Debt (61 page)

The story of the origins of capitalism, then, is not the story of the gradual destruction of traditional communities by the impersonal power of the market. It is, rather, the story of how an economy of credit was converted into an economy of interest; of the gradual transformation of moral networks by the intrusion of the impersonal—and often vindictive—power of the state. English villagers in Elizabethan or Stuart times did not like to appeal to the justice system, even when the
law was in their favor—partly on the principle that neighbors should work things out with one another, but mainly, because the law was so extraordinarily harsh. Under Elizabeth, for example, the punishment for vagrancy (unemployment) was, for first offense, to have one’s ears nailed to a pillory; for repeat offenders, death.
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The same was true of debt law, especially since debts could often, if the creditor was sufficiently vindictive, be treated as a crime. In Chelsea around 1660,

As a result, Margaret Sharples was hanged.

Obviously, it was the rare shopkeeper who wished to see even his most irritating client on the gallows. Therefore decent people tended to avoid the courts entirely. One of the most interesting discoveries of Craig Muldrew’s research is that the more time passed, the less true this became.

Even in the late Middle Ages, in the case of really large loans, it was not unusual for creditors to lodge claims in local courts—but this was really just a way of ensuring that there was a public record (remember that most people at the time were illiterate). Debtors were willing to go along with the proceedings in part, it would seem, because if there was any interest being charged, it meant that if they did default, the lender was just as guilty in the eyes of the law as they were. Less than one-percent of these cases were ever brought to judgment.
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The legalization of interest began to change the nature of the playing field. In the 1580s, when interest-bearing loans began to become common between villagers, creditors also began to insist on the use of signed, legal bonds; this led to such an explosion of appeals to the courts that in many small towns, almost every household seemed to be caught up
in debt litigation of some sort or other. Only a tiny proportion of these suits were ever brought to judgment, either: the usual expedient was still to rely on the simple threat of punishment to encourage debtors to settle out of court.
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Still, as a result, the fear of debtor’s prison—or worse—came to hang over everyone, and sociability itself came to take on the color of crime. Even Mr. Coward, the kindly shopkeeper, was eventually laid low. His good credit itself became a problem, especially as he felt honor-bound to use it to help the less fortunate:

It is perhaps not surprising, when one consults contemporary sources about what those prisons were like, particularly for those who were not of aristocratic origins. Mr. Coward would surely have known, as the conditions at the most notorious, like Fleet and Marshalsea, caused periodic scandals when exposed in parliament or the popular press, filling the papers with stories of shackled debtors “covered with filth and vermin, and suffered to die, without pity, of hunger and jail fever,” as the aristocratic roués placed in the elite side of the same jails lived lives of comfort, visited by manicurists and prostitutes.
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The criminalization of debt, then, was the criminalization of the very basis of human society. It cannot be overemphasized that in a small community, everyone normally was both lender and borrower. One can only imagine the tensions and temptations that must have existed in a communities—and communities, much though they are based on love, in fact,
because
they are based on love, will always also be full of hatred, rivalry and passion—when it became clear that with sufficiently clever scheming, manipulation, and perhaps a bit of strategic bribery, they could arrange to have almost anyone they hated imprisoned or even hanged. What was it that Richard Bennett really had against Margaret Sharples? We’ll never know the back-story, but it’s a pretty safe bet that there was one. The effects on communal solidarity must have been devastating. The sudden accessibility of violence really
did threaten to transform what had been the essence of sociality into a war of all against all.
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It’s not surprising then, that by the eighteenth century, the very notion of personal credit had acquired a bad name, with both lenders and borrowers considered equally suspect.
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The use of coins—at least among those who had access to them—had come to seem moral in itself.

Understanding all this allows us to see some of the European authors considered in earlier chapters in an entirely new light. Take Panurge’s encomium on debt: it turns out that the real joke is not the suggestion that debt ties communities together (any English or French peasant of the day would have simply assumed this), or even that
only
debt ties communities together; it is putting the sentiment in the mouth of a wealthy scholar who’s really an inveterate criminal—that is, holding up popular morality as a mirror to make fun of the very upper classes who claimed to disapprove of it. Or consider Adam Smith:

The bizarre thing here is that, at the time Smith was writing, this simply wasn’t true.
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Most English shopkeepers were still carrying out the main part of their business on credit, which meant that customers appealed to their benevolence all the time. Smith could hardly have been unaware of this. Rather, he is drawing a utopian picture. He wants to imagine a world in which everyone used cash, in part because he agreed with the emerging middle-class opinion that the world would be a better place if everyone really did conduct themselves this way, and avoid confusing and potentially corrupting ongoing entanglements. We should all just pay the money, say “please” and “thank you,” and leave the store. What’s more, he uses this utopian image to make a larger point: that even if all businesses operated like the great commercial companies, with an eye only to self-interest, it wouldn’t matter. Even the “natural selfishness and rapacity” of the rich, with all their “vain and insatiable desires” will still, through the logic of the invisible hand, lead to the benefit of all.
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In other words, Smith simply imagined the role of consumer credit in his own day, just as he had his account of the origins of money.
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This allowed him to ignore the role of both benevolence
and
malevolence in economic affairs; both the ethos of mutual aid that forms the necessary foundation of anything that would look like a free market (that is, one which is not simply created and maintained by the state),
and
the violence and sheer vindictiveness that had actually gone into creating the competitive, self-interested markets that he was using as his model.

Nietzsche, in turn, was taking up Smith’s premises, that life is exchange, but laying bare everything (the torture, murder, mutilation) that Smith preferred not to have to talk about. Now that we have seen just a little of the social context, it’s difficult to read Nietzsche’s otherwise puzzling descriptions of ancient hunters and herdsmen keeping accounts of debts and demanding each others’ eyes and fingers without immediately thinking of Casimir’s executioner, who actually did present his master with a bill for gouged eyes and severed fingers. What he is really describing is what it took to produce a world in which the son of a prosperous middle-class reverend, such as himself, could simply assume that all human life is premised on calculated, self-interested exchange.

One reason that historians took so long to notice the elaborate popular-credit systems of Tudor and Stuart England is that intellectuals of the time spoke about money in the abstract; they rarely mentioned it. For the educated classes, “money” soon came to mean gold and silver. Most wrote as if it could be taken for granted that gold and silver had always been used as money for all nations in history and, presumably, always would be.

This not only flew in the face of Aristotle; it directly contradicted the discoveries of European explorers of the time, who were finding shell money, bead money, feather money, salt money, and an endless variety of other currencies everywhere they went.
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Yet all this just caused economic thinkers to dig in their heels. Some appealed to alchemy to argue that the monetary status of gold and silver had a natural basis: gold (which partook of the sun) and silver (which partook of the moon) were the perfected, eternal forms of metal toward which
all baser metals tend to evolve.
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Most, however, didn’t feel that much explanation was required; the intrinsic value of precious metals was simply self-evident. As a result, when royal advisors or London pamphleteers discussed economic problems, the issues they debated were always the same: How do we keep bullion from leaving the country? What do we do about the crippling shortage of coin? For most, questions like “How do we maintain trust in local credit systems?” simply did not arise.

This was even more extreme in Britain than on the Continent, where “crying up” or “crying down” the currency was still an option. In Britain, after a disastrous attempt at devaluation under the Tudors, such expedients were abandoned. Henceforth, debasement became a moral issue. For the government to mix base metal into the pure eternal substance of a coin was clearly wrong. So, to a lesser extent, was coin-clipping, a near-universal practice in England, which might be thought of as a kind of popular version of devaluation, since it involved secretly shaving silver off the edges of coins and then pressing them down so they seemed like they were still the original size.

What’s more, those new forms of virtual money that began to emerge in the new age were firmly rooted in these same assumptions. This is critical, because it helps explain what might otherwise seem a bizarre contradiction: How is it that this age of ruthless materialism, in which the notion that money was a social convention was definitively rejected, also saw the rise of paper money, along with a whole host of new credit instruments and forms of financial abstraction that have become so typical of modern capitalism? True, most of these—checks, bonds, stocks, annuities—had their origins in the metaphysical world of the Middle Ages. Yet in this new age, they underwent an enormous efflorescence.