In the book of Leviticus, the Lord commanded from Sinai that when the children of Israel came to the promised land they should keep every seventh year as a Sabbatical year (Shmita) for the land. They were not to sow the fields or harvest (except that anyone could pick the fruit for personal use). Shmita was to be a blessing for the land, to make it more productive. It was also a test of faith.
And if ye shall say, What shall we eat the seventh year? behold, we shall not sow, nor gather in our increase:
Leviticus 25:20-22
Then I will command my blessing upon you in the sixth year, and it shall bring forth fruit for three years.
And ye shall sow the eighth year, and eat yet of old fruit until the ninth year; until her fruits come in ye shall eat of the old store.
All debt was forgiven
After every seven Sabbatical years, the 50th year was designated the year of Jubilee. All slaves and indentured servants (at least the Hebrew ones) were to be freed. All debt was to be forgiven, and all land was to be returned to its original owners.
Consider for a moment how radical this sounds in our day. “You mean, all creditors had to simply absorb a loss that year?” Yes, that is what the Lord commanded them to do.
What is seldom spoken of, however, is that modern creditors, especially credit card companies, do this all the time. It is called “writing off debt.” When they decide they have little chance of collecting a debt, they usually sell the “bad debt” in a bundle, at a huge write off, to collection companies who specialize in harassing poor people for money.
Jubilee was not limited to the Hebrews
The Jubilee Year has not been observed for centuries, but some Orthodox Jews do still try to observe the Shmita. Interestingly, the concept of the Jubilee was not limited to the ancient Hebrews.
In Babylon, for over 2000 years, whenever a new ruler took the throne, they would cancel all personal debts throughout the country. Bond-servants (people who were required to work off their debts through labor) would be freed. Any land that had been forfeited to pay debt would be returned.
This practice was common throughout the Near Eastern Kingdoms, including Persia.
Debt forgiveness is necessary for economic stability
When debts grow too large to be paid without reducing debtors to poverty, the way to hold society together and restore balance is simply to cancel the bad debts.
Michael Hudson
Debt forgiveness eventually becomes necessary in every society. The total debt in a given society tends to continually increase. As debt increases, people’s discretionary spending decreases. This depresses the economy. Eventually large numbers of people cannot afford the necessities of life.
If the greater part of people’s income is going to pay debts to the financial class, there is no room for consumer spending. Without consumer spending, the economy will collapse.
The way to restore normalcy today is a debt write-down. The debts in deepest arrears and most likely to default are student debts, medical debts, general consumer debts and purely speculative debts. They block spending on goods and services, shrinking the “real” economy. A write-down would be pragmatic, not merely moral sympathy with the less affluent.
Michael Hudson
During this Covid-19 crisis, the upper classes are doing just fine. It is time to give some relief to the rest of the people. In addition to broadening and lengthening unemployment benefits, and requiring landlords to forgive rent payments during the crisis, Congress should immediately forgive, at a minimum, all student debt and all medical debt.
The people’s jubilee is long overdue.
Source: Michael Hudson, “A dept jubilee is the only way to avoid a depression,” The Washington Post, March 21, 2020.
Michael Hudson, “…and Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year,” ISLET, 2018.
David Brancaccio, “How a debt jubilee could help the U.S. avert economic depression,” Marketplace, Minnesota Public Radio, April 2, 2020.
A beautiful message during this difficult time.
Thank you for posting it.
Yes. The wealthiest have done remarkably well under the corona virus, billions in increase. So the question is, are we all in this together, “one nation under God, indivisible, with justice for all,” or, so we divide up into classes, where “every man prospers according to his strength, and whatsoever a man does is no crime.