The Meaning of Liberty

An Untold Story of Debt Forgiveness in the Bronze Age

This part of the System Failure constellation of ideas explores how the Fall of Rome shaped Christianity. Death and rebirth are central to that religion, both in its mythology—the story of Jesus is about coming back from the dead—and in its history. Christianity resurrected much older Jewish and Greco-Roman traditions, dusted them off, and transported them forward into the Middle Ages and beyond. Three major examples—readily allegorized by death and rebirth—are debt forgiveness, astronomical cycles, and ego death.

Christianity originated within the Roman Empire, which eventually collapsed because of debt. The Romans were pioneers in forgoing the stability of systematic debt forgiveness. By contrast, much older Fertile Crescent societies held a long tradition of it to stave off collapses exactly like the one that befell Rome. This Mesopotamian tradition arrived in the Roman Empire through Jewish scripture. That’s the story of Jesus. However, Rome's fate was sealed when the financial forgiveness he preached was changed into forgiveness for bad behavior instead. That’s how the Christianity we recognize today was shaped by the Fall of Rome.

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Debt

During the earliest days of the Agricultural Revolution, debt was an indispensable tool for expanding societies, as it still is today. Those early farming settlements needed to establish new farms to support growing populations. And to establish new farms, somebody needed to loan somebody else some seeds. There was no way around it. Once the new farm was up and running, the borrowed seedcorn—plus a little interest—could be returned to its original owner. Society and debt have always gone hand-in-hand.

But debt is far more dangerous than it first appears. It always accumulates at a faster rate than the ability to repay it. That’s just human nature; it’s far easier to promise future payment than to actually deliver on that promise. But it’s also a mathematical certainty that some percentage of debts will always turn out to be unpayable for wholly unforeseeable reasons, such as when a borrower loses their job. Or dies unexpectedly.

The question that has animated all of history is, what is to be done when debts turn out to be unpayable? There are only two options: foreclosure or forgiveness.

Foreclosure

The ever-present risk of default prompted many early creditors to demand collateral before lending out their wealth. But it was the dawn of human society, and people had little to put up beside their land…and themselves. Defaulters were often obliged to work for their creditors as slaves until they paid off their debt. Freedom is chiefly an economic concept.

The cleverest creditors realized they could become far wealthier through foreclosure than by merely collecting interest on their wealth. They had only to make collateralized loans and wait for the inevitable flood, famine, war, or drought to render vast swathes of agricultural debt impossible to repay. Through foreclosure, they could then take possession of all the land and all the people put up as collateral.

Forgiveness

The Kings of early Mesopotamian societies understood that debt represented an existential threat. They couldn’t afford to have their subjects enslaved by private creditors because those subjects were sorely needed for public works and the defense of the kingdom. There was also the risk that creditors could grow wealthy enough to challenge the king’s power directly.

Additionally, those first city-states were relatively small. Poor farmers who fell into hopeless debt could simply move to a neighboring city-state for a fresh financial start. Therefore, the Mesopotamian kings had a powerful incentive to keep the economic game from becoming too lopsided.

The solution was periodic debt forgiveness. When a new king took the throne, he wiped out debts by raising a symbolic torch of freedom. They also canceled debts at regular intervals or when the inevitable floods, famines, wars, and droughts disrupted their economies. By resetting the economic scoreboard every so often, the kings of the Fertile Crescent maintained everyone’s incentive to keep playing the game. That practice was crucial to the stability of their societies.

The Code of Hammurabi is the legal code of that Babylonian king. Law #48 commands: “If a man has a debt lodged against him, and the storm-god Adad devastates his field or a flood sweeps away the crops, or there is no grain grown in the field due to insufficient water—in that year he will not repay grain to his creditor.” It clearly illustrates the tradition of debt forgiveness that stabilized Babylonian society for centuries.

Liberty

“Liberty” was a rallying cry of both the American and French Revolutions, and those movements drew upon the oldest symbols of economic freedom to make their points. That’s why, when the French presented America with the Statue of Liberty, they envisioned her holding aloft the same torch of freedom once born by the Kings of Babylon.

In addition, the Liberty Bell hanging in Philadelphia has Leviticus 25:10 engraved on it. The full passage reads, “And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof: it shall be a jubile unto you; and ye shall return every man unto his possession, and ye shall return every man unto his family.” It’s another clear example of the old tradition of debt forgiveness, here referred to as a “jubilee”.

The interesting thing about this passage is that it comes from the Old Testament, which means that the Mesopotamian tradition of debt forgiveness made it into the Bible. How it got from the Fertile Crescent into Jewish scripture is a fascinating story for next week…

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Further Materials

A study of the long sweep of history reveals a universal principle to be at work: The burden of debt tends to expand in an agrarian society to the point where it exceeds the ability of debtors to pay. That has been the major cause of economic polarization from antiquity to modern times. The basic principle that should guide economic policy is recognition that debts which can’t be paid, won’t be. The great political question is, how won’t they be paid?
Michael Hudson, …and Forgive Them Their Debts, 2018, Page 16

To a visitor from Hammurabi’s Babylon, the Statue of Liberty might evoke the royal iconography of the important ritual over which rulers presided: restoring liberty from debt. The earliest known reference to such a ritual appears in a legal text from the 18th century BC. A farmer claims that he does not have to pay a crop debt because the ruler, quite likely Hammurabi (who ruled for 42 years, 1792–1750 BC), has “raised high the Golden Torch” to signal the annulling of agrarian debts and related personal “barley” obligations.
Michael Hudson, …and Forgive Them Their Debts, 2018, Page 33