Credit and usury
I am curious about the silence of the church on usury when (nearly) every single building campaign is based upon this system, as is the rest of society. Can there be a Christian witness against usury (and I am broadly defining usury as all interest loans)? Oh, and then there is student loans and personal mortgages etc., credit cards, plus (to add a twist to the picture) the historic anti-antisemitism surrounding the Christian association of usury as a Jew-thing. It is not a clean-cut issue.
My overriding trouble with the system is that I feel like here is one of those situation that the contemporary Church ignores, or only talks about 'short-term' loans or 'variable-rate' loans, or some other way to make themselves feel good about defending the 'unfortunate.'
Or am I thinking to macro and need to just witness to Jesus Christ in the life of the church in any and every way possible.
My overriding trouble with the system is that I feel like here is one of those situation that the contemporary Church ignores, or only talks about 'short-term' loans or 'variable-rate' loans, or some other way to make themselves feel good about defending the 'unfortunate.'
Or am I thinking to macro and need to just witness to Jesus Christ in the life of the church in any and every way possible.
posted by Unknown at 1:41 PM
10 Comments:
I'll bite. This is a big issue. Prepare for another long post, one I hope will be useful to others just thinking of this issue.
1. I can’t agree that all loans with interest constitute “usury.” I reach that conclusion in the same way I believe the Roman church reached it (I recall reading something about this). There is a true economic cost of capital that derives from differences in the risks one assumes over different time periods. The greater the period of a loan, the greater the risk of loss. And the idea of ‘opportunity cost’ means that there is a cost of capital in terms of opportunity foregone when capital is loaned to another. So the true cost of any product necessarily includes its cost of capital. That is a real cost. It is not usurious to loan money to another in exchange for an interest charge that recovers the opportunity cost and compensates one for the risk embraced for the benefit of the other. To do any less is to offer money below its cost, which will result over the long term in going out of business. Usury refers rightly to the practice of loaning money at a rate that exceeds the cost of capital. However, it is surely charity to loan money at no interest rate, and charity ought to be the basis of relations with each other. What are we to do? My own thought is that interest is appropriately charged in commerce, for otherwise the enterprises to which we turn for employment will not long survive. But interest ought not be charged among individuals in those situations in which we come to another’s aid on an occasional basis by lending them money. So a father ought not charge interest to a son, nor a brother to his brother or sister. That is, when our intention is to offer charity, we should not charge interest.
2. I don’t believe the context of the biblical concerns about usury suggest that we interpret Scripture in our time as a prohibition against all interest charges on debt. The distinction we must make involves recognizing when our duty is charity (such as our duty to 3rd World nations). Here is my understanding of the biblical context, from research I did not long ago.
In an economy based almost entirely on agriculture and fishing, the primary means to wealth was through control of the land and fishing rights. The accumulation of wealth was therefore a zero-sum game: one could accumulate wealth only if someone else lost it. It is likely that some of that control was bestowed on selected clients of Herod the Great and his heirs in their efforts to consolidate power throughout Palestine, resulting in the entitlement of their protégés to both land and the labor of the peasants attached to it. However, the more common path was the one historically proscribed by the laws of the Jews: foreclosure on loans made to peasants.
Nature, Rome, and their local aristocracy conspired to relieve the peasantry of the burdens of owning the land of their fathers. Nature's contribution was in the form of a bad harvest, perhaps as a result of drought, storm, or disease. Farming in antiquity produced a very low yield since the only energy sources were human and animal labor. Between 25% and 50% of the yield was claimed by Antipas and the Temple in the form of taxes, tithes, and tolls (Antipas, in turn, paid tribute to his patron, Tiberius). The scribes of Temple and tetrarch descended upon each village at harvest to claim their share. As a result, even a mildly weak harvest could drive a family below the subsistence level, requiring them to consume the seed grain reserved for the coming year in order to survive. In trouble, the peasant had little alternative but to borrow from those whose livelihood allowed them to accumulate cash. Since there were very few wealthy merchants, that meant borrowing from those whose income came from taxes, tolls, and tithes: the local lay and priestly elite. Loans were made at usurious rates of interest (exceeding 50%) in antiquity or they were interest-free; as a rule, the aristocracy was not motivated to make the loans in hope of achieving a return on investment from interest earned. Rather, the debt created a dependency that resulted in foreclosure, allowing the elite to amass large estates that were both engines and showplaces of power and, therefore, honor. In this way, peasants were converted from landowners to tenants on their ancestral lands.
The three obstacles to the smooth operation of the land consolidation cycle were under the control of the aristocrats. The first obstacle was the ancient Jewish law designed to prevent such consolidation – the requirement that all debts be forgiven every seventh year (Deut 15:1-3). The wisdom of the Pharisees of the Hillel school helped overcome this concern. They invented a legal device called a prozbul that circumvented the intent of the Law by allowing the creditor to turn the debt instrument over to a court and by securing the debt with the real estate of the debtor. The second obstacle was the court itself. Of course, the courts were run by the same elite making the loans, so it was a simple matter to enforce foreclosure of the defaulted loans while maintaining the appearance of compliance with Torah. The third obstacle was the Temple, the institution responsible for mediating God's will and, from the peasants' perspective, ensuring fertility of the fields. It is conceivable that those entrusted with the prayers of the people could have raised concerns about the justice of the land consolidation cycle, but the Temple elite and the local elite were nearly synonymous. The Judaism of both Sadducees and Pharisees reinforced the notion that foreclosure justice was God's justice.
Life near subsistence was therefore the destiny of the Palestinian peasant. The economics were harsh: roughly 90% of the population worked the land and supported the 10% who controlled it. Cultural mores and religion provided the moral sanction necessary to sustain such an arrangement. The support was claimed in the legal form of taxes and tithes and paid in the raw substance of the harvest. Galilean peasants likely rendered unto Caesar about the same percentage of their harvest as did other Mediterranean peasants, but the qualities that made Judaism the model of compassion in the empire made that share a greater burden for them. Unlike their Mediterranean counterparts, Jewish peasants practiced neither infanticide nor abortion nor birth control. Nature might have corrected the error of their ways, driving their population downward to a sustainable level through providential famine and disease, but Jewish peasants compounded their misery with their unique tradition of charity. Charity was enshrined in Torah. The gleanings of the harvest were both duty and demand. As a result, Jewish widows and children persisted in demanding their seat at the table, surviving if not thriving, adding their weight to the minimum sustainable harvest. Given such dynamics, one can imagine the bitter fruit sown by the sound of young growling stomachs echoing in a barn stacked full with tithes and taxes.
Indeed, it is in this light that Jesus' invective against the Pharisaic emphasis on holiness resonates. For the Pharisaic politics of holiness were politics of alienation. Their holy winnowing rendered the clean unclean by slicing the hearts of those trapped in a structure of demonic invention. The peasant in debt had no hope of escape from the cycle. It was dishonorable to starve, but it was unclean to feed a starving child food reserved for tithe and Temple. Prayers aren't edible and, for the unclean, they aren't audible. Yet prayers fertilize. So a father barters his fourth-born for forgiveness. The sin offering is made, communion is restored, a child is fed, and a fourth-born survives as the bonded servant of his father's master.
Thus, when Jesus spoke against debt, he spoke against the leaders of the temple-state oligarchy who robbed fellow Jews of their birthright - of their participation in the promises of Israel - by using debt as a weapon against the poor. That is the context. I suggest that there are times when our context is similar and therefore is judged by the Word's injunction (such as much of our 3rd world debt). But I think we are able to make a distinction between that and borrowing that fuels the economy by allowing capital holders to recover their reasonable costs of capital. And at all times, we are called to charity as the basis of our relations. The challenge is to discern where our duty lies in a given situation.
Craig, you're argument is substantial, but how much is it based on the needs for society to be maintained as is. I mean, the commands against usury were interpreted differently when we didn't have an economy based on the metaphysical "invisible hand of the market." Were they wrong (including Thomas) to think that the commands should not be overly particularized?
I do not wish to dismiss your learned exploration of the biblical context, but your argument falls back onto "Capital" and whether there are times when we do not act in charity.
I'm not trying to be a marxist or an idealist, I just think this is an under discussed issue (at least, in the circles in which I have been).
Wilson,
My point about capital was to remind us that there is an inherent cost in all goods that reflects the cost of the capital used to produce those goods. This is not just a reality in capitalism and thus we can't discount it with an allusion to the invisible hand (pardon the pun!). This is not just a capitalist phenomenon. Marxists cannot avoid the cost of capital either. Why is that reminder important? Because it makes no sense for us to interpret the Word in such a way that places God in the position of mandating businesses act in a manner that leads inevitably to their demise. Given that assertion, I posit further that usury must be rightly understood as the practice of charging rates higher than that inherent cost.
I don't see my assertion as a baptism of our current practice, but simply as a logical inference from the understanding that God desires to bless us with the ongoing capacity to produce that which we need to dine with God. If a business can't recover its costs, it forfeits its ongoing capacity to produce.
The context qualifies this. It makes clear that "love your neighbor" constrains the economic aspects of human relations, such that we cannot use debt to limit another's participation in the abundance of God's promises. Usury is one way we locate that constraint. But the duty of reciprocity is also a constraint. "Love your neighbor" also means that one should not expect a neighbor to relate to others in a way that is destructive of their own ability to survive economically.
My last sentence above is not quite right, I think, without the context of our entire conversation here. That statement must be held in tension with the one I made about charity above. There are clearly times when living the crucified life means making choices that are apparently sacrificial of our own ongoing economic livelihood. But that is where Sabbath living - gathering no manna on the seventh day - comes in. As Christians we are ever mindful of God's providence and are able to make those choices trusting that God's abundant love for us transcends the limits of our imagination.
I was waiting to see if anyone else would join in, but I guess it is still just you and me, craig.
I am going to try and not get too marxist on here, but you are running with a number of unchecked assumptions concerning capital, production, abundance, etc. The whole point of Das Kapital was to narrate the genesis of means of production within capitalism and how they were not just a part of "being human" but the result of historical forces. Now, Marxism has plenty of problems, but it can be helpful to us by pointing out that our reason should be on the side of institutions just because that is the only system we have known. Of course within a capitalist system it is illogical to mandate that businesses work against their own interests. But the whole difficulty of the capitalist system is its conception of personal interest and business interest which is (I would say) contrary, in many ways, to charity. I am not evangelizing marxism, just that there are things that marx has to say about the status quo.
And that continues into our ideas of production. I don't think an understanding of the abundant love of God means that God gives us the ability to continually produce the things we need, but that God gives us the things we need.
That being said, I think your last point in the penultimate post is your strongest (even without context) and is one of the reasons why Christianity is not about overthrowing the current economic system (as Barth says, the revolution already happened in Palestine 2000 years ago) but loving our neighbors. What I am concerned about is pastoring to business owners and to bank owners who might need to collect loans on fellow members of the church. If we maintain this idea of "Capital", that there is a metaphysical cost to lent money, then the relations between the members of my church will not be as brothers and sisters, but more like Ananias and Sapphira.
If usury only concerns economic malpractice, is it right for people who commune together to foreclose on each other if there is no malpractice involved?
Sorry for jumping in late here. I just realized that I never had the permit to post on the blog. :(
Craig, you've laid out an extensive context for the usury laws. If you don't mind me asking, what's your source? It seems that more material is available than I realized with regard to first century economics in the Ancient Near East.
Not sure what the consensus about Scriptural infallibility is in this post, but I'm afraid that I have to respectfully disagree with the biblical texts that assert that charging interest is always unethical. I think the univocal witness of Scripture is that charging interest is wrong. But the writers' contexts were such that none of them could fathom the possibility that interest could lead to the creation of wealth (even for the poor, I might add!). Economics was hardly an academic subject until the Enlightenment, so even the above-average intellectual in antiquity still had little concept of the "time value of money," which is an essential mechanism for the generation of wealth in a capitalist system.
Essentially, I agree with Craig's pragmatist argument. I think we're making the same points.
Regarding Wilson's latest point about a banker foreclosing on his fellow in communion whose loan is in default: I don't think it's ethical for a banker to forgive the debt of the person in communion only to turn around and foreclose on a person not in communion. I think we're all agreed on that.
But I think Wilson has raised a hypothetical case that does not necessarily have to end as an ethical quandary. A loan, after all, is a legal contract, a written agreement expressing mutual trust, a covenant, etc. The debtor who defaults on a loan has broken that trust. A sense of restorative justice demands that the banker receive compensation for the money lost. Is restorative justice appropriate among Christians? I think so.
As for Ananias and Sapphira, I'm not sure how their narrative fits into this discussion of usury.
Wilson,
I have delayed answering your last question because I thought it was an excellently provocative question.
My answer is "I don't know." As a trained economist, business executive, part of three generations of Uffman males who have served the credit industry, and as one recovering from a lifetime as a liberal protestant (which allowed me to baptize what I did for a living), I am conditioned to respond just as Wes did.
And that may be the right answer, particularly in his concern for treating both Christian and non-Christian the same.
But a nagging voice (with a West Texas twang) causes me to make a distinction between the ethical demands placed on Christians and those placed on non-Christians. I am mindful of the call for us to be the church and not reform society - of the call to Christian non-violence. In that situation, I conclude with Hauerwas that it is problematic for a Christian to be faithful whilst serving in the armed forces. So I am now asking myself if that same logic pertains here. If so, then I must conclude that a Christian cannot be faithful and serve in a capacity that would have them act without charity. And to put a family out on the street seems to me analogous in our time to forcing another into the despairing world of the"day worker." Charity, it seems, forecloses that option. So it seems to me that in the scenario you propose it would be incumbent upon the Christian to assure that the debtor has adequate shelter upon the conclusion of their encounter. Perhaps that allows room for foreclosure. Perhaps it does not. In our prevailing systems, I think it most likely does not. And so now you have led me to doubt. Just as the Christian ought not serve in the armed forces, perhaps the Christian ought not serve in a capacity that would cause them to participate in foreclosure activity. I need to think more about this with you.
Peasant Wes,
The bottom line is that information about taxation in the Middle East seems to be well documented. So, too, is the participation of the Temple oligarchy in the land consolidation process. This was not a uniquely Jewish phenomenon. The temples in Greek cities were also the centers of finance for the same reasons. (The Pauline mandate for Christians to withdraw from participation in the Greek temples was not least a demand to withdraw from participation in the economic structures that trapped the peasantry in despair.)
The sources for my account of context are multiple. I am in England for a few weeks and so can’t get back to my library to give you something more precise than what I provide below until late August.
I began with Wright (Wright, N. T. (1996). Jesus and the Victory of God (First North American ed. Vol. 2). Minneapolis, MN: Fortress Press.) and simply used the same sources I found in his footnotes.
There is a valuable source I used, not listed below, which dealt with the high priests up to 70 CE. I will look that up when I return home.
In addition to these two, I recall relying upon:
Bailey, K. E. (1983). Poet & Peasant (Poet & Peasant and Through Peasant Eyes Combined ed.). Grand Rapids, MI: Wm. B. Eerdmans Publishing Company.
Borowski, O. (2003). Daily Life in Biblical times. Atlanta: Society of Biblical Literature.
Herzog, W. R. I. I. (1994). Parables as Subversive Speech: Jesus as Pedagogue of the Oppressed. Louisville, KY: Westminster John Knox Press.
Herzog, W. R. I. I. (2000). Jesus, Justice, and the Reign of God: a Ministry of Liberation. Louisville, KY: Westminster John Knox Press.
Horsley, R. A. (2003). Jesus & Empire: The Kingdom of God and the New World Disorder. Minneapolis, MN: Augsburg Fortress.
Horsley, R. A. & Silberman, N. A. (2002). The Message and the Kingdom: How Jesus and Paul Ignited a Revolution (First Fortress Press ed.). Minneapolis, MN: Fortress Press.
Malinas and Nehrey, in Nehrey, The Social Context of Luke-Acts
Perdue, L. G. (1997). Families in ancient Israel (1st ed.). Louisville, Ky.: Westminster John Knox Press.
Thanks Craig, you didn't have to list all those sources. I was just looking for a couple of starter books for me to look into.
I agree that the charitable thing for a Christian banker to do would be to ensure that a person in default has adequate shelter. I'm not ready to agree that a Christian cannot be employed as a banker/loan officer. That logic, is it called consequentialism? (I'm not sure; help me out here.) That ethic eventually becomes untraceable. It's easier for me to see the uncharitable effects of a loan officer foreclosing on someone, but aren't there so many other actions we commit as consumers in the market that also affect people adversely somewhere down the line? I'm pretty sure some of the products I buy on a regular basis support conglomerates that treat workers poorly, sell pornography, or something. As much as I try to eat at the refectory, there are still a lot of ways that, through my market activities, I unwittingly hurt people. Sure, I'm not happy that it's so, but I don't know of any other way to live in a capitalist society. As far as I can tell, in this consequentialist system, the only ethical options I have are to withdraw from society or launch reform, and I think we left those topics out of the purview of this discussion.
Regarding Wilson's comment: "an understanding of the abundant love of God [does not mean] that God gives us the ability to continually produce the things we need, but that God gives us the things we need."
Is this the "ethics of abundance" that Amy Laura Hall likes to talk about? (As you can see, I'm not up-to-speed with my Duke lingo yet.) I have a hard time believing that such an ethic is Scriptural or feasible. Adam was charged (cursed?) to till the earth. Proverbs says all sorts of things about productivity? Did Jesus undo all those exhortations about being productive?
Wes, when you say that the ethic becomes untracable, you bring a point that Augustine makes in De Doctrina... (I think) where he says that charity is first and foremost to our neighbors. That means people we see. If we cannot love the people we see then we cannot love. If we cannot love the man lying on the side of the road, then we cannot love.
Worrying about how far love "traces out" is the concern of the Priest and the Levite. Sure we are complicit in a lot of things through the market economy, but I think there is a distinction that does not form a slippery slope whereby I sin by signing the foreclosure statement on someone, whereas I do not sin by eating a banana.
That point from Augustine is well taken. So back to Craig's question, is it ethical for the banker to foreclose on the person as long as provision of shelter is made for the person?
And here's a spin on the topic about which I'm curious. It's pretty easy for us to feel sympathy for someone in our church with a lovely wife and three doe-eyed little children who've all just fallen on hard times. Unfortunately, I'm afraid most people who default on loans are not of this sort. People who default on their house payments usually have a trail of poor financial decisions in their past, with a low credit rating to prove it. Do we still simply provide shelter for a person who has made a string of poor decisions in the past? I'm inclined to say, "yes" but I feel that something more needs to be done also, but I don't know how to make people exercise financial discipline.
Another spin on the question. What if the Christian banker was foreclosing on Ken Lay's home, post-Enron? Do we give him shelter, too? What about internet access so that he can check his "dirty big business" emails?
I'm just trying to think of more complicated scenarios.
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