…And Forgive Them Their Debts

UN speech, Mexico City, 1979

“I went to a meeting for the United Nations in Mexico City in 1979 on third world North/South debt. I was an advisor to UNITAR – the United Nations Institute for Training and Research – that was following Third World debt. I’d learned already on Wall Street – at Chase Manhattan Bank – that the Third World… most Latin American and African countries were absolutely at their limit, they couldn’t pay anymore debts. And I realized that the debts had to be cancelled”, says Hudson, adding:

“I gave a speech and there was literally a riot after it. There was a man – who I think was a CIA plant – who was a reporter and who said after I gave my speech that I’d said that the Third World would have to work hard to repay the debts. So I stood up and demanded an apology from the president of Mexico for permitting a CIA American operative to misrepresent and falsify what I was saying.”

Walk out

Hudson realized that his critics had difficulty understanding the idea that most debts couldn’t be paid and that that was natural that every economy tends to get out of balance and develop a larger amount of debt. The apparent lack of understanding and the inability of his critics to apologize, prompted him and other delegates to walk out.

It was during this time that Hudson began to advocate for the debt cancellation of Third World countries using the historical precedents within classical antiquity to bolster his case. “I realized that there were hints of something in Babylonia and Sumer”, says Hudson. The popular histories were all about the Sumerian literature, writing, how modern they were.”

Hudson referenced, among many others, the ancient ruler of the city state Lagash in Mesopotamia, Urukagina, who was best known for his reforms to combat corruption:

“The American Samuel Kramer said that when Urukagina cancelled the Sumerian debts in around 2200 B.C this was a tax reduction. He wrote a letter to the New York Times when Ronald Reagan was elected saying, ‘Ronald Reagan do what Urukagina did and cancel the debts’.

Research associate

Hudson collected all the debt cancellations he could find from Sumer and then after having subsequently been made research associate in Babylonian archaeology at Harvard’s Peabody Museum in 1984, co-created a colloquium that would write an economic history of the ancient Near East (ie southern Iraq – basically Sumer – going north along the Euphrates into Syria into Anatolia – now central Turkey – and then further eastward, what is now Iran).

From this, Hudson was able to conclude that, in relation to the ancient Near East, “a debt was really the imbalance in the various sectors of the economy.” For Hudson this posed a series of questions in relation to the interface between economy and debt in the region during that time. For instance: 

“How did the economy operate?”

“What was the role of debt?”

“What was the logic that led Bronze Age rulers to cancel debts when they’d taken to the throne?”

“Why didn’t the rest of Western civilization follow suit?”

The questions Hudson raises are relevant today in as much as they provide an impetus for their modern counterparts to acknowledge the links between societal problems and contemporary debt. Hudson’s historical contextual analysis helps us understand the nature of the modern economy.

Learning the lessons of ancient history, however, is what Hudson believes many people are resistant to:

“There is an active hatred and opposition of history before Greece and Rome – especially on the left” – argues Hudson. In countering Findlay’s notion that “the Near East has nothing to do with Western civilization”, Hudson says, “the fact is almost all of the techniques of economic enterprise, weights and measures, mythology, comes from the Near East.”

Anathema

“But”, says Hudson, “this has been expurgated from history because the very thought of debt cancellation, as preserving stability rather than causing a disaster, is anathema to the Chicago school, bankers and the economics department of the university.”

In other words, the prevailing historical world view orthodoxy is one in which the narrative perspectives of the ‘winners’ is hegemonic, embodied in neoliberal ideology. The prerequisite for maintaining such a worldview, is the obliteration – what Hudson refers to as a “frontal lobotomy” – of alternative histories that seek to question the prevailing dominant ideology.

One way of doing this has been the attempt to separate theological questions from the kind of historical treatment outlined by Hudson in his book:

“Economists don’t talk about religion or society or anything about how to trade in a market. And theologians act as if religions are all about religion and heaven and sex. Debt is left out”

The author outlines an explanation for the latter:

“I think part of the reason is when they translated the Bible into English, German and the vernacular, they didn’t know what many of the words meant and so they didn’t understand that most of the Bible was redacted by the returnees from the Babylonian captivity – people who came back from Babylon. And what they brought back from Babylon was this concept of a debt cancellation….They didn’t realize that the Ten Commandments were very largely about debt. ‘One shall not covet the neighbours wife’, means, you don’t make a loan to the guy so that he has to pledge his wife as a debt slave so that you can have your way with her.”

In other words, what today we conceive as adultery, was then a vehicle for debt.

Hudson continues:

“Thou shall not take the Lord’s name in vain,” means, if you’re a creditor you can’t swear that so-and-so owes you the money and he didn’t. Connected to the great destabilising factor in society during the first millennium B.C, was the notion that debts beyond the ability to be paid lead to bondage of the debtor and ultimately to forfeiture of the land to wealthy people who were beginning to group lands altogether…The neo Assyrian Empire held itself together by cancelling the debts regularly. And after them the Persians and the Babylonian Empire. But these are all looked at as somehow anomalies.”

Time machine

Despite the historical record outlined, Hudson claims that the economics profession continue to deny, in principle, that debt can be a destabilising factor:

“[I discussed with] some professor at Yale University about the history of money. He talked about the market crash of something like 1782 B.C. and argued there had to be a market crash because the debts were all cancelled….They assume that all debts can be paid [but] that has never been the case at any point in history”, says Hudson, who adds:

“So if you would have members of the Chicago school or the mainstream economists today get in a time machine, go back to Greece or Rome or Judea or Sumer or Babylonian and say, ‘We have some advice for you. Here’s how to organize a society.’ That society would have polarized very quickly, the population would have fallen into debt for the creditors, the land would be monopolized. The Kings would have been overthrown by a democracy for rich people (ie oligarchy). You’d have instability and the land would very quickly either be conquered by other countries or the people would just defect to whoever was going to overthrow their rotten Mafiosi running the country.”

Forgive them their sins

Hudson makes the point that in Indo-European, Hebrew and Babylonian languages, the word for sin and debt is the same. From an anthropological perspective the explanation for this is clear:

“If you injure somebody you would have to pay reparations or else you would have a feud”, reasons Hudson. Reparations signify an aspiration for justice. “So the result for creating an offence – a sin – is to pay the reparations debt. The debt and the reparations were considered two sides of the same coin. But in English, it’s been a more reductionist sort of translation…

Forgive them their debt is not something that the translator of the Bible and their sponsors looked very happily on. And the very thought of Jesus coming and saying, ‘I’ve come to cancel your debts, not to save you from the sin’, is not the way to make the Bible a bestseller”, says Hudson.

Vested interests

So it appears that there is whole range of vested interests at play in relation to the historical role religion has in helping to maintain the socioeconomic status-quo. The idea that the payment of debt should have priority instead of society having priority become a distinguishing feature of Western civilization around the time of the emergence of the Templars in the 12th century. Michael Hudson notes that the Templars developed the concept of banking, credit, foreclosure and lending against land which was taken out of the community in order to line their pockets. The whole religion, in other words, was all about how the papacy treated England similar to the way the European Union treats Greece today. Implicit in that is the notion that modern civilization is modeled on Rome, which as Hudson acknowledges, “is the exact opposite of the origins of civilization.”

Hudson expands on this point:

“Western civilization made an abrupt detour with Rome. Rome was never a democracy. The votes were weighted according to landholding rights and how much land and money you had. So it was very much like today – the donor class ran the votes, not the actual voters – who had very little impact. Rome destroyed Greece militarily first at the end of the third century when it was called in to help fight against the two kings of Sparta – Ages and Cleomenes – who cancelled the debts and were killed for it as followed by Nabis who also was destroyed.”

Hudson adds:

“Rome began to destroy northern Greece and Sparta at that time. It then destroyed Athens and Corinth in the middle of the second century B.C. And then during the Mithridatic Wars, the Roman dictator to be – Sulla – looted Athens and Asia Minor. He paid his army to come back to Rome and make himself dictator, his official title. He rewrote the constitution, murdered thousands of his enemies and bought up their property – at fire-sale prices – for himself and for his cronies like Crassus – who became the richest man in Rome after Sulla. Rome subsequently bequeathed its legacy of creditor-oriented law to Western Europe.”

The Romans were the equivalent of today’s neoliberals. “The key of neoliberalism”, posits Hudson, “is you have to kill everybody who’s not a neoliberal, who doesn’t share your belief. That was Roman neoliberalism. There was mass murder.”

Hence, the parallels with contemporary U.S foreign policy in relation, for example, to the Middle East and Latin America where the installation of dictators, the use of punishing sanctions and the funding of proxies as a means to control resources, is a common practice.

Hereditary oligarchies

Hudson remarks on Aristotle’s concept of how democracies tend to evolve into hereditary oligarchies and it’s relevance today:

“The first thing the oligarchy do – once they get rid of the Kings, tyrants and central government that could tax or regulate them – is they un-tax themselves, deregulate the economy and do what Margaret Thatcher and Ronald Reagan did – create an economy run for rich people”, says Hudson. “They then expurgate and rewrite history to say there is no alternative as if it’s always been that way. That’s what modern history is.”

But as the survival of the Sumer, Babylonia, Persia and the whole Near East civilisations show, maintaining stability and keeping  populations free from debt bondage is an economic model whose success has to be treated, is an anathema as if it couldn’t happen. “The Babylonian and Sumerian rulers had, in effect, a much more sophisticated model that is used by any government today”, says Hudson, adding:

“They knew the economy grew in an S curve. They knew debts grew faster than the ability to pay. And so when any new ruler would take the throne they would cancel the debts, claim a clean slate, liberate the bond servants and return lands that had been forfeited by debtors to their creditors in order to restore a independent self supporting peasantry that could serve in the army and provide the core of a labour duties which built up all of the public infrastructure.”

Hope in Jesus?

How could Hudson’s insightful and historical contextual analysis be used to influence U.S foreign policy in positive, rather than destructive, ways?

The author sees in the parabolic economic reforming messages of Jesus, some hope for the future:

“When he went back to his hometown – to the temple, to the synagogue to give a sermon – he unrolled the scroll of Isaiah that said, ‘I’ve come to proclaim the year of the Lord’ and Jesus said, “That is my mission here.” The people got so upset they drove him out of town. They didn’t like him and the Pharisees said, ‘We got to get rid of this guy,’ and Luke then said, ‘The Pharisees loved money.’ You know they didn’t like him. The Rabbinical school rejected the entirety of the Jewish Bible. They were the Atheists of their time. Judaism since Hillel has been essentially pro creditor, there’s been that strain in it. Other people tried to restore the Jubilee Year but that has been sort of subordinated to the history and obviously the Christians are no more eager – even less eager – to say this was the message of Jesus to proclaim the Jubilee Year and cancel the debts. Not what the oligarchy wants to do.”

Hudson adds:

“When he said he’d come to proclaim the Jubilee Year, what that meant was returning the land to the debtor who had forfeited it to the foreclosing creditor….Today he would be called a socialist because he advocated a mixed economy. There had to be a check to the power of the independent oligarchy and without checks and balances you’re going to have a one sided oligarchic takeover. Jesus was saying exactly what Socrates had said in the Republic… very similar reasoning although he didn’t read Socrates but it was spontaneous. It was sort of obvious from the logic of the time.”