Economic History Conclusion

I hope you enjoyed my summaries of the ISCANEE volumes edited by Michael Hudson.  I apologize for the length of those posts. These are essentially the “long” versions; the “rough draft'” i.e. summaries for my own use. If I were to use them in a book chapter, for example, I would summarize and condense a lot of the material, with much shorter citations. By the way, that’s true of a lot of the stuff on this blog. Of course, there’s far more material in these books than I can reasonably summarize, but I tried to hit the most notable points and the most interesting ideas.

Here’s Wikipedia’s summary on Michael Hudson’s biography page:

In 1984, Hudson joined Harvard’s archaeology faculty at the Peabody Museum as a research fellow in Babylonian economics. A decade later, he was a founding member of ISCANEE (International Scholars Conference on Ancient Near Eastern Economies), an international group of Assyriologists and archaeologists that has published a series of colloquia analyzing the economic origins of civilization. This group has become the successor to Karl Polanyi’s anthropological and historical group of a half-century ago. Four volumes co-edited by Hudson have appeared so far, dealing with privatization, urbanization and land use, the origins of money, accounting, debt, and clean slates in the Ancient Near East (a fifth volume, on the evolution of free labor, is in progress)(This is now out-CH). This new direction in research is now known as the New Economic Archaeology.

I don’t think I’m going to review the other two volumes in the series. There is one on the details of the accounting techniques which were developed in Babylonia: Creating Economic Order: Record-keeping Standardization and the Development of Accounting in the Ancient Near East. I think that’s been covered in enough detail in the other volumes. We don’t need to get into the nitty-gritty of how they did it.

The other remaining book is essentially the “main course” in the series: Debt and Economic Renewal in the Ancient Near East. From my understanding, the first two books–on privatization and urbanization, were mainly about setting the groundwork for this volume. After that volume was published, additional volumes on accounting and labor in the ancient world were published to round out the picture (with the one on labor being the last and most recent book released).

However, I think Hudson’s work on debt cancellation is pretty well known by most people at this point (at least, the people likely to read this blog), so I don’t know if the book would shed any further light on this topic. I think the basics are quite well-known: debt grows faster than the ability to repay; ancient societies recognized this as a threat to the stability of their societies, so they implemented regular debt cancellations including the Jubilee Year described in the Bible. Then, when debt and interest-bearing loans came to the West, the debt cancellations were forgotten, leading the social disintegration in Greece and Rome. Those societies reconfigured themselves around money economies and held debt claims sacrosanct. Eventually, creditor oligarchies led to slavery, and, later, the disintegration of the Roman empire, serfdom, and the Middle Ages.

So, in lieu of any more reviews, I’ll just link to a recent talk by Hudson himself describing the inception of the books and their conclusions: If We Don’t Solve The Problem Of Economic Polarization, We’re Going To Go Into Another Dark Age. With that we’ll conclude this economic history phase for now. Some highlights:

The rulers had what we would call an economic model. They realized that every economy tended to become unstable as a result of compound interest. We have the training tablets that they trained scribal students with, around 1800 or 1900 BC. They had to calculate: How long does it take debt to double its size, at what we’d call 20% interest? The answer is 5 years. How does long it take to multiply four-fold? The answer is 10 years. How much to multiply 64 times? The answer is 30 years. Well you can imagine how fast the debts grew.

So they knew how the tendency of every society was that people would run up debts. Now when they ran up debts in Sumer and Babylonia, and even in in Judea in Jesus’ time, they didn’t borrow money from money lenders. People owed debts because they were in arrears: They couldn’t pay the fees owed to the palace. We might call them taxes, but they actually were fees for public services. And for beer, for instance. The palace would supply beer and you would run up a tab over the year, to be paid at harvest time on the threshing floor. You also would pay for the boatmen, if you needed to get your harvest delivered by boat. You would pay for draught cattle if you needed them. You’d pay for water. Cornelia Wunsch…found that 75% of the debts, even in neo-Babylonian times …were arrears.

Sometimes the harvest failed…[a]nd…they couldn’t pay their fees and other debts. Hammurabi canceled debts four or five times during his reign…because either the harvest failed or there was a war and people couldn’t pay. One reason they would cancel debts is that most debts were owed to the palace or to the temples, which were under the control of the palace. So you’re canceling debts that are owed to yourself.

Rulers had a good reason for doing this. If they didn’t cancel the debts, then people who owed money would become bondservants to the tax collector or the wealthy creditors, or whoever they owed money to. If they were bondservants, they couldn’t serve in the army. They couldn’t provide the corvée labor duties – the kind of tax that people had to pay in the form of labor. Or they would defect. If you wanted to win a war you had to have a citizenry that had its own land, its own means of support.

Basically what you had in the Bronze Age and every ancient society was a different concept of time than you have today. You had the concept of time as circular. That meant economic renewal. The idea was that every new ruler, every new reign, began time all over again. It wasn’t really time, it was really the economy had to start from a new position of equilibrium. This equilibrium – basically freedom from debt, the ability to support yourself – had to start afresh.

Economists look at ancient Near Eastern history and think: “You couldn’t have had Clean Slates, you couldn’t have canceled the debts, because then you would have had anarchy.” The fact is that proclaiming a Clean Slate was the way to avoid anarchy. It was the way to restore people to self-sufficiency. So in Sumer and in Babylon, every major ruler would proclaim a Clean Slate. We have the records to detail this century after century. The word that they used was andurarum, a word that has the sense of “a river flowing.” You sort of restore the flow. It really meant that bond servants were free to go back to their families.

These Clean Slates had three elements: Number one, they would cancel the personal debts – not the business debts, not the debts denominated in silver among merchants and other rich people. These debts were business contracts, and they remained in place. It was the petty debts, the consumer debts, that were canceled. Number two, lands that had been forfeited were restored: the crop rights, if they’d been pledged to creditors. And three, all the human beings who had been pledged as bondservants would be free to return to their families.

What happened between writing the Bible…and Jesus?…We don’t know really what happened up until the time of Jesus, except that there was at that time the same war between creditors and debtors that there was in Rome. Every Roman historian of the time – Livy, Plutarch, Diodorus – they all blamed the fall of the Roman republic on the creditors behavior of assassinating the debtors’ leaders, the rule by violence and the takeover of the economy by creditors after centuries of debt war. We know that this was going on throughout the whole ancient world, including in the Near East.

We know that in the very first sermon that Jesus gave when he returned to Nazareth…was to proclaim freedom for the captives, and release for the prisoners, and to proclaim the year of the Lord’s favor, deror, which meant, basically, a Clean Slate. …What does it mean: Is he saying forgive us our sins, or forgive us the debts? Well, most of religion’s leaders, certainly the vested interests, say: “He’s talking about sins,” that religion and Christianity is all about sin, it’s not about debt.

Actually, the word for sin and debt is the same in almost every language. Schuld, in German, means the debt as well as the offense or the sin. It’s devoir in French. Basically you had exactly the same duality in meaning Akkadian, the Babylonian language. The reason goes back to an idea, called wergeld in parts of Europe, which is universal – we have it in Babylonia too. If you injure somebody: if you hurt him or you kill him, either you have to go into exile in the city of refuge, or the family gets to kill you, or you settle matters by paying. And the payment – the Schuld or the obligation – expiates you of the sin. So the word for the payment of the offense is the same as the offense, and you’d expect this similarity to occur in every language.

Some of the Qumran [Dead Sea] scrolls really proved that what was at issue was debt. ..

Well, you can imagine how upset most religions were when they found these scrolls. They said they must be by this sectarian group, the Essenes. They must be a radical group, sort of like the Trotskyists. We can just sort of ignore them. But it turns out now that biblical scholars have found that the Qumran caves seem to be the library of the Temple of Jerusalem. During the wars with Rome they moved the library to the caves of Qumran in order to keep them from being destroyed when the Temple was sacked and burned down. So these scrolls were the very core of Judaic religion.

 The fight of Jesus against the Pharisees was about this. At first Jesus said: “Good to be back in Nazareth, let me read to you about Isaiah.” In Luke 4 says it that this was all very good, and they liked him. But then he began talking about debt cancellation, and they tried to push him off a cliff.

 So basically you have the whole origin of Christianity was a last gasp, a last fight, to try to reimpose this idea of the economic renewal – of a Clean Slate – that goes back at least to the 3rd millennium BC and probably all the way to the Neolithic.

So you have this last attempt to try to get a Clean Slate, and we know what happened to Jesus. His followers were not able to bring it about. So by the 1st and 2nd centuries of our era, what could the Christians do? You’re never going to get the Roman Empire to announce a Clean Slate…So all the Christians could do was have charity. Well, the problem with charity is that you have to be rich in order to lend to somebody. It’s like what David Graeber did with Strike Debt. You can buy the debt and pay somebody else’s debt and give money away, but that doesn’t really fix the system. The result was, it really was the end times. The choice was: either you’re going to have economic renewal and restore people’s ability to support themselves; or you’re going to have feudalism.

That basically is how the Roman historians described Rome as falling. The debtors were enslaved, not only the debtors but just about everybody was enslaved, put in barracks on the land. Finally, you needed to have a population, so you let people marry and you gave them land rights – and you had slavery develop into serfdom.

Well we’re going into a similar situation today, where I think we’re going into a kind of neo-feudalism. The strain of today’s society is as much a debt strain as it was back then.

If We Don’t Solve The Problem Of Economic Polarization, We’re Going To Go Into Another Dark Age by Michael Hudson (Dandelion Salad)

For a take on more recent developments, see: How Bankers Became the Top Exploiters of the Economy (Counterpunch)