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World Guide
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 but it is difficult for an apple tree to produce a harvest with compound interest

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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