A rake in debtor's prison, from William Hogarth's A Rake's Progress
An absolutely fascinating article from Alexander Rose on The Long Now traces the 5,000 year history of Debt. There's a lot here, but one important fact is that credit is not a modern invention. In fact, "virtual" money is as ancient as possible (as in fucking Sumerian), and has recurred throughout history (Israel, the medieval era). Interestingly, virtual money seems to thrive the more cultural and financial institutions are entwined, while coinage or "fixed" money of some type seems to dominate in eras of frontiers and expansion (be it by trade or force) into unknown territory.
The reason this is so important is because understanding the development of a modern financial system — of which debt is a key part — is vastly important to understanding how our society has changed and will change again. I've said here before that the Industrial Era could as easily be called the Compound Interest Age.
So, on that note, here's what Rose has to say about our modern crux. It's some pretty heady food for thought:
What can we say for certain about this new era? So far, very, very little. Thirty or forty years is nothing in terms of the scale we have been dealing with. Clearly, this period has only just begun. Still, the foregoing analysis, however crude, does allow us to begin to make some informed suggestions.
Historically, as we have seen, ages of virtual, credit money have also involved creating some sort of overarching institutions – Mesopotamian sacred kingship, Mosaic jubilees, Sharia or Canon Law – that place some sort of controls on the potentially catastrophic social consequences of debt. Almost invariably, they involve institutions (usually not strictly coincident to the state, usually larger) to protect debtors. So far the movement this time has been the other way around: starting with the ’80s we have begun to see the creation of the first effective planetary administrative system, operating through the IMF, World Bank, corporations and other financial institutions, largely in order to protect the interests of creditors. However, this apparatus was very quickly thrown into crisis, first by the very rapid development of global social movements (the alter-globalisation movement), which effectively destroyed the moral authority of institutions like the IMF and left many of them very close to bankrupt, and now by the current banking crisis and global economic collapse. While the new age of virtual money has only just begun and the long-term consequences are as yet entirely unclear, we can already say one or two things. The first is that a movement towards virtual money is not in itself, necessarily, an insidious effect of capitalism. In fact, it might well mean exactly the opposite. For much of human history, systems of virtual money were designed and regulated to ensure that nothing like capitalism could ever emerge to begin with – at least not as it appears in its present form, with most of the world’s population placed in a condition that would in many other periods of history be considered tantamount to slavery. The second point is to underline the absolutely crucial role of violence in defining the very terms by which we imagine both “society” and “markets” – in fact, many of our most elementary ideas of freedom.
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