Will Greece default on its debts?
Will it leave the Eurozone?
Will it leave the European Union?
Will it matter? To whom?
From most British and European newspapers you might have got the impression that if Greece defaults on its debts the world will return to the chaos that reigned before it cooled down enough to sustain life. The loans must be repaid! Or else… anything could happen!
If, on the other hand, they do get repaid, the present suffering of many Greeks will get worse; but the news media rarely notice that. The Greek people do, of course, and that is why their government remains popular.
The International Monetary Fund are so fed up with the Greeks that they have refused to play any more, picked up their bat and ball and gone home. Lucky them. They have homes to go to, unlike many suffering the effects of their policies.
Why not just cancel the debts? Why don’t the creditors write them off?
Imagine what it would be like if you were a financial wheeler-dealer, with billions passing through your accounts all the time. Suppose millions of people were homeless or starving because of the interest rates you were imposing. How would you feel about imposing all that suffering on them? Might you not feel a twinge of conscience? Might you not wonder whether the decent thing to say was ‘okay, don’t bother to repay me’? After all this is how most people treat their children and anyone else they care about. Why can’t we extend it?
As it is, the creditors can provide reasons why they cannot cancel the debts. There are chains of formal and legal obligations. Those obligations all boil down to the same thing: rich people are making money out of the poverty of poor people, and they want to carry on. The trails are so long that nobody sees the people they are oppressing, or even knows who they are.
Throughout history – even before money was invented – rich people found ways to increase their wealth at the expense of the poor. If it carried on too long there was social unrest. Throughout history, extremes of wealth and poverty have been solved by cancelling debts. Ancient Near Eastern kings, on their accession, often made themselves popular by decreeing a cancellation. There is evidence that Solon, usually credited with introducing the first democracy in Athens, also decreed a cancellation of debts.
The Bible approves. In the oldest law code,
If you lend money to my people, to the poor among you, you shall not deal with them as a creditor; you shall not exact interest from them (Exodus 22:25).
Why not? Because they were not talking about new businesses needing a bank loan in order to start making a profit. They were talking about the far more common situation where desperate poverty forces people to borrow money which they will probably never be able to repay.
About the same time as Solon, Deuteronomy (15:1) rationalised the occasional debt cancellations by fixing them at seven-year intervals. This provided a precedent: the book of Nehemiah provides a fascinating account from the following century of how Nehemiah publicly chastised Jewish creditors for disobeying Deuteronomy and obliged them to cancel debts.
Later again Jesus appealed to this tradition, calling it ‘the kingdom of God’. The most familiar version of the Lord’s Prayer includes the words:
Forgive us our trespasses as we forgive those who trespass against us.
It is the polite version. (What counts as a trespass?) The Lord’s Prayer appears in two gospels, Matthew and Luke. The Matthew version runs:
Forgive us our debts, as we also have forgiven our debtors (Matthew 6:12, NRSV).
Jesus was, after all, talking to people who knew all about debt and starvation.
The theme continued in the early Christian Church. Almost two hundred years after Jesus a Christian philosopher, Clement of Alexandria, could write a book entitled Can the Rich Man be Saved?
Cancelling debts was ‘the kingdom of God’ because God has provided a world with enough good things for everybody’s needs to be met. When some have more than they need and others have less, the best arrangement is for those with more to give to those with less. You do not need to accept the authority of the Bible or believe in God to see the point.
It has been done. The last major cancellation of debts in Europe was caused by the Second World War. Thereafter the Welfare State was designed to prevent extremes of wealth and poverty. Over the last forty years, however, it has been gradually dismantled, allowing for the rapid polarisation of wealth which is happening now.
What happens next? If history is any guide there will be increasing unrest until something is done about it. It may be war or revolution, or it may be a systematic redistribution managed by governments. There have been times – the ancient Roman empire, the USA and Russia today – when government power is so great, and the impoverished so powerless, that extremes survive for a very long time. I cannot see that happening in Europe, with its smaller and better educated countries. I expect some kind of major upset within the next ten years or so.
If the International Monetary Fund, the European Union and the European Central Bank had reflected on what sort of future their policies are going to produce, they might have accepted that Solon was right, and so are his present day successors.