This might be post for the super wonks but Michael Reddell (Croaking Cassandra) is debating with Steve Keen on the merits of writing down the value of debt under what is known as a debt “jubilee”. For those unfamiliar with the term, Michael offers a short summary including a link to the passage in the Old Testament where the practice appears to have started.
“In the Western tradition, the idea of the year of jubilee comes to us from the Old Testament. The idea was to avoid permanent alienation of people from their ancestral land – in effect, land transfers were term-limited leases, and if by recklessness or bad luck or whatever people lost their land it was for no more than fifty years. In the fiftieth year – the Year of Jubilee – all would be restored: land to the original owners and hired workers could return to their land. It wasn’t a recipe for absolute equality – the income earned wasn’t returned etc – but about secure long-term economic and social foundations.”
My understanding is that the process was a lot simpler in biblical times in part because all the players knew that the write-down would occur (and so adjusted their lending behaviour accordingly) and also because the debt was owed, for the most part, to the King and the political elite associated with the King. From my reading, this was not just an act of generosity on the part of the King. Michael refers to its place in securing the economic and social foundations of the kingdom which included the capacity to raise an army from the population when required.
If you are interested then you can read his whole post here …
A debt jubilee? https://croakingcassandra.com/2020/04/30/a-debt-jubilee/
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