Since 5,000 years ago and the invention of writing, debt has played a central role in social relations. For thousands of years, the struggle between rich and poor has taken the form of a conflict between creditors and debtors. Over that long period, with remarkable regularity, popular insurrections have begun in the same way – with the ritual destruction of debt documents (tablets, papyrus, parchments, etc.)

For thousands of years, the struggle between rich and poor has taken the form of a conflict between creditors and debtors

With the crisis in 2007 and the evictions that followed in the USA, ordinary citizens have begun to question debt, and more and more people are calling debt into question in a country where not repaying a loan is considered unthinkable.

But these challenges are insufficient. David Graeber underlines the fact that in 2009–2010 in the USA, the number of incarcerations for payment default increased greatly. [2] Between 2008 and 2015, 12 million families unable to repay their mortgage debts were evicted from their homes in the USA, and 400,000 in Spain. In Asia, Africa, and Latin America–Caribbean, the “debt system” is tightening its grip just as it is in the most industrialized countries.

David Graeber underlines the fact that in 2009–2010 in the USA, the number of incarcerations for payment default increased greatly

Since ancient times, debt has been used to subjugate, despoil, dominate and dispossess the working classes (among whom women are in the first rank of victims) – small peasants, artisans, fishermen, etc., up to and including modern salaried workers, and the members of their households. The process is simple: the lender requires the borrower to surrender what she or he owns as security. This collateral can be the land owned and worked by a farmer, the tools of an artisan’s trade, or the house a family lives in. The loan is repaid in kind or in currency. Since the interest rate is high, to repay the loan the borrower is forced to transfer to the lender a large part of the product of her or his labour, and as a result is impoverished. If the borrower is unable to repay the loan, the lender takes possession of whatever was put up as collateral. Today, most of the students who go into debt in order to pursue university studies in the USA, Great Britain and Japan will labour under the burden of repayment for decades. In South Asia the situation of the victims of microcredit scam is tremendous

According to prevailing notions the first form of exchange in human history was barter; money appeared later as a medium for facilitating such exchanges, and then credit emerged in the wake of money.

Graeber demonstrates that credit in fact came first and not third. Barter, according to Graeber, was not a type of economy in itself but rather an occasional practice, and credit as used in Mesopotamia 5,000 years ago preceded the stamping of money by more than 2,000 years.

Barter, according to Graeber, was not a type of economy in itself but rather an occasional practice

In that region, around 2,400 BCE, merchants and government leaders began to grant loans to peasants. When borrowers were unable to repay, the lenders confiscated their assets and were entitled to enslave the members of their family. To respond to popular discontent, the power in place periodically cancelled private debt and restored peasants’ rights. The cancellations were occasions for large celebrations during which the clay tablets on which debts were recorded were destroyed. There were some thirty general cancellations of private debt in Mesopotamia between -2400 and -1400. [3] One of the cancellation decrees specifies that official creditors and tax collectors who have evicted peasants must compensate them.

After that period, there is no record of debt cancellations in Mesopotamia. Inequalities, meanwhile, became much greater. Land was taken over by large private owners, and slavery due to debt became common. During the following centuries, nevertheless, there is evidence of violent social struggles between creditors and indebted persons.

In -432, certainly under the influence of the old Mesopotamian tradition, Nehemiah [4] proclaimed the cancellation of the debts of Jews who were indebted to their rich compatriots. It is at that time that the Torah was completed. [5] The tradition of general debt cancellations is part of the Jewish religion and is found in the earliest Christian texts via Deuteronomy, which proclaims the obligation to cancel debts every seven years, and Leviticus, which requires it at each jubilee, or every 50 years.

In the “Our Father,” the best known of all Christian prayers, the phrase most often translated as “Forgive us our trespasses as we forgive those who trespass against us,” in Matthew’s original Greek text (Ch. 6, verse 12) reads: “Forgive us our debts, as we also have forgiven our debtors.” [6]As a matter of fact, in German and Dutch, the word Schuld designates both sin and debt. Alleluia, the expression of joy used in the Jewish and Christian religions, come from the language spoken in Babylon in the second millennium BCE and referred to the liberation of those in debt slavery. [7]

“Forgive us our debts, as we also have forgiven our debtors.”, in the “Our Father”

In Greece, beginning in the sixth century BCE, major struggles arose against debt slavery and for cancellation of the private debts of the people. Aristotle writes in the Constitution of the Athenians: “The poor were enslaved to the rich – themselves and their children and their wives.” Social and political struggles increased and ultimately led to legal provisions prohibiting debt slavery, the best example being Solon’s reforms in Athens. At Megara, a city near Athens, a radical faction came to power. Loans for interest were prohibited and the measure was applied retroactively, forcing creditors to reimburse the interest they had collected. [8]

Public debt can also serve as a mechanism for subjugation

In parallel with David Graeber’s research and writing covering the period from the earliest antiquity through the end of the 18^th century, I focused my attention particularly on the period between the North American and French revolutions of the late 18^th century up to the present time. That work resulted in several books, including The Debt System, first published in 2017, and The World Bank, a Never Ending Coup d’Etat, first published in 2006, which provide a partial systematization of the conflicts surrounding the question of sovereign public debt. That work led me to develop ideas that are not touched on in David Graeber’s work.

Greece in the years from 2010 is a demonstration of how a country and a people can be deprived of their freedom by being forced to repay a debt that is clearly illegitimate. Since the 19^th century, from Latin America to China and including Haiti, Greece, Tunisia, Egypt and the Ottoman Empire, public debt has been used a weapon of domination and spoliation [9] Creditors – whether powerful States, the multilateral entities that serve them, or banks – have perfected the manœuvres by which they impose their will on debtors. Before the end of the first half of the 19^th century, Haiti served as a laboratory. Haiti was the first independent Black republic; the island freed itself of France’s yoke in 1804. But that did not mean that Paris was prepared to give up its hold on Haiti. French slave owners were given royal compensation for their “losses.” The accords signed in 1825 with Haiti’s new leaders created a monumental debt weighing on the independent State, which Haiti had difficulty in repaying as early as 1828 and which in fact took a century to repay, making any real development impossible in the meantime.

Over the last two centuries, several countries have successfully repudiated or unilaterally restructured debts

Debt was also used to subjugate Tunisia to France in 1881, and Egypt to the UK in 1882; the creditor powers used unpaid debt to subjugate what until then had been two sovereign nations. Similarly, Greece came into being in the 1830s already shackled to a debt held by the UK, France and Russia. In 1934, the island of Newfoundland, which until then had been a Dominion of the Crown, with its own Parliament, was facing bankruptcy – more than 63% of the budget was devoted to debt service. The United Kingdom handed over management to a commission of civil servants and ceded the province to Canada in 1949. [10]

Over the last two centuries, several countries have successfully repudiated or unilaterally restructured debts by arguing that they were either illegitimate or odious. Portugal (1837), Mexico (1861, 1867, 1883, 1914, 1943), the USA (1837, 1865, 1898), Russia (1917–1918), Costa Rica (1919), Brazil (1931, 1946), Cuba (1909, 1934, 1959), China (1949), Indonesia (1956), Iran (1979), Paraguay (2005), Ecuador (2007-2009), Iceland (2008-2009) have all done [11].

According to the odious debt doctrine theorized by Alexander Sack in 1927 a debt may be considered odious if it fulfils two conditions:

1) The population does not enjoy the benefits: the debt was incurred not in the interests of the people or the state but against their interest and/or in the personal interest of the leaders or persons holding power.

2) Lenders’ complicity: the lenders had foreknowledge, or could have had foreknowledge, that the funds concerned would not benefit the population.

The democratic or despotic nature of a regime does not influence this general rule.

The father of the odious debt doctrine clearly states that “regular governments (may) incur debts that are incontestably odious.” Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with”. [12]

Sack says that a debt may be considered odious if:

“a) the purpose which the former government wanted to cover by the debt in question was odious and clearly against the interests of the population of the whole or part of the territory, and

b) the creditors, at the moment of the issuance of the loan, were aware of its odious purpose.”

He continues: “Once these two points are established, the burden of proof that the funds were used for the general or special needs of the state and were not of an odious character would be upon the creditors.” (see 14223)

The notion of odious and illegitimate debt has been invoked and applied several times in history.

Current economic conditions make cancellation of debts more imperative than ever, beginning with debts of countries of the South that have the effect of perpetuating neocolonial domination.

Translated by Snake Arbusto and Christine Pagnoulle.