Forgiving Debt: Ancient Analogies for the US

The function of debt-cancelling decrees was to restore socioeconomic balance, writes Eva von Dassow. That included inequity, so the cycle of borrowing-to-survive would start over. 

Part of a restoration edict of Ammisaduqa, one of the rulers of ancient Babylon. (© The Trustees of the British Museum, CC BY-NC-SA)

By Eva von Dassow 
University of Minnesota

Student loan debt is one of the most burdensome forms of debt in America today. According to oft-cited statistics, approximately 43 million Americans have student loan debt, cumulatively amounting to around $1.7 trillion.

The exorbitant costs of higher education in the United States, combined with the fact that educational credentials serve as a ticket to decent employment, require many students to take out loans that follow them long past graduation – and that are almost impossible to discharge in bankruptcy.

Hence, calls for cancellation of student loan debt by legislative or executive action keep intensifying, and President Joe Biden is expected to respond by ordering cancellation of some amount, notwithstanding arguments against any blanket debt amnesty.

Yet this very policy is inscribed on the U.S. Liberty Bell. “Proclaim liberty throughout all the land unto all the inhabitants thereof!” it declares, quoting the biblical Book of Leviticus, 25:10. The Hebrew word translated “liberty,” “deror,” actually refers to debt amnesty.

A large bell is displayed on a stand, with a shady courtyard in the background.

The Liberty Bell, with its famous crack, in Philadelphia. (Joe Sohm/Visions of America/Universal Images Group via Getty Images)

In the world of the Bible, it was customary to cancel all noncommercial debts from time to time. As a scholar of the ancient Near East, I’ve read many cuneiform tablets that record how people then – like Americans today – often went into debt to meet living expenses. They might mortgage their property to keep a roof over their heads, only to find that ever-accruing interest made it impossible to pay off the principal.

They faced the additional risk of debt bondage: People lacking sufficient property to secure their debts would have to pledge their dependents or even their own selves to their creditors. Their creditors thus became their masters, and those pledged for debt were effectively enslaved, unless and until they were redeemed. A decree of debt amnesty would wipe the slate clean, springing people from bondage and restoring their freedom as well as their fortunes.

Kings Clean the Slate

The earliest recorded instances of this practice come from ancient Sumer, a land in the south of what is now Iraq. Urukagina, ruler of the city of Lagash around 2400 B.C., decreed a debt amnesty soon after he came to power, releasing people living in debt bondage to go home and even clearing the prisons. In the Sumerian language, this amnesty was termed “amargi” – “return to mother” – for it restored people to their families.

Urukagina was not the first to issue such a decree, and it may already have become traditional by his time. The practice of decreeing debt amnesty is widely documented in the Semitic-speaking kingdoms of Syria and Mesopotamia during the early second millennium B.C.

Debt amnesty was routinely triggered by the death of a ruler: His successor would raise a golden torch and decree “anduraru,” or “restoration” – the Akkadian equivalent of Hebrew “deror.” The stated purpose of such decrees was to establish or reestablish equity. A king’s foremost duty was to maintain “justice and equity,” as Hammurabi of Babylon claimed to do when promulgating his laws around 1750 B.C.

While lending at interest was not considered unjust, debt that deprived families of their property and liberty created inequity, which had to be remedied. A decree of “anduraru” restored equity, liberty and family property by canceling debts incurred for subsistence – including tax arrears owed to the state – while leaving commercial debts untouched.

When Hammurabi was on his deathbed, his son Samsu-iluna took power and issued a decree remitting noncommercial debts, canceling arrears and forbidding their collection; thus, he declared, “I have established restoration throughout the land.”

A decree of restoration could also be issued to address political or economic crisis. The usurper or conqueror, having subjected a people to his rule, could establish their “restoration,” both remitting debts and enabling those captured during hostilities to go free. Hammurabi himself did this upon conquering the kingdom of Larsa, which was part of ancient Sumer.

A stone relief shows two men with long beards: one standing, with a hand to his mouth, the other seated and holding a staff.

Detail of a relief of King Hammurabi before the sun-god Shamash, from a stone stele inscribed with his proclamation of laws and dedicated around 1750 B.C., discovered at Susa in present-day Iran. (DEA / G. Dagli Orti/DeAgostini via Getty Images)

Thus the conqueror could pose as a liberator setting a disordered realm to rights. The idea was to restore the inhabitants of the land to their original condition, before incurring debt, losing their property or losing their liberty.

In the End, Not So Forgiving

The issuance of debt-canceling decrees was sporadic, not periodic, so one never knew when it would occur. But everyone knew it would happen sooner or later. Financiers would therefore prepare for this eventuality to avoid taking losses whenever debts were abruptly remitted and their collection prohibited. They used various methods to insulate transactions and investments from debt remission – because otherwise who would ever offer credit to those in need?

They developed legal fictions to disguise mortgage loans, debt bondage, and the like as contracts of other kinds, avoiding their cancellation by decree. The decree of Ammi-Saduqa, a king of Babylon in the 17th century B.C., explicitly prohibits such subterfuge, but regulation was a step behind entrepreneurs. Clever financial instruments immunized debt from amnesty and kept credit, as well as profit, flowing.

Ultimately a program for periodic debt cancellation was developed in biblical law. The Book of Deuteronomy requires remission of debts among Israelites every seventh year, using the term “šemittah” – “remission” – and stipulating that every creditor should remit the debt owed him. The Book of Leviticus adds the requirement to proclaim amnesty, Hebrew “deror,” after every seventh cycle of seven years, restoring every Israelite to his property and family in the 50th year – the jubilee year. Recognizing that a predictable debt amnesty would only make creditors’ planning easier, Deuteronomy 15:9 warns against refusing to lend as the seventh year approaches.

The biblical authors must have had some experience with creditors’ efforts to evade the requirement to remit debts. According to the Book of Jeremiah, when Zedekiah, the last king of Judah, decreed “deror” in the face of the Babylonian invasion of 587 B.C., creditors agreed to release their enslaved fellow Judeans, then found ways to force them back into bondage.

Not only was the ostensible purpose of debt-remission decrees defeated by creative credit instruments, the true purpose of such decrees was not to fix the problems that made them necessary. People would still need to go into debt to survive, pay their taxes and keep a roof over their heads. They would still risk impoverishment, debt bondage and eventual enslavement. Sporadic debt cancellation did not eliminate chronic indebtedness, nor was it meant to.

Instead, the function of such decrees was to restore socioeconomic balance – and the tax base – enough that the cycle of borrowing-to-survive could start over. In a sense, debt amnesty actually served to restore society to its ideal state of inequity, so that it would always need the same remedy again.

This dynamic is worth considering amid calls for canceling student loan debt. Certainly a student debt amnesty would benefit millions whose lives are shackled by interest on loans they took out in the hope that a degree would guarantee them gainful employment. It would do nothing to address the problems that make incurring such debt necessary.

As long as higher education is treated simultaneously as a private good and a job requirement, people will still need to go into debt to get degrees. Then the same remedy will have to be applied again.The Conversation

Eva von Dassow is associate professor of Ancient History, University of Minnesota.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The views expressed are solely those of the author and may or may not reflect those of Consortium News.

10 comments for “Forgiving Debt: Ancient Analogies for the US

  1. KPR
    July 29, 2022 at 06:22

    Cancelling the debt is not free. The money that was supposed to come in from paying off the loans won’t be there, meaning more money must be borrowed in the future.

  2. Vincent ANDERSON
    July 28, 2022 at 22:11

    Great stuff! One little Greek footnote – not that it saved me from 2x debt peonage, post-grad and -law degrees. But….
    The Pauline doctrine that ‘we are justified by faith’ [r.t. by ‘works’ etc.] actually translates the Greek ‘pistis’ or ‘credit.’ Don’t ask me whether Jesus is the latter-day Hammurabi, but David Cox explores some aspects in JUNG AND ST. PAUL, for the therapeutically minded.
    Now, where the rubber currently meets the road. The alleged value-added Ph.D. netted a starting philosophy salary of $16k, 4 decades back. Real Ph.D.s, i.e. in the sciences, started at twice that. It took me 12 years (plus mortgage qualification!) to pay off that $65k one. The J.D. debt (compliments of state university tuition subsidies) was merely $45k; paid that off just after the Obama salvation for the post-Lehmann financier crowd, who got about 100% forgiveness, while we sole practitioners who had just been stiffed both on re-fi gigs and big foreclosure firm sub-contracting got zilch.
    That is my bill of particulars. Perhaps the recent crop of grad- and law-level earners are doing far better, as a whole. I sense a forthcoming ‘application’ process, to determine just how bad the debt-peonage facts are for each individual case.

  3. JonnyJames
    July 28, 2022 at 20:32

    As mentioned, Prof. Michael Hudson’s And Forgive Them Their Debts covers this topic very well. The late David Graeber’s magnum opus does as well (Hudson was a major influence).

    The history of economic thought, moral philosophy, and international political economy need to be returned to the mainstream economics curricula. Now, all we have is neoclassical/neoliberal ideology, aka Junk Economics

  4. Drew Hunkins
    July 28, 2022 at 18:16

    Biden was instrumental c. 1980 in deforming the bankruptcy laws to make it impossible for student loan debtors to discharge SL debt. He thereby saddled tens of millions of hardworking intelligent Americans to a lifetime of debt bondage. Folks mired in massive SL debt can never buy a home, have kids, and suitable marriage mates will reject them due to their massive SL debt.

    I want every lawmaker who’s still living who voted for this change in the bankruptcy laws to be sentenced to life in prison. Bc that’s essentially what they did to millions of innocent people who didn’t quite know what they were getting into when they were 17 to 24 years old.

  5. Jim Thomas
    July 28, 2022 at 18:11

    Michael Hudson has made this point in many of his writings, concluding that the failure of the US (and the “rest of the west”) to purge the system of the enormous debt burden has placed an unsustainable drag on the real economy (as opposed to the phony financialized economy we now have). Instead of doing so, in the US the FED has just pumped more money into the economy which has been made available to the wealthy rather than to the working people and, therefore, used to inflate the prices of real estate, stocks and bonds. Obama should have dealt with the problem in 2008 by allowing the banks to fail and wiping out the garbage on the balance sheets of the banks; instead, he gave the thieves the key to the treasury and allowed them to write their own ticket. The result is a bubble economy which is based on air and bs rather than real value. We are in deep trouble and no one in Washington is making any mention of it, much less making proposals for how to deal with it. Such is the state of US “leadership”.

  6. Charles Carroll
    July 28, 2022 at 17:06

    After I steamed on this ridiculous idea I thought of a question for Ms. Eva von Dassow. Suppose Sleepy Joe forgives all “student” debt today, who will pay the rent, food and car payment tomorrow? What about all the rent property owners? Who will take care of them?
    Like all welfare programs, easy to acquire, impossible to quit.
    Hasn’t anyone up there remember Brer Rabbit and the Tar Baby?

  7. July 28, 2022 at 15:37

    Ah ha, so good to read someone writing about ancient debt cancellation tradition! Mention made of the quote on the Liberty Bell of Leviticus Jubilee. Note that the 50 year Jubilee cancelled debt plus restored peoples right to land to the original fairly allocated boundaries. Generations were thus freed from the “sins” of their forefathers and mothers (debt, land loss). We need to address the Land and Money justice issues today. Some of us are doing so by working for Public Banks and Land Value Tax / Commons Rent public finance.

    • Bart Hansen
      July 30, 2022 at 20:25

      It’s good to know that Professor Dassow is keeping alive the research on debt forgiveness. As Professor Hudson states, “Debts that can’t be paid, won’t be paid”

  8. Dienne
    July 28, 2022 at 15:23

    Kings in ancient times did this because they and the merchant/banker class were at odds with each other and it was in the kings’ best interest not to allow the other side to accrue too much power. Through debt, creditors essentially owned the people and could raise their own armies if they wanted. The kings freed those people to keep them loyal to him.

    It doesn’t work today because the merchant/banker class owns the ruling class, so their interests are mutual. Debt is essential to raise armies because there effectively is no separate state/country/king to be loyal to. That’s why the merger of state and country is called fascism.

    • Tedder
      July 30, 2022 at 11:59

      Your analysis is just a little bit ahistorical. What happened in the earliest civilizations is that when the farmers got too deeply into debt, they would just run away to resume a life of hunter-gathering. In other words, the debt structure could destroy social balance that would deprive the ruler of soldiers, workers, and farmers, a disaster. The wise ruler–whether a king or a temple–avoided this and had the power and authority to defend his people from the predations of a financial class.
      See David Graeber’s ‘Debt: The First 5,000 Years.”

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