Debt, Credit, Interest
Out of that dampening function of society comes that thing called debt or credit, depending on which side you look at it: today I have eaten your eggs, therefore I have a debt to you and you have the corresponding credit toward me, until tomorrow when you will eat my fishes.
And out of debt/credit comes interest. Today you have eggs and I don’t have fishes, and so for your eggs today you ask me a handful more of fish tomorrow; tomorrow I’ll have fish and you’ll not have eggs, and so for my fish tomorrow I’ll ask you one more egg the day after tomorrow. Or, today you have grains of wheat and I don’t, and so for some of your grains today you ask me some grains more tomorrow.
Both borrowing/lending and earning out of lending are controversial subjects, so some examples may help evaluate when they are ethical and when they are suppressive.
Is it right to borrow/lend? if you give me some of your eggs, or grains of wheat, you apparently decreased the wealth of your small group, your family, on one hand, but increased that of your wide group, your fellows, on the other, and a stronger wider group will make your smaller group stronger, too. Provided I roll up my sleeves and grow more wheat.
Credit can also have a leverage effect: suppose a given resource produces a given amount of survival factors, and has a given cost. To purchase it one had to set aside the corresponding purchasing power by saving one’s surplus, accumulating it little by little, which would require a given time. If one borrows that purchasing power one can purchase that resource sooner, so it can start producing survival factors sooner. It’s just ethics as usual: is that beneficial – really beneficial – for all? On the one hand, one ought to weigh up the pros and cons of getting the production in advance against the cost and indebtness for borrowing the means to acquire that resource in advance. But on the other hand, beyond the specific case, one has to take into account the ethics of the philosophical side of it as well, in that a whole concept of conducting business on debt develops on this basis, whose ethics is indeed questionable.
Debt, Credit, Interest, 2
Is it right to ask an interest? Thanks to you not only I did not starve, but I also produced more wheat that increased the food reserves of the community, so it may be right to share some of this with you whose willingness to help made it possible. As long as everyone receives in ratio to the effort put into it.
Because interest has a very dark side, too, and therefore it requires a very careful ethics scrutiny. As any quest for survival always involves some risk, the point is: whose risk? Charging whatever interest has been excommunicated repeatedly, and for good reasons. It may open the door to the separation of the lender from the endeavour, and in fact it gets excommunicated in favour of partnership, which by contrast means sharing the risk together with the fruit in full.
This separation has two stages. The first miseducates to separate yield from investment and risk, product from toil, effect from cause. As the risk does not cease to exist for being merely repelled by the creditor, the more risk the creditor repels, the more risk falls on the debtor, and it can cross the limit of viability. And the second stage of separation is that of the malicious intent: the lender can push this beyond that limit intentionally, so as to cause the borrower to go bankrupt and thus foreclose him.
Anyway, up to a given point we’re helping one another. So when do things change and help becomes betrayal? Debt/credit and interest are used to suppress when and to the degree the exchange gets unfair and results in more damage than benefit for the whole of the people involved. When one has to borrow one is in need, and thus easy prey to blackmail and extortion. There is a word for it: usury.
And to rob as much as possible, some suppressive people do not restrict themselves to exploit the existing need, no; they come to the point of artificially creating the need. It’s the very same swindle than that perpetrated with criminal protection and nicotine addiction: you damage people and force them in a lower degraded state, then you exploit their drive to regain the original state, selling them the cause of the disease as if it was its cure, selling them dearly a tiny bit of that which was their own in its entirety in the first place, while you ensure they never realize the truth but on the contrary remain sided with their torturers and fighting their rescuers. And, both as the grease and as the irony of adding insult to injury, the whole scheme will be topped with the oppressor posing as the authority, the benefactor, occasionally even the victim of the ungrateful “beneficiaries” who dare to bite the “helping” hand, should any victim ever dare to object to sheer suppression. Is there a worse example of betrayal disguised as help?
Debt, Credit, Interest, 3
And finally out of debt/credit comes the risk also: the possibility that things go wrong and the debtor cannot return the loan or even steals it. So what about ethics of bankruptcy laws? On one hand, the bankrupt has to account for his or her mistakes, and the community would protect itself from the risk of recidivism. But on the other hand, too heavy and permanent consequences after a bankrupt would deprive the community of the potential for success left in the bankrupt. Attempts are a form of investment, and many great forward steps required many attempts and persistence. What about the ethics of the privilege of limited liability granted to legal persons, which is liable to represent a break of the equality of rights compared to its denial to natural persons? On one hand, the limited liability is an incentive to conduct a legal person less scrupulously than a natural person, an abuse the community would protect itself from; but on the other hand, too downright a ban of this form of dumping a share of business risk on third parties would deprive the community of the yield potential of business success. The controversial privilege of limited liability is a form of investment, too: the wager that there are more ethical people than unethical people. So, basically in the debt/credit related risk as well the point is estimating the most benefit for all: as the initiative of individuals represents for the community an investiment in the potential that makes it progress, it takes on a share of the related business risk; it's just a question of honesty and fair proportions.