Debt cyclesMay 19, 1980
It may be that the fundamental dynamic which causes cycles in human action is the phenomenon of debt and the need for its elimination, if debt is understood as one human being feeling that he owes anything to, or must give credit for his accomplishments to, another human being. The dynamic is strengthened when the debtor feels unable ever to repay or wipe out the debt.
In the economic sphere, the relation seems obvious. “Boom” times are built on increasing debt, which must eventually be eliminated by a “bust.” The bust may be a time when the creditor’s supposed assets are eliminated, and the debtor is free. Or,it may be a long period of time during which the debtor repays the debt. In most cases, forces push times toward the former. Debtors usually outnumber creditors. The strong are few; the weaker are many. Those who exercise the self-discipline necessary to place themselves in the creditor camp are fewer than those who slide into debtor status. At some times in history, schemes are developed in the creditor’s favor; when the scheme is discovered the debtors demand a time of adjustment. At other times, the scheme may be in the debtor’s favor. But demagogues arise who persuade the debtors that the creditors have schemed against them. The “scheme” is used as an excuse for the demagogues to seize control over the lives of all, which the debtors assume will be for the good, because they see their debts as taken away. They would rather be men in bondage with no debts than to be men in freedom who owe debts to other free men.
The Old Testament Year of Jubilee recognized the need for periodic readjustment of debt, every fifty years.
The debt which the tide of history erases may be psychological, sociological, or political, as well as financial. It is basic human nature for those strong in any area to develop of spheres of influence--groups of human beings who have profited from the strong man’s strength and will likely continue to do so, and who therefore, when called to do so, will support the proposals of the strong man. Thus, the strong individual cultivates a group of “debtors” and becomes the strong “creditor.” Every community has its strong man, its center of influence, its unrecognized government, etc. These are comparable to the financial creditor. After enough years pass, greater numbers of “debtors” feel that they will never be able to repay their “debt.” Furthermore, potential rivals see the evolved “debt structure” as impenetrable. These feelings lead to the pressure for change. The debts must be eliminated. If individuals do not see this as possible through the simple removal of the “creditor” and the elimination of their “debts," then they may accept the alternative--an alternative strong man who leads them to believe that it will be in the good interests of all the people to make him (or his associates) the center of strength, thus eliminating the present strong man.
It is the absence of debt or feelings of debt which permits new communities, formed when large numbers of individuals are thrown
together for the first time, such centers of vitality. Every man feels “debt free.” Each man makes his decisions on the basis only of
hard facts, without consideration of whose favor he must court, Each man’s suggestions are as good as another’s. The ideas which are followed are the best ideas, rather than the ideas of the largest “creditor.” In a long-established community, on the other hand, an idea can never be implemented unless it has the proper endorsements.
It is the increasing awareness of the need to wipe out this “debt” structure which makes radical adjustments inevitable in the cycles of human life.
Postscript (same date)
There is a wealth of wisdom in the admonitions “Owe no man anything, but to love one another,” and “Neither a borrower nor a lender be.”
If men wish to be truly free, they must remain free on a daily basis, for most life situations are the result of many small daily decisions. When one accepts a favor from another which both see as a favor, then a creditor-debtor relationship follows, however small the matter. This is avoided only if the value received is truly a gift, with no implication of a promise to return the gift, and is so understood by both parties. A true “birthday gift,” for example, does not imply the obligation for a return gesture. Truly free and independent men recognize that the urge to present gifts varies among individuals. But true gifts are very rare. Generally speaking, there is no free lunch. Free men should attempt to leave every situation on a debt-free, credit-free basis, with each owing the other absolutely nothing. Any implied debt should be settled with a return of value, or open recognition by both of the debt-forgiveness as an outright gift. The latter should always be chosen with utmost caution.
If there is to be a structure of obligations and prerogatives among men, it seems to be more in the interests of stability, harmony, and dignity if such structures proceed from birth, such as family obligations or class structures. When relationships proceed from birth, the individual loses no dignity, for the matter is obviously out of his control and not predicated on his attributes. A son’s obligation to provide for his father does not impair his dignity. If anything, it enhances it and helps to define his value. It is possible that strictly limited governmental powers conferred through birth could promote stability. Such a system eliminates the struggle for succession or election. The natural development of a structure of debts, obligations, and prerogatives, on the other hand, implies that those in the “debtor” class are less capable. This, over a period of time, builds the pressures for a change in the system, as discussed earlier.
A personal strategy with no debts or credits has many attractions. It can be fully versatile and flexible. Pooled assets can be used to form business enterprises, with all capital holders sharing the risks and rewards. In a society of joint ventures all citizens share the risks and rewards of the future together. Money becomes primarily a means of current exchange. There should be far less anxiety regarding future booms or busts since all would share the benefits and risks. There would be no creditors or debtors to take a disproportionate benefit.
Even a father lending to his son so that the son can buy a house might be better advised simply to buy a or 1/10 share of the house, which the son could later purchase for fair value. Family relationships are perhaps most vulnerable to creditor-debtor problems.