I Meet the Leading Authority on the Babylonian and Near East Tradition of Debt Cancellation

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Copy of a regular newsletter by Boudewijn Wegerif, Sweden


Dear list members,

Yesterday I was with an American economist who says of himself that he is a Marxist, whose godfather was Leon Trotsky, whose father was thrown in prison in the US in 1941 for advocating the overthrow of the government, who has worked for the Chase Manhattan Bank as their balance of payments expert, and who is now an authority on the Babylonian and Near East tradition of debt cancellation. I was with someone who in another guise, as musician, once auditioned to conduct the orchestra of the Stockholm Opera Company: – someone whom I had been told I would find extremely rude, with a verbal bite as sharp as his bark, and who I found, in fact, to be as sensitive and friendly as I like to imagine myself to be.

I had come from Sweden to London to meet this man and hear him talk to an audience of Christian monetary reformers on the history of debt forgiveness.

I am referring to Michael Hudson, or if you like, Professor Michael Hudson, whom I have written about on a number of occasions as having something important to say about how Judaism and Christianity have their roots in economics, and specifically debt management.

Michael Hudson went on from working for Chase Manhattan to teaching international finance at the Graduate Faculty of the New School for Social Research and Bronze Age archaeology at the New York University Institute of Fine Arts. His latest assignment is to coordinate the research and be the co-editor of the published books of the International Scholar Conference on Ancient Near Eastern Economies (ISCANEE) and the Institute for the Study of Long-Term Management Trends (ISLET).

I first came across Michael Hudson’s work through a small booklet, The Lost Tradition of Biblical Debt Cancellation, based on research that he had done at Harvard University on Babylonian economic history. In my review of the booklet I wrote that we might have the bottom line here to understanding what Judaism and the Jesus event were really about.

“The implication is that there was a call on Judaism to establish a tradition of clean slate debt cancellations and land restitution,” I wrote, “and on the followers of Jesus to see his remonstration against the moneychangers and merchants in this light. It also means that until the call for an economic clean slate is taken up and followed through on, there will be ever greater poverty and desolation radiating out from centres of increasingly obscene wealth” (PS1).

I came away from yesterday’s meeting with Michael Hudson more definitely convinced of this.

You will be hearing a lot more from me about the Clean Slate challenge in future E-letters. Here I simply want to introduce you to Michael Hudson, out of our meeting in the morning, and to share a few highlights from his talk and the interesting discussion that followed it.

Michael Hudson is a fifth generation American, with Red Indian Chipawa blood in his veins from his mother’s side. He was born in Minneapolis in 1939. His father was a trade unionist and leading light in the civic management of what Michael describes as “the only city in the world run by Trotskyites.” The money establishment was, understandably, not very happy about this. Michael was just two years old when his father was made a political prisoner. His early childhood will have been traumatic, lightened by the
study of music. This was never going to be satisfactory as a career, however, because of his wanting to get to grips with understanding the causes of the social-economic injustice that his father, as a follower of Leon Trotsky (1879-1940), was not shy to confront.

It was not easy for Michael to choose between being a pianist-cum-conductor and being an economist. One could say that the choice was made for him through the success of his book, “Super-Imperialism, the Economic Strategy of American Empire,” published in 1972, and now being updated for the umpteenth time, for reissue by Pluto Books in November.

A talk Michael gave on Super-Imperialism in the early 1970s led to his being invited to join the Hudson Institute team of researchers around Hermann Kahn, who was advising the White House on future economic trends. I raised an eyebrow on hearing this and Michael explained, “In Super-Imperialism I expose how the US financed the Vietnam War with European funds. This was useful information, for more rip offs.”

“And how did Europe finance the Vietnam War?” I asked. “Easy,” said Michael. “After Nixon delinked the dollar from gold [in August 1971], the US ran up a huge trade deficit with the rest of the world. This left the European central banks with loads of dollars, which were only good for buying US treasury bills.” And that is the way it is still today.

This is an over-simplification, of course, out of a discussion in the noisy Methodist Central Hall basement cafe, off Parliament Square. However, it was a nice entrée to the main fare at the Charing Cross Hotel in the evening.

The meeting of about 70 people was organised by the Christian Council for Monetary Justice – (PS2). I was delighted to hear Michael introduce his talk with an account of how Jesus declared the intent of his ministry in his hometown synagogue by reading from the prophet Isaiah, chapter 61:

“The spirit of the Lord is on me
because he has anointed me;
he has sent me to announce good news to the poor,
to proclaim release for prisoners
and recovery of sight for the blind;
to let the broken victims go free,
to proclaim the year of the Lord’s favour.”

His audience will have known that when Isaiah, and Jesus inspired by the same spirit, proclaimed the “year of the Lord’s favour”, the reference was to the Sabbath Year cancellation of debts and the Jubilee Year restitution of land (PS3).

We have to understand, said Michael, that Jesus was addressing a situation in which more than 25 percent of the farmland was pledged to usurers. And we need to understand how every major religion is essentially about how to handle debt – a word that in northern European languages also means guilt.

Michael went on to ask how it is that Christianity, from being rooted in the economy, for the sanctification of credit – i.e. trust – came to be so other-worldly?

As he sees it, much of the change is a product of the Reformation against the economic abuse of Rome. In his notes for the talk, Michael writes about how Martin Luther accused the princes of Rome of behaving like princes of the world rather than princes of God. Rome had been draining European realms of tribute for over 500 years, through the notorious Peters’ Pence and other charges such as the sale of indulgences. In this Rome was backed up by the usurious practices of Italian banking families, which it sponsored and was taken over by. Luther sought to limit Rome’s acquisitive tactics. He sought to contain papal ambitions by demanding that the Roman Church confine itself to concerns of the next world, not that of the living.

“Inevitably,” notes Michael Hudson, “this idea was retrojected back to the origins of Christianity and religion generally, to portray Luther’s political program as having always been relevant historically. Yet this perspective was anything but historical. Jesus did not come into this worldto give hope for the next world, but to announce a program for the earthly realm itself. That was why he cited Isaiah, at what Luke represents as the start of his ministry, immediately after the baptism and his 40-day sojourn in the wilderness.”

It is an interesting argument, open to discussion. Which could easily lead one away from the core message. Before reacting, therefore, please do read my review of Hudson’s work on the origins of debt and debt cancellation in the two essays Clean Slate and Hard Economic Facts (PS1). The important point is to appreciate how it is in the nature of money – especially interest-bearing money – to generate ever-mounting debt, and how Judaism, Christianity and Islam are essentially about stopping the debt/guilt=sin process.

In the discussion that followed on Michael Hudson’s talk, there were some interesting points made by members of the audience, and by Michael in his responses.

# It seems that there is a Law of Fraudulent Conveyance in the US (or in New York state, at least, so Wall Street) by which debts entered into when it is known that the debtor will not be able to repay the debt can be declared illegal. Almost all, if not all, national debts are now of this order, with new debt taken on to finance the servicing of unrepayable old debts.

# Not just the ruling transnational plutocracy, but the power elites of the third world countries also are not in a great hurry to set aside the impossible debt burdens, because servicing them involves the continuous devaluation of the local currency, and with that ever-declining, exploitable labour costs and land prices.

# One way of dealing with Third World debt, suggested the ex-banker and author of Honest Money, John Tomlinson, is for the debtor countries to be allowed to service their debts in their own currencies. Since this paper money will be totally useless internationally, the creditors will have no option but to spend/invest the money locally.

# In support of this, another member of the audience, George Talbot, said that debts build up because people make savings. As John Maynard Keynes, the leader of the British delegation at Bretton Woods, made clear, mechanisms are needed to ensure that surplus savings are spent in the countries and localities where they are generated. “One cannot make savings that do not have their counterpart in investments.”

# “The debt issue effects every aspect of the economy,” said Michael Hudson, in his concluding statement. “You have to change the whole system, in its entirety, and this requires a preparatory period of training in systems analysis, for an overall plan to emerge, which all can agree to.” Basic to the overall plan would be the clean slate cancellation of debts, not out of charity, but for economic survival, out of enlightened self-interest.

The churches in still nominally Christian Europe and the Americas should be challenging the world with this message. Why aren’t they? For me, the answer to that is that the church leaderships are not being pressed to do so by determined lay members.

To build up the determination requires a programme of seminars and talks, based on the research and proposals of Michael Hudson, and also Michael Rowbotham, Bernard Lietaer, James Robertson, Joseph Huber, John Tomlinson, Richard Douthwaite, Thomas Greco and other monetary reformers.

In friendship,

Boudewijn Wegerif
What Matters Programme
Folkhogskola Vardingeby **

PS1 – http://www.whatmattersnu/cleanslate.html . See also the article Hard Economic Facts, at http://www.whatmatters.nu/hef.html

PS2 – Christian Council for Monetary Justice, open to all on the basis of a £10 ($15) annual subscription. To join, E-mail the General Secretary Colin J. Whitmill – seejyw@onetel.net.uk. The CCMJ web site http://go.to/ccmj – is due for a revamp. The officers list and events diary is out of date, but the other information is still useful.

PS3 – Luke 4- 18/19, Isaiah 61: 1-2. See also Deuteronomy 15: 1 and Leviticus 25.

This E-letter is posted at http://www.whatmatters.nu/wmemails/wmemails15.html#WM-77