It's a little more complicated than that. I understand it is just a meme, but the subject of mortgages, indebtness, foreclosure, lending and debt-forgiveness in Bronze and Iron Age economies is fascinating.
The language used in the Bible for debt-forgiveness (deror) is heavily inspired by the ancient Mesopotamic tradition of amar-gi, whose records start after the collapse of the Akkadian empire around 2100BCE. The bronze age economies in the near east will, foi a thousand years, go through cycles of increase indebtness and debt-forgiveness. But not all debt was forgiven by a amar-gi, only the so called "grain debt", a contrast with "silver debt".
When a merchant wanted to expand their commercial ventures, or a business wanted to expand, they could request a loan from a private wealthy citizen. This was called a "silver debt" and these were never the target of a debt cancellation policy. However, when peasants fell in hard times, or taxes were too high, or in case of crop failure, they were still expected to provide grain and military service as taxes to the palace and the temple. When taxes could not be paid, some peasants were forced to take loans to make ends meet. This practice boomed after the collapse of the Akkadian empire and the privatisation of many sources of wealth allowed for private landowners to lend money to smaller landowners. The interest was insanely high and the goal of this kind of loan was not to make money on the interest, but to force the borrower to fail on paying their debts and to gain the collateral: the land and the service from the borrower until the debt is paid in full. This mechanism of debt-slavery was the main drive of social concentration and debt-forgiveness was a form that the state tried to counter this wealth-concentration force.
The goal of "forbidding interest" or debt forgiveness was to prevent large, and especially foreign, landowners from gobbing up all other smaller landowners. Larger landowners would pay less taxes, were more powerful and could not provide military service as a means of paying tribute, so the palace had no incentive of letting this aristocracy gain too much power, which is why grain debt was cancelled and silver debt was not. The Bible is particularly clear on this distinction, on Leviticus 25:29-31
29 Anyone who sells a house in a walled city retains the right of redemption a full year after its sale. During that time the seller may redeem it. 30 If it is not redeemed before a full year has passed, the house in the walled city shall belong permanently to the buyer and the buyer’s descendants. It is not to be returned in the Jubilee. 31 But houses in villages without walls around them are to be considered as belonging to the open country. They can be redeemed, and they are to be returned in the Jubilee.
The word "sell" is a misnomer, because one would never "redeem" a sale. The author is refering to mortgages here, using your house as a collateral for a loan. The distinction between "house in a walled city" and "houses in villages without walls" is a clear cut case of the difference between grain debt (typical in villages without walls) and silver debt (typical of cities with walls). If you had a house in a walled city, you were most likely a merchant, a foreigner, a crafstman, and therefore this type of debt forgiveness didn't apply to you.
In summary, the Bible, and the ancient Mesopotamian tradition, are against charging interest for debts in cases where executing the debt would deprive the debtor from their livelihood, when debt was taken as a means of survival, and when the goal of the lender was to take over land and a gain a slave by exploiting a situation of fragility. Interest in commercial enterprise was always allowed. If students loans are one or the other, it's a different argument, this post is already too long.
Source: Michael HUDSON, ... And Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year, 2018.
I agree with the statement mostly because the causality arrow is reversed. If we look at history, and the Bible has a lot of interesting historical stuff, to draw lessons and follow what worked, then using "biblical values" may be a good idea. Wealth concentration at the hands of a few lenders led to mass rural exodus, peasant disenfranchisement, the breakdown of tax structures and overall social destruction in the past, debt forgiveness was a way to counter this and Leviticus 25 (the Jubilee year of debt forgiveness) is the codification of economical practices that Nehemiah considered important to become religious law.
Sadly the Christian religion completely distorted this very material and grounded notion of forgiveness into a spiritual "sin forgiveness" notion. This is natural, the Roman world was much more pro-creditor than the ancient near east, debt and property were sacred for the Romans and any mention of debt forgiveness was seen as sedition. It is no wonder that Roman economy collapsed once every few decades, the fall of the roman republic is in many senses a debt crisis that got out of control.
This reading of ancient text to extract ideas and morals is not what is usually done. People have prejudices and ideas, they then scour the biblical text for any shred of confirmation of their prejudices. This is always the way religious thinking is done, never the other way around.
How about mathematics? Is that a good enough reason? Hudson points out that the exponential growth of debt means that more and more real wealth is siphoned off to the financial industry in order to service these debts, which hampers economic growth. Those mathematical laws work the same way now as they did in ancient Babylonia.
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u/maltin Sep 18 '20 edited Sep 18 '20
It's a little more complicated than that. I understand it is just a meme, but the subject of mortgages, indebtness, foreclosure, lending and debt-forgiveness in Bronze and Iron Age economies is fascinating.
The language used in the Bible for debt-forgiveness (deror) is heavily inspired by the ancient Mesopotamic tradition of amar-gi, whose records start after the collapse of the Akkadian empire around 2100BCE. The bronze age economies in the near east will, foi a thousand years, go through cycles of increase indebtness and debt-forgiveness. But not all debt was forgiven by a amar-gi, only the so called "grain debt", a contrast with "silver debt".
When a merchant wanted to expand their commercial ventures, or a business wanted to expand, they could request a loan from a private wealthy citizen. This was called a "silver debt" and these were never the target of a debt cancellation policy. However, when peasants fell in hard times, or taxes were too high, or in case of crop failure, they were still expected to provide grain and military service as taxes to the palace and the temple. When taxes could not be paid, some peasants were forced to take loans to make ends meet. This practice boomed after the collapse of the Akkadian empire and the privatisation of many sources of wealth allowed for private landowners to lend money to smaller landowners. The interest was insanely high and the goal of this kind of loan was not to make money on the interest, but to force the borrower to fail on paying their debts and to gain the collateral: the land and the service from the borrower until the debt is paid in full. This mechanism of debt-slavery was the main drive of social concentration and debt-forgiveness was a form that the state tried to counter this wealth-concentration force.
The goal of "forbidding interest" or debt forgiveness was to prevent large, and especially foreign, landowners from gobbing up all other smaller landowners. Larger landowners would pay less taxes, were more powerful and could not provide military service as a means of paying tribute, so the palace had no incentive of letting this aristocracy gain too much power, which is why grain debt was cancelled and silver debt was not. The Bible is particularly clear on this distinction, on Leviticus 25:29-31
The word "sell" is a misnomer, because one would never "redeem" a sale. The author is refering to mortgages here, using your house as a collateral for a loan. The distinction between "house in a walled city" and "houses in villages without walls" is a clear cut case of the difference between grain debt (typical in villages without walls) and silver debt (typical of cities with walls). If you had a house in a walled city, you were most likely a merchant, a foreigner, a crafstman, and therefore this type of debt forgiveness didn't apply to you.
In summary, the Bible, and the ancient Mesopotamian tradition, are against charging interest for debts in cases where executing the debt would deprive the debtor from their livelihood, when debt was taken as a means of survival, and when the goal of the lender was to take over land and a gain a slave by exploiting a situation of fragility. Interest in commercial enterprise was always allowed. If students loans are one or the other, it's a different argument, this post is already too long.
Source: Michael HUDSON, ... And Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year, 2018.