Is Debt Inherently Immoral?

From the ancient writings of our theologians to the modern world, the concept of debt and the moral quandaries it ignites continue to influence economic philosophies. LSE scholar, David Graeber, highlighted a medieval perspective of debt in a riveting discussion with Disenz on “harmful jobs, odious debt, and fascists who believe in global warming”. The notable point in the discussion was a medieval scenario of a man imprisoned, offered food in exchange for his property, who later questions the enforceability of this agreement once free. The profound relevance of this scenario is its striking resemblance to the Global South’s plight, currently trapped in a cycle of debt with the Global North.

As Graeber argued, economics – both now and in medieval times – has always been a branch of theology, a moral domain. To explore this further, we delve into the theological essence of the medieval stance against coerced debt, primarily drawn from biblical interpretations.

The Bible abounds with injunctions against debt enslavement. The story of Joseph in Genesis introduces us to debt’s immorality under duress. Joseph, sold into slavery, rises to the position of the Pharaoh’s Vizier and eventually aids his brothers who sold him during a famine. The pervasive famine leads Joseph to sell everyone into debt servitude to the Pharaoh, which is considered highly immoral by most biblical scholars from the medieval period onwards.

This theme continues in Leviticus 25, which instructs readers to support their kin who have fallen into difficulty, without imposing interest or profit. The New Testament further illuminates this concept through the life of Jesus, seen as redemption not only from sin but also from the conception of debt itself. Jesus’s ministry is primarily directed at the poor, reflecting the biblical tradition of assisting the needy without pushing them into debt.

The Patristic period (c. 100 – 450 AD) deemed collecting interest as incompatible with Christian Charity. Early scholars like Gregory the Bishop of Nyssa voiced strong disapproval of those who lent at interest, accusing them of trapping those in need. Consequently, usury, the practice of lending money at interest, was viewed as a specific sin, an interpretation upheld by Medieval Christians.

Medieval theologians viewed money as sterile, a concept initially proposed by Aristotle. Money couldn’t create more of itself; its function was to assign theoretical value to something already in existence. Hence, lending money at interest was seen as charging twice for the same thing, a position that St. Thomas Aquinas, the prominent theologian, staunchly supported.

However, the rules against lending did not completely halt the practice in the medieval period. There were ways to lend in a theologically correct manner. Charging interest was permissible under certain conditions, such as when the lender could have made more money by not lending. Jewish people were allowed to lend at interest to Christians as per medieval Christian law, leading to Jewish communities becoming significant capital lenders, often due to restrictions on other occupations.

The overarching message is clear: debt is inherently immoral, a position echoed by both ancient and contemporary thinkers, including Graeber and Aristotle. However, eradicating debt alone will not create an equitable society. The medieval period witnessed the perversion of the concept of usury into a tool of oppression against Jewish communities. If we aim for a more equitable world, it is essential not just to abolish current lending practices but also to reimagine our world in an inclusive way that prevents the concentration of violence on others. Otherwise, we risk repeating the tragedies of the past, where the cycle of debt has only served to amplify the wealth of a select few at the expense of the many.

Towards the end of the medieval period, the Church gradually loosened its stringent rules against usury, due to the development of commerce and the growth of towns, which demanded the facilitation of money lending. By the 15th century, though the Church still prohibited interest, it started to allow “rent” to be charged on loans, representing a form of profit for the lender. This rent was not considered as usury since it was regarded as compensation for the lender’s loss of use of the money. Nonetheless, the notion of debt as a form of moral enslavement still lingered in the collective mindset.

However, even as these changes occurred, the emphasis on charity and assistance to those in need never completely disappeared. The establishment of the Montes Pietatis, a type of charitable institution that offered interest-free or low-interest loans to the poor, exemplified this continuing commitment. Despite the changes in the perception and practice of lending, the moral dimension of debt continued to influence decisions and attitudes towards it.

The lessons from the past are crucial as we navigate our way through the complexities of the modern economic system. In a world where debt is now a common part of life, it is essential to remember the moral imperatives and conceptions of fairness that underpin our economic interactions. Whether it is dealing with the student loan crisis, creating equitable lending practices, or ensuring that countries do not fall prey to crippling debt, a moral lens can offer crucial insights. And perhaps, we might also reconsider the practice of debt forgiveness, drawing inspiration from the jubilee years of the ancient world and their echoes in medieval thought.

In the final analysis, while abolishing debt is a moral imperative, we must remember the lesson from the medieval experience – any reforms to the system must be done in a way that does not marginalize or oppress any group of people. The historical journey of debt and lending practices offers us vital perspectives that we can use in the creation of a more equitable and moral economic system.

Whether it is debt abolition or creating more fair lending practices, we must learn from our history to ensure that the weight of debt does not crush the most vulnerable among us. After all, the history of debt is not merely about economics, but about people, power, and morality.