When you think about debt what is the first thing that comes to mind?
Your ballooning credit card payment?
All the bills stacking up on your dining room table?
Crunching the numbers and realizing you’re never going to be able to catch up?
According to the Federal Reserve Bank of New York, Americans now collectively hold more than $17 trillion in debt.
T-R-I-L-L-I-O-N.
That number is so large it’s hard to grasp.
For perspective, if all 213.6 million working-age adults worked for $30 per hour to pay off the debt, each person would have to work for 2,662 hours.
That’s basically sacrificing more than a year of your life just to pay down the debt. Not to cover your living expenses or pay Uncle Sam his fair share in income taxes.
Just debt.
And that also assumes a wage that is far above the current minimum standard. In reality, it would take several years to pay it off given the current level of wages.
What this tells us is that debt isn’t intended to be repaid. It’s like a Gordian Knot of finance that’s designed to be impossible to overcome.
The idea of repaying debt is a myth. It would assume the existence of a power structure that simply does not exist. To be able to get out of debt is to be an equal — or rather a peer — with your lender.
You are not. You are their asset. And they rely on you to continue generating a profit.
This essay is going to dive into how debt is an instrument of power that fosters inequality. Specifically, it will identify how debt has historically been used to deprive debtors of honor and justice. By accepting debt as a matter of personal responsibility, we’ve become prisoners of a power dynamic that is difficult to escape.
The history of America is one of debt — not freedom.
Something that is lost in the study of American history is that America was not founded on democratic principles. On paper, our founding documents espouse the ideals of freedom and equality. But in practice, early Americans came as debtors which meant they lived in a society that treated them as such.
The Atlantic Slave Trade, of course, is the most obvious example of the injustices America was founded upon. In order to be reduced to a state of slavery, people had to be stripped from their communities and deprived of their dignity. What you might not know is that the origin of this process — of dehumanizing one person in order to sell them to another — is based on the need to repay a debt.
According to David Graeber’s analysis in Debt: The First 5000 Years:
During the 1760s alone, perhaps a hundred thousand Africans were shipped down the Cross River to Calabar and nearby ports, where they were put in chains, placed on British, French, or other European ships, and shipped across the Atlantic — part of perhaps a million and a half exported from the Bight of Biafra during the whole period of the Atlantic slave trade. Some of them had been captured in wars or raids, or simply kidnapped. The majority, though, were carried off because of debts. (Graeber, David. Debt. 208.)
The origin of slavery is rooted not in malice, but debt. People enslave other people in an attempt to repay debt. If that debt didn’t exist, there wouldn’t be a purpose for enslaving them in the first place.
Slaves weren’t the only ones to come to America in bondage. In exchange for passage to the New World, indentured servants contracted out their labor. Some chose to sell themselves into indenture to escape poverty. Others to escape debt.
And it’s worth noting that Georgia the last colony to be founded, was created as a refuge for English debtors. Instead of rotting away in a debtors prison in London, the poor could go to Georgia and try their shot at making their way as a colonist instead.
Even the elites of Boston weren’t spared from the tyranny of debt. The entire premise for colonizing America was to repay England’s war debts. American colonists were being taxed without representation because that was the point. America was designed to be a new place for King George III to generate tax revenue from.
Unless you can trace your lineage to the handful of entrepreneurial landholders and merchants that colonized the New World, your origin story is likely one of debt, slavery, or a combination of the two.
The structural injustices manifest in our society today exist as a result of debt. Economic inequality and class divisions are built off of a historical narrative where debt has become an instrument of power. A ruling class exists at the expense of the indebted class beneath them.
Your indebtedness is not a sign of personal failings. It’s merely a legacy you’ve inherited from your ancestors.
The perpetuation of debt eliminates individual honor, widening the chasm of inequality.
Debt isn’t just a number on your credit statement. It actually symbolizes an obligation. It represents someone lending money to you and that person who is lending you money trusts that you will eventually repay them.
Today this is codified as a credit score. A lender evaluates your creditworthiness — or how trustworthy you are — before lending you money. A low score represents a low degree of confidence that you can repay new debt.
Before the existence of a credit score, trust was measured by your word and your honor. Your ability to repay debt demonstrated how honorable you were within your community.
This idea of honor has largely been stripped away by the financial aspect of debt. After all, we don’t live in tight-knit communities anymore. Few of us know the names of our neighbors, let alone how honorable they are.
For debt to exist today it has to be represented by something more than honor. Trust is measured in the form of money. At first, this came into being as physical notes — paper money — that was used in the economy to buy and sell things. But today debt and the trust it represents is increasingly represented by securitized assets held by large institutional banks.
This is where the power structure has changed. Debt has become a tool to subordinate. Trust is pushed to the limits. It doesn’t matter so much that you can repay a debt. What matters is that you can continue to make monthly payments toward repaying that debt.
It’s about consistent cash flow.
When you look at debt as a function of trust and how it’s changed to become something to take advantage of it begs an important question: is debt moral?
Is it moral to lend money to someone, knowing they don’t have the ability to repay it, for the sake of generating a profit?
When you look at our collective debt burden, this is where we’re at now. But this isn’t where we’ve always been.
Historically, usury — or charging exorbitantly high interest on debt — was prohibited. The Bible is explicitly clear on this:
“‘If any of your fellow Israelites become poor and are unable to support themselves among you, help them as you would a foreigner and stranger, so they can continue to live among you. Do not take interest or any profit from them, but fear your God, so that they may continue to live among you. You must not lend them money at interest or sell them food at a profit. (Leviticus 25: 35–37)
And in Islam, paying interest is considered a sin:
“O believers, take not doubled and redoubled interest, and fear God so that you may prosper”. (Surah Ali ‘Imran 130–132)
It wasn’t until the advent of capitalism that debt was turned into an asset that capitalists could leverage to generate a profit. If you’re a banker you’re in the game of making money rather than evaluating trust. It’s not your responsibility if someone can’t repay their debt — it’s theirs.
This is where the power balance has shifted. Debt was originally intended to be repayable because it was a symbol of honor and trust within your community. That is no longer the case.
Now debt has become a tool that reshapes the power balance. It turns debtors into criminals and de facto wage slaves. To be in debt in today’s society isn’t just to be dishonorable, it’s to be inferior too.
Final takeaway.
Debt that’s created for the purpose of generating profit isn’t something that’s intended to be repaid. When you repay a debt that means you’re no longer an asset to the lender who’s keeping your debt on their books.
Why on earth would they make it easy to repay?
When you look at debt through the lens of power and control, it raises important questions about the morality of debt itself. Specifically, of one’s personal responsibility to repay an unrepayable debt.
We no longer live in a society built on communal trust. Instead, trust has been turned into financial instruments that predetermine our success or failure in life. We’re only as valuable as a three-digit score generated by the Fair Isaac Corporation.
Your value in society is, in turn, translated into your ability to manage debt. This is what honor and dignity have been reduced to. In doing so, it’s created a power structure that inherently subordinates one group of people to another.
So long as debt exists inequality will also exist. Because that is the foundation modern debt has been built upon.
Of course, just because this is how it’s always been doesn’t mean this is how it has to continue to be.
Debt jubilees were not only practiced by the Israelites. They were practiced according to secular law in ancient Babylon too.
Islamic banks have figured out a novel way to generate profit through equity sharing rather than interest. An Islamic bank’s profits, in a sense, are tied to the success of its borrowers.
There is precedent for restoring honor and dignity in society by eliminating debt.
The question then is: do we have the courage to change course, not simply for ourselves, but for our progeny?
And if not, for how much longer will we be able to tolerate debt knowing it will never be repaid?
This essay was inspired by the work of David Graeber from Debt: The First 5000 Years.
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