Commodity money, particularly in the form of gold and silver, is distinguished from credit money most of all by one spectacular feature: it can be stolen. Since an ingot of gold or silver is an object without a pedigree, throughout much of history bullion has served the same role as the contemporary drug dealer's suitcase full of dollar bills, as an object without a history that will be accepted in exchange for other valuables just about anywhere, with no questions asked. As a result, one can see the last 5 000 years of human history as the history of a kind of alternation. Credit systems seem to arise, and to become dominant, in periods of relative social peace, across networks of trust, whether created by states or, in most periods, transnational institutions, whilst precious metals replace them in periods characterised by widespread plunder. Predatory lending systems certainly exist at every period, but they seem to have had the most damaging effects in periods when money was most easily convertible into cash.
These scraps of primitive interest rates are in fact all a part of modern history, not of ancient history or of the prehistory of credit. Inferences from them should be made with caution. They do, however, serve to illustrate the actual operation of primitive credit in kind and in very general terms show the type and magnitude of return the creditor often expected. In most cases per annum rates were not conventional and our translation into modern credit terms is forced. The term was the natural term of the transaction: from seed time to harvest, for example. But since such a seed loan can often be made only once a year, it might have been a matter of indifference to both debtor and creditor whether the term was six months or twelve monthsIt seems that going into near ancient times, from Sumerian and beyond, interest rates were regulated more on how well a central authority could enforce such regulations (which would follow the assertion that in peaceful times loan sharks less common). The stability of credit itself was actually a long, slow evolution as various terms were agreed upon. Penalty for payment? Penalty for non-payment? Rates of return? Rates at temples reflected such uncertainty the Temple of Arbela charged 25% ~732BC and in 608 BC Suka borrowed 3 mina of silver at an incredible 40% interest. This was not interest rate as we would think of them, but rather penalty for non-payment with non-payment expected, otherwise why would you be borrowing, if that makes any sort of sense. One more thing, since the article seems to address Alexandra the Great's conquest of Persia as a sort of pivotal moment, here's what the book says about that:
The end of the classical period of Greek history and the beginning of the Hellenistic period is usually dated from the conquests of Alexander, circa 325 B.C. These wars had revolutionary economic effects, two of which should be mentioned here. Alexander seized and distributed a vast hoard of Persian gold and silver. Much of it was subsequently coined, and it is said that the money stock of the Mediterranean world was multiplied several-fold in a few years. Prices rose and interest rates declined. Also, the opening of the East and of Africa and the unifying of the known world created a much wider trading area. This vastly increased the demand for, and supply of, goods and expanded trade.posted by geoff. at 8:34 AM on August 23, 2009 [1 favorite]
From 7000 to 4000 B.C. there existed an egalitarian society in Anatolia and the Balkan region with gender equality and where wars were unknown. Its high living standard for everyone was only achieved again millenniums later.Emergence and development of an egalitarian society - ancient communism in Turkey. We've had a post about Çatalhöyük before IIRC, but closed to new posts now.
In the settlement of Çatalhöyük, up to ten thousand people lived together for more than one thousand years. From the archaeological findings, not only the egalitarian structure of society can be deduced but also insights can be gained into the cultural achievements of a free society.
Credit was in general use in ancient and in medieval times. Credit long antedated industry, banking, and even coinage; it probably antedated primitive forms of money. Loans at interest may be said to have begun when the Neolithic farmer made a loan of seed to a cousin and expected more back at harvest time. Be this as it may, we know that the recorded legal history of several great civilizations started with elaborate regulation of credit.posted by geoff. at 9:37 AM on August 23, 2009
For example, about 1800 B.C., Hammurabi, a king of the first dynasty of ancient Babylonia, gave his people their earliest known formal code of laws. A number of the chief provisions of this code regulated the relation of debtor to creditor. The maximum rate of interest was set at 33 1⁄3% per annum for loans of grain, repayable in kind, and at 20% per annum for loans of silver by weight. All loans had to be accompanied by written contracts witnessed before officials. If a higher than legal interest rate was collected by subterfuge, the principal of the debt was canceled. Land and movables could be pledged for debt, as could the person of the creditor, his wife, concubine, children, or slaves. Personal slavery for debt, however, was limited to three years.
why do we put up with the payment of interest? Credit I get, but how did we come to accept the idea that it's SOP to buy something on credit and pay a non-commodity-related premium, namely interest, that doesn't necessarily go to the seller, but to an unrelated third party? Why not just pay the buyer, over time, without credit?Because, if I am a seller, it is my job to sell things, not lend money to people. Now, if I open a business that sells things, I could start extending credit to my customers to make it easier for them to buy my things, but I'd just as soon have my customers find someone else to lend them money to buy my things rather than doing it myself, which distracts me from my core business (selling things). Extending credit means that I have to deal with a whole other set of functions, like evaluating credit-worthiness, documenting open credit accounts, and creating mechanisms of dealing with those who fail to pay and possibly repossessing the goods. If I were really good at all of that, I would have opened a bank, rather than a store to sell things.
"to produce what we like to call the market: an arena where anything can be bought and sold, because all objects are disembedded from their former social relations and exist only in relation to money.As someone who's worked in the arts my whole life, this is a concept I struggle with daily-- the struggle between the soul's need for art and society's desire to commoditize everything.
That was actually the weakest part of the essay. It wasn't that the "social relations" of objects are disembedded and exist "only in relation to money." It's that the laws surrounding the recovery of debts hadn't yet defined a "maximum limit" (what we know as bankruptcy) that would prevent the borrower in default from becoming property of the lender."to produce what we like to call the market: an arena where anything can be bought and sold, because all objects are disembedded from their former social relations and exist only in relation to money.As someone who's worked in the arts my whole life, this is a concept I struggle with daily-- the struggle between the soul's need for art and society's desire to commoditize everything.
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posted by anotherpanacea at 7:37 AM on August 23, 2009