The function of debt in the ancient Near East

Contrary to the assumption that the primary function of debt was to ensure that the lender grew richer from the interest, it seems that that key issue was labour. In a situation with plenty of land and scarce labour, all sorts of means were used to secure labour. One was debt. Why else would a wealthy person lend money to an impoverished peasant? Would it not be more profitable to lend to another wealthy person? It seems not. Since it was routinely impossible for the debtor to pay off even even the interest, he would need to work the land of the lender until the ‘debt’ was paid off. The lender was in no hurry to see the debt repaid. As Steinkeller observes:

Assuming that most loans were made with other objectives than the interest-generated profit in mind, it follows that, in such circumstances at least, interest was a tool and not an economic end in itself, being therefore devoid of real economic value. Its rate was largely irrelevant vis-à-vis the amount of the loan, except that it had to be sufficiently high to make it impossible for the borrower to repay the capital (‘The Money-Lending Practices in Ur III’, 2002, p. 113).

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3 thoughts on “The function of debt in the ancient Near East

  1. ok, but yet, while the role of the trading market is small when measured against the whole population, it seems to occupy a lot of the commercial records of the elite. And the elite receive the surplus. And to diagnose the mode of production you must follow the surplus.The interest on loans given to commodity traders drive the demand side, just as the loans to labour controls the supply side. Or, Morris Silver was right.

    1. Except that the primary function of markets in most parts of the world and history was not profit at all. As for records, the vast bulk concern ‘loans’ (a very elastic term). Morris Silver … oh dear … save yourself from mental rot.

      1. I agree – loans to traders weren’t motivated primarily by profit. They were motivated by getting shiny trinkets, such as the latest tablet with clear clay display and larger storage capacity and friendly user interface, or those pots with those trendy little embossed handles that Ilimilku’s wife keeps going on about, that stuck-up bitch.

        C’mon, “Silver” is a great name for doing ancient economics, though, isn’t it? Sure, it’s not quite in the same league as Jagdish Chandra Jain, the scholar of Jainism and author of The Jain Way of Life. And if he had really been dedicated, he could have changed his name by deed poll to something cool like Fiscal Drag. But he’s got to get some credit for “Silver”, doesn’t he? I mean, c’mon.

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