Thursday, January 12, 2012


I liked this piece on the Euro debt crisis by Aditya Chakrabortty, not least because he argues that the human consequences of austerity "are not merely coincidental to those discussions about how to tackle the debt; they are integral to it."  Whilst it is easy to read all sorts of guff about the 'moral risk' of debt forgiveness, there is far less, other than in the pages of literature where it has been a common theme for centuries, about the immoral consequences of the extraction of repayment from those who no longer have the means to pay.

Chakrabortty has been reading David Graeber's new book and it shows.
Strip away the technicalities and you are left with two ways to think about the debt crisis. One is as a battle between the past and the future ...  the second way to think about any argument over debt [is] as a fight between creditors and borrowers, or the haves and the have-nots. 
He argues that the current austerity programme sacrifices the future of the individual citizens of debtor countries, who bear little responsibility for the crisis, in a vain attempt to repay debts acquired in the past through the actions of previous governments; whilst the creditors use their power to extract as much as possible from the borrowers to avoid facing the consequences of their own poor investment decisions. It is almost as if we have reinvented the old debtors' prisons, on an international scale. The borrowers are punished by endless austerity, whilst the creditors are protected, even rewarded, whatever responsibility they share for the creation of the crisis.

The 1869 Bankruptcy Act abolished imprisonment for debt in Britain and, in effect, allowed for an orderly debt default and debt forgiveness. This is a lesson seemingly lost to the EU as it seeks to bind the recalcitrant nations with perpetual fiscal restraints.

Chakraborrty concludes:
In his recent, brilliant history Debt: the First 5,000 Years, the anthropologist David Graeber calls for a modern-day debt jubilee, a cancellation of all debts, just as they had in Mesopotamia. His suggestion is provocative, but it should be taken seriously. Because the longer we keep protecting the haves over the have-nots and honouring the past while destroying the future, the worse this debt crisis will get.

Greece's new place in Europe

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