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Today, lending money is big business.
Global capital is pushing loans onto people and poor countries
as never before, fueling the
gap between rich and poor, accelerating the debt crisis and
bringing economic and ecological chaos on a vast scale. In his
Divine Comedy, Italian
poet Dante placed usurers in the same category as criminals and
those with ´unnatural vices´. Dante was responding
to prohibitions and taboos that have their roots in ecology,
the natural economy. A taboo arises from condemnation of an existing
practice. Usury was seen, like incest, as an unnatural practice.
It has been condemned since ancient times because it seeks a
benefit beyond the primary economic one. The transaction of usury
-guaranteeing that the usurer gets something for nothing- was
seen as a violation of the natural law, a design fault that would
produce imbalance and disintegration.
The fact that usury had constantly to be outlawed shows just
how deeply ingrained it was. But of course despite being illicit,
money-lending never went away; the taboo was always broken. Since
the Reformation in 16th century Europe, the practice spread rapidly.
Today, usury -lending money at exorbitant interest rates- has
conquered the world, lining up the rich world as lenders against
the poor countries as borrowers.
Taboos are supposed to protect society. The taboo of incest for
example arises from the need for healthy reproduction of the
species and also to avoid confusion between the generations:
children, who become parents, who become grandparents, great-grandparents,
and so on. Whilst succession is also a way of dividing inheritance,
both it and usury are economic forms of absorbing, locking up,
future resources, denying them to others.
Usury and chaos
Several arguments back
up the outlawing of usury. A main objection of the Christian
Church was that earning income from the practice was immoral.
The Bible´s statement that bread must be earned
'by the sweat of the brow' led to the 1515 Council of
Letran 'fair price doctrine' relating to a use or profit obtained
without work, that is,
something that is not gainful in itself, and at the expense or
risk of the lender. In the Middle Ages people compared usury
to 'selling a loaf of bread and then making a surcharge for
its use' or, in the words of St Thomas, 'selling the same
thing twice'. In the same vein, a biographer quoted economist
John Maynard Keynes as saying that the 'love
of money' for its own was 'at the root of all the economic
problems of the world'. Usury, in this sense, marks the distinction
between money as a means for negotiating supply and demand, and
cash as an end in itself.
Exploitation of the most needy by usurers was condemned by most
large religions. The Jains articulated it by saying that the
poor live to pay the interest and not to enjoy the goods they
bought with the loan: 'it is usury -this heartless extortion-
which eats the bone-marrow of poor farmers and condemns them
to a life of penury and slavery'. This thinking was given
a contemporary dimension when Pope John Paul II said in his Solicitude
Rei Socialis (1989) that 'the capital
needed by the debtor nations to improve their standard of living
ends up being used to pay the interest on their debts'. Elsewhere,
today´s economists have considered the loss in usefulness
or utility of the loan suffered by the poor when paying their
debts is much greater even than the profit made by the rich.
Each unit of interest paid increases the loss in marginal utility,
which leads to a reduction in utility in the economy (implying that those who justify this
as an efficient economic tool should be made to prove that usury
works in increasing utility - something they have so far been
unable to do).
Finance versus ecology
Another argument against
usury is the practice of discounting future values. Compound
interest results in the growth of invested monetary capital,
and tends to favor a definite in the now (present
net value) rather
than the same amount in the future. It has been noted that in
an ecological context that this could lead to the 'economically
rational' extinction of species, simply because the prevailing
interest rate is greater than the reproduction rate of the exploited
species.
Meanwhile, the present net value leads toward maximizing utilities
for the present generation at the expense of future ones. The
financial economy
operates on the basis of compound interest, whilst nature works
in harmony with simple interest: money deposited in a bank becomes
more (if capital of 100 becomes
110 in a year, interest in the second year is applied to this
new amount), but
it is difficult for an apple tree to produce a harvest with compound
interest. In this way, there is disjuncture between the natural
and financial economies, and the result is either the progressive
destruction of nature or the absence of redistributive social
justice, which has been at the root of financial crashes throughout
history.
A cautionary note to end on: if Judas Iscariot had invested his
30 pieces of silver at a moderate rate of compound interest,
his payment in silver today would be equal to the weight of the
entire planet.
*Published
in The World Guide
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