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Debt jubilee: will our debts be canceled?

What is a jubilee?

It is literally a trumpet, announcing that it is time to write off all debts to protect the long term interests of the entire community and the regime. In Jewish and Christian traditions, a jubilee (the word comes from “yobel”, Hebrew meaning “trumpet”) was blown every 50 years to mark the Year of the Lord, during which all personal debts were canceled. .

According to the Mosaic law – that is to say the law given to Moses by God as stated in the Pentateuch or the written Torah – in each jubilee year, each household must recover its absent members; the land seized is returned to its former owners; contract slaves freed and debts written off. For details of Mosaic’s property rights and debt, see Leviticus 25.

Did this really happen?

Yes. Until recently, some historians doubted that a Debt Jubilee was possible in practice, or that such proclamations could have been implemented, said Michael Hudson, an American scholar and author, in the Washington Post. But research carried out by Assyriologists has revealed that “since the beginning of recorded history in the Middle East, it was normal for the new rulers to proclaim a debt amnesty upon accession to the throne.” Instead of blowing the trumpet, the sovereign “raised the sacred torch” to signal amnesty.

Such jubilees were neither utopian nor altruistic: they were a lucid recognition that to maintain social order and political stability – and to protect the long-term sustainability of economic life, commerce and a peaceful regime – he is necessary to prevent credit systems from degenerating into the enslavement of debtors by their creditors. This is how lawlessness and violence are found.

When was the first jubilee?

According to anthropologist David Graeber, the author of Debt: the first 5,000 years, the first recorded jubilee declaration was made in 2,400 BC, when Sumerian King Enmetena declared a blanket debt cancellation in his kingdom. Moreover, his statement marks the first time that the word “freedom” – here, the freedom of once-indebted slaves – has appeared in a political document.

Indeed, the first word for freedom known in any language is Sumerian “amargi” meaning “return to mother,” presumably because child slaves in particular were allowed to return home. In other words, a Debt Jubilee is a recognition that economic life must be socially rooted in order to be sustainable. If the debts can’t be paid off, they won’t – and it might be better for everyone if it could be settled peacefully.

Why are you telling me all this?

Because the idea of ​​a debt jubilee, which aroused great interest after the great financial crisis of the late 2000s, is receiving renewed attention in the face of the current global emergency. Back then, versions of a jubilee were supported by Orthodox voices (such as Morgan Stanley’s influential economic chief Stephen Roach) as well as radical voices.

Roach argued for a grand out-of-court settlement between bond investors, banks and consumer groups – what he called a “big haircut” – to address the underlying debt problem excessive and revive the economy. Obviously, the idea is resurfacing now because the world is facing two simultaneous and overlapping crises, US lawyer Katharina Pistor explains in The Guardian – namely, the coronavirus pandemic and the “economic threat it faces. puts a strain on our debt-fueled economy ”.

What is there to do?

We urgently need measures that keep financial markets functioning and protect businesses, perhaps in the form of government cancellations of corporate bonds purchased with printed currency to weather the crisis. But we also need debt relief, especially for households at the bottom of the income and wealth ladder, Pistor says. Without it, the world faces a prolonged spiral of depression brought on by business collapses and rapidly declining demand for goods and services. “To deal with the economic fallout from the coronavirus, governments should directly assume the debt of high-risk households,” she argues. Trying to get lenders to ease the terms of existing loans, as the US government did after the 2008 crisis, for example, “will be too slow to meet the current challenge.”

What is the case in favor?

The same as in Sumer and Babylonia: pragmatism and long term stability. The economic and social consequences of the current emergency are unknown, but in a collapsing global economy, “any demand for massive new debt to be paid to a financial class that has already absorbed most of the wealth gained since 2008 will fail. that divide our society further, ”says Hudson.

Or we could learn a lesson from 20th century history. After World War I, war debts and reparations further ruined and traumatized Germany, contributing to the global financial collapse of 1929-1931, the rise of fascism and the horrors that followed. In contrast, Germany’s ‘modern debt jubilee’ in 1948, when the Allied Powers replaced the Reichsmark with the Deutsche Mark, wiped out 90% of public and private debt and paved the way for the economic miracle of West Germany.

What is the case against?

Debts must be repaid, otherwise credit will dry up and trade will be impossible. Writing it encourages future recklessness. And there’s no guarantee that debt cancellation would spur a recovery, since every liability is also an asset: every additional pound saved on debt repayments is also a pound cut from equity or equity. a lender, draining future confidence and investment. In addition, any country establishing a jubilee unilaterally risks capital flight.

For all of these reasons, a debt jubilee would seem unthinkable – without the fact that the current pandemic and economic collapse involves all manner of previously unthinkable state actions announced every two days.


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John Smith

The author John Smith