Debt (3 page)

Looking over world literature, it is almost impossible to find a single sympathetic representation of a moneylender—or anyway, a professional moneylender, which means by definition one who charges interest. I’m not sure there is another profession (executioners?) with such a consistently bad image. It’s especially remarkable when one considers that unlike executioners, usurers often rank among the richest and most powerful people in their communities. Yet the very name, “usurer,” evokes images of loan sharks, blood money, pounds of flesh, the selling of souls, and behind them all, the Devil, often represented as himself a kind of usurer, an evil accountant with his books and ledgers, or alternately, as the figure looming just behind the usurer, biding his
time until he can repossess the soul of a villain who, by his very occupation, has clearly made a compact with Hell.

Historically, there have been only two effective ways for a lender to try to wriggle out of the opprobrium: either shunt off responsibility onto some third party, or insist that the borrower is even worse. In medieval Europe, for instance, lords often took the first approach, employing Jews as surrogates. Many would even speak of “our” Jews—that is, Jews under their personal protection—though in practice this usually meant that they would first deny Jews in their territories any means of making a living except by usury (guaranteeing that they would be widely detested), then periodically turn on them, claiming they were detestable creatures, and take the money for themselves. The second approach is of course more common. But it usually leads to the conclusion that both parties to a loan are equally guilty; the whole affair is a shabby business; and most likely, both are damned.

Other religious traditions have different perspectives. In medieval Hindu law codes, not only were interest-bearing loans permissible (the main stipulation was that interest should never exceed principal), but it was often emphasized that a debtor who did not pay would be reborn as a slave in the household of his creditor—or in later codes, reborn as his horse or ox. The same tolerant attitude toward lenders, and warnings of karmic revenge against borrowers, reappear in many strands of Buddhism. Even so, the moment that usurers were thought to go too far, exactly the same sort of stories as found in Europe would start appearing. A Medieval Japanese author recounts one—he insists it’s a true story—about the terrifying fate of Hiromushime, the wife of a wealthy district governor around 776 ad. An exceptionally greedy woman,

After she died, for seven days, monks prayed over her sealed coffin. On the seventh, her body mysteriously sprang to life:

Gawkers descended. Guilty and ashamed, the family made desperate attempts to buy forgiveness, canceling all debts owed to them by anybody, donating much of their wealth to religious establishments. Finally, mercifully, the monster died.

The author, himself a monk, felt that the story represented a clear case of premature reincarnation—the woman was being punished by the law of karma for her violations of “what is both reasonable and right.” His problem was that Buddhist scriptures, insofar as they explicitly weighed in on the matter, didn’t provide a precedent. Normally, it was debtors who were supposed to be reborn as oxen, not creditors. As a result, when it came time to explain the moral of the story, his exposition grew decidedly confusing:

So which will it be? They can’t both end up as animals in each other’s barns.

All the great religious traditions seem to bang up against this quandary in one form or another. On the one hand, insofar as all human relations involve debt, they are all morally compromised. Both parties are probably already guilty of something just by entering into the relationship; at the very least they run a significant danger of becoming guilty
if repayment is delayed. On the other hand, when we say someone acts like they “don’t owe anything to anybody,” we’re hardly describing the person as a paragon of virtue. In the secular world, morality consists largely of fulfilling our obligations to others, and we have a stubborn tendency to imagine those obligations as debts. Monks, perhaps, can avoid the dilemma by detaching themselves from the secular world entirely, but the rest of us appear condemned to live in a universe that doesn’t make a lot of sense.

The story of Hiromushime is a perfect illustration of the impulse to throw the accusation back at the accuser—just as in the story about the dead usurer and the donkey, the emphasis on excrement, animals, and humiliation is clearly meant as poetic justice, the creditor forced to experience the same feelings of disgrace and degradation that debtors are always made to feel. It’s all a more vivid, more visceral way of asking that same question: “Who really owes what to whom?”

It’s also a perfect illustration of how the moment one asks the question “Who really owes what to whom?,” one has begun to adopt the creditor’s language. Just as if we don’t pay our debts, “our payment becomes that of being reborn as a horse or an ox”; so if you are an unreasonable creditor, you too will “repay.” Even karmic justice can thus be reduced to the language of a business deal.

Here we come to the central question of this book: What, precisely, does it mean to say that our sense of morality and justice is reduced to the language of a business deal? What does it mean when we reduce moral obligations to debts? What changes when the one turns into the other? And how do we speak about them when our language has been so shaped by the market? On one level the difference between an obligation and a debt is simple and obvious. A debt is the obligation to pay a certain sum of money. As a result, a debt, unlike any other form of obligation, can be precisely quantified. This allows debts to become simple, cold, and impersonal—which, in turn, allows them to be transferable. If one owes a favor, or one’s life, to another human being—it is owed to that person specifically. But if one owes forty thousand dollars at 12-percent interest, it doesn’t really matter who the creditor is; neither does either of the two parties have to think much about what the other party needs, wants, is capable of doing—as they certainly would if what was owed was a favor, or respect, or gratitude. One does not need to calculate the human effects; one need only calculate principal, balances, penalties, and rates of interest. If you end
up having to abandon your home and wander in other provinces, if your daughter ends up in a mining camp working as a prostitute, well, that’s unfortunate, but incidental to the creditor. Money is money, and a deal’s a deal.

From this perspective, the crucial factor, and a topic that will be explored at length in these pages, is money’s capacity to turn morality into a matter of impersonal arithmetic—and by doing so, to justify things that would otherwise seem outrageous or obscene. The factor of violence, which I have been emphasizing up until now, may appear secondary. The difference between a “debt” and a mere moral obligation is not the presence or absence of men with weapons who can enforce that obligation by seizing the debtor’s possessions or threatening to break his legs. It is simply that a creditor has the means to specify, numerically, exactly how much the debtor owes.

However, when one looks a little closer, one discovers that these two elements—the violence and the quantification—are intimately linked. In fact it’s almost impossible to find one without the other. French usurers had powerful friends and enforcers, capable of bullying even Church authorities. How else would they have collected debts that were technically illegal? Hiromushime was utterly uncompromising with her debtors—“showing no mercy whatsoever”—but then, her husband was the governor. She didn’t have to show mercy. Those of us who do not have armed men behind us cannot afford to be so exacting.

The way violence, or the threat of violence, turns human relations into mathematics will crop up again and again over the course of this book. It is the ultimate source of the moral confusion that seems to float around everything surrounding the topic of debt. The resulting dilemmas appear to be as old as civilization itself. We can observe the process in the very earliest records from ancient Mesopotamia; it finds its first philosophical expression in the Vedas, reappears in endless forms throughout recorded history, and still lies underneath the essential fabric of our institutions today—state and market, our most basic conceptions of the nature of freedom, morality, sociality—all of which have been shaped by a history of war, conquest, and slavery in ways we’re no longer capable of even perceiving because we can no longer imagine things any other way.

There are obvious reasons why this is a particularly important moment to reexamine the history of debt. September 2008 saw the beginning of
a financial crisis that almost brought the entire world economy screeching to a halt. In many ways the world economy did: ships stopped moving across the oceans, and thousands were placed in dry dock. Building cranes were dismantled, as no more buildings were being put up. Banks largely ceased making loans. In the wake of this, there was not only public rage and bewilderment, but the beginning of an actual public conversation about the nature of debt, of money, of the financial institutions that have come to hold the fate of nations in their grip.

But that was just a moment. The conversation never ended up taking place.

The reason that people were ready for such a conversation was that the story everyone had been told for the last decade or so had just been revealed to be a colossal lie. There’s really no nicer way to say it. For years, everyone had been hearing of a whole host of new, ultra-sophisticated financial innovations: credit and commodity derivatives, collateralized mortgage obligation derivatives, hybrid securities, debt swaps, and so on. These new derivative markets were so incredibly sophisticated, that—according to one persistent story—a prominent investment house had to employ astrophysicists to run trading programs so complex that even the financiers couldn’t begin to understand them. The message was transparent: leave these things to the professionals. You couldn’t possibly get your minds around this. Even if you don’t like financial capitalists very much (and few seemed inclined to argue that there was much to like about them), they were nothing if not capable, in fact so preternaturally capable, that democratic oversight of financial markets was simply inconceivable. (Even a lot of academics fell for it. I well remember going to conferences in 2006 and 2007 where trendy social theorists presented papers arguing that these new forms of securitization, linked to new information technologies, heralded a looming transformation in the very nature of time, possibility—reality itself. I remember thinking: “Suckers!” And so they were.)