A few weeks ago I had a short exchange with Nick Land on Twitter on the issue of debt.
Debt is a huge issue, a big part of what's wrong with the fabric of modernity, a big factor of what's driving modern civilization into collapse. And yet it has remained largely underdiscussed in these circles. Moldbug, who to the end still remained something of a libertarian, did have a keen interest in finance, and after the great crisis of 2008 made a series of long posts on financial crises and how to design a properly sound banking system. His "favorite topic" he even called it. Well it's certainly not my favorite topic, nor I'm sure it's Mr. Land's, but it's nonetheless a fascinating issue, and more importantly, a critical one.
Again, my approach to all intellectual issues is to think about its history, and the one thing that strikes one when thinking about debt is how easy-going the ancients were about them. Sovereign bankruptcies were routine, and nothing really happened. But most importantly, debt jubilees were *very* common. Mr. Land here seems to think it's a horrible idea, and he may be right, but I can't be faulted for liking something that Chinese emperors did every few years as part of general amnesties. New emperor? Cancel the people's debt. Emperor has a change of mood and sets a new regnal era? Cancel the debt. Cute imperial baby is born? Out with the debt. Some Emperors had general amnesties almost every year. It's interesting to note that the Song Dynasty, famous for its fabulous wealth, commercial mindset and urban culture, and thus a polity which you would expect to have more care about enforcing contracts, had over 200 debt jubilees over its 318 year history. That's one every eighteen months.
Again, you could say that the one thing that ensured the Great Divergence, the Rise of the West, the Industrial Revolutions and basically everything that's nice and productive about the modern world (and there's plenty of that, I do like fast transport, air conditioning and modern hygiene, thank you very much), was the establishment of the Sanctity of Contracts as an important part of Western culture. There's certainly something to that. A non-negligible part of reactionary authors will spit on Libertarianism a dozen times a day, but they will stay give you a 2 hour speech in praise of the Joint Stock Corporation as the fundamental basis of the modern economy and Western Civilization as we know it. By that line of reasoning, the only reason we ever got away of the Malthusian trap was when we stopped forgiving damn debtors and we used state authority to enforce commercial contracts.
And yet, reactionaries since Moldbug have also been very concerned with the problem of sovereignty. Most precisely, the lack of it. We bemoan the lack of ability of the holders of political power in the West to take hard measures that could fix many of the social problems which afflict us. But, you know, that's not surprising given that we don't allow our political authorities to mess with "the sanctity of contracts". If routine commercial transactions are held to be above the supreme power of the land, how the hell do we expect them to get anything done at all?
Why did the kings and emperors of yore issue decree debt jubilees so often? Why at all? Not just to get debt out of their own shoulders, obviously, they had the power to do that and just that, and do not relieve the commoners from their own debt obligations. And yet they did that, all the time: have commoners be free of paying back their debts. Again this sounds outrageous to our modern sensibilities, and yet it was routinely done for millennia, and everybody thought it perfectly natural. Part of that is because anything the Sovereign did was perfectly natural. The whole point of being king is that you get to do things like issue debt jubilees and screw the merchants royally. Pun intended. There's such a thing as different sorts of power, and economic power, the power that arises from having massive amounts of wealth, is very real. And yet, all that power is good for nothing in front of the King's authority, who on a whim can wipe out all your claims of debt collection. The merchants cry, and the indebted peasants rejoice. That's just good politics for the king: gains him popular favor, and signals his power.
But was that all? Just the King, sticking it to the merchants because he can? The whole frequency of the measure seems to hint there's something more going on. Maybe debt jubilees were an actual tool of governance. A good tool, a necessary tool, in order to achieve some positive outcome. Surely in terms of political stability, the most immediate concern of kings. And maybe something more. Maybe debt relief just actually fixes something in society, corrects some imbalances which lead to not just more safety for the king, but actually a better society, in terms of economics, natality and just general happiness and prosperity.
If you have read Peter Turchin's book War and Peace and War, and if you haven't you should stop right here and just go read it right now (if you have time for my blog you really should be going and read that book), you might recall Chapter 10, which Turchin titled "The Matthew Principle". That's a rather forced coinage from a quote of the evangelist. The idea is basically that the rich always get richer and the poor always get poorer. That's a historical reality and there's plenty of evidence for it in premodern times, those very times I'm referring to as having frequent amnesties and debt jubilees, canceling everybody's debt and starting over, screwing with creditors every few years.
Now, when talking at this level of abstraction it's always important to take a pause and think carefully of the definitions we are using. Think of the proposition "the rich always get richer". Who exactly is "the rich" here? Are we talking of individuals? Do rich men, on average, grow their fortune over time until their death? I'm not sure that's true, but even if it were, analysis of a single lifetime are hardly interesting. What about families? Are rich families, again on average, richer over generations? That seems intuitively to be true, and Gregory Clark has written an interesting book arguing that case, The Son also Rises. The difference between families and individuals is that families to some extent get to choose their members, so rich family names persist by accepting rich heiresses and the like, and gently expelling underperforming sons, helping maintain or grow the family "honor".
What about the rich as a class? That was the focus of Turchin's argument. What he meant is that absent political action to counter it (i.e. violence), economic inequality always grows. And grows. And grows. It happens that it always ends, or at least has ended to this point in history, with some eruption of violence, either a popular revolt, a civil war, or some kind of crackdown by the government against the wealthy. But if you were somehow able to avoid violence from ever happening, inequality just would continue to grow, slowly but steadily, by its implacable mathematical logic, until we got a Gini coefficient of 1. That's just a law of nature. Pure, abstract math, in practical terms. Just the way humans work. The rich just keep getting richer, and the poor keep getting poorer, and there's nothing you can do about it except using organized violence (i.e. politics) to stop the process. Those processes of growing inequality and eventual freak-out tend to last about a 100 years, so Turchin calls them "secular cycles".
Turchin, who may be right or wrong but is nonetheless a great writer, describes his argument with a very easy example. In any competition, he notes, the poor are at a disadvantage against the rich, having fewer resources, and so overtime tend to lose ground. Think of land, the almost only source of wealth in civilized societies until very recently. Assume an initially completely equal distribution of land. And that's, by the way, not an absurdity. There's actually a very good example in China's Tang Dynasty, which adopted an "equal-field" system. All land was owned by the state, which allotted equal sized fields to individual peasant families.
What happened afterwards? Concentration. Little by little, some peasants were thriftier, others more prone to spend. Some were luckier, some more unfortunate with weather, or disease, or family issues. Some peasants started mortgaging away their fields to other peasants who again, due to thrift or luck had money available to spend. Those latter peasants then ended up with more land. Rince and repeat the process for several decades, and you get some very rich guys and a lot of landless vagrants. Keep the process going for even longer and you'd get even more inequality.
As Turchin himself says it:
“The mathematical model I developed, however, tells us that this mechanism by itself will not produce a vast gulf between the rich and the poor. When land becomes a scarce commodity, however, another process begins to operate. Human beings need to consume a certain amount of goods to survive. Most basically, they have to get enough food. Those who do not have enough land to feed themselves will have to start selling what they have to make up the difference. As a result, they become poorer. By contrast, those who have more land than they need to feed themselves will have a surplus income that they can use to acquire even more land. Thus, the rich get richer. The positive feedback of the Matthew principle arises as a result of threshold of the minimum consumption level. The Matthew principle ensures that all people whose land holdings are below the threshold—the poor—gradually lose their remaining property, which ends up in the hands of the rich. Finally, the population is divided into a tiny minority of wealthy landowners and a huge majority of landless proletarians.”
But that seldom happened, as eventually some ambitious man always found a way of organizing those landless vagrants into a rebel army and started a big fat war. Chinese dynasties tended to all last exactly 250 years, with a big rebellion in the middle. Two secular cycles. And the Chinese historians always agree in the culprit. 土地兼并, land concentration. Every single time. Europe had less obvious closure but also plenty of wars to stir things up. And eventually, of course, the Age of Revolutions.
Things are of course different now in our incredibly diversified economies; even landless peasants or the equivalent today can work their way up some corporate ladder or find some new economic niche and start a successful business. But the fact that poor people, on average, are at a disadvantage in resource competition against the rich. The rich just have less to lose. As Half Sigma, unsuccessful candid Jew always says, talk of "risk-taking entrepreneurs" is just bullshit. Rich people have enough money stashed away to live comfortably all their lives. They are investing their spare wealth, and yes, there's always a risk there. But big deal. They're covered.
Again, I'm following Turchin and talking like evolution ends at the neck. Which it doesn't. People are genetically different, not only in intelligence but appearance (a very important part of individual capital), and a myriad personality traits which affect one's ability to gain wealth. Those successful genes, "moxie" as Greg Cochran calls them, also get sent up to wealthier families as successful people choose to marry into them, depleting the lower classes of the most fundamental resource, the very physical basis of economic success, especially in a culture like ours, without marriage taboos or formally separate social classes.
Modern debt has perhaps little to do with the debt of a peasant mortgaging his small plot of land to pay for his father's funeral. While commoners today have plenty of student or consumer debt, most debt is hold by corporations or public entities, in a complete madness of intertwined obligations going on for trillions and trillions. But it's not unreasonable to see corporations as the perhaps foremost subjects of the modern state, and not humans, who are but appendixes to corporations in the eyes of many bureaucratic agencies. Debt in the modern economy might not be as obvious as the poor medieval peasant of Turchin's tale, but the deleterious social effects, and the existence of a class of advantaged people using their position to increase their wealth against the debt of the masses is still very similar, and fits Turchin's equations.
Back to the beginning of the post, you can now see what debt jubilees were meant to achieve. Interestingly, Turchin's book doesn't mention the word "jubilee" even once. He probably didn't think them important, as economic inequality historically did grow anyway. But surely periodic legal debt relief made the process slower. Eased societal contradictions to a more manageable level for the court. But it was never enough, it was barely a stopgap to the inexorable trend. But at least it served to lower the gas boiling the frog.
I just realized that I started this post with the intention of arguing in favor of debt relief, of learning from the ancients how to pacify society. But given the limited power it historically had, and given the trends we are seeing now, the complete obliteration of Western Civilization down the road to becoming Brazil, then South Africa and ultimately Haiti, maybe the proper accelerationist position is to make the fire stronger and make the damned frog jump from the pot once and for all. No jubilee. No peace. Let's just observe the coming of the age of the oligarchs, and hope it breaks down fast.
If it does, though.