Debt as a moral obligation

We consider the repayment of debt to be a moral obligation and the refusal or inability to pay one’s debts to be a moral failure or even a criminal act.

Surely one has to pay one’s debt.

• a moral standard applied to economic scenario.
• the inherent risk of lending
  • if all loans were retrievable the results would be disastrous.
  • no reason not to make a stupid loan IMF - International Monetary Fund Resetting the International Monetary (Non)System | Oxford Academic The IMF: The World’s Controversial Financial Firefighter | Council on Foreign Relations OPEC countries OPEC: Definition, Members, History, Goals

Why is debt so important?

Consumer debt is the lifeblood of our country. All modern nation-states are built on deficit spending. …a central issue of international politics.

• What is the alternative?
• Debt! Why don’t we know what it is?

…there’s no way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt.

• transfer blame and guilt to the victim: “You owe me your life… because I didn’t kill you.”

…the flexibility of the concept of debt is the basis of its power.

Debt = evidence of guilt, victor’s justice

• Third World Debt - reparations to their conquerors

  • France and Madagascar - 1895

• Also, a way to punish the wrong winners

  • France and the Republic of Haiti

    Debt = tribute

• Sometimes owing debt to someone means YOU have power over them, they have an obligation to you. The debt is a representation of that obligation.

• US foreign debt = treasury bond

• Whether it’s guilt or tribute depends on who’s holding the gun

• Taxes and debts are closely linked

• Ongoing conflict between debtors and creditors

• Revolution in the ancient world: “Cancel all debts and redistribute the land.” (Moses Finley)

• the idea of the complicated and inconvenient pre-currency barter system 1776 - Adam Smith - professor of moral philosophy at University of Glasgow Behold: Economics!

• his whole barter problem theory

• Adam Smith #p

• John Locke #p

• Karl Menger #p

• Stanley Jevons 1871 versus Lewis Henry Morgan - economic descriptions

• Caroline Humphrey - Cambridge #p

  • “No example of a barter economy … has ever been described.”

• Barter does/did exist…between stranger and enemies

• Gift economies

• Elaborate barter economies tend to exist

  • after economic collapse
  • when you know about money, you just don’t have any
  • “reverting” to barter

• A. Mitchell-Innes #p

  • improvising credit systems because actual money was in short supply
  • 1913-14 Banking Law Journal

• Smith

  • The economy exists!
  • And it has rules!
  • And the rules are:
    • self-interest and an unfettered market and the invisible hand = general welfare
  • The assumption still = economies are vast barter systems. Money simplifies and modernizes them.
  • EXCEPT

…history shows that without money, such vast barter systems do not occur.

• The role of gov’t policy

• Credit theory - Chartalist - money is not a thing but an accounting tool, a unit of measurement - money measures debt - a coin = an IOU - German Historical School - G.F. Knapp 1905 #p - State Theory of Money - markets tend to spring up around ancient armies. Taxes!

• William Jennings Bryan #p

  • populist campaign
  • 1900 Free Silver platform
  • Wizard of Oz - Baum

• Panic of 1893

• Great Depression 1930s

• Keynesianism

  • John Maynard Keynes
  • Treatise on Money

• 1971 Nixon - eliminate gold standard

• fiat money

• weak link = taxes

• primordial debt theory

  • Michel Aglietta
  • Andre Orléans
  • Bruno Théret

• primordial debt = “that owed by the living to the continuity and durability of the society that secures their individual existence”

  • taxes are “a measure of our debt to the society that made us”

• Geoffrey Ingham - sociologist
  

• Berhard Laum - German historian

  • why are cattle used as money? or not? um.