn't really exist, you are part of what you owe it to.
 
In the Bible it's the same thing, in Aramaic debt and sin are the same word, even the Lord's prayer really says "forgive us our debts"... but then, ultimately, it's not paying your debts that's sacred, it's debt forgiveness, redemption. The obvious question then is: why do they have to start with that notion that morality is just a matter of paying one's debts to begin with? And that's where the politics of the time I think become crucial. Obviously we can't know what people in ancient India or Judaea were arguing about when they were hanging around in the tavern, but clearly, the language of debt, questions of who owes what to whom, were everywhere. Again
 

We have seen countries such as Greece or Spain which borrowed money and did not quite run their countries well enough, but now do not have the money to repay. To keep the system alive there has to be further assistance given by the ECB, etc. how would you interpret this kind of a phenomenon in the context of debt history?
The language here is telling. Why doesn't anyone talk about banks that didn't run their business very well because they lent to countries unlikely to be able to pay them back? Why does "running a country well" mean being able to service loans properly? This isn't a language of economic efficiency. It's a language of morality.
 
Do you think that lenders should separate their assistance given to borrowers (be it people or countries) into loans and aid — if we lend money to say a poor country, a part should be grant that need to be repaid while the rest should be paid.
Personally I think we should just hit the "reset" button and cancel such debts entirely. It's been done many, many times in world history. It's a much simpler and more elegant solution. And above all, it will bring home to us that money really is just something we make up. It's a series of promises we make to one another. Of course such things can and have always been rearranged.
 
When you speak of morality of debt it raises some interesting debate. Can one practically take this view in a commercial economy? When we talk of market mechanisms, we cannot bring in emotions, and morality is even one step ahead as it gets philosophical?
I think that is itself a moral position, and a deeply perverse one. Market economies are entirely based on a peculiar sort of morality, whereby one is rational, self-interested, but at the same time law-abiding, pays one's debts, etc., etc. (that is, unless one is truly wealthy and powerful, in which case, practically no rules apply.) So, it's not a question of whether we take a moral position. The very idea of a "market" or a "commercial society" is a moral system.
 
What’s your energy drink?
To be honest I'm still stuck on espresso. When I'm working, I drink like four double espressos a day.
 
What's the hardest thing about being a writer?
Never knowing whether or when you will be paid. Actually this is a classical example of how the sacred obligation to pay one's debts only exists for the poor. Employers rarely seem to feel the grip of sacred morality in this regard.
 
What are you reading now?
The Problem With Work: Feminism, Marxism, Antiwork Politics, and Postwork Imaginaries by Kathi Weeks.
 
What’s next?
I have been involved in something called The People's Bailout. (http://rollingjubilee.org/)

(Compiled by Jinoy Jose P.)

businessworldbooks(at)gmail(dot)com