The Philosophy of Debt

Alexander X. Douglas

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781317398851
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

I owe you a dinner invitation, you owe ten years on your mortgage, and the government owes billions. We speak confidently about these cases of debt, but is that concept clear in its meaning? This book aims to clarify the concept of debt so we can find better answers to important moral and political questions.

This book seeks to accomplish two things. The first is to clarify the concept of debt by examining how the word is used in language. The second is to develop a general, principled account of how debts generate genuine obligations. This allows us to avoid settling each case by a bare appeal to moral intuitions, which is what we seem to currently do. It requires a close examination of many institutions, e.g. money, contract law, profit-driven finance, government fiscal operations, and central banking. To properly understand the moral and political nature of debt, we must understand how these institutions have worked, how they do work, and how they might be made to work.

There have been many excellent anthropological and sociological studies of debt and its related institutions. Philosophy can contribute to the emerging discussion and help us to keep our language precise and to identify the implicit principles contained in our intuitions.

Part I Language

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1 ‘Debt’ as equivocal

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I have determined to examine the concept of debt. But how do we examine a concept? An attractive choice is to begin with the use of the various words associated with it. Speaking and thinking being so closely related, perhaps we can discover something about the concept of debt by seeing how the word ‘debt’ and related terms tend to be used.

It is obvious, however, that our use of ‘debt’ is far from univocal. One does not admit to owing a debt of gratitude the same sense as one admits to owing a mortgage. Nor does the difference lie only in what is owed. Rather, in each case what it means to owe is different. In the first case, for example, the admission of owing grounds only the expectation that the debt will be acknowledged. In the latter case it is expected that the debt will be settled. To ask somebody to cancel a debt of gratitude now that you’ve provided some means of settlement, whatever this might be, would indicate that you didn’t understand what a debt of gratitude was. A comparable lack of understanding would be shown were you to expect a banker to be fully satisfied by frequent public acknowledgements of your outstanding mortgage.

Nor, again, does the difference just follow from the fact that what is owed in one case is money. Philippe Rospabé’s book, La dette de vie, provides many examples of societies in which something at least externally resembling money, known sometimes as wergeld, was used in relation to debts. According to Rospabé, however, it was never used to settle them. Rather, the giving of money-tokens was a symbolic acknowledgement of a debt that could never be settled. This kind of debt was usually incurred by marrying a woman and taking her out of her community or killing a member of another group and thus incurring a ‘blood debt’. Such debts, like the debt of gratitude, could not be settled. They were life debts: ‘The … payments are never equivalent to the lives taken. … In both cases, the payment is the recognition of a life debt.’ ¹ Indeed, the English word ‘pay’ (and the French word ‘payer’ – Rospabé is writing in French) comes from ‘pacify’ – to make peace.

One might object that what happens in such societies, so different from our own, ought not to inform our understanding of the concept of debt as it works in our own society. Indeed, Rospabé himself notes that: ‘Far from being the rudimentary prefigurations of our modern money, the precious goods that circulate in savage [sic] societies introduce us to a world totally disjoined from that of market goods.’ ² Yet we should be very careful of disjoining these worlds entirely. David Graeber’s Debt: The First 5000 Years tells a compelling story about how this kind of money – a symbolic means of acknowledging debts – was converted into a means of settling them. The key element in the transformation was the slave trade, which turned life debts into life purchases. ³ But the sad details are not important here. What is important is this: to the extent that there is continuity between what Rospabé calls ‘primitive money’ and our own money, with its debt-settling capacity, the mere use of money alone cannot be sufficient to distinguish between the sense of ‘debt’ in which it demands acknowledgement and that in which it demands settlement. And there are almost certainly more senses besides these two.

Here one might be content to disambiguate the various senses in which the term is used. One might then individually investigate its use in each sense. But this would be to assume that the term is not sometimes used in multiple senses at once, perhaps exploiting the ambiguity among them to achieve a distinct purpose. That assumption is unwarranted – indeed we’ll see that it is false. Since meaning is revealed through use, disambiguating a term can’t be the right way to understand its meaning where common usage exploits the ambiguity.

Notes

1. Philippe Rospabé, La dette de vie. Aux origines de la monnaie (Paris: La Découverte, 1995) 34. Rospabé, it must be noted, is here partly rejecting what Mark Peacock calls ‘the ‘orthodox interpretation’ of wergeld’, according to which ‘payment of these fines by the perpetrator to the victim (or the victim’s family) is understood as adequate compensation and, by accepting it, the victim or the victim’s family divests itself of the right to retaliate’. – Mark Peacock, Introducing Money, ed. Tony Lawson, Economics as Social Theory (Milton Park: Routledge, 2013) 106. This ‘orthodox’ interpretation was proposed by Grierson – Philip Grierson, The Origins of Money (London: Athlone, 1977). Rospabé would, I think, agree that one divests oneself of the right to retaliate by accepting wergeld; he would deny, however, that it should therefore be understood as adequate compensation to the victim. His interpretation is probably closer to that of Bernard Laum. See Bernard Laum, Heiliges Geld: eine historische Unterschung “ber den sakralen Ursprung des Geldes (T’bingen: J.C.B. Mohr, 1924) ch.2, Peacock, Introducing Money 111–12.
2. Rospabé, Dette de vie 241.
3. David Graeber, Debt: The First 5,000 Years (New York: Melville House, 2011) 137–44 and ff.

2 Debitum

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Digging pa st usage and into etymology brings up further mysteries. The most obvious root of the English word ‘debt’ is the Latin ‘debitum’, from ‘debere’. ‘Debere’ can be translated ‘to be obliged’. Certainly the link between ‘obligation’, ‘owe’, and ‘ought’ is apparent enough, though there is another important etymological strain in ‘owe’ that will be examined below. The words ‘due’ and ‘duty’ arise also from ‘debitum’. This all suggests that ‘debt’ might, in its canonical usage, have a principally moral sense: when you owe someone something, you ought to give it; it is perhaps even your duty to do so. This is not merely a feature of English and Latin; it holds for Indo-European languages generally: ‘In Armenian “parkt,” “debt,” designates also “obligation” in general … just like German Schuld.’ ¹

What is also striking is that ‘debitum’ is a past participle. This, as R.G. Collingwood notes, implies ‘a past act of incurring the debt’. ² A typical debt-incurring act might be borrowing something from a neighbour and promising to return it. Most people would agree that this usually places one under an obligation to do as one has promised. But what sort of obligation? A moral obligation? Plato’s Socrates raises a problem with this theory when it is proposed in the Republic. He gives a single example: suppose that you have borrowed a weapon from your neighbour, promising to return it on demand. This is the very model of what in the Preface I called the ‘close-to-home case’. Socrates asks us to suppose that in the meantime the neighbour has become dangerously insane. Now he demands his weapon back. Honouring the promise is now not obviously the right thing to do. ³ Socrates claims that returning the weapon to an insane neighbour would in some way be doing him harm. Perhaps it would place him in danger. Or perhaps he would use the weapon to do bad things, and the notion that doing bad things is always ultimately a kind of self-harm is one of the glories of Socrates’s moral philosophy (at least as Plato portrays Socrates). Thus for you to return the weapon is to visit harm upon one who has been generous to you; this is palpably unjust, and it is difficult to see why you should be nevertheless morally obliged to do it.

The context of the conversation is as follows: Socrates is interrogating the traditional view, initially endorsed by Cephalus that justice consists of always returning what one owes. He raises the above problem case. Cephalus agrees that this is a problem but has no time to reply. He appoints his son, Polemarchus, to reply in his place. Polemarchus does so by claiming that what was really meant was not that justice means always returning what one has borrowed. Rather, justice means always returning to people what is actually due to them. Thus a person who has kindly loaned me a weapon is due kindness, not a weapon as such. If circumstances are such that returning the weapon would be unkind, then I owe no weapon; I must think of something else, something kind to do to repay the original act of generosity. But this means that what one owes depends in no direct way upon what has been lent. We can’t use knowledge of what we have borrowed from people in order to work out what our duties to them are. We must know other things – what is kind, what is generous, what is an equivalent kindness, and so on.

At this point the notion of debt is simply dropped from the discussion, to be replaced by general notions of fairness and duty. The distinguishing feature of a debt, that it is incurred by some past act of borrowing, is replaced by the condition, stated by Polemarchus, that kindness is owed to friends and harm to enemies. But ‘owed’ here refers merely to duty; if one preferred, one could leave out the words ‘owe’ and ‘debt’ altogether and speak only of duty and obligation. The upshot is that a duty can’t be the same thing as a debt fixed by some prior act of borrowing. Subsequently to that debt-fixing act, circumstances may change so that a friend becomes an enemy, or (as with the insane neighbour) what would have been kindness becomes harmfulness.

The initial plausibility of the original suggestion – that justice means returning what one has borrowed – no doubt arises partly from the fact that the Greek word ‘ὀφειλή’, like ‘debitum’, can be used to mean, among other things, both ‘debt’ and ‘duty’. Socrates’ thesis amounts to the claim that there are duties determined on principles of justice but there are no debts in Collingwood’s sense – duties that arise entirely and unqualifiedly from some prior act of borrowing. Cephalus’ mistake was to suppose that since ‘duty’ is the same word as ‘debt’, one could work out what one’s duties are by thinking about debts, and further decide what one’s debts are by thinking about what one has borrowed. But Socrates’ example is enough to show that if one wishes to know what one genuinely owes to somebody, what matters is not what one has borrowed from her. It must, rather, hang upon one’s obligations of kindness, fairness, generosity, and so on. To know what you owe, you must first have a sense of how you ought generally to behave; debt is understood via duty rather than the other way around.

Notes

1. Émile Benveniste, Problems in General Linguistics (Coral Gables: University of Miami Press, 1971) 147.
2. R. G. Collingwood, The New Leviathan (Oxford: Clarendon Press, 1947) 17.12.
3. Plato, The Republic, trans. H. D. P. Lee and M. S. Lane, 2nd ed. (London: Penguin, 2007) 331c.

3 Debt and sin

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There are also theological overtones to the language of debt. In many Indo-European languages the terms used for debt are often the same as those used for sin and guilt. ¹ ‘Schuld’ in German is a commonly cited example (connected also to the English word ‘should’). ² Since that word means both ‘debt’ and ‘sin’, settling a debt comes to sound like an act of atonement. Still, if duty, or atonement for sin, were really simply the same thing as debt, the question ‘should one always pay one’s debts?’ would be as trivial as the question ‘should one always do what one should do?’ or the – to a certain kind of believer – no less trivial question: ‘should one always atone for one’s sins?’

Backed by the mysteriously irresistible force of religious injunction, the idea that not repaying one’s debts is sinful, rather than merely wrong, is capable of overcoming the resistance of Socrates’ counterexample. Returning a sword to an insane neighbour may not be kind, and it may be an action from which harm will follow. But who are we to say whether or not divine law might sometimes bid us cause harm or act unkindly? If divine law rules it sinful not to pay one’s debts, and if one feels the force of divine injunction above all else, then one’s moral attitudes towards the likely outcome of avoiding sin don’t matter. One had better ignore one’s human feelings and defer to the infinite wisdom of divinity.

Peter Geach has an intriguing article on Plato’s Euthyphro, developing this line of thought. ³ There he argues, contrary to Socrates in that dialogue, that blind obedience to the divinity – indeed the worship of divine power – is necessary for true virtue. His argument is based on the premise that true virtue involves a genuine incapacity to violate the rules of virtue (whatever these might be). The following analogy might help to explain this. An actor playing George V in a historical drama may choose to act as much like George V as he is capable of doing. But George V himself doesn’t need to choose to act like himself; he acts like himself because he is himself. Likewise, one may at every moment willingly follow the rules of virtue, but then one is still merely playing at virtue. The truly virtuous person doesn’t need to follow any rules; the rules are rather simply the way she acts. Virtue flows from her nature rather than requiring any conscious commitment to rules. ⁴ To quote Gilbert Ryle: ‘as a person who looks much at his spectacles betrays that he has difficulties in look...

Table of contents

• Cover Page
• Half-Title Page
• Title Page
• Copyright Page
• Table of Contents
• Preface
• Acknowledgements
• Part I Language
• Part II History
• Part III Money
• Part IV Political economy
• Part V Notes and replies to objections
• Conclusion
• Bibliography
• Index