Sunday, October 09, 2011

Debt Forgiveness

The invention of debt in ancient Mesopotamia, combined with human nature and the vagaries of the harvest, produced periodic mass impverishments, reducing a large fraction of the population to debt peonage. David Graeber describes the result:

The effects were such that they often threatened to rip society apart. If for any reason there was a bad harvest, large proportions of the peasantry would fall into debt peonage; families would be broken up. Before long, lands lay abandoned as indebted farmers fled their homes for fear of repossession and joined semi-nomadic bands on the desert fringes of urban civilization. Faced with the potential for complete social breakdown, Sumerian and later Babylonian kings periodically announced general amnesties: “clean slates,” as economic historian Michael Hudson refers to them. Such decrees would typically declare all outstanding consumer debt null and void (commercial debts were not affected), return all land to its original owners, and allow all debt-peons to return to their families.

Graeber, David (2011-07-12). Debt: The First 5,000 Years (p. 65). Melville House. Kindle Edition.

It hardly needs to be mentioned that we face related problems today. The question becomes, how do we devise the forgiveness, i.e., who takes the fall.