Criticism of debt
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This article is about criticism of, and arguments against debt.
There are many arguments against debt as an instrument and institution, on a personal, family, social, corporate and governmental level. Usually these refer to conditions under which debt should not be used as a solution, e.g. to fund consumption for survival. Consumer debt and public debt deal with some of these issues. Calls for debt relief to the developing countries have been more and more insistent since the 1980s Latin American debt crisis, and more recently the Argentine economic crisis. Developing countries' debt has often been qualified as an odious debt and a means of neocolonialism, in particular by "third-worldism" (tiers-mondisme) and the more recent alter-globalization movement.
Debt is a major source of money creation in modern economies. Some economists, especially the Austrian school, believe that fractional reserve banking should not be allowed and banks should not be allowed to lend money deposited in their accounts by individuals, unless they approve. Money creation should either be banned (Austrian school) or be a government privilege.
The Biblical books of Deuteronomy (23:20)  and Leviticus (25:37)  explicitly prohibit lending at interest, and are the source of two of the 613 mitzvot (Maimonides #534 & #535), the commands of God to the Jewish people. According to Proverbs 22:7, "The rich rule over the poor, and the borrower is slave of the lender". NRSV
Christian philosophy has historically also been concerned with these same issues, and the Catholic Church prohibited lending at interest throughout most of the Middle Ages. The words for sin and debt are the same in Aramaic, and the Lord's Prayer can be read as "redeem us from our debts, as we redeem our debtors." The French philosopher Simone Weil has argued that debt is evil, because it leads us to the false belief that the past (a promise to pay later for instance) give us the right to a certain future (a given money sum at a given date). God wants us to remain in the present, in His presence, so it is supposed that debt moves us away from the feeling of God's instantaneous presence.
Islamic economics, concerned with the equity of distribution of these things and the potential for unrest if simple luck is permitted to cause some to starve while others prosper, simply for having held a safer debt asset through a catastrophe, has alternative instruments that do not obligate repayment in the sense of debt but instead act as a joint venture type instrument. The justification for this is a hadith which states as a rule of trade: "nothing present for that which is absent". This avoids the problems of the devalued asset or bad debt becoming a source of unrest later on, should it be devalued or defaulted through no fault of the borrower.
|Wikiquote has quotations related to: Debt|
- Criticism of fractional-reserve banking
- Debt relief
- Odious debt
- Jeffrey Sachs
- Wage slavery
- money reform
- de Grazia, Alfred, "Consumerism and Fiscal Disorder" chapter 65 in Reconstructing American History, Metron, Princeton, NJ 1999
- Jochnick, Chris, editor, Sovereign Debt at the Crossroads: Challenges and Proposals for Resolving the Third World Debt Crisis, Oxford University Press, 2006
- Nelson, Julie, "Ethics and International Debt: A View From Feminist Economics", August 2006 paper
- Simms, Andrew, Ecological Debt, New Economics Foundation, London, 2005
- (PDF) http://econfaculty.gmu.edu/pboettke/pubs/the_austrian_school_of_economics_1950_2000.pdf, retrieved 2010-08-17 Missing or empty
- http://www.mechon-mamre.org/p/pt/pt0523.htm#20, retrieved 2010-08-17 Missing or empty
- http://www.mechon-mamre.org/p/pt/pt0325.htm#37, retrieved 2010-08-17 Missing or empty
- http://www.gnpcb.org/esv/search/?q=Proverbs+22%3A7, retrieved 2010-08-17 Missing or empty
- The Borrowing Mentality vs. The Pay As You Go Approach from Project Worldview