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Fri Mar 6, 2015, 07:42 PM


Tikkun: The Debt Strike As Credible Threat

While most contemporary talk of Jubilee
carries religious connotations, the first mass
debt cancellations were likely born out of secular
power consolidation. Economist Michael
Hudson traces the earliest Jubilees to pre-biblical times, in
periodic “clean slate” decrees issued by Bronze Age kings.
While immediate motivations for the abolitions varied from
instance to instance, an important common thread is that
the rationale was most often material, rather than a spiritual
ethic. In his Bible Review article on “The Economic Roots
of Jubilee,” Hudson argues that the seeming magnanimity
of these decrees was usually a product of “enlightened selfinterest.”

Clean slate decrees helped the rulers to maintain
a stable empire in which the king was the primary locus of
power and debtors remained loyal recruits for military campaigns.
If the king did not release debtors from their obligations,
then the debtors could threaten to gather together and
release the king’s head from his neck.

In game theory, this is what’s known as a “credible threat”:
the potential for pursuing action that by its mere plausibility
shapes the strategies of others. In modern times the credible
threat has largely evaporated, leaving debtors without tactical
recourse in a deeply asymmetric struggle. This playing
field cannot be leveled by appealing to legislators with moral
arguments. This playing field can only be leveled when debtors
develop and wield their own form of counterpower: the
credible threat of revolt.

This sort of threat needn’t entail physical attacks on lenders
or legislators (though the balancing potential of the proverbial
“pitchforks and torches” should never be underestimated).
Instead, debtors can establish their willingness to
withdraw compliance. They must demonstrate that they can
stop paying, en masse. Oil tycoon J. Paul Getty captured this
succinctly when he said: “If you owe the bank $100, that’s
your problem. If you owe the bank $100 million, that’s the
bank’s problem.” Taken alone, debts are individual problems.
But when lumped together, they are a systemic threat. The
threat of mass debt refusal may not only bring about a contemporary
Jubilee, but could also change the terms of future
debts—and perhaps much else



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