Is the current unrest in Greece the harbinger for a coming popular movement against the excesses of the banking industry and government taxation?
Will history repeat itself?
In the 6th century BC, the people of Athens were suffering the consequences of lending with unchecked interest. Debtors who could not repay their loans were forced to turn over their land to creditors. If the value of the land didn't meet the amount of the debt, the debtor and his family would become slaves of the creditor. This led to the widespread slavery of the working class in Athens and culminated in an economic disaster.
Sound familiar? It may have been a long time ago but, as they say, the more things change, the more they stay the same. Just how far have we come when today we face the same cycle of excessive debt, accumulated interest and excessive taxation?
In ancient Athens, to resolve the debt crisis the influential lawmaker Solon introduced what was called seisachtheia--the relief of burdens. This was an immediate cancellation of all outstanding debts, which freed the slaves, returned their land to them, and made it illegal to offer one's personal freedom as collateral on a loan. Seisachtheia is one of many ways in which lending was regulated in ancient cultures.
When credit and interest on debt get out of control, wiping the slate clean is often what it takes to get things back in working order.
Here's the part we can't seem to understand: there has never been anything natural or useful about interest on money.
Throughout the history of Europe and the Middle East, up until only about 300 years ago, there were strict laws prohibiting Christians and Muslims from charging interest. There were also religious laws prohibiting interest, such as those of the Qur'an and the Torah.
Jews were prohibited by their religion from lending money to other Jews, but became the de facto facilitator moneylenders in societies where the Christian majority was prohibited from any lending whatsoever. Christians were prohibited by the church from such professions. Likewise, in cultures with Muslim majorities, Jews again were pushed away from certain jobs, and took others that were barred from Muslims and considered sinful, such as winemaking, musicianship and, of course, money lending. Under Muslim rule, Jews were permitted to take the money and lend it out, keep a cut and repay the remainder either in the form of tax to the rulers or returns to the investors. Essentially, a bank was born.
When economic disaster hit, the rulers became self-righteous, persecuted and scape-goated the Jews and confiscated their assets. Debts were wiped out.
In the 12th century King Philip of France expelled the Jews and took their property, but he then decided that the profits he could get from taxing them was too good to pass up and invited them back 16 years later. This pattern continued through the next four centuries when England, Hungry, Germany, Austria, Lithuania, Spain, and Portugal all expelled the Jews and confiscated their assets.
Do we see anything like that relationship today? Of course we do. But now governments and banking institutions are working hand-in-hand.
The mentality that it was appropriate to charge interest on loans without taking risks along with the borrower became entrenched only about 300 years ago. Even then, Herbert Spencer and Adam Smith deemed interest a "necessary evil."
And so, 300 years ago, the age of broadly charging interest began.
Before that, money was by and large a medium of exchange. Long before Smith and Spencer, Aristotle and later Thomas Aquinas wrote that interest ought to be charged only when the lender was thought of as a partner, sharing in profit and loss.
Aristotle wrote, "The most hated sort [of business] and with the most reason, is usury, which makes a gain out of money itself and not from the natural object of it. For money was intended to be used in exchange but not to increase at interest."
And Thomas Aquinas echoed him about a millennium and a half later. He wrote, "To take usury for money lent is unjust in itself, because this is to sell what does not exist, and evidently leads to inequality which is contrary to justice."
But gradually the "evil" of lending which Smith and Spencer wrote of has come to be accepted and run rampant. But is it necessary?
The practice has been institutionalized in banks the world over. Money lending has essentially become a risk-free business, with lenders doing no productive work.
What's the result? Unfairness. Widespread disparity in wealth. Social unrest and upheaval. And yesterday, three people dead in a Grecian bank.
Another well-known example of social unrest and wholesale debt default occurred in the late '90s. Argentina had begun a severe economic recession that lasted several years. Unable to make payments on its debts, in 2002 the country defaulted on many of them. It was the largest debt default in human history, at over $100 billion. The default was denounced by creditors, many of whom were private citizens in other parts of the world whose savings and pensions had been invested in bonds.
Other nations have suffered similar economic burdens because of the lending practices of the World Bank and the IMF. It is no surprise that those institutions have come to be seen, rightly, as leaches waiting to take advantage of the excessive debts many governments and people find themselves owing.
During the '90s, the World Bank was forced to cancel the debts of numerous poor nations (considered Heavily Indebted Poor Countries, or HIPC) on a humanitarian basis. The basic needs of these countries' people weren't being met because the countries were being forced to pay off their debts, leading to widespread poverty and starvation.
Essentially, World Bank was forced to declare seisachtheia, the law of old Athens. The relief of burdens. Lending had gotten out of hand, and World Bank had to do the same thing as the government of ancient Athens.
As former president Bill Clinton told the National Summit on Africa, "Struggling democratic governments should not have to choose between feeding and educating their children and paying interest on a debt."
Now Greece finds itself in the middle of its own crisis and revolt. How much has changed since the Athens of 6th century, BC? The government, IMF and World Bank tax people and lend money and then bail out the banks.
The Grecian revolt may prove to be the forerunner of similar events in Spain, Portugal, and across Europe. Our own Tea Party activism may be an intuitive awakening of people who feel it in their gut that something is not quite right.
One of these days, we will learn from our history. One of these days, the revolts and inefficiencies that come with pushing credit on people to get them to borrow, spend, and be enslaved to their debts, will come to an end.