By Michael Hudson – excerpts.
Many people think that debt and the payment of interest and the fact that all debtors have to pay their debts, it’s assumed that the rules of finance are universal, they’ve always been this way, and that there is no alternative. You could say that the political message of modern economic history is there is no alternative and there never has been an alternative. Therefore, there is not any alternative in the future. All debts have to be paid and creditor interests have to take priority over debtor interests and those of the indebted society as a whole.
Well, beginning in the 1980s, I thought of writing a long history of how countries were ruined by their foreign creditors. I began really in the 18th and 19th century. Then I went back to classical antiquity. And I found out by about 1982 that there was this whole undiscovered or unwritten-about area of the ancient Near East and debt cancellations. And since what I’d been writing in the 1970s was all about the fact that the Third World countries, the Global Majority, cannot pay their foreign debts.
The fact that early societies coped with the debt problem, not by letting the creditors foreclose and property passing into their hands, but by writing down the debts so that they would maintain a balance between what was owed and what could be paid.
It took about 25 years, working with Harvard University that put together, or let me put together, a group of Assyriologists and Egyptologists and anthropologists to look at the very origins of debt and economic relations and privatization and land ownership and land rent in the ancient Near East.
I wanted to start really at the beginning and look at how the original idea of debt service, of interest payments, of land tenure were all put in place already in the third millennium BC, and how these dynamics changed over time. That took me until about 2015, from I think 1994 through 2015, to write the ancient Near Eastern five volumes of colloquia that I published there.
Then I began to follow up what happened in antiquity. I subtitled that book, The Turning Point. Most people think of Greece and Rome and Western civilization as just the beginning of everything, as if somehow Greece and Rome developed their economic practices and their social practices out of primitive tribes that somehow developed.
A lot of this was simple racism, that it had to be the Anglo-Saxons that developed the economics. It couldn’t have been the Mesopotamians or the Egyptians, much less Easterners, who did any of this.
Starting the history with Greece and Rome misses the point that they were sort of on the periphery of 3,000 years of development from Sumer to Babylonia to Assyria to Judea and Israel.
All of these Near Eastern countries had a common practice. The common practice was what the Jewish religion called the Jubilee Year, the cancellations of debts in the 50th year that was put at the very center of Mosaic law in Leviticus chapter 25. The Jewish laws were taken word for word from the Babylonian practice. You’d cancel the debts, personal debts, not the commercial debts, but the personal debts that were due.
You’d liberate the bond servants that were pledged and you’d restore lands to people who lost them. And that way you prevented an oligarchy from developing and taking over all of the land.
What happened in the 8th century BC was, there was a really bad climate from about 1200 BC to about 800 BC. Populations couldn’t make it on the land that they lived on. There was a great population movement. There was a great shrinkage of population. And there was really a dark age. Writing disappeared. Before 1200 BC, you had syllabic scripts. When writing was reinvented, it was the alphabetic script from the Phoenician countries and then the Jewish lands.
Gradually you had in this dark age warlords or mafia families taking over local districts and local cities. Classical historians themselves have used the term mafiosi states for these small cities.
Greece and Rome were very different political environments from the Near East. All the Near Eastern countries had kings, had central rulers. Their role was to preserve economic balance, to preserve an army, a fighting force of citizenry that would fight to either defend or sometimes attack enemies.
The idea was, kings didn’t want an independent oligarchy to develop because if an oligarchy developed, they would end up indebting the population and the indebted population would lose its lands to the oligarchy and would have to go and work for the creditors.
But Greece and Rome in the West didn’t have any practice like that. So gradually you had the revival of trade along the Mediterranean and the Aegean in the 8th century BC. Then you had Assyrian traders, Phoenician traders coming, and they brought weights and measures and commercial practices to Greece and to Italy. And these practices included charging of debt.
There was no indication of charging of debt in Greece or anywhere else in the Mediterranean before the 8th century. In the Mycenaean culture before 1200 BC, there was no interest bearing debt. This was brought to Greece and Rome, and this was something completely novel. And the mafiosi leaders of local cities immediately did what wealthy people would have liked to have done in Judea and Babylonia.
They would have liked to make loans to debtors who would pledge their land and mostly their labor, and then the debtors would have to work off their debts by working for the creditors, and ultimately they’d lose their land and they’d be absorbed in a dependency relation to the creditors.
That was prevented from happening in the Near East because rulers prevented it. And if they didn’t prevent it, they would be overthrown.
Well, by the 8th century BC, you had a similar evolutionary process occurring in Greece and Rome. Starting in Corinth, you had reformers, usually from the leading families, saying, “Look, we can’t just have a dictatorship and impoverish everybody just to make these mafiosi families rich. We’ve got to overthrow them. We’re going to cancel the debts and we’re going to redistribute the land.”
Same thing in Italy. The Roman kings, according to the Roman historians, all prevented an oligarchy from developing by making sure that the people who came to Rome would have their own access to land. They wouldn’t lose it to creditors. And to make sure that the kings wouldn’t represent the oligarchy, Rome would appoint kings from other regions. They wouldn’t appoint one of their own leading families as kings. They were always an outsider.
Persia had had the same practice of making sure that Persian cities would have outside rulers so that they wouldn’t get involved in the internecine conflicts and favoritism among families.
Well, Rome became a magnet for people who ran away from very centralized, mafiosi-like states. Rome was originally settled by fugitives. Fugitives were runaways in flight. This practice of flight is found all the way through the Bronze Age in Mesopotamia. Debtors would avoid falling into debt bondage just by running away. By the 14th century BC in Mesopotamia, they were called the hapiru. And they seemed to be the predecessors of the Hebrew speakers.
The hapiru were just sort of like pirate gangs or armed gangs who had run away. And they were very egalitarian among themselves. They said, “We’re not going to let inequality develop as it developed in the countries that we’ve run away from.”
A similar thing apparently happened in Italy. People ran out to Rome and Rome built up a kind of proto-democracy under the kings. But the oligarchy overthrew them in 509 BC. And the oligarchs spent the next five centuries trying to fight against anyone who would try to cancel the debts and redistribute the land. And that was the constant cry throughout all of antiquity.
I mentioned Corinth before. In Sparta, you had leaders come who would redistribute the land that they grabbed from the neighboring helots that they enslaved. They banned money altogether just to prevent debt to the largest amount, largest degree possible.
So for the next five centuries, from Greece all the way to Italy, you had one revolution after another urging exactly the policy that had preserved stability in the Near East. Cancel the debts, redistribute the land, and prevent an oligarchy from concentrating all the wealth and all the land in their own hands.
In Rome, certainly, you have century after century, any popular leader who said, we’ve got to preserve economic balance by canceling the debts and not letting people lose their land, they were assassinated. The typical oligarchic political response was violence and political assassination. And that went right down to the second century when the leading reformers were killed.
Catiline and his army urged that cancellation, he was killed. And finally, Julius Caesar was killed because they had feared that he was going to cancel the debts, although he only canceled the debts of the wealthy people, not really the poor people.
So I find the common theme that made Western civilization different from everything that went before was the fact that they didn’t cancel the debts, that Western civilization let an oligarchy take over. Instead of the basic rule, that debts have to be written down to the ability to pay, Rome introduced a pro-creditor law. All the debts have to be paid no matter what the social consequences are, no matter how much society is injured by families losing their land and the land being concentrated, the money being concentrated, the wealth being concentrated and political power being concentrated in the hands of a creditor oligarchy.
A debt is a debt, and it has to be paid. Well, the Roman law is still the philosophy of modern law. The whole modern legal system is still based on that of Greece and Rome.
The Collapse of Antiquity is inextricably linked with debt, the assassination of politicians who advocated debt write-downs.
